Aspen Technology Reports Eighteen Percent Year-Over-Year Growth in Software License Revenues
CAMBRIDGE, Mass., Oct 29, 2003 (BUSINESS WIRE) -- Aspen Technology, Inc. (NASDAQ: AZPN), a leading provider of software and services to the process industries, today reported financial results for its fiscal 2004 first quarter ended September 30, 2003.
Total revenues for the first quarter were $77.0 million, with software license revenues totaling $35.1 million, and services revenue totaling $41.9 million. On a Generally Accepted Accounting Principles (GAAP) basis, AspenTech reported diluted earnings per share to common shareholders of $0.10 per share. GAAP earnings included a one-time gain of $6.5 million relating to the retirement of the Series B preferred stock. On a pro forma basis, excluding this one-time gain as well as preferred stock dividend and discount accretion, AspenTech posted net income of $0.5 million, or $0.01 per diluted share.
"We are extremely pleased to have delivered profitability in the first quarter, which is our seasonally weakest quarter," said David McQuillin, President & CEO of AspenTech. "These results indicate that our focus on improving execution and financial performance is yielding success. With the closing of our private equity financing, a substantial reduction of outstanding debt, and the generation of positive cash flow from operations, we have dramatically improved our balance sheet and put the company in a position to capitalize on improving IT demand in the process industries.
"We recently introduced a number of new products for the Enterprise Operations Management (EOM) market with some of our largest customers. We are encouraged by both the growth prospects for these solutions, as well as the demonstrable uptick in customer interest to deploy these types of applications. Given our improved operational execution and lower quarterly expenses, we are positioned to continue our progress and deliver on our objectives for this fiscal year."
First Quarter Highlights
AspenTech accomplished the following in the first quarter:
-- Continued improvement in company execution, with first quarter
operating results creating an operating profit in the
seasonally weak September quarter for the first time in five
years.
-- Signed significant license transactions with ICI Paints, CITGO
Petroleum, CIBA Specialty Chemicals, Rohm & Haas, Jacobs
Engineering and Aventis. Additionally, the company signed two
large transactions for its polymer production control
solutions, one of AspenTech's strategic growth markets.
-- Generated $13.8 million of positive cash flow from operations.
-- Strengthened the balance sheet through a $100 million private
equity transaction with Advent International.
-- Purchased and retired approximately $12.6 million of the
company's convertible bonds and made a final payment of
approximately $8.2 million to Accenture, resulting in a $20.8
million reduction in total debt.
-- Retired $60 million of the company's Series B preferred stock
in its entirety by paying down $30 million in cash and
converting the final $30 million at a discount into $21
million of Series D preferred stock.
-- Established a strategic alliance with UOP to market Aspen
RefSYS, a refinery-wide simulation and optimization solution
for the petroleum industry.
-- Held successful user group meetings with approximately 1,200
participants in New Orleans, Louisiana and Paris, France to
demonstrate new products and introduce updated product
positioning.
"We improved on many of our key financial metrics in the first quarter," said Charles Kane, Senior Vice President & CFO of AspenTech. "This included reducing DSOs for billed receivables to 74 days from 85 days in the previous quarter, significantly decreasing the leverage on the balance sheet, reducing total expenses by 13 percent year-over-year, and substantially improving our year-over-year operating results."
The company will be holding 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 Wednesday, October 29,2003. 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 October 29, 2003, by dialing (800) 642-1687 and entering in confirmation code: 3081208.
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
September 30, September 30,
2003 2002
REVENUES:
Software licenses $35,063 $29,646
Services 41,951 47,604
Total revenues 77,014 77,250
EXPENSES:
Cost of software licenses 3,617 3,335
Cost of services 24,632 28,008
Selling and marketing 23,874 29,154
Research and development 16,006 17,745
General and administrative 8,740 9,821
Total costs and expenses 76,869 88,063
Income (loss) from operations 145 (10,813)
Other income (expense), net (228) (501)
Interest income, net 722 581
Income (loss) before provision for
income taxes 639 (10,733)
Provision for income taxes 188 -
Net income (loss) 451 (10,733)
Accretion of preferred stock discount
and dividend (1) 3,852 (2,234)
Net income (loss) applicable to common
stockholders $4,303 $(12,967)
EARNINGS PER SHARE COMPUTATIONS:
Net income (loss) applicable to common
stockholders $4,303 $(12,967)
Plus: impact of assumed conversion of
Series D preferred stock 1,661 -
Net income (loss) applicable to common
stockholders, including assumed
conversions $5,964 $(12,967)
Weighted average shares outstanding -
Basic 39,772 37,994
Common stock equivalents 1,497 -
Incremental shares from assumed
conversion of Series D preferred stock 18,168 -
Weighted average shares outstanding -
Diluted 59,437 37,994
Basic net income (loss) per share
applicable to common stockholders $0.11 $(0.34)
Diluted net income (loss) per share
applicable to common stockholders $0.10 $(0.34)
PRO FORMA EARNINGS PER SHARE:
Net income (loss) before Preferred stock
discount and dividend accretion: $451 $(10,733)
Diluted earnings (loss) per share $0.01 $(0.28)
Weighted average shares outstanding -
diluted 59,437 37,994
(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
September 30, September 30,
2003 2002
Net income (loss) $4,303 $(12,967)
Adjustment to net income (loss):
Preferred stock discount and dividend
accretion 2,600 2,234
Gain on conversion of Series B
redeemable preferred stock (6,452)
Pro forma net income (loss) $451 $(10,733)
ASPEN TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
September 30, June 30,
2003 2003
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $101,591 $51,567
Accounts receivable, net 63,712 77,725
Unbilled services 15,883 15,279
Current portion of long-term installments
receivable, net 32,147 34,720
Deferred tax asset 2,929 2,929
Prepaid expenses and other current assets 10,061 11,581
Total current assets 226,323 193,801
Long-term installments receivable, net 71,031 73,377
Equipment and leasehold improvements, net 27,879 31,158
Computer software development costs, net 18,137 17,728
Intangible assets, net 39,847 41,279
Purchased intellectual property, net 1,719 1,861
Deferred tax asset 13,830 13,831
Other assets 7,254 5,445
Total assets $406,020 $378,480
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $2,632 $3,849
Amount owed to Accenture - 8,162
Accounts payable and accrued expenses 73,428 82,094
Unearned revenue 19,772 20,492
Deferred revenue 35,553 37,266
Total current liabilities 131,385 151,863
Long-term debt, less current maturities 77,027 89,911
Deferred revenue, less current portion 8,390 9,815
Deferred tax liability 13,402 13,258
Other liabilities 15,482 16,009
Redeemable preferred stock 101,078 57,537
Total stockholders' equity 59,256 40,087
Total liabilities and stockholders' equity $406,020 $378,480
SOURCE: Aspen Technology, Inc.
Aspen Technology, Inc. For Investors: Joshua Young, 617-949-1274 joshua.young@aspentech.com or For Media: Peter Watt, +44 1223 819-752 peter.watt@aspentech.com
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