1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): April 27, 1999 ASPEN TECHNOLOGY, INC. ------------------------------------------------------ (exact name of registrant as specified in its charter) Delaware 0-24786 04-2739697 - ------------------------------------------------------------------------------ (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) Ten Canal Park, Cambridge, Massachusetts, 02141 - ---------------------------------------------------- (Address of principal executive office and zip code) Registrant's telephone number, including area code: (617) 949-1000
2 ITEM 5. OTHER EVENTS. On April 27, 1999, Aspen Technology, Inc. issued a press release containing information regarding its reported results for its third fiscal quarter of 1999 and announcement that it implemented a restructuring program intended to reduce AspenTech's operating costs and improve productivity. A copy of the April 27, 1999 press release is filed as Exhibit 5.1 to this Current Report and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Business Acquired. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. EXHIBIT NUMBER DESCRIPTION - ------- ----------- 5.1 Press release of Aspen Technology, Inc. issued April 27, 1999 reporting 1999 Third Quarter Results and announcing a Restructuring Program Intended to Reduce Costs, Improve Productivity SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ASPEN TECHNOLOGY, INC. Date: May 10, 1999 By: /s/ STEPHEN J. DOYLE ---------------------------------- Stephen J. Doyle Senior Vice President, General Counsel and Secretary 2
1 Exhibit 5.1 to Aspen Technology, Inc. 8K filed May 10, 1999 Aspen Technology Reports 1999 Third Quarter Results Announces Restructuring Program Intended to Reduce Costs, Improve Productivity Cambridge, MA - April 27, 1999 -- Aspen Technology, Inc. (NASDAQ: AZPN), the leading supplier of enterprise manufacturing optimization solutions for the process industries, today reported results for its third quarter ended March 31, 1999. Based on these results and continuing economic pressures on customers in the refining, chemicals and petrochemicals sectors, the Company announced it has implemented a restructuring program intended to reduce AspenTech's operating costs and improve productivity. The Company reported total revenues of $54.2 million in the third quarter of fiscal 1999, compared with $68.4 million in the same period last year. For the three months ended March 31, 1999, software license revenue was $22.2 million, while services revenue totaled $32.0 million. Net loss for the third quarter totaled $5.9 million or $0.23 per share, compared with net income of $9.3 million or $0.37 per share, excluding one-time charges, for the same period in fiscal 1998. During the third quarter, AspenTech closed a number of software license agreements. The Company's supply chain business performed well, closing significant transactions in the quarter for its Aspen MIMI product with a major European specialty chemicals company and with one of the largest aluminum recyclers in the world. The Company sold the largest Aspen PIMS license in the company's history to Equiva, the services group for Motiva and Equilon (the new refining joint ventures from Texaco, Shell and Star). AspenTech also won a major integrated Plantelligence automation project for an ethylene complex in North America to be operated by the BASF Fina joint venture. Additional transactions signed during the third quarter included license agreements with Aristech Chemical, Consolidated Paper, Dow Chemical, Hoechst and Union Carbide. "Difficult economic conditions in the refining, chemicals and petrochemicals sectors, our core markets, along with resultant corporate restructurings and consolidation, were the primary causes for the shortfall in third quarter revenue," said Larry Evans, chairman and CEO of Aspen Technology. "We saw no decline in our competitive win rate, and we continued to see solid demand for our solutions, which help process manufacturers become more competitive. However, decisions are taking longer and the sales cycles are more complex in this environment. Consequently, we have taken decisive actions to adjust our strategy and tactics accordingly, as well as our cost structure. "First, in light of protracted weakness in our core vertical markets, we have taken aggressive steps to significantly reduce our overall cost structure by shrinking our headcount worldwide, streamlining operations, and consolidating facilities. These actions should better align revenues and expenses and are intended to enable us to return to profitability in the near term. Second, we have made some changes within the sales organization to focus more senior resources on day-to-day management of the sales process. And third, we are focussing a larger proportion of our resources on supply chain and Plantelligence opportunities, where our solutions are clearly differentiated, and where we have seen strong market demand and recent competitive success." In connection with this restructuring, AspenTech is reducing its staff by approximately 200 employees, about 12 percent of the global workforce, as well as consolidating facilities, streamlining operations and -more-
2 Aspen Tech Page 2 rationalizing certain non-core products and activities acquired in recent years. As a result of these measures, AspenTech expects to report a $17-19 million restructuring charge in the fourth quarter ending June 30, 1999 and reduce substantially its operating costs for fiscal year 2000. "These actions have sharpened our focus on strategic initiatives. The elimination of redundant, non-core activities will enable us to improve our productivity, maintain customer confidence, and concentrate our investments on innovation and customer support, the foundation of our longstanding industry leadership," said Evans. "Longer term, I am confident that we are well-positioned for continued market leadership, with the largest installed base of customers, the most advanced technology base, the most integrated solutions and the largest implementation force in the industry." Aspen Technology, Inc. (www.aspentech.com) is a leading supplier of software and services for the design and automation of process manufacturing plants and the optimization of the supply chain in process industries including chemicals, petrochemicals, petroleum refining, pulp and paper, metals and minerals, electric power, pharmaceuticals, semiconductor, consumer packaged goods, and food and beverage. Process manufacturers use AspenTech's solutions to improve the way they design, operate and manage their plants and global supply chain. These solutions enable manufacturers to reduce their raw material, energy and capital expenses; meet environmental and safety regulations; improve customer service levels; reduce inventory requirements; improve product quality; and shorten the time required to get new production processes on stream. AspenTech employs more than 1,400 and is headquartered in Cambridge, Mass., with offices in 22 countries worldwide. Plantelligence, AspenTech's suite of products and services, is the process manufacturing industry's only complete solution for optimizing manufacturing enterprises from supply chain to plant execution. Deep process knowledge, combined with world-leading optimization expertise and integration with enterprise resource planning (ERP) and open control systems, brings AspenTech manufacturing customers' businesses closer to their true potential. Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include the risks set forth under the caption "Risk Factors" in Aspen Technology's Amendment No. 1 to the S-3, filed on December 23, 1998 (file number 333-68789) with the Securities and Exchange Commission, which factors are incorporated herein by reference. Such risk factors include without limitation the risk that the Company's operating results are difficult to predict and may fluctuate significantly from quarter to quarter, the Company's revenues are concentrated in the chemicals, petrochemicals and petroleum industries, and customers may decide not to purchase the Company's products and services, or may decide to delay purchasing our products or services in anticipation of year 2000 computer compliance issues. CONTACTS: Lisa Zappala Joshua Young Chief Financial Officer Investor Relations Aspen Technology, Inc. Aspen Technology, Inc. 617-949-1000 617-949-1274 joshua.young@aspentech.com - tables follow -
3 Aspen Technology, Inc. Consolidated Condensed Statements of Operations (Dollars in thousands, except per share data) Three Months Ended Nine Months Ended March 31, March 31, March 31, March 31, 1999 1998 1999 1998 ----------------- ----------------- ----------------- --------------- REVENUES: Software licenses $ 22,191 $ 38,691 $ 66,868 $ 95,544 Maintenance and other services 32,001 29,697 95,688 82,500 ----------------- ----------------- ----------------- --------------- Total revenues 54,192 68,388 162,556 178,044 ----------------- ----------------- ----------------- --------------- EXPENSES: Cost of software licenses 2,149 1,540 5,759 4,964 Cost of maintenance and other services 21,204 17,274 62,217 48,342 Selling and marketing 22,207 19,876 62,961 52,683 Research and development 12,297 10,998 35,838 31,519 General and administrative 6,235 5,309 17,335 14,650 Costs related to acquisitions - 8,947 - 9,456 ----------------- ----------------- ----------------- --------------- Total costs and expenses 64,092 63,944 184,110 161,614 ----------------- ----------------- ----------------- --------------- Income (loss) from operations (9,900) 4,444 (21,554) 16,430 Other income (expense), net (115) (162) 131 (320) Interest income, net 1,005 1,358 3,369 4,158 ----------------- ----------------- ----------------- --------------- Income (loss) before provision for (benefit from) income taxes (9,010) 5,640 (18,054) 20,268 Provision for (benefit from) income taxes (3,153) 5,073 (6,318) 10,324 ----------------- ----------------- ----------------- --------------- Net income (loss) $ (5,857) $ 567 $ (11,736) $ 9,944 ================= ================= ================= =============== Net income (loss) per common and common equivalent share $ (0.23) $ 0.02 $ (0.47) $ 0.41 ================= ================= ================= =============== Weighted average common and common equivalent shares outstanding 24,925 25,324 24,954 24,432 ================= ================= ================= ===============
4 Aspen Technology, Inc. Consolidated Condensed Balance Sheet (Dollars in thousands) March 31, June 30, 1999 1998 ------------------ ----------------- ASSETS Current Assets: Cash, cash equivalents and short-term investments $ 99,900 $ 113,681 Accounts receivable and unbilled services, net 82,101 89,880 Current portion of long-term installments receivable, net 29,268 23,643 Prepaid expenses and other current assets 12,294 10,831 ------------------ ----------------- Total current assets 223,563 238,035 ------------------ ----------------- Long-term installments receivable, net 33,078 36,203 Equipment and leasehold improvements, net 41,848 42,736 Computer software development costs, net 5,952 5,696 Intangible assets, net 11,703 12,857 Other assets 6,602 7,355 ------------------ ----------------- Total assets $ 322,746 $ 342,882 ================== ================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 842 $ 2,187 Accounts payable and accrued expenses 26,123 38,545 Unearned revenue 7,316 6,008 Deferred revenue 20,501 17,888 Deferred income taxes 541 541 ------------------ ----------------- Total current liabilities 55,323 65,169 ------------------ ----------------- Long-term debt, less current maturities 90,376 90,635 Deferred revenue, less current portion 12,825 15,074 Other liabilities 539 914 Deferred income taxes 6,076 6,074 ------------------ ----------------- Total stockholders' equity 157,607 165,016 ------------------ ----------------- Total liabilities and stockholders' equity $ 322,746 $ 342,882 ================== ================= ###