Aspen Technology Announces Financial Results for the Third Quarter of Fiscal 2005.CAMBRIDGE Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , Mass. -- Company announces initiatives to simplify corporate structure, improve execution and enhance profitability Aspen Technology Aspen Technology (NASDAQ: AZPN) provides software and professional services to the manufacturing and process industries which allows companies to model, manage, and control their operations. AspenTech was founded in 1981 by MIT professor Dr. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : AZPN), the leading provider of software and services to the process industries, today reported financial results for its third quarter of fiscal 2005, ended March 31, 2005. Total revenues for the third quarter totaled $64.2 million, with software license revenues of $31.1 million and services revenues totaling $33.1 million. On a Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis, the Company reported a third quarter net loss applicable to common shareholders of $13.7 million, or $0.32 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which includes fees related to the recently completed audit committee investigation. On a non-GAAP basis, excluding these fees, amortization of intangibles, an adjustment to previously recorded restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , and the preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividend and discount accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the , the Company reported a fiscal 2005 third quarter net loss of $4.4 million, or $0.05 per share. A $1.1 million tax provision for international locations is included in these results, which increased the GAAP loss per share by $0.03 and the non-GAAP loss per share by $0.01. "While our third quarter revenues and expenses were in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with the directional In one direction. Contrast with omnidirectional. guidance we provided on our March 15 earnings call, we are working hard to ensure that the Company is in position to report improved financial results in the future," said Mark Fusco Mark Fusco (born March 12, 1961 in Burlington, Massachusetts) is a retired ice hockey player. Fusco won the Hobey Baker Award in 1983. He would also be a member of the American 1984 Winter Olympics ice hockey team. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of AspenTech. "After evaluating AspenTech's operations during my first 90 days as CEO, I have determined that the Company must simplify its structure and processes in order to remove internal obstacles that have prevented it from growing revenues and delivering profitable performance. Although some of these changes will take time to implement, we have finalized See finalization. a plan to improve our performance, which we expect will enhance results in our next fiscal year." Highlights of New Plan to Improve Operational Performance On the Company's March 15 conference call, management discussed its high level priorities designed to help AspenTech improve its profitability and revenues. Today, AspenTech is announcing the details of its new execution plan which is focused on three areas: (1) operational improvement, (2) end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. vertical alignment of customer facing functions, and (3) integration of product management and marketing into a single organization that is closer to the customer. Details and benefits to the new plan include the following:
-- Operational Improvement
-- Consolidate disparate facilities and back office personnel
in order create a simplified operating infrastructure and
improve efficiency, control and information flow
-- Consolidate R&D to fewer locations in order to improve
productivity, quality and efficiency of R&D resources
-- Vertical Alignment
-- Align all customer-facing employees - product marketing,
product management, professional services, pre-sales, and
direct sales - into key vertical market segments
-- Create greater accountability across each functional
department and ensure that employees closest to the
customer are driving R&D toward the greatest areas of
customer demand
-- Integration of Product Management and Marketing into a Single
Function
-- Merge product management and marketing into one
organization, with a greater emphasis on customer
interaction and marketing resources in the field
-- Increase the allocation of resources toward key vertical
market initiatives
-- Create increased interaction and better communication with
our customers, and increase the resources available to
drive our vertical sales strategy
"Our new operational plan is comprehensive, and we believe that successful execution against it will put AspenTech in a much better position to deliver consistent and improving financial results. Many of our customers continue to report solid financial results, and we have the capability to significantly increase our percentage of their software spending as we improve our execution. He added, "We have a solid sales pipeline and expect to deliver an improvement in software licenses In computing, software that is copyrighted and licensed under a software license is done under a variety of licensing schemes. For end-users there are proprietary licenses and there are free software licenses, and there are proprietary Within these schemes are further classifications. , services, and profitability in the June June: see month. quarter. Most important, we believe AspenTech has the potential to return to profitability and free cash flow generation in fiscal 2006 by streamlining our focus and improving the day-to-day day-to-day adj. 1. Occurring on a routine or daily basis: the day-to-day movements of the stock market. 2. execution of our business strategy." Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by Kane Kane can refer to: In sports:
A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . We also plan to pay off our 5.25% convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. , which will improve the Company's ongoing financial position over the next few months." Additions to Management Team Over the past few months, AspenTech made significant additions to its senior management team. Blair Wheeler joined the Company as Senior Vice President of Marketing, following a distinguished career in sales and marketing across a variety of organizations, including Cisco and Amoco. Hedwig (Hedy) Whitney was named Vice President of Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , after having held senior executive positions in a similar capacity at New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. Business Services and Fidelity Investments Fidelity Investments is a group of privately held companies in the financial services industry. It is made up by two independent but closely cooperating companies, Fidelity Management and Research Corporation (FMR Co. . Wheeler and Whitney will play instrumental roles in executing the Company's new plan to improve its operational performance. Significant Transactions AspenTech signed significant software transactions in the third quarter with Air Liquide
Financial Impact of Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). As a result of the operational changes and restructuring, the Company expects to reduce its quarterly run rate by roughly $3 to $4 million over the course of Fiscal 2006. Management anticipates incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. a fourth quarter restructuring charge of between $4 and $6 million. Conference Call and Webcast AspenTech will host a conference call and webcast to discuss its financial results, business outlook, and related corporate and financial matters at 4:45 p.m. Eastern Daylight Time on May 5, 2005. 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 Investor relations The process by which the corporation communicates with its investors. section of the site. A replay of the call will be archived on AspenTech's website and will also be available via telephone at (800) 642-1687, confirmation code 6079595, for four days, beginning at 8:00 p.m. Eastern Daylight Time on May 5, 2005. Non-GAAP Results AspenTech reports pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (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 non-GAAP financial results, to GAAP financial results, is included in the attached condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . About AspenTech Aspen Technology Inc. provides industry-leading software and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. that help process companies improve the efficiency of their business processes, optimize optimize - optimisation their operational performance and enhance their financial results. The new generation of integrated aspenONE(TM) solutions gives manufacturers the capabilities they need to model, manage and control their operations, enabling real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. decision making and synchronization (1) See synchronous and synchronous transmission. (2) Ensuring that two sets of data are always the same. See data synchronization. (3) Keeping time-of-day clocks in two devices set to the same time. See NTP. of the plant and supply chain. Over 1,500 leading companies already rely on AspenTech's software, including Aventis, Bayer, BASF BASF Bar Association of San Francisco (since 1872; San Francisco, California) BASF Badische Anilin und Soda Fabrik (German chemical products company) BASF Builders Association of South Florida , BP, ChevronTexaco, Dow (Direct OverWrite) See magneto-optic disk. Chemical, DuPont, ExxonMobil, Fluor, GlaxoSmithKline, Shell, and Total. For more information, visit www.aspentech.com. The third paragraph, the section captioned "Highlights of New Plan to Improve Operational Performance", and the sentence under the caption "Financial Impact of Restructuring" of this press release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. for purposes of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Actual results may vary significantly from AspenTech's expectations based on a number of risks and uncertainties, including: AspenTech's plan to improve operational performance may not be implemented effectively; AspenTech has identified material weakness in its internal controls with respect to software license revenue recognition, that, if not remedied effectively, could result in material misstatements; AspenTech's lengthy sales cycle which makes it difficult to predict quarterly operating results; fluctuations in AspenTech's quarterly operating results; AspenTech's dependence on customers in the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. chemicals, petrochemicals and petroleum industries; AspenTech's ability to raise additional capital as required; AspenTech's ability to retire its 5.25% convertible debentures; 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 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 the forward-looking statements after the date of this press release.
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,
2005 2004 2005 2004
--------- --------- --------- ---------
REVENUES:
Software licenses $31,097 $36,636 $93,102 $113,636
Service and other 33,121 44,939 106,011 130,090
--------- --------- --------- ---------
Total revenues 64,218 81,575 199,113 243,726
--------- --------- --------- ---------
COST OF REVENUES:
Cost of software licenses 4,035 3,854 12,707 11,786
Cost of service and other 19,215 25,345 63,236 73,973
Amortization of
technology related
intangible assets 1,778 1,806 5,330 5,480
--------- --------- --------- ---------
Total cost of revenues 25,028 31,005 81,273 91,239
--------- --------- --------- ---------
Gross profit 39,190 50,570 117,840 152,487
OPERATING COSTS:
Selling and marketing 24,299 23,841 70,075 71,449
Research and development 11,552 14,234 35,309 44,534
General and administrative
(includes litigation
defense and settlement
costs, audit committee
review costs, and one-
time contract termination
costs of $4,014, $1,450,
$11,939 and $1,450 for
the three months ended
March 31, 2005 and 2004
and nine months ended
March 31, 2005 and 2004,
respectively) (2) 12,746 6,399 35,867 19,878
Restructuring charges and
FTC legal costs (97) - 21,630 2,000
Loss (gain) on sales and
disposals of assets 81 (206) (276) (885)
--------- --------- --------- ---------
Total operating costs 48,581 44,268 162,605 136,976
--------- --------- --------- ---------
Income (loss) from
operations (9,391) 6,302 (44,765) 15,511
Other income (expense),
net (16) 256 (58) (189)
Interest income, net 477 419 1,788 1,956
--------- --------- --------- ---------
Income (loss) before
provision for income
taxes (8,930) 6,977 (43,035) 17,278
Benefit from (provision
for) income taxes (1,133) (341) (220) (2,330)
Equity in earnings from
joint ventures - - - (100)
--------- --------- --------- ---------
Net income (loss) (10,063) 6,636 (43,255) 14,848
Accretion of preferred
stock discount and
dividend (1) (3,630) (3,400) (10,747) (2,900)
--------- --------- --------- ---------
Net income (loss)
applicable to common
stockholders $(13,693) $3,236 $(54,002) $11,948
========= ========= ========= =========
EARNINGS PER SHARE:
Basic net income (loss)
per common share $(0.32) $0.08 $(1.28) $0.30
========= ========= ========= =========
Diluted net income (loss)
per common share $(0.32) $0.06 $(1.28) $0.25
========= ========= ========= =========
Weighted average shares
outstanding - Basic 42,639 41,049 42,193 40,326
========= ========= ========= =========
Weighted average shares
outstanding - Diluted 42,639 51,907 42,193 48,275
========= ========= ========= =========
PRO FORMA (NON-GAAP) EARNINGS PER SHARE:
Pro forma (non-GAAP) net income excludes Accretion of preferred
stock discount and dividend, Amortization of technology related
intangible assets, Litigation defense and settlement costs, one-
time contract termination costs, Restructuring charges and FTC
legal costs, and gain on sale of the AXSYS product line. Pro forma
(non-GAAP) weighted average shares outstanding assumes the
conversion of the Series D preferred stock to common stock.
Net income $(4,368) $9,892 $(4,690) $23,778
========= ========= ========= =========
Diluted earnings (loss)
per share $(0.05) $0.11 $(0.05) $0.30
========= ========= ========= =========
Weighted average shares
outstanding - diluted 87,262 88,244 87,910 78,556
========= ========= ========= =========
(1) Detail of this amount is provided on the reconciliation of net
income (loss) to pro forma (non-GAAP) net income
(2) These parenthetical references will not be presented in our Form
10-K.
Supplemental information -
Three Months Ended Nine Months Ended
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
--------- ---------- --------- ---------
Reconciliation of total
expenses to pro forma (non-
GAAP) total expenses
Total expenses (cost of
revenues and operating costs) $73,609 $75,273 $243,878 $228,215
Adjustments to total
expenses (cost of
revenues and operating
costs)
Amortization of
technology related
intangible assets (1,778) (1,806) (5,330) (5,480)
Litigation defense and
settlement costs,
included in General and
Administrative costs - (1,450) (3,765) (1,450)
Fees associated with the
audit committee review,
included in General and
Administrative costs (4,014) - (7,103) -
One-time contract
termination cost,
included in General and
Administrative costs - - (1,071) -
Restructuring charges
and FTC legal costs 97 - (21,630) (2,000)
Gain on sale of AXSYS
product line, included
in Loss (gain) on sales
and disposals of assets - - 334 -
--------- ---------- --------- ---------
Pro forma (non-GAAP) total
expenses (cost of revenues
and operating costs) $67,914 $72,017 $205,313 $219,285
========= ========== ========= =========
Reconciliation of net income
(loss) to pro forma (non-
GAAP) net income (loss)
Net income (loss) applicable
to common stockholders $(13,693) $3,236 $(54,002) $11,948
Adjustments to net
income (loss)
applicable to common
stockholders
Net effect of
adjustments to cost of
revenues and operating
costs 5,695 3,256 38,565 8,930
Preferred stock discount
and dividend accretion 3,630 3,400 10,747 9,352
Gain on conversion of
Series B redeemable
preferred stock - - - (6,452)
--------- ---------- --------- ---------
Pro forma (non-GAAP) net
income $(4,368) $9,892 $(4,690) $23,778
========= ========== ========= =========
ASPEN TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
March 31, June 30,
2005 2004
--------- ---------
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $69,127 $107,677
Accounts receivable, net 54,199 50,874
Unbilled services 12,262 15,518
Current portion of long-term installments
receivable, net 24,946 25,244
Deferred tax asset 275 31
Prepaid expenses and other current assets 12,682 10,084
--------- ---------
Total current assets 173,491 209,428
--------- ---------
Long-term installments receivable, net 61,294 65,527
Equipment and leasehold improvements, net 15,161 18,664
Computer software development costs, net 17,965 16,863
Intangible assets, net 28,794 34,307
Purchased intellectual property, net 871 1,295
Deferred tax asset 2,613 2,492
Other assets 3,038 3,158
--------- ---------
Total assets $303,227 $351,734
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $58,108 $58,595
Accounts payable and accrued expenses 63,005 83,115
Unearned revenue 20,613 18,051
Deferred revenue 30,937 33,462
Deferred tax liability 441 325
--------- ---------
Total current liabilities 173,104 193,548
--------- ---------
Long-term debt, less current maturities 1,049 1,952
Deferred revenue, less current portion 3,465 5,363
Deferred tax liability 4,241 4,220
Other liabilities 24,101 11,527
--------- ---------
Redeemable preferred stock 117,508 106,761
Total stockholders' equity (deficit) (20,241) 28,363
--------- ---------
Total liabilities and stockholders' equity
(deficit) $303,227 $351,734
========= =========
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion