Aspen Technology Announces Financial Results for the Fourth Quarter and Fiscal Year 2012

August 21, 2012

BURLINGTON, Mass.--(BUSINESS WIRE)--Aug. 21, 2012-- Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software and services to the process industries, today announced financial results for its fourth quarter and fiscal year 2012, ended June 30, 2012.

Mark Fusco, Chief Executive Officer of AspenTech, said, "The fourth quarter was a strong finish to a great year for AspenTech. The company exceeded its fiscal 2012 guidance for each of its key financial metrics, including growth in total license contract value, free cash flow and expense management. Our aspenONE® subscription software offering continues to gain traction in the market and we have a significant opportunity to drive increased product adoption and usage levels over the long term."

Fourth Quarter and Fiscal Year 2012 and Recent Business Highlights

The license portion of total contract value was $1.46 billion at the end of fiscal 2012, which increased 4.6% sequentially and 14.5% compared to the end of fiscal 2011.
Total contract value, including the value of bundled maintenance, was $1.68 billion at the end of fiscal 2012, which increased 5.4% sequentially and 17.7% compared to the end of fiscal 2011.
Annual spend, which the company defines as the annualized value of all term license and maintenance revenue contracts at the end of the quarter, was approximately $304 million at the end of fiscal 2012, which increased 4.4% sequentially and 12.7% compared to the end of fiscal 2011.

Summary of Fourth Quarter Fiscal Year 2012 Financial Results

AspenTech's total revenue of $64.0 million increased 22% from $52.6 million in the fourth quarter of the prior year.

Subscription and software revenue was $45.8 million in the fourth quarter of fiscal 2012, an increase from $28.7 million in the fourth quarter of fiscal 2011.
Services & other revenue was $18.2 million in the fourth quarter of fiscal 2012, compared to $23.9 million in the fourth quarter of fiscal 2011.

For the quarter ended June 30, 2012, AspenTech reported a loss from operations of $3.6 million, compared to a loss from operations of $18.3 million for the quarter ended June 30, 2011.

Net loss was $5.4 million for the quarter ended June 30, 2012, leading to a net loss per share of ($0.06), compared to a net income per share of $0.43 in the same period last fiscal year. The company's net income for the fourth quarter of fiscal year 2011 was positively impacted by a $57.3 million net tax benefit primarily related to a valuation reversal against our deferred tax assets.

Non-GAAP loss from operations, which adds back stock-based compensation expense, restructuring charges and amortization of intangibles associated with acquisitions, was $0.9 million for the fourth quarter of fiscal 2012, compared to a non-GAAP loss from operations of $16.1 million in the same period last fiscal year. Non-GAAP net loss was $3.5 million, or ($0.04) per share, for the fourth quarter of fiscal 2012, compared to a non-GAAP net loss of $19.0 million, or ($0.20) per share, in the same period last fiscal year. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

AspenTech had a cash balance of $165.2 million at June 30, 2012, a decrease of $17.3 million from the end of the prior quarter after using $14.0 million in cash to repurchase shares of common stock and reducing secured borrowings by $22.6 million. During the fourth quarter, the company generated $21.7 million in cash flow from operations and $18.6 million in free cash flow after taking into consideration $3.1 million in capital expenditures and capitalized software. For the twelve months ended June 30, 2012, the company generated $104.6 million in cash flow from operations and $100 million in free cash flow after taking into consideration $4.8 million in capitalized expenditures and capitalized software.

Summary of Fiscal Year 2012 Financial Results

AspenTech's total revenue of $243.1 million increased 23% from $198.2 million for fiscal year 2011.

Subscription and software revenue was $166.7 million, an increase from $103.7 million for fiscal year 2011.
Services & other revenue was $76.4 million, compared to $94.5 million for fiscal year 2011.

For the fiscal year ended June 30, 2012, AspenTech reported a loss from operations of $15.0 million, an improvement from a loss from operations of $54.6 million for fiscal year 2011.

Net loss was $13.8 million for the fiscal year ended June 30, 2012, leading to net loss per diluted share of ($0.15), compared to net income per basic and diluted share of $0.11 for fiscal year 2011. The company's net income for fiscal year 2011 was positively impacted by a $54 million net tax benefit primarily related to a valuation reversal against our deferred tax assets.

Non-GAAP loss from operations, which adds back stock-based compensation expense, restructuring charges and amortization of intangibles associated with acquisitions, was $2.8 million for fiscal year 2012, an improvement compared to a non-GAAP loss from operations of $45.1 million for fiscal year 2011. Non-GAAP net loss was $5.2 million, or ($0.06) per share, for fiscal year 2012, an improvement compared to a non-GAAP net loss of $43.5 million, or ($0.45) per share, for fiscal year 2011. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

Use of Non-GAAP Financial Measures

This press release contains "non-GAAP financial measures" under the rules of the U.S. Securities and Exchange Commission. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.

Management considers both GAAP and non-GAAP financial results in managing AspenTech's business. As the result of adoption of new licensing models, management believes that, for the next few years, a number of AspenTech's performance indicators based on GAAP, including revenue, gross profit, operating income (loss) and net income (loss), will be of limited value in assessing AspenTech's performance, growth and financial condition. Accordingly, management instead is focusing on certain non-GAAP and other business metrics, including the non-GAAP metrics set forth in this press release, to track AspenTech's business performance. None of these non-GAAP metrics should be considered as an alternative to any measure of financial performance calculated in accordance with GAAP.

Conference Call and Webcast

AspenTech will host a conference call and webcast today, August 21, 2012, at 4:30 p.m. (Eastern Time), to discuss the company's financial results for the fourth quarter and fiscal year 2012 as well as the company's business outlook.

The live dial-in number is (877) 245-0126, conference ID code 15108160. 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 (855) 859-2056 or (404) 537-3406, conference ID code 15108160, through August 28, 2012.

About AspenTech

AspenTech is a leading global provider of mission-critical process optimization software solutions, which are designed to manage and optimize plant and process design, operational performance, and supply chain planning. AspenTech's aspenONE software and related services have been developed specifically for companies in the process industries, including the energy, chemicals and engineering and construction industries. Customers use AspenTech's solutions to improve their competitiveness and profitability by increasing throughput and productivity, reducing operating costs, enhancing capital efficiency, and decreasing working capital requirements. To see how the world's leading process manufacturers rely on AspenTech to achieve their operational excellence goals, visit http://www.aspentech.com.

Forward-Looking Statements

The second 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. Actual results may vary significantly from AspenTech's expectations based on a number of risks and uncertainties, including, without limitation: AspenTech's failure to develop new software products, enhance existing products and services, or penetrate new vertical markets; demand for, or usage of, aspenONE software declines for any reason; unfavorable economic and market conditions or a lessening demand in the market for process optimization software; unforeseen difficulties or uncertainties in the application of accounting standards; weaknesses in AspenTech's internal controls; 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. AspenTech expressly disclaims any current intention to update forward-looking statements after the date of this press release.


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

	Three Months Ended						Twelve Months Ended
	June 30,						June 30,
		2012			2011			2012			2011
Revenue:
Subscription and software	$	45,832		$	28,744		$	166,688		$	103,699
Services and other		18,185			23,901			76,446			94,455
Total revenue		64,017			52,645			243,134			198,154
Cost of revenue:
Subscription and software		2,554			2,844			10,617			5,213
Services and other		10,547			12,306			41,660			47,132
Total cost of revenue		13,101			15,150			52,277			52,345
Gross profit		50,916			37,495			190,857			145,809
Operating expenses:
Selling and marketing		26,357			27,544			96,400			90,771
Research and development		15,259			13,818			56,218			50,820
General and administrative		13,067			14,544			53,547			59,041
Restructuring charges		(158	)		(87	)		(301	)		(247	)
Total operating expenses		54,525			55,819			205,864			200,385
Loss from operations		(3,609	)		(18,324	)		(15,007	)		(54,576	)
Interest income		1,537			2,746			7,578			13,075
Interest expense		(1,486	)		(1,059	)		(4,204	)		(5,138	)
Other (expense) income, net		(1,036	)		983			(3,519	)		2,919
Loss before income taxes		(4,594	)		(15,654	)		(15,152	)		(43,720	)
Provision for (benefit from) income taxes		794			(57,335	)		(1,344	)		(53,977	)
Net loss (income)	$	(5,388	)	$	41,681		$	(13,808	)	$	10,257
Net (loss) income per common share:
Basic	$	(0.06	)	$	0.44		$	(0.15	)	$	0.11
Diluted	$	(0.06	)	$	0.43		$	(0.15	)	$	0.11
Weighted average shares outstanding:
Basic		93,563			94,169			93,780			93,488
Diluted		93,563			96,568			93,780			95,853


ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share data)

	June 30,			June 30,
		2012			2011

ASSETS
Current assets:
Cash and cash equivalents	$	165,242		$	149,985
Accounts receivable, net		31,450			27,866
Current portion of installments receivable, net		33,184			38,703
Current portion of collateralized receivables		6,297			15,748
Unbilled services		1,592			2,319
Prepaid expenses and other current assets		16,219			10,819
Prepaid income taxes		283			1,151
Deferred income taxes- current		7,196			7,272
Total current assets		261,463			253,863
Non-current installments receivable, net		14,046			47,773
Non-current collateralized receivables		-			9,291
Property, equipment and leasehold improvements, net		7,037			6,730
Computer software development costs, net		1,689			2,813
Goodwill		19,399			18,624
Deferred income taxes- non-current		58,559			57,061
Other non-current assets		6,142			3,639
Total assets	$	368,335		$	399,794

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of secured borrowings	$	10,756		$	15,756
Accounts payable		2,566			2,099
Accrued expenses and other current liabilities		37,989			64,467
Income taxes payable		598			672
Deferred revenue		143,578			90,681
Current deferred tax liability		232			-
Total current liabilities		195,719			173,675
Long-term secured borrowings		-			9,157
Long-term deferred revenue		43,595			38,262
Other non-current liabilities		15,429			20,897
Commitments and contingencies
Series D redeemable convertible preferred stock, $0.10 par value-
Authorized- 3,636 shares at June 30, 2012 and June 30, 2011
Issued and outstanding- none at June 30, 2012 and June 30, 2011		-			-
Stockholders' equity:
Common stock, $0.10 par value- Authorized-210,000,000 shares
Issued- 96,663,580 shares at June 30, 2012 and 94,939,400 shares at June 30, 2011
Outstanding- 93,465,955 shares at June 30, 2012 and 94,238,370 shares at June 30, 2011		9,666			9,494
Additional paid-in capital		547,546			530,996
Accumulated deficit		(395,079	)		(381,271	)
Accumulated other comprehensive income		8,095			9,115
Treasury stock, at cost-3,197,625 shares of common stock at June 30, 2012 and 701,030 at June 30, 2011		(56,636	)		(10,531	)
Total stockholders' equity		113,592			157,803
Total liabilities and stockholders' equity	$	368,335		$	399,794


ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)

	Three Months Ended						Twelve Months Ended
	June 30,						June 30,
		2012			2011			2012			2011
Cash flows from operating activities:
Net (loss) income	$	(5,388	)	$	41,681		$	(13,808	)	$	10,257
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		1,294			1,411			5,278			5,336
Net foreign currency loss (gain)		169			114			953			(2,167	)
Stock-based compensation		2,802			2,301			12,406			9,699
Deferred income taxes		(1,162	)		(64,308	)		(4,827	)		(64,264	)
Provision for bad debts		(82	)		(1,828	)		22			(2,755	)
Write-down of investment		-			-			-			600
Other non-cash operating activities		(2,181	)		26			(1,695	)		453
Changes in assets and liabilities:
Accounts receivable		(3,894	)		665			(4,285	)		5,981
Unbilled services		(463	)		(642	)		734			(477	)
Prepaid expenses, prepaid income taxes, and other assets		(3,848	)		(4,468	)		(3,918	)		(773	)
Installments and collateralized receivables		14,493			17,556			57,003			72,752
Accounts payable, accrued expenses and other liabilities		7,626			11,555			(1,583	)		(12,758	)
Deferred revenue		12,301			6,369			58,357			41,446
Net cash provided by operating activities		21,667			10,432			104,637			63,330
Cash flows from investing activities:
Purchase of property, equipment and leasehold improvements		(3,066	)		(517	)		(4,241	)		(2,839	)
Payments for acquisitions, net of cash acquired		-			-			(2,617	)		-
Capitalized computer software development costs		(24	)		(323	)		(511	)		(1,990	)
Net cash used in investing activities		(3,090	)		(840	)		(7,369	)		(4,829	)
Cash flows from financing activities:
Exercise of stock options and warrants		2,332			1,999			8,913			9,703
Proceeds from secured borrowings		-			-			4,982			2,500
Repayments of secured borrowings		(22,622	)		(5,387	)		(44,892	)		(32,051	)
Repurchases of common stock		(13,986	)		(6,368	)		(46,105	)		(10,531	)
Payment of tax withholding obligations related to restricted stock		(1,472	)		(1,152	)		(4,597	)		(3,885	)
Net cash used in financing activities		(35,748	)		(10,908	)		(81,699	)		(34,264	)
Effects of exchange rate changes on cash and cash equivalents		(151	)		263			(312	)		803
(Decrease) increase in cash and cash equivalents		(17,322	)		(1,053	)		15,257			25,040
Cash and cash equivalents, beginning of period		182,564			151,038			149,985			124,945
Cash and cash equivalents, end of period	$	165,242		$	149,985		$	165,242		$	149,985

Supplemental disclosure of cash flow information:
Income tax paid (refunded), net	$	1,108		$	876		$	2,707		$	(2,112	)
Interest paid		1,488			1,061			4,206			5,476


ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
GAAP Results Reconciled to Non-GAAP Results
The following table reflects selected Aspen Technology GAAP results reconciled to Non-GAAP results.
(unaudited in thousands, except per share data)

	Three Months Ended June 30,						Twelve Months Ended June 30,
		2012			2011			2012			2011
Total expenses
GAAP total expenses (a)	$	67,626		$	70,969		$	258,141		$	252,730
Less:
Stock-based compensation (b)		(2,802	)		(2,301	)		(12,406	)		(9,699	)
Restructuring charges		158			87			301			247
Amortization of intangible assets		(106	)		-			(142	)		-

Non-GAAP total expenses	$	64,876		$	68,755		$	245,894		$	243,278

Loss from operations
GAAP loss from operations	$	(3,609	)	$	(18,324	)	$	(15,007	)	$	(54,576	)
Plus:
Stock-based compensation (b)		2,802			2,301			12,406			9,699
Restructuring charges		(158	)		(87	)		(301	)		(247	)
Amortization of intangible assets		106			-			142			-

Non-GAAP loss from operations	$	(859	)	$	(16,110	)	$	(2,760	)	$	(45,124	)

Net (loss) income
GAAP net (loss) income	$	(5,388	)	$	41,681		$	(13,808	)	$	10,257
Plus:
Stock-based compensation (b)		2,802			2,301			12,406			9,699
Restructuring charges		(158	)		(87	)		(301	)		(247	)
Amortization of intangible assets		106			-			142			-
Less:
Non-recurring valuation allowance reversal		-			(62,791	)		-			(62,791	)
Income tax effect on Non-GAAP items (c)		(814	)		(125	)		(3,609	)		(466	)

Non-GAAP net (loss) income	$	(3,452	)	$	(19,021	)	$	(5,170	)	$	(43,548	)

Diluted (loss) income per share
GAAP diluted (loss) income per share	$	(0.06	)	$	0.43		$	(0.15	)	$	0.11
Plus:
Stock-based compensation (b)		0.03			0.02			0.13			0.10
Restructuring charges		-			-			-			-
Amortization of intangible assets		-			-			-			-
Less:
Non-recurring valuation allowance reversal		-			(0.65	)		-			(0.66	)
Income tax effect on Non-GAAP items (c)		(0.01	)		-			(0.04	)		-

Non-GAAP diluted (loss) income per share	$	(0.04	)	$	(0.20	)	$	(0.06	)	$	(0.45	)

Shares used in computing Non-GAAP diluted (loss) income per share		93,563			96,568			93,780			95,853

(a) GAAP total expenses
	Three Months Ended June 30,						Twelve Months Ended June 30,
		2012			2011			2012			2011
Total costs of revenue	$	13,101		$	15,150		$	52,277		$	52,345
Total operating expenses		54,525			55,819			205,864			200,385
GAAP total expenses	$	67,626		$	70,969		$	258,141		$	252,730

(b) Stock-based compensation expense was as follows:
	Three Months Ended June 30,						Twelve Months Ended June 30,
		2012			2011			2012			2011
Cost of service and other	$	271		$	225		$	1,168		$	945
Selling and marketing		1,099			890			4,601			3,603
Research and development		314			278			1,334			1,152
General and administrative		1,118			908			5,303			3,999
Total stock-based compensation	$	2,802		$	2,301		$	12,406		$	9,699

(c) The income tax effect on Non-GAAP items is calculated utilizing our estimated effective tax rate. During the three and twelve months ended June 30, 2011, we had a U.S. valuation allowance in place which resulted in a minimal income tax adjustment.

Source: Aspen Technology, Inc.

Media Contact
AspenTech
Erik Mason, +1 781-221-8386
erik.mason@aspentech.com
or
Investor Contact
ICR
Brian Denyeau, +1 646-277-1251
brian.denyeau@icrinc.com

Release Details

Aspen Technology Announces Financial Results for the Fourth Quarter and Fiscal Year 2012

Contact Investor Relations