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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 29, 2004
ASPEN TECHNOLOGY, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-24786 04-2739697
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(State or other juris- (Commission (IRS Employer
diction of incorporation File Number) Identification No.)
Ten Canal Park, Cambridge, Massachusetts 02141
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 949-1000
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(Former name or former address, if changed since last report)
Item 12. Results of Operations and Financial Condition
On April 29, 2004, Aspen Technology, Inc. announced its financial
results for the quarter ended March 31, 2004. The full text of the press release
issued in connection with the announcement is attached as Exhibit 99.1 to this
Current Report on Form 8-K.
The information in this Form 8-K and the Exhibit attached hereto shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934 or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except as expressly set forth by
specific reference in such a filing.
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.
Date: April 29, 2004 ASPEN TECHNOLOGY, INC.
By: /s/ Charles F. Kane
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Charles F. Kane
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
99.1 Press release issued by Aspen Technology, Inc. on
April 29, 2004.
Exhibit 99.1
Aspen Technology Reports Fourth Consecutive Quarter
of Software License Revenue Growth
CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 29, 2004--
Company Delivers Significant Improvement
in Year-over-Year Operating Margins Driven by Rebound
in Spending From the Chemicals Market
Aspen Technology, Inc. (NASDAQ: AZPN) today reported financial
results for its fiscal 2004 third quarter and nine months ended March
31, 2004.
Total revenues for the third quarter totaled $80.7 million, with
software license revenues of $35.9 million and services revenues of
$44.8 million. On a Generally Accepted Accounting Principles (GAAP)
basis, the company reported third quarter net income of $1.5 million,
or $0.03 per diluted share, compared to a net loss of $2.0 million, or
($0.05) per diluted share, in the same period last year. On a pro
forma (non-GAAP) basis, excluding the preferred stock dividend and
discount accretion, the company reported fiscal 2004 third quarter net
income of $4.9 million, or $0.06 per diluted share.
"The strength of our business in the chemicals and oil & gas
industries, combined with continued operational execution, enabled us
to meet or exceed our quarterly targets for revenue and net income for
the sixth consecutive quarter," said David McQuillin, President and
CEO of AspenTech. "We continue to see modest improvements in the
global economic environment and our customer base is actively looking
to invest in IT solutions that support their corporate-wide
initiatives to improve operational performance.
"During the past nine months, we have released nine new products,
which we believe will fuel our future growth. Now, our challenge as a
company is to focus on capturing the growth opportunities of these new
products, as well as maximize the performance of our existing point
solutions. As we build our sales pipeline for these products, we plan
to reallocate organizational resources into sales and marketing
activities that support our plans for profitable, sustainable growth
in fiscal 2005 and beyond."
Total revenues for the nine months ended March 31, 2004 were
$238.1 million, with software license revenues growing by
approximately seven percent year-over-year to $108.7 million and
services revenue totaling $129.4 million. On a GAAP basis, the company
reported net income of $6.4 million, or $0.13 per diluted share, as
compared to a net loss of $151.8 million, or ($3.96) per diluted
share, for the same period last year. On a pro forma (non-GAAP) basis,
excluding the preferred stock dividend and discount accretion, the
company reported net income of $9.3 million, or $0.12 per diluted
share, compared to a pro forma (non-GAAP) loss of $7.7 million, or
($0.20) per diluted share, in the prior year.
"The company has made significant strides in consistently meeting
or exceeding our operational targets and improving our financial
performance, as evidenced by the year-over-year increase in our
operating margins," said Charles Kane, Senior Vice President & CFO.
"As we seek to grow our revenues and hit our long-term operating
margin goals, it is necessary to maintain our focus on operational
improvement and invest in the areas of the business that will produce
the greatest growth opportunities."
Third Quarter Highlights
AspenTech accomplished the following in the third quarter:
-- Generated 6.6 percent operating margins, its highest quarterly
operating margin in four years and a more than two-fold
improvement from last year's third quarter.
-- Lowered DSOs for billed receivables by 21 days to 67 days
compared to 88 days in the third quarter of fiscal 2003.
-- Pro forma (non-GAAP) net income more than doubled from the
year-ago quarter.
-- Paid down approximately $12 million of debt, relating to the
company's outstanding convertible debentures.
-- Signed significant license transactions with Eni Refining,
Suncor Energy, Statoil, Mitsui Chemicals, Lubrizol, Valero
Energy Corporation and L'Oreal.
-- Delivered on new product development commitments with the
commercial launch of the Aspen Operations Manager Suite and
the roll-out of the company's first vertical market solution,
Aspen Oil & Gas.
-- Received prestigious awards from Frost & Sullivan and the
Supply Chain Council in recognition of the company's
differentiated technology and value proposition to customers.
The company was also recognized by the Service and Support
Professionals Association for the third year in a row for
outstanding customer support.
The company will hold 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 Thursday, April 29,
2004. 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 April 29,
2004, by dialing (800) 642-1687 and entering in confirmation code:
6816709.
Pro Forma (non-GAAP) 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, fourth and sixth 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 Nine Months Ended
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
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REVENUES:
Software licenses $35,914 $34,883 $108,736 $101,310
Services 44,785 44,846 129,397 138,642
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Total revenues 80,699 79,729 238,133 239,952
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EXPENSES:
Cost of software licenses 3,854 2,891 11,786 9,737
Cost of services 25,345 25,745 74,223 80,576
Selling and marketing 23,818 24,455 71,281 80,640
Research and development 14,234 15,727 44,534 49,469
General and administrative(1) 8,098 8,893 25,005 27,637
Goodwill Impairment Charge - - - 74,715
Restructuring & Other One
Time Charges - 2,100 2,000 62,629
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Total costs and expenses 75,349 79,811 228,829 385,403
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Income (loss) from operations 5,350 (82) 9,304 (145,451)
Other income (expense), net 462 64 757 (750)
Interest income, net 460 349 2,077 1,198
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Income (loss) before provision
for income taxes 6,272 331 12,138 (145,003)
Provision for income taxes 1,352 - 2,855 -
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Net income (loss) 4,920 331 9,283 (145,003)
Accretion of preferred stock
discount and dividend(2) (3,400) (2,291) (2,900) (6,812)
-------- -------- --------- ----------
Net income (loss) applicable
to common stockholders $1,520 $(1,960) $6,383 $(151,815)
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EARNINGS PER SHARE:
Basic net income (loss) per
common share $0.04 $(0.05) $0.16 $(3.96)
======== ======== ========= ==========
Diluted net income (loss) per
common share $0.03 $(0.05) $0.13 $(3.96)
======== ======== ========= ==========
Weighted average shares
outstanding - Basic 41,049 38,795 40,326 38,295
======== ======== ========= ==========
Weighted average shares
outstanding - Diluted 51,907 38,795 48,275 38,295
======== ======== ========= ==========
PRO FORMA EARNINGS PER SHARE:
Pro forma net income (loss) excludes Accretion of preferred stock
discount and dividend for all periods and Restructuring and other
charges for the periods ended March 31, 2003, and pro forma
weighted average shares outstanding assumes the conversion of the
Series D preferred stock to common stock.
Net income (loss) $4,920 $2,431 $9,283 $(7,659)
======== ======== ========= ==========
Diluted earnings (loss) per
share $0.06 $0.06 $0.12 $(0.20)
======== ======== ========= ==========
Weighted average shares
outstanding - diluted 88,244 40,938 78,556 38,295
======== ======== ========= ==========
(1) General and administrative costs include amortization of
intangible assets of $1.9 million and $5.8 million in the three
and nine months ended March 31, 2004, and $2.2 million and $8.7
million in the three and nine months ended March 31, 2003.
(2) 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 Nine Months Ended
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
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Net income (loss) applicable to
common stockholders $1,520 $(1,960) $6,383 $(151,815)
Adjustments to net income (loss):
Restructuring and other
charges - 2,100 - 137,344
Preferred stock discount
and dividend accretion 3,400 2,291 9,352 6,812
Gain on conversion of
Series B redeemable
preferred stock - - (6,452) -
--------- -------- --------- ----------
Pro forma net income (loss) $4,920 $2,431 $9,283 $(7,659)
========= ======== ========= ==========
ASPEN TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
March 31, June 30,
2004 2003
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ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $114,387 $51,567
Accounts receivable, net 60,225 77,725
Unbilled services 18,399 15,279
Current portion of long-term installments
receivable, net 20,301 34,720
Deferred tax asset 2,929 2,929
Prepaid expenses and other current assets 9,667 11,581
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Total current assets 225,908 193,801
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Long-term installments receivable, net 69,110 73,377
Equipment and leasehold improvements, net 23,895 31,158
Computer software development costs, net 18,998 17,728
Intangible assets, net 36,182 41,279
Purchased intellectual property, net 1,437 1,861
Deferred tax asset 13,831 13,831
Other assets 3,925 5,445
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Total assets $393,286 $378,480
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $1,996 $3,849
Amount owed to Accenture - 8,162
Accounts payable and accrued expenses 70,949 82,094
Unearned revenue 18,714 20,492
Deferred revenue 36,007 37,266
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Total current liabilities 127,666 151,863
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Long-term debt, less current maturities 64,201 89,911
Deferred revenue, less current portion 6,637 9,815
Deferred tax liability 11,195 13,258
Other liabilities 8,150 16,009
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Redeemable preferred stock 103,303 57,537
Total stockholders' equity 72,134 40,087
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Total liabilities and stockholders' equity $393,286 $378,480
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CONTACT: Aspen Technology, Inc.
Joshua Young, 617-949-1274
joshua.young@aspentech.com