Aspen Technology Reports Fourth Consecutive Quarter of Software License Revenue Growth.Business Editors/High-Tech Writers 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.--(BUSINESS WIRE)--April 29, 2004 Company Delivers Significant Improvement in Year-over-Year Operating Margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: Driven by Rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in Spending From the Chemicals Market 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) 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 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 third quarter net income of $1.5 million, or $0.03 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, 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 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 (non-GAAP) basis, excluding 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 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 (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. "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 Verb 1. reallocate - allocate, distribute, or apportion anew; "Congressional seats are reapportioned on the basis of census data" reapportion allocate, apportion - distribute according to a plan or set apart for a special purpose; "I am allocating a loaf of 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 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:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-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 Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the company's outstanding 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. . -- Signed significant license transactions with Eni ENI Ente Nazionale Idrocarburi (Italy) ENI Ecole Nationale d'Ingénieurs (French: National Engineer School) ENI Employee Network Inc. Refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar , Suncor Energy, Statoil Statoil ASA (OSE: STL, NYSE: STO) is a Norwegian petroleum company established in 1972. It is the largest petroleum company in the Nordic countries and Norway's largest company, employing over 25,000 people. , Mitsui Mitsui: see zaibatsu. Chemicals, Lubrizol, Valero Energy Corporation and L'Oreal. -- Delivered on new product development commitments with the commercial launch of the Aspen aspen, in botany aspen: see willow. Aspen, city, United States Aspen (ăs`pən), city (1990 pop. 5,049), alt. 7,850 ft (2,390 m), seat of Pitkin co., S central Colo. Operations Manager See datacenter 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 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 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 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 pro forma to GAAP 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 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 Operations management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. (EOM (End Of Message) A character that signals the end of the current message. ), 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 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, 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 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. 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 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 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
-------- -------- --------- ----------
REVENUES:
Software licenses $35,914 $34,883 $108,736 $101,310
Services 44,785 44,846 129,397 138,642
-------- -------- --------- ----------
Total revenues 80,699 79,729 238,133 239,952
-------- -------- --------- ----------
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
-------- -------- --------- ----------
Total costs and expenses 75,349 79,811 228,829 385,403
-------- -------- --------- ----------
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
-------- -------- --------- ----------
Income (loss) before provision
for income taxes 6,272 331 12,138 (145,003)
Provision for income taxes 1,352 - 2,855 -
-------- -------- --------- ----------
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)
======== ======== ========= ==========
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
--------- -------- --------- ----------
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
--------- ---------
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
--------- ---------
Total current assets 225,908 193,801
--------- ---------
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
--------- ---------
Total assets $393,286 $378,480
========= =========
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
--------- ---------
Total current liabilities 127,666 151,863
--------- ---------
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
--------- ---------
Redeemable preferred stock 103,303 57,537
Total stockholders' equity 72,134 40,087
--------- ---------
Total liabilities and stockholders' equity $393,286 $378,480
========= =========
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