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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-20647
123,093 SHARES
ASPEN TECHNOLOGY, INC.
COMMON STOCK
All of the 123,093 shares of Common Stock offered hereby are being sold by
the Selling Stockholders. See "Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling Stockholders.
The Company's Common Stock trades on the Nasdaq National Market under the
symbol "AZPN." On January 28, 1997, the closing sale price of the Common Stock,
as reported by the Nasdaq National Market, was $72.375 per share.
On January 28, 1997, the Company announced that it would effect a
two-for-one stock split of its Common Stock by way of a stock dividend to
persons who are holders of record of Common Stock as of February 14, 1997. The
stock dividend will be distributed on February 28, 1997. The information in this
Prospectus does not give effect to the stock dividend. See "Prospectus
Summary--Recent Events."
The shares of Common Stock offered hereby may be sold from time to time by
the Selling Stockholders, or by pledgees, donees, transferees or other
successors in interest of the Selling Stockholders. Such sales may be made on
the Nasdaq National Market, or otherwise, at prices and on terms then prevailing
or at prices related to the then-current market prices, or in negotiated
transactions at negotiated prices. The shares may be sold by one or a
combination of the following: (a) a block trade in which the broker or dealer so
engaged will attempt to sell the shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. Brokers or dealers will
receive commissions or discounts from Selling Stockholders in amounts to be
negotiated immediately prior to the sale. The Selling Stockholders will be
responsible for any discounts, concessions, commissions or other compensation
due to any broker or dealer in connection with the sale of any of the shares
offered hereby. All of the other expenses of this offering (other than legal
fees and expenses incurred by separate counsel for certain of the Selling
Stockholders), estimated at $20,000, will be paid by the Company. See "Plan of
Distribution."
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SEE "RISK FACTORS" COMMENCING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF SHARES OF COMMON STOCK
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
February 4, 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information may be
inspected and copies may be obtained (at prescribed rates) at the Commission's
Public Reference Section, 450 Fifth Street, N.W., Room 1024, Washington D.C.
20549, and at the Commission's Regional Offices at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, Suite 1300, New York, New York 10048. Reports and other
information concerning the Company also may be inspected at the offices of the
Nasdaq Stock Market, 1735 K Street, N.W., Washington D.C. 20006-1500.
This Prospectus constitutes part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information contained in the Registration Statement,
and reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities offered
hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in such instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference: (1) the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996
(the "Annual Report"); (2) the Company's definitive Proxy Statement dated
November 11, 1996 used in connection with its Annual Meeting of Stockholders
held on December 16, 1996; (3) the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1996 (the "Quarterly Report"); and (4)
the Company's Current Report on Form 8-K dated January 29, 1997 (the "Current
Report").
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
Any person to whom a copy of this Prospectus is delivered may obtain,
without charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein, except for the exhibits to such documents
(other than exhibits expressly incorporated by reference into such documents).
Requests for such documents should be addressed to the Manager of Investor
Relations of the Company, Ten Canal Park, Cambridge, Massachusetts 02141 or
directed to the Manager of Investor Relations at either telephone number (617)
577-0100 or e-mail address [email protected].
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus or incorporated by reference herein. Information
herein does not give effect to the two-for-one stock split of the Company's
Common Stock to be effected by a stock dividend to persons who are holders of
record of Common Stock as of February 14, 1997. See "Recent Events" below.
THE COMPANY
Aspen Technology, Inc. ("AspenTech" or the "Company") is a leading supplier
of off-the-shelf software products and services for the analysis, design and
automation of manufacturing facilities by companies in the process industries,
including the chemicals, petroleum, pharmaceuticals, pulp and paper, electric
power, and food and consumer products industries.
AspenTech provides a sophisticated, integrated family of off-the-shelf
software products for use across the entire process manufacturing life-cycle,
from "off-line" applications used primarily in research and development and
engineering to "on-line" applications used primarily in production. AspenTech's
product offering is classified in four categories: modeling; process information
management ("PIM"); advanced process control ("APC") and optimization; and
planning and scheduling. The Company's off-line modeling software is used by
engineers on desktop computers primarily to simulate and predict manufacturing
processes in connection with the design of new facilities or processes and the
analysis of existing facilities or processes. AspenTech's on-line PIM, APC and
optimization software, which is connected directly to plant instrumentation,
enables the real-time adjustment of production variables in response to
constantly changing operating conditions to improve process efficiency.
AspenTech's PC-based planning and scheduling software is used by companies in
the process industries for economic planning and scheduling for both short-term
and strategic applications, including feedstock selection, product mix
optimization, logistics and supply chain management, scheduling, process unit
optimization, and investment planning. AspenTech couples its off-the-shelf
software products with design and implementation consulting services in order to
market a complete solution to its customers. AspenTech believes its ability to
offer a complete solution of both industry-leading software and sophisticated
process engineering expertise is an important source of competitive
differentiation.
The Company initially became a provider of PIM software and services
through its acquisition of Industrial Systems, Inc. in May 1995. The Company
significantly enhanced its PIM, APC and optimization software service offerings
through its acquisitions of Dynamic Matrix Control Corporation ("DMCC") in
January 1996 and Setpoint, Inc. ("Setpoint") in February 1996. In October 1996
AspenTech acquired all of the outstanding stock of B-JAC International, Inc.
("B-JAC"), a supplier of detailed heat exchanger modeling software, in exchange
for 52,081 shares of the Company's Common Stock, including certain of the shares
being offered hereby. In October 1996 the Company also acquired, in a cash
purchase transaction, all of the assets of the Process Control Division of
Cambridge Control Limited (the "Cambridge Control Division"), which specializes
in APC solutions specifically aimed towards process manufacturing controls
applications for the refining, petrochemical, and pulp and paper industries. In
December 1996 AspenTech acquired the process industries modeling system business
of Bechtel Corporation (the "Bechtel Business"), which provides software
products that are used for planning and scheduling in the process industries and
that are based on linear programming technology. The consideration for the
Bechtel Business consisted of a cash payment to Bechtel Corporation and the
issuance of 77,870 shares of the Company's Common Stock (including certain of
the shares offered hereby) in exchange for all of the outstanding stock of Basil
Joffe Associates, Inc., a related software development organization.
AspenTech's customers span a broad range of process industry segments. With
more than 750 customers worldwide, AspenTech' customers include 44 of the 50
largest chemical companies in the world and 18 of the 20 largest petroleum
refiners in the world.
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The Company was founded in 1981 and is a Massachusetts corporation.
AspenTech's executive offices are located at Ten Canal Park, Cambridge,
Massachusetts 02141, and its telephone number is (617) 577-0100.
RECENT EVENTS
On January 28, 1997, the Company announced financial results for the three
and six months ending December 31, 1996. A copy of the Company's press release
summarizing those financial results is included in the Current Report.
In connection with the announcement of those financial results, the Company
also announced that it would effect a two-for-one stock split of its Common
Stock by way of a stock dividend to persons who are holders of record of Common
Stock as of February 14, 1997. The stock dividend was approved by the board of
directors of the Company on January 27, 1997 and will be payable on February 28,
1997. THE INFORMATION IN THIS PROSPECTUS DOES NOT GIVE EFFECT TO THE STOCK
DIVIDEND.
THE OFFERING
All of the 123,093 shares of Common Stock offered hereby are being sold by
the Selling Stockholders. The offered shares consist of a portion of the shares
of Common Stock issued to the former stockholders of B-JAC, which was acquired
by the Company in October 1996, and to the former stockholder of Basil Joffe
Associates, Inc., which was acquired by the Company in December 1996 as part of
the Bechtel Business. See "Selling Stockholders."
Pursuant to registration rights arrangements entered into with the former
shareholders of B-JAC and Basil Joffe Associates, Inc., the Company is obligated
to keep the Registration Statement in effect for a period of ninety days after
the date on which the Registration Statement is declared effective, or such
shorter period that will terminate when all of the shares offered by such former
shareholders have been sold. The Company may, in its sole discretion, determine
to keep the Registration Statement effective for a longer period of time. See
"Plan of Distribution."
The Company will not receive any of the proceeds from the sale of shares by
the Selling Stockholders. See "Use of Proceeds."
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The Aspen leaf logo is a registered trademark, and "AspenTech" is a
trademark, of the Company.
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RISK FACTORS
THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THE RESULTS CONTEMPLATED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF A NUMBER OF FACTORS, INCLUDING THE RISK FACTORS SET
FORTH BELOW.
Integration of Acquired Businesses. Since January 1996, the Company has
acquired DMCC, Setpoint, B-JAC, the Cambridge Control Division and the Bechtel
Business. Through these acquisitions, the Company has increased its product and
service offerings to include additional planning and scheduling, PIM, APC and
optimization software and services, and has substantially increased its scope of
operations and number of personnel. The successful and timely integration of
these acquired businesses into the Company is critical to the Company's future
financial performance. This integration will require that the Company, among
other things, integrate the companies' software products and technologies,
retain key employees, assimilate diverse corporate cultures, integrate
management information systems, consolidate the acquired operations and manage
geographically dispersed operations, each of which could pose significant
challenges. The diversion of the attention of management created by the
integration process, and any disruptions or other difficulties encountered in
the transition process, could have a material adverse effect on the business,
operating results and financial condition of the Company. The difficulty of
combining these numerous businesses may be increased by the need to integrate
personnel, and changes effected in the combination may cause key employees to
leave. The long-term success of the acquisitions will require the further
development of the PIM, APC and optimization software and services markets,
which currently are immature. There can be no assurance that the Company will be
able to integrate and develop the operations of the acquired businesses
successfully, and any failure to do so could have a material adverse effect on
the Company's business, operating results and financial condition.
A substantial majority of the revenues of each of DMCC, Setpoint and the
Cambridge Control Division has been generated by service engagements.
AspenTech's revenues historically have been derived principally from the
licensing of software products, and its management has limited experience in
managing a service business. In particular, a significant portion of the service
engagements of these businesses has been undertaken on a fixed-price basis. The
Company bears the risk of cost overruns and inflation in connection with
fixed-price engagements, and as a result any of these engagements may be
unprofitable. While the Company believes that its reserves for fixed-price
contracts are reasonable, there can be no assurance that the Company's reserves
will be sufficient to cover future losses that might be incurred with respect to
any fixed-price contracts. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations" in the
Annual Report and the Quarterly Report.
Dependence Upon Increased Market Penetration. Increased use in the process
industries, particularly the chemicals and petroleum industries, of software and
services for the analysis, design and automation of process manufacturing plants
in general and of the Company's software products and services in particular is
critical to the Company's future growth. The Company believes that a number of
factors will determine its ability to achieve increased market penetration.
These factors include product performance, accuracy of results, ease of
implementation and use, breadth and integration of product offerings,
reliability and scope of applications. Failure of the Company to achieve
increased market penetration in the process industries would substantially
restrict the future growth of the Company and could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Business--The AspenTech Advantage" and "--Strategy" in the Annual Report.
Fluctuations in Quarterly Operating Results. The Company's operating
results have fluctuated in the past and may fluctuate significantly in the
future as a result of a variety of factors, including purchasing patterns,
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timing of new products and enhancements by the Company and its competitors, and
fluctuating foreign economic conditions. In addition, the Company ships software
products within a short period after receipt of an order and typically does not
have a material backlog of unfilled orders of software products. Therefore,
revenues from software licenses in any quarter are substantially dependent on
orders booked in that quarter. Historically, a majority of each quarter's
revenues from software licenses has come from license contracts that have been
effected in the final weeks of that quarter. The revenues for a quarter
typically include a number of large orders. If the timing of any of these orders
is delayed, it could result in a substantial reduction in revenues for that
quarter. Since the Company's expense levels are based in part on its
expectations as to future revenues, the Company may be unable to adjust spending
in a timely manner to compensate for any revenue shortfall and any revenue
shortfalls would likely have a disproportionate adverse effect on net income.
Prior to fiscal 1996, the Company experienced a net loss for the first quarter
of each fiscal year, in part because a substantial portion of the Company's
revenues is derived from countries other than the United States where business
is slow during the summer months and also in part because of the timing of
renewals of software licenses. The Company expects that these factors will
continue to affect its operating results and that the Company may experience net
losses in the initial quarter of future fiscal years. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results" in the Annual Report.
Concentration of Revenues in the Chemicals and Petroleum Industries. The
Company derives a significant portion of its revenues from companies in the
chemicals and petroleum industries. Accordingly, the Company's future success is
dependent upon the continued demand for modeling software by companies in the
chemicals industry, for planning and scheduling software in the petroleum
industry, and for PIM, APC and optimization software and services by companies
in the chemical and petroleum industries. The chemical and petroleum industries
are highly cyclical. The Company believes that economic downturns in the United
States, Europe, Japan, Asia and South America and pricing pressures experienced
by chemical and petroleum companies in connection with cost-containment measures
have led to delays and reductions in certain capital and operating expenditures
by many of such companies worldwide. The Company's revenues have in the past
been, and may in the future be, subject to substantial period-to-period
fluctuations as a consequence of such industry patterns, as well as general
domestic and foreign economic conditions and other factors affecting spending by
companies in the Company's target process industries. There can be no assurance
that such factors will not have a material adverse effect on the Company's
business, operating results and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations" in the Annual Report and the Quarterly
Report.
Product Development and Technological Change. The market for software and
services for the analysis, design and automation of process manufacturing plants
is characterized by continual change and improvement in computer hardware and
software technology. The Company's future success will depend on its ability to
enhance its current software products and services, to introduce new software
products and services that keep pace with technological developments, and to
continue to address the changing needs of its customers. There can be no
assurance that the Company will be successful in developing and marketing new
and enhanced products and services, or that its products and services will
continue to address adequately the needs of the marketplace. Like many other
software products, the Company's products have on occasion contained undetected
errors or "bugs." In addition, because new releases of the Company's products
are initially installed only by a small number of customers, any errors or
"bugs" in those new releases may not be detected for a number of months after
the delivery of the software. If the Company's products do not perform
substantially as expected or are not accepted in the marketplace, the Company's
business, operating results and financial condition would be materially
adversely affected. See "Business--Product Development" in the Annual Report.
Dependence on Key Personnel. The Company's future success depends to a
significant extent on Lawrence B. Evans, the Company's chief executive officer,
its other executive officers, and certain key technical, managerial and
marketing personnel. The loss of the services of any of these individuals or
groups
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of individuals could have a material adverse effect on the Company's business,
operating results and financial condition. None of the Company's executive
officers has entered into an employment agreement with the Company, and the
Company does not have, and is not contemplating securing, any significant amount
of key- man life insurance on any of its executive officers or other key
employees. The Company believes that its future success also will depend
significantly upon its ability to attract, motivate and retain additional highly
skilled technical, managerial and marketing personnel. Competition for such
personnel is intense, and there can be no assurance that the Company will be
successful in attracting and retaining the personnel it requires to continue to
grow and operate profitably. See "Business--Employees" in the Annual Report.
Product Liability. The sale and implementation of on-line applications by
the Company may entail the risk of product liability claims. The Company's APC
and optimization software products and services are used in the design,
operation and management of manufacturing processes at large facilities, and any
failure by the software at those facilities could result in significant claims
for damages or for violations of environmental, safety and other laws and
regulations. The Company's agreements with its customers generally contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective as
a result of federal, state or local laws or ordinances or unfavorable judicial
decisions. A successful product liability claim against the Company could have a
material adverse effect upon the Company's business, operating results and
financial condition.
Migration to Microsoft Windows. AspenTech believes that operating systems
similar to Microsoft Windows, due to their interoperability and customization
capabilities, are increasingly the preferred choice of certain of its customers.
AspenTech is currently developing native Windows 95 and Windows NT versions of
its software products. The Company is aware of two competitors that are
marketing modeling and simulation software for use with existing Microsoft
Windows operating systems, both of which are currently shipping a release of
modeling and simulation software for Windows operating systems. There can be no
assurance that the Company will be successful in developing versions of any or
all of its software products that will operate on Windows 95 or Windows NT, or
that any such development, even if successful, will be completed concurrent with
or prior to introductions by competitors of software products on Windows 95,
Windows NT or any other Microsoft Window system. Any such failure or delay could
affect the Company's competitive position or lead to product obsolescence in the
future. See "Business--Product Development" and "Competition" in the Annual
Report.
Dependence on Proprietary Technology. The Company regards its software as
proprietary and relies on a combination of copyright, patent, trademark and
trade secret laws, license and confidentiality agreements, and software security
measures to protect its proprietary rights. AspenTech has received a United
States patent for the expert guidance system in its proprietary graphical user
interface. The Company has registered or applied to register certain of its
significant trademarks in the United States. The Company generally enters into
non-disclosure agreements with its employees and customers, and historically has
restricted access to its software products' source codes, which it regards as
proprietary information. In a few cases, the Company has provided copies of the
source code for certain products to customers solely for the purpose of special
customization of the products and has deposited copies of the source code for
certain products in third-party escrow accounts as security for on-going service
and license obligations. In these cases, the Company relies on nondisclosure and
other contractual provisions to protect its proprietary rights.
The laws of certain countries in which the Company's products are
distributed do not protect the Company's products and intellectual property
rights to the same extent as the laws of the United States. The laws of many
countries in which the Company licenses its products protect trademarks solely
on the basis of registration. The Company currently possesses a limited number
of trademark registrations in certain foreign jurisdictions and does not possess
any foreign copyright or patent registrations. The Company derived more than 50%
of its revenues in each of fiscal 1994 and fiscal 1995, approximately 45% of its
revenues in fiscal
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1996 and approximately 57% of its revenues in the first six months of fiscal
1997 from customers outside the United States.
There can be no assurance that the steps taken by the Company to protect
its proprietary rights will be adequate to deter misappropriation of its
technology or independent development by others of technologies that are
substantially equivalent or superior to the Company's technology. Any such
misappropriation of the Company's technology or development of competitive
technologies could have a material adverse effect on the business, results of
operations and financial condition of the Company. The Company could incur
substantial costs in protecting and enforcing its intellectual property rights.
Moreover, from time to time third parties may assert patent, trademark,
copyright and other intellectual property rights to technologies that are
important to the Company. In such an event, the Company may be required to incur
significant costs in litigating a resolution to the asserted claims. There can
be no assurance that such a resolution would not require that the Company pay
damages or obtain a license of a third party's proprietary rights in order to
continue licensing its products as currently offered or, if such a license is
required, that it will be available on terms acceptable to the Company. See
"Business--Proprietary Rights."
Competition. The Company's software products compete with software tools
that are internally developed by companies in the process industries and with
certain process modeling, PIM, APC and optimization software products that are
sold by a number of commercial suppliers. AspenTech's primary commercial
competitors in the process modeling software market are Simulation Sciences
Inc., Hyprotech, Ltd. and Chemstations, Inc. In the planning and scheduling
market, AspenTech primarily competes with Bonner & Moore Associates, Inc.,
Haverly Systems, Inc., Chesapeake Decision Sciences, Inc., and Ernst & Young
Wright Killen. In the PIM market, AspenTech primarily competes with Oil Systems
Inc. and Biles and Associates and, to a lesser extent, with digital control
system vendors such as Honeywell Inc. In the APC and optimization markets,
AspenTech competes with the Profimatics and Icotron divisions of Honeywell Inc.,
which primarily sell digital control system hardware, as well as with the Simcon
division of ABB Asea Brown Boveri (Holding) Ltd. Several smaller competitors,
including the Litwin Engineering division of Raytheon Company and Treiber
Control, focus exclusively on the APC market. Emergence of a new competitor or
the consolidation of existing competitors could adversely affect the Company's
business, operating results and financial condition. Certain competitors also
supply related hardware products to existing and potential customers of
AspenTech, and may have established relationships that afford the competitors an
advantage in supplying software and services to those customers. The Company's
continued success depends on its ability to compete effectively with its
commercial competitors and to persuade prospective customers to use the
Company's products and services instead of, or in addition to, software
developed internally or services provided by their own personnel. In light of
these factors, there is no assurance that the Company will be able to maintain
its competitive position. See "Business--Competition" in the Annual Report.
Management of Growth. Since fiscal 1990, the Company has experienced
substantial growth in the number of its employees, the scope of its operating
and financial systems, and the geographic area of its operations. The Company's
operations have expanded significantly through both internally generated growth
and acquisitions, particularly the acquisitions of DMCC and Setpoint in the
third quarter of fiscal 1996. This growth has resulted in an increase in the
level of responsibility for management personnel. To manage its growth
effectively, the Company must continue to implement and improve its operating
and financial systems, and to retain and increase its employee base. There can
be no assurance that the management systems currently in place will be adequate
or that the Company will be able to manage the Company's recent or future growth
successfully, and any failure to do so could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations" in the Annual Report and the Quarterly
Report.
International Operations. The Company derived more than 50% of its revenues
in each of fiscal 1994 and fiscal 1995, approximately 45% of its revenues in
fiscal 1996 and approximately 57% of its revenues in the first six months of
fiscal 1997 from customers outside the United States. The Company anticipates
that
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revenues from customers outside the United States will continue to account for a
significant portion of its total revenues in the foreseeable future. AspenTech's
customers outside the United States historically have been located principally
in Europe and Japan, while Setpoint historically has derived a substantial
portion of its revenues from customers in Asia and South America. The Company's
operations outside the United States are subject to certain risks, including
unexpected changes in regulatory requirements, exchange rates, tariffs and other
barriers, political and economic instability, difficulties in managing
distributors or representatives, difficulties in staffing and managing foreign
subsidiary operations, difficulties or delays in translating products and
product documentation into foreign languages, and potentially adverse tax
consequences. There can be no assurance that any of these factors will not have
a material adverse effect on the Company's business, operating results and
financial condition.
The impact of future exchange rate fluctuations on the Company's financial
condition and results of operations cannot be accurately predicted. In recent
years, the Company has increased the extent to which it denominates arrangements
with customers outside the United States in the currencies of the country in
which the software or services are provided. From time to time the Company has
engaged in, and may continue to engage in, hedges of a significant portion of
installment contracts denominated in foreign currencies. There can be no
assurance that any hedging policies implemented by the Company will be
successful or that the cost of such hedging techniques will not have a
significant impact on the Company's business, results of operations or financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Annual Report and the Quarterly Report.
Risks Associated With Future Acquisitions. To expand its markets, the
Company's business strategy includes growth through additional acquisitions.
Identifying and pursuing acquisition opportunities and integrating acquired
products and businesses requires a significant amount of management time and
skill. There can be no assurance that the Company will be able to identify
suitable acquisition candidates, consummate any acquisition on acceptable terms
or successfully integrate any acquired business into the Company's operations.
There also can be no assurance that any future acquisition will not have an
adverse effect upon the Company's operating results, particularly in the fiscal
quarters immediately following consummation of the acquisition while the
acquired business is being integrated into the Company's operations. As a result
of acquisitions, the Company may encounter unexpected liabilities and
contingencies associated with the acquired businesses. The Company may use
Common Stock or Preferred Stock or may incur additional long-term indebtedness
or a combination thereof for all or a portion of the consideration to be paid in
future acquisitions. The issuance of Common Stock or Preferred Stock in
acquisitions could result in dilution to existing stockholders, while the use of
cash reserves or significant debt financing to fund acquisitions could reduce
the Company's liquidity.
Potential Volatility of Stock Price. The stock market has from time to time
experienced extreme price and volume fluctuations, particularly in the high
technology sector, and those fluctuations have often been unrelated to the
operating performance of particular companies. In addition, factors such as
announcements of technological innovations or new products by the Company or its
competitors, as well as market conditions in the computer software or hardware
industries, may have a significant impact on the market price of the Company's
Common Stock.
Effect of Certain Charter and By-Law Provisions and Anti-Takeover
Provisions; Possible Issuances of Preferred Stock. The Company's Restated
Articles of Organization, its By-Laws and certain Massachusetts laws contain
provisions that may discourage acquisition bids for the Company and that may
reduce the temporary fluctuations in the trading price of the Company's Common
Stock which are caused by accumulations of stock, thereby depriving stockholders
of certain opportunities to sell their stock at temporarily higher prices or
receive a premium for their shares as part of an acquisition of the Company.
Preferred Stock may be issued by the Company in the future without stockholder
approval and upon such terms as the Board of Director may determine. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in
9
<PAGE> 10
the future. The issuance of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, a majority of the
outstanding stock of the Company. The Company has no present plans to issue any
shares of Preferred Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders, nor will any such proceeds be available for use by the
Company or otherwise for the Company's benefit. See "Selling Stockholders."
SELLING STOCKHOLDERS
<TABLE>
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by each of the Selling
Stockholders as of January 28, 1997 and as adjusted to reflect the sale of the
shares of Common Stock offered hereby for all Selling Stockholders. The
following information does not give effect to the stock dividend described in
"Prospectus Summary--Recent Events."
<CAPTION> Shares to be
Shares Beneficially Owned
Beneficially Owned After Offering if
Prior to Offering(1) Number of All Shares Sold(1)
------------------- Shares Being ------------------
Name Number Percent Offered Number Percent
- ---- ------ ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
B-JAC International, Inc.
Employees Stock
Ownership Plan(2).... 15,624 * 14,062 1,562 *
Basil Joffe(3)............ 77,870 * 76,220 1,650 *
Beatrice R. Noe(4)........ 19,098 * 17,188 1,910 *
Bruce J. Noe(5)........... 17,359 * 15,623 1,736 *
John W. Noe(6)............ 19,098 * 17,188 1,910 *
<FN>
- ----------------
* Percentage of shares beneficially owned is less than 1.0%.
(1) Unless otherwise noted, each person identified possesses sole voting and
investment power with respect to shares subject to community property laws
where applicable.
(2) Mary A. Palermo, the Senior Vice President, Finance and Chief Financial
Officer of the Company, is the trustee of the B-JAC International, Inc.
Employee Stock Ownership Plan.
(3) Mr. Joffe was the President and sole director of Basil Joffe Associates,
Inc. until its acquisition by the Company in December 1996.
(4) Includes 19,098 shares held by John Noe (of which 8,594 shares are being
offered hereby), the spouse of Ms. Noe. Ms. Noe was the Secretary and a
director of B-JAC until its acquisition by the Company in October 1996.
(5) Mr. Noe was the Vice President and a director of B-JAC until its
acquisition by the Company in October 1996.
(6) Includes 19,098 shares held by Beatrice Noe (of which 8,594 shares are
being offered hereby), the spouse of Mr. Noe. Mr. Noe was the President
and a director of B-JAC until its acquisition by the Company in
October 1996.
</TABLE>
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<PAGE> 11
PLAN OF DISTRIBUTION
This Prospectus and the Registration Statement are in furtherance of a
"shelf" registration pursuant to Rule 415 promulgated by the Commission under
the Securities Act. Pursuant to registration rights arrangements entered into
with the former shareholders of B-JAC and Basil Joffe Associates, Inc., the
Company is obligated to keep the "shelf" registration effective for a period of
ninety days after the date on which the Registration Statement is declared
effective by the Commission, or such shorter period that will terminate when all
of the shares offered by such former shareholders have been sold. The Company
may, in its sole discretion, determine to keep the Registration Statement
effective for a longer period of time.
The shares offered hereby may be sold from time to time by the Selling
Stockholders, or by pledgees, donees, transferees or other successors in
interest of the Selling Stockholders. Such sales may be made on the Nasdaq
National Market, or otherwise, at prices and on terms then prevailing or at
prices related to the then-current market prices, or in negotiated transactions
at negotiated prices. The shares may be sold by one or a combination of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers will receive commissions
or discounts from Selling Stockholders in amounts to be negotiated immediately
prior to the sale. The Selling Stockholders and any broker-dealers that
participate in the distribution may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commission received by
them and any profit on the resale of shares sold by them may be deemed to be
underwriting discounts and commissions.
Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplemented prospectus will
be filed, if required, pursuant to Rule 424(c) under the Securities Act, setting
forth (i) the name of such Selling Stockholder and the name of each of the
participating broker-dealers, (ii) the number of shares involved, (iii) the
price at which such shares were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealers, where applicable, (v) a statement to
the effect that such broker-dealers did not conduct any investigation to verify
the information set out or incorporated by reference in this Prospectus and (vi)
other facts material to the transaction.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Foley, Hoag & Eliot LLP, Boston, Massachusetts.
EXPERTS
The consolidated balance sheets of the Company and its subsidiaries as of
June 30, 1995 and 1996 and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended June 30, 1994, 1995 and
1996 incorporated by reference herein have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
11
<PAGE> 12
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No broker, dealer or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Selling Stockholder. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities other than
the shares of Common Stock to which it relates or an offer to, or a solicitation
of, any person in any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that information
contained herein is correct as of any time subsequent to its date.
=================
TABLE OF CONTENTS
=================
Available Information....................... 2
Information Incorporated by Reference....... 2
Prospectus Summary.......................... 3
Risk Factors................................ 5
Use of Proceeds............................. 10
Selling Stockholders........................ 10
Plan of Distribution........................ 11
Legal Matters............................... 11
Experts..................................... 11
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123,093 SHARES
ASPEN TECHNOLOGY, INC.
COMMON STOCK
----------
PROSPECTUS
----------
February 4, 1997
================================================================================
