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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ASPEN TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2739697
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
TEN CANAL PARK
CAMBRIDGE, MASSACHUSETTS 02141
(617) 949-1000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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LAWRENCE B. EVANS
Chairman of the Board and Chief Executive Officer
ASPEN TECHNOLOGY, INC.
Ten Canal Park
Cambridge, Massachusetts 02141
(617) 949-1000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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Copies to:
STEPHEN J. DOYLE, ESQ. MARK L. JOHNSON, ESQ.
Senior Vice President, General Counsel, FOLEY, HOAG & ELIOT LLP
Chief Legal Officer and Secretary One Post Office Square
ASPEN TECHNOLOGY, INC. Boston, Massachusetts 02109
Ten Canal Park
Cambridge, Massachusetts 02141
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _____
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Stock, $.10 par value.... 1,039,361 shares $10.9375 $11,368,011 $3,161
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(1) Estimated solely for the purpose of determining the registration fee. In
accordance with Rule 457(c) under the Securities Act of 1933, the above
calculation is based on the average of the high and low sale prices
reported in the consolidated reporting system of the Nasdaq National Market
on December 10, 1998.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell securities, and the selling stockholders are
not soliciting offers to buy these securities, in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 11, 1998
1,039,361 SHARES
ASPEN TECHNOLOGY, INC.
COMMON STOCK
The selling stockholders are offering 839,361 shares of common stock. We will
not receive any of the proceeds from sales of shares by the selling
stockholders.
Our common stock trades on the Nasdaq National Market under the symbol "AZPN."
On December 10, 1998, the last reported sale price of our common stock on the
Nasdaq National Market was $11 1/16 per share.
The selling stockholders may sell these shares from time to time on the Nasdaq
National Market or otherwise. They may sell the shares at prevailing market
prices or at prices negotiated with buyers. The selling stockholders will be
responsible for any commissions or discounts due to brokers or dealers. The
amount of those commissions or discounts will be negotiated before the sales. We
will pay all of the other offering expenses, which we estimate will total
$16,000.
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INVESTING IN THESE SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________, 199_
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NEITHER WE
NOR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE SELLING
STOCKHOLDERS ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF COMMON
STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. IN THIS
PROSPECTUS, REFERENCES TO "WE," "US" AND "OUR" REFER TO ASPEN TECHNOLOGY, INC.
AND ITS SUBSIDIARIES.
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TABLE OF CONTENTS
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Prospectus Summary......................................................... 3
Risk Factors............................................................... 5
Litigation................................................................. 12
Use of Proceeds............................................................ 12
Selling Stockholders....................................................... 13
Plan of Distribution....................................................... 14
Legal Matters.............................................................. 14
Experts.................................................................... 15
Where You Can Find More Information........................................ 15
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PROSPECTUS SUMMARY
Because this is only a summary, it does not contain all of the information that
may be important to you. You should read the entire prospectus, including "Risk
Factors" and the information incorporated by reference, before deciding to
invest in shares offered by this prospectus.
ASPEN TECHNOLOGY, INC.
OUR BUSINESS: We are the leading supplier of software and service
solutions used by companies in the process
industries to design, operate and manage their
manufacturing processes. The process industries
include manufacturers of chemicals, petrochemicals,
petroleum products, pharmaceuticals, pulp and
paper, electric power, food and beverages, consumer
products, and metals and minerals.
OUR SOFTWARE AND SERVICES: We offer a comprehensive, integrated suite of
process manufacturing solutions that help process
manufacturers enhance their profitability by
improving their efficiency, productivity, capacity
utilization, safety and environmental compliance.
Our solutions facilitate these improvements
throughout the entire manufacturing life-cycle,
from research and development to engineering,
planning and scheduling, procurement, production
and distribution. In addition to software
solutions, we offer consulting services through our
staff of more than 475 project engineers. Since May
1995, we have acquired 15 companies and lines of
business to obtain technologies and expertise that
complement or enhance our core software and
services solutions.
OUR STRATEGY: Our objective is to extend our leadership in
providing process management solutions to the
process industries. To achieve this objective, we
pursue the following key strategies:
- extending our technology leadership position by
continuing to invest in research and development
and to identify and pursue opportunities for
strategic acquisitions;
- increasing the integration of many of our
products for the design, operation and management
of process plants, and providing consulting
services to implement this technology around the
business processes of customers;
- leveraging our position in the process industries
to increase our supply chain business, and
incorporating our supply chain technology as a
key component of our integrated product
offerings;
- leveraging our installed customer base in the
chemical, petrochemicals, petroleum products and
pharmaceuticals industries by increasing the
number of users of software currently licensed by
our existing customers and by licensing
complementary software and services to those
customers;
- increasing our penetration of other process
industries, particularly the pulp and paper,
electric power, and food and beverage industries,
as well as the semiconductor industry;
- pursuing strategic acquisitions of complementary
technologies and services capabilities; and
- selectively partnering with providers of
complementary products and services to supplement
our ability to offer enterprise-wide solutions.
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OUR CUSTOMERS: We currently have more than 750 customers
worldwide, including 44 of the 50 largest chemical
companies, 17 of the 20 largest petroleum refiners
and 16 of the 20 largest pharmaceutical companies.
OUR ADDRESS: Our principal executive offices are located at Ten
Canal Park, Cambridge, Massachusetts 02141. Our
telephone number is (617) 949-1000. Our website is
located at www.aspentech.com; information contained
in our website is not a part of this prospectus.
THE OFFERING
COMMON STOCK OFFERED: All of the 1,039,361 shares offered by this
prospectus are being sold by the selling
stockholders. The selling stockholders are former
record and beneficial stockholders of Chesapeake
Decision Sciences, Inc. who acquired these shares
as the result of our acquisition of Chesapeake
Decision Sciences, Inc. in May 1998.
USE OF PROCEEDS: We will not receive any of the proceeds from sales
of shares by the selling stockholders.
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RISK FACTORS
An investment in shares of our common stock is risky. You should consider
carefully the following risk factors in addition to the remainder of this
prospectus, including information incorporated by reference, before purchasing
shares offered by this prospectus.
Some of the information in this prospectus contains forward-looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," "continue" and similar words. You should
read statements that contain these words carefully because they (1) discuss our
future expectations, (2) contain projections of our future operating results or
financial condition or (3) state other "forward-looking" information. We believe
it is important to communicate certain of our expectations to our investors.
There may be events in the future, however, that we are not accurately able to
predict or over which we have no control. The risk factors listed in this
section, as well as any other cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our common stock, you should be aware that the
occurrence of any of the events described in these risk factors and elsewhere in
this prospectus could have a material adverse effect on our business, financial
condition and results of operations. In such case, the trading price of our
common stock could decline and you could lose all or part of your investment.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE
Our operating results are difficult to predict and may fluctuate significantly
from quarter to quarter. If our operating results fall below the expectations of
investors or public market analysts, the price of our common stock could fall
dramatically.
Our operating results in the fiscal quarter and fiscal year ended June 30, 1998
were below the expectations of some public market analysts and investors,
principally because our services revenues grew more slowly than anticipated and
our company-wide expenses were higher than expected. Our operating results in
the fiscal quarter ended September 30, 1998 were below the expectations of some
public market analysts and investors, principally because our license revenues
were lower than anticipated. During the fiscal quarter ending December 31, 1998,
we have reassessed our business prospects for the last three quarters of fiscal
1999 and significantly reduced our internal estimates of revenues and earnings
from previously anticipated levels. From July 27, 1998, the date on which we
preliminarily announced our estimated results for the fiscal quarter and year
ended June 30, 1998, through the close of business on December 10, 1998, the
price per share of our common stock, as reported by the Nasdaq National Market,
decreased from $48.25 to $11 1/16. See "Litigation."
Our revenues are difficult to forecast for a number of reasons:
- - License fees for our software products are substantial, and as a result the
sales process for our solutions is lengthy, sometimes exceeding a year. The
length of the sales process makes our software revenues difficult to
predict, and the delay of one or more large orders could cause our
quarterly revenues to fall substantially below expectations.
- - We ship our software products within a short period after receipt of an
order, and we usually do not have a material backlog of unfilled orders of
software products. Consequently, our revenues from software licenses in any
quarter depend substantially on the orders booked and shipped in that
quarter. We historically have derived a majority of our quarterly software
license revenues from license agreements consummated in the final weeks of
the quarter. As a result, even a short delay in the consummation of an
agreement may cause our revenues to fall below expectations for that
quarter.
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- - Our revenues during the first quarter of each fiscal year typically decline
from the immediately preceding fiscal quarter, in part because (1) a
substantial portion of our revenues are derived from foreign countries
where business is slow during the summer months and (2) a relatively
smaller portion of our software licenses come up for renewal in the first
quarter.
- - Fluctuating economic conditions may vary demand for our products and
services in ways that are difficult to predict. For example, during an
economic downturn in the process industries, some manufacturers may cancel
orders due to cash flow concerns. Other manufacturers, however, may choose
to accelerate or increase their orders for our software and services since
they can use our solutions to improve their efficiency and productivity.
Most of our expenses, particularly employee compensation, are relatively fixed.
As a result, even relatively small variations in the timing of our revenues may
cause significant variations in our quarterly operating results and may result
in quarterly losses.
As a result of these factors, we believe that quarter-to-quarter comparisons of
our results of operations are not necessarily meaningful. You should not rely on
our quarterly results of operations to predict our future performance.
WE FACE SIGNIFICANT COMPETITION FOR A LIMITED SUPPLY OF QUALIFIED PROJECT
ENGINEERS
We derive a substantial portion of our revenues from services provided in
connection with extremely complex projects. In general, only highly qualified,
highly educated project engineers have the training and skills necessary to
complete these projects successfully. In order to continue to staff our current
and future projects, we will need to attract, motivate and retain a significant
number of qualified chemical and other project engineers. Qualified project
engineers are in short supply and we face significant competition for these
employees, from not only our competitors but also clients, academic institutions
and other enterprises. Other employers may offer project engineers significantly
greater compensation and benefits or more attractive career paths or geographic
locations than we are able to offer. Any failure on our part to hire, train and
retain a sufficient number of qualified project engineers would seriously damage
our business.
WE FACE INTENSE COMPETITION FROM A BROAD AND INCREASING RANGE OF VENDORS
We face intense competition from four primary sources:
- - commercial vendors of software products and related consulting services
for one or more elements in the design, operation and management of
manufacturing processes;
- - hardware vendors that offer software solutions in order to add value to
their proprietary distributed control systems, or DCS, which use computer
hardware systems, communication networks and industrial instruments to
measure, record and automatically control process variables during
production;
- - large operating companies in the process industries that have developed
their own proprietary software solutions; and
- - companies licensing proprietary manufacturing processes and providing
consulting services.
Because of the breadth of our software and service offerings, we face
competition from different vendors depending on the solution in question:
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- - With respect to particular software solutions, we compete with
Chemstations, Inc., Hyprotech, Ltd. (a subsidiary of AEA Technology plc),
The Foxboro Company, Simulation Sciences, Inc. and Wonderware Corporation
(all of which are subsidiaries of Siebe plc), OSI Software, Inc., the
Simcon division of ABB Asea Brown Boveri (Holding) Ltd., and several
smaller competitors, such as Pavilion Technologies, Inc.
- - With the acquisition of Chesapeake Decision Sciences, Inc., we now compete
with established commercial vendors of supply chain management software,
including i2 Technologies, Inc. and Manugistics Group, Inc.
- - A number of vendors of enterprise resource planning, or ERP, software
products, such as Baan Company N.V., J.D. Edwards Inc., Oracle Corporation,
PeopleSoft, Inc., and SAP A.G., have announced their intentions to enter or
expand their existing presence in the market for supply chain management
solutions. ERP solutions help a process manufacturer manage resources
across the enterprise and enable the manufacturer to integrate front- and
back-office business functions.
- - We also expect to encounter continuing competition from DCS solution
vendors, such as Honeywell Inc., as they expand their software and service
offerings to include additional aspects of process manufacturing.
In recent years, consolidation in our markets, such as the acquisitions by Siebe
plc of Simulation Sciences, Inc. and Wonderware Corporation and the acquisition
of Elsag Bailey by Asea Brown Boveri (Holding) Ltd. has expanded the breadth of
product and service offerings by some of our competitors. As a result of this
consolidation and the expansion of DCS and ERP vendors into additional markets,
we may compete from time to time with divisions of companies, such as Honeywell
Inc. and Siebe plc, with which we collaborate on other occasions. Our inability
to compete and cooperate simultaneously with these companies may seriously
damage our business.
OUR ACQUISITION STRATEGY INVOLVES RISKS
From May 1995 through May 1998, we completed 15 acquisitions. Our largest
acquisition to date has been Chesapeake Decision Sciences, Inc., which we
acquired on May 27, 1998. Through these acquisitions, we have expanded our
product and service offerings, entered new markets, and increased the scope of
our operations and the number of our employees. While we are not currently a
party to any agreements or understandings for any material acquisitions, we
expect to continue to acquire both domestic and foreign companies as part of our
growth strategy. Acquisitions involve risks that could cause our actual growth
to differ from our expectations. For example:
- - We may be unable to continue to identify suitable acquisition candidates.
In light of the consolidation trend in our industry, we face increasing
competition for acquisition opportunities. This competition may
substantially increase the cost of any acquisition we complete.
- - In future acquisitions, we may issue equity securities that could be
dilutive to our shareholders. In those acquisitions, we also may incur
additional debt and amortization expense related to goodwill and other
intangible assets. This additional debt and amortization expense may
materially and adversely affect our business and operating results.
- - We may be unable to integrate acquired businesses successfully and to
realize anticipated economic, operational and other benefits in a timely
manner. Integration of an acquired business is especially difficult when we
acquire a business in a market in which we have limited or no expertise or
a business with a corporate culture different from ours. If we are unable
to successfully integrate acquired businesses, we may incur substantial
costs and delays or other operational, technical or financial problems. In
addition, the failure to integrate acquisitions successfully may divert
management's
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attention from our existing business and may damage our relationships with
our key clients and employees.
OUR REVENUES ARE CONCENTRATED IN THE CHEMICALS, PETROCHEMICALS AND PETROLEUM
INDUSTRIES
We derive a substantial majority of our revenues from companies in the
chemicals, petrochemicals and petroleum industries. We expect that companies in
these industries will continue to account for a substantial majority of our
revenues for the foreseeable future. Our success therefore depends directly on
continued demand for our software and services by companies in these industries.
The chemicals, petrochemicals and petroleum industries are highly cyclical. We
believe that in the past chemical, petrochemical and petroleum companies have
delayed and reduced capital and operating expenditures as the result of economic
downturns, as well as pricing pressures experienced in connection with
cost-containment measures and environmental regulations. These industry
patterns, as well as general domestic and foreign economic conditions, could
seriously damage our business.
Recently some of our clients have completed or announced mergers with other of
our clients. For example, The British Petroleum Company p.l.c. and Amoco
Corporation executed a merger agreement in October 1998 and Exxon Corporation
and Mobil Corporation executed a merger agreement in December 1998. We
currently are unable to predict the effect, if any, that these consolidations
will have on the nature and quantity of software and services we provide to
these clients.
WE NEED TO DEVELOP NEW SOFTWARE AND SERVICES
We face rapidly changing technology and continuing improvements in computer
hardware, operating systems, programming tools, programming languages and
database technology. In order to be successful, we must:
- - enhance our current software products and services;
- - integrate our current and future software offerings;
- - modify our products to operate on additional or new operating platforms or
systems; and
- - develop in a timely and cost-effective manner new software and services
that meet changing market conditions, including evolving customer needs,
new competitive software and service offerings, emerging industry standards
and changing technology.
We face rapidly changing technology and continuing improvements in computer
hardware, operating systems, programming tools, programming languages, and
database technology, as well as the development of open standards and
interfaces between our products and the products of other companies.
In the past, we have experienced delays in developing new products and enhancing
existing products, and on occasion we have postponed scheduled delivery dates
for products. Like many other software products, our software on occasion has
contained undetected errors or "bugs" that may not be detected for a number of
months after the delivery of the software. In order to be successful, we must
meet our customers' expectations with respect to product development,
enhancement and integration and our software and services must address
adequately the needs of our customers.
WE DEPEND ON THE SERVICES OF OUR CURRENT CHIEF EXECUTIVE OFFICER
Our future success depends to a significant degree on the skills, experience and
efforts of our executive officers, particularly Lawrence B. Evans, our principal
founder and Chairman and Chief Executive Officer. Dr. Evans has led us since our
incorporation in 1981. We do not have any employment contract requiring Dr.
Evans or any of our other executive officers to continue their employment for
any period of time, and we do not maintain any significant amount of key-person
life insurance on any of our executive officers. The loss of the services of Dr.
Evans would seriously damage our business.
WE ARE SUBJECT TO PRODUCT LIABILITY CLAIMS
The sale and implementation of our software products and services potentially
may result in significant product liability claims. Process manufacturers use
our software products and services in designing, operating and
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managing their manufacturing processes at large facilities. Any failure of the
software at those facilities could result in significant claims for damages or
for violations of environmental, safety and other laws and regulations.
Our agreements with our customers generally contain provisions designed to limit
our exposure to potential product liability claims. These provisions may,
however, not be effective as a result of applicable laws or judicial decisions.
OUR PROPRIETARY TECHNOLOGY IS SUBJECT TO LIMITED PROTECTION
Our business could be materially and adversely affected if we are not able to
protect adequately our proprietary software and other proprietary intellectual
property rights. We rely on a combination of copyright, patent, trademark and
trade secret laws, license and confidentiality agreements, and software security
measures to protect our proprietary rights. Although we presently hold U.S. and
foreign registered trademarks and U.S. patents on certain of our proprietary
technology, we may be unable to obtain similar protection for our other
intellectual property. In addition, the laws of certain countries in which our
products are licensed do not protect our products and intellectual property
rights to the same extent as U.S. laws. We generally enter into non-disclosure
agreements with our employees and customers and restrict access to, and
distribution of, our proprietary information. Nevertheless, we may be unable to
deter misappropriation of our proprietary information, detect unauthorized use
and take appropriate steps to enforce our intellectual property rights. Our
competitors also may independently develop technologies that are substantially
equivalent or superior to our technology. Although we believe that our services
and products do not infringe on the intellectual property rights of others, we
cannot prevent someone else from asserting a claim against us in the future for
violating their technology rights.
OUR INTERNATIONAL OPERATIONS INVOLVES ADDITIONAL RISKS
In fiscal 1996, 1997 and 1998 and the first three months of fiscal 1999, we
derived 42.0%, 50.0%, 45.4% and 51.7% of our revenues from customers outside the
United States. We anticipate that revenues from international customers will
continue to account for a significant portion of our revenues for the
foreseeable future. Our international operations are subject to additional
risks, including:
- - fluctuations in exchange rates may reduce our earnings, particularly where
we denominate arrangements with international customers in the currency of
the country in which our software or services are provided, and the hedging
techniques we implement may be expensive and may not fully eliminate the
impact of exchange rate fluctuations on our operating results;
- - tariffs and other barriers may reduce our ability to sell our solutions or
may reduce the profitability of those solutions;
- - political and economic instability, such as the economic downturn in Asia
in 1998, may lead to reduced demand for our solutions or make it difficult
for us to offer our products;
- - changes in technology standards, such as interfaces between products, that
are developed by European or foreign groups may require additional
development efforts by us or may change the buying behavior of some of our
customers;
- - unexpected changes in regulatory requirements may decrease the usefulness
of our solutions for process manufacturers and therefore reduce the demand
for those solutions;
- - we may experience difficulties in managing a global network of distributors
or representatives and in staffing and managing foreign subsidiary
operations;
- - we may encounter difficulties or delays in translating products and product
documentation into foreign languages;
- - we may suffer potentially adverse tax consequences from operations in a
large number of countries; and
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- - the adoption and use of the euro, the single European currency to be
introduced in January 1999, may adversely affect our business in ways we
cannot currently predict.
WE MUST INCREASE OUR MARKET PENETRATION
Our failure to achieve increased market penetration in the process industries
would substantially restrict our future growth and damage our business
prospects. Our ability to increase market penetration will depend upon a number
of factors, including product performance, accuracy of results, reliability,
breadth and integration of product offerings, scope of applications, and ease of
implementation and use.
OUR PRODUCTS, SERVICES AND SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT
Many existing computer systems and software applications use only two digits to
identify a year in the date field. These systems and applications were designed
and developed without considering the impact of the upcoming change in the
century. If not corrected, year 2000 problems may cause many computer
applications to fail or create erroneous results for calculations involving
years after 1999.
If we are not able to develop or offer, in a timely manner, year 2000 compliant
products and product updates, we may suffer the following consequences:
- - We could experience a significant loss of revenues. Customers may decide
not to purchase our products and services, or may decide to delay
purchasing our products or services in anticipation of our future release
of year 2000 compliant products.
- - Year 2000 errors in our products could materially impair the utility of our
products and services and could result in significant product liability
claims against us.
- - We could incur significant expenses in making our products, services and
internal systems year 2000 compliant. We currently believe the total costs
to be incurred for all of our year 2000 related projects will not have a
material impact on our operating results. Currently unidentified year 2000
problems may, however, cause us to incur material unanticipated expenses.
We are assessing these costs on an ongoing basis in order to adjust our
spending plans as necessary.
We have undertaken, but not completed, a program to determine whether and to
what extent we may need to update our software products and service processes to
become year 2000 compliant. We have tested and determined that over 90% of our
standard products are compliant. We have not, however, completed testing on
other software products or on the work processes of our service groups. We do
not intend to test or modify all prior versions of our software products,
current products used on year 2000 non-compliant systems, custom applications
developed by or for customers, or certain current software products that we plan
to replace with either new software products or year 2000 compliant releases by
the end of 1999. Until we have completed our assessment, we cannot be sure that
our efforts to address year 2000 issues are adequate. Although we have obtained
representations as to year 2000 compliance from the sellers of certain of our
recently acquired technologies, we cannot be certain that we will not encounter
year 2000 problems arising from these technologies. Moreover, the ability of our
software products and services to comply with year 2000 requirements depends in
part upon the availability of year 2000 compliant versions of operating systems
and software applications used by or with our products and services.
We currently are evaluating the readiness of those of our internal systems that
are business-critical. We consider hardware, software, systems, technologies and
applications to be "business-critical" if a failure would either have a material
adverse impact on our business or involve a safety risk to our employees or
customers. We have reviewed certain of our internal systems and future system
plans to assess year 2000 compliance. We expect that
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our internal system development plans will address the year 2000 issue and will
correct any existing non-compliant systems without the need to accelerate the
overall information systems implementation plans. Our business would be
adversely affected if there are unidentified dependencies on internal systems to
operate the business, or if any required modifications are not completed on a
timely basis or are more costly to implement than currently anticipated.
OUR STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY
Our common stock is traded on the Nasdaq National Market. The market price of
our common stock could fluctuate substantially based on a variety of factors
such as our financial performance, announcements concerning us or our key
clients or competitors, technological innovations, litigation or changes in
earnings estimates by analysts. Stock prices may fluctuate widely for reasons
unrelated to operating results. Fluctuations in general economic, political and
market conditions, such as recessions or international currency fluctuations,
may adversely affect the market price of our common stock.
The market price of our common stock has been volatile during the second half of
calendar 1998. Our operating results in the fiscal quarter and fiscal year ended
June 30, 1998 were below the expectations of some public market analysts and
investors, principally because our services revenues grew more slowly than
anticipated and our company-wide expenses were higher than expected. Our
operating results in the fiscal quarter ended September 30, 1998 were below the
expectations of some public market analysts and investors, principally because
our licenses revenues were lower than anticipated. During the fiscal quarter
ending December 31, 1998, we have reassessed our business prospects for the last
three quarters of fiscal 1999 and significantly reduced our internal estimates
of revenues and earnings from previously anticipated levels. Since July 27,
1998, the date on which we preliminarily announced our estimated results for the
fiscal quarter and year ended June 30, 1998, the price per share of our common
stock, as reported by the Nasdaq National Market, decreased from $48.25 to a low
of $6.125 on October 5, 1998. On December 8, 1998, the last reported sale price
of our common stock on the Nasdaq National Market was $___. See "Litigation" for
a brief description of three purported class actions against us and certain of
our officers and directors on behalf of purchasers of our common stock during
certain periods in 1998.
OUR ANTI-TAKEOVER PROVISIONS MAY DISCOURAGE POTENTIAL TAKEOVER ATTEMPTS
Certain provisions of our certificate of incorporation and Delaware law could be
used by our incumbent management to make it more difficult for a third party to
acquire control of us, even if the change in control might be beneficial to our
stockholders. This could discourage potential takeover attempts and could
adversely affect the market price of our common stock.
In particular, we may issue preferred stock in the future without stockholder
approval, upon terms determined by our board of directors. The rights of holders
of our common stock would be subject to, and may be adversely affected by, the
rights of holders of any preferred stock issued in 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 our outstanding stock. We have adopted
a stockholder rights plan that may deter or delay attempts to acquire us or to
accumulate shares of common stock. Except for the stockholder rights plan, we
have no present plans to designate or issue any shares of preferred stock.
11
<PAGE> 13
LITIGATION
On October 5, 1998, a purported class action lawsuit was filed in the United
States District Court for the District of Massachusetts against us and certain
of our officers and directors, on behalf of purchasers of our common stock
between April 28, 1998 and October 2, 1998. This lawsuit seeks an unspecified
amount of damages and claims violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, alleging that we and the named officers and
directors issued a series of materially false and misleading statements
concerning our financial condition, operations and integration of several
acquisitions. On October 26, 1998, a second purported class action lawsuit was
filed in the United States District Court for the District of Massachusetts
against us and certain of our officers and directors, on behalf of purchasers of
our common stock between April 28, 1998 and October 2, 1998. The complaint for
this second lawsuit is identical to the complaint for the first lawsuit, except
for the plaintiff's name. On November 20, 1998, a third purported class action
lawsuit was filed in the United States District Court for the District of
Massachusetts against us and certain of our officers and directors, on behalf of
purchasers of our common stock between January 27, 1998 and October 2, 1998. The
complaint for this third lawsuit is identical to the two prior complaints,
except for the plaintiff's name and the additional reference to statements made
between January 27, 1998 and April 28, 1998. We believe that we have meritorious
legal defenses to these lawsuits, and we intend to defend vigorously against
these actions. We currently are unable, however, to determine whether resolution
of these matters will have a material adverse impact on our financial position
or results of operations, or we are unable to estimate the amount of the loss,
if any, that may result from resolution of these matters.
USE OF PROCEEDS
All of the shares of common stock offered by this prospectus are being offered
by the selling stockholders. For information about the selling stockholders, see
"Selling Stockholders." We will not receive any proceeds from sales of these
shares.
12
<PAGE> 14
SELLING STOCKHOLDERS
One of the selling stockholders is a founder and employee of Chesapeake Decision
Sciences, Inc. ("Chesapeake") who is offering 200,000 of the shares he acquired
as the result of our acquisition of Chesapeake on May 27, 1998. These shares
have been registered in accordance with the provisions of a registration rights
agreement entered into in connection with the acquisition.
The other selling stockholders are employees of Chesapeake to whom a total of
839,361 of the offered shares were distributed upon the termination of
Chesapeake's employee stock ownership plan (the "ESOP") in December 1998. The
ESOP had been a stockholder of Chesapeake and had received 839,361 shares of our
common stock as the result of our acquisition of Chesapeake on May 27, 1998. In
order to satisfy regulations of the Internal Revenue Service applicable to the
termination of the ESOP, we have registered the shares with the Securities and
Exchange Commission in order to enable the shares to be freely tradable. We
expect to withdraw registration of any unsold shares on or shortly after May 27,
1999, when we expect the shares will become eligible for public sale pursuant to
the exemption from registration provided by Rule 144 under the Securities Act of
1933.
The following table sets forth certain information with respect to the
beneficial ownership of our common stock by the selling stockholders as of
December 7, 1998 and as adjusted to reflect the sale of the shares of common
stock offered by this prospectus.
- ------------------------------------------------------------------------------
SHARES TO BE
SHARES BENEFICIALLY OWNED
BENEFICIALLY OWNED NUMBER AFTER OFFERING IF
PRIOR TO OFFERING(1) OF SHARES ALL SHARES SOLD(1)
---------------------- BEING -------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
- ---- ------ ------- ------- ------ --------
[INFORMATION TO BE PROVIDED BY AMENDMENT]
- -----------------
* Percentage of shares beneficially owned is less than 1.0%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated, each of
the selling stockholders possesses sole voting and investment power with
respect to all of the shares of common stock owned by them, subject to
community property laws where applicable. Percentage of beneficial ownership
is based on 24,726,751 shares of common stock outstanding as of December 7,
1998.
13
<PAGE> 15
PLAN OF DISTRIBUTION
The shares offered by this prospectus may be sold from time to time by selling
stockholders, who consist of the persons named under "Selling Stockholders"
above and those persons' pledgees, donees, transferees or other successors in
interest. The selling stockholders may sell the shares on the Nasdaq National
Market or otherwise, at market prices or at negotiated prices. They may sell
shares by one or a combination of the following:
- a block trade in which a 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;
- purchases by a broker or dealer as principal and resale by the broker or
dealer for its account pursuant to this prospectus; and
- ordinary brokerage transactions and transactions in which a 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 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 of 1933, and any proceeds or
commissions received by them, and any profits on the resale of shares sold by
broker-dealers, may be deemed to be underwriting discounts and commissions.
If any selling stockholder notifies us that a 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, we will file, a prospectus supplement, if required
pursuant to Rule 424(c) under the Securities Act of 1933, setting forth:
- the name of each of the participating broker-dealers,
- the number of shares involved,
- the price at which the shares were sold,
- the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable,
- a statement to the effect that the broker-dealers did not conduct any
investigation to verify the information set out or incorporated by
reference in this prospectus, and
- any other facts material to the transaction.
LEGAL MATTERS
Foley, Hoag & Eliot LLP, Boston, Massachusetts, has advised us with respect to
the validity of the shares of common stock offered by this prospectus.
14
<PAGE> 16
EXPERTS
Our consolidated balance sheets as of June 30, 1997 and 1998 and our related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended June 30, 1996, 1997 and 1998 incorporated by reference in this
prospectus from our Annual Report on Form 10-K for the fiscal year ended June
30, 1998 have been audited by Arthur Andersen LLP, independent public
accountants, to the extent and for the periods indicated in their reports
included in that Form 10-K and are incorporated by reference in this prospectus
in reliance upon the authority of Arthur Andersen LLP as experts in giving those
reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports, quarterly reports, current reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy our SEC filings at the SEC's public reference room at 450
Fifth Street, N.W., Washington D.C. 20549. You may call the SEC at
1-800-SEC-0330 for further information about the public reference room. Our SEC
filings also are available on the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information from certain of our
other SEC filings. This means that we can disclose information to you by
referring you to those other filings, and the information incorporated by
reference is considered to be part of this prospectus. In addition, certain
information that we file with the SEC after the date of this prospectus will
automatically update, and in some cases supersede, the information contained or
otherwise incorporated by reference in this prospectus. We are incorporating by
reference the information contained in the following SEC filings:
- - our Annual Report on Form 10-K for the fiscal year ended June 30, 1998 (as
filed on September 28, 1998);
- - our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
1998 (as filed on November 16, 1998 and as amended by Amendment No. 1 filed
on November 20, 1998);
- - our Current Reports on Form 8-K dated October 2, 1998 (as filed on
October 6, 1998) and October 5, 1998 (as filed on October 7, 1998);
- - our definitive Proxy Statement (as amended by Amendment No. 1 filed on
November 18, 1998) being used in connection with our Annual Meeting of
Stockholders to be held on December 15, 1998;
- - the description of our common stock contained in our Registration Statement
on Form 8-A (as amended by Amendment No. 1 filed on June 12, 1998); and
- - any filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of this prospectus
(information in these filings will be incorporated as of the filing date).
You may request copies of these filings, at no cost, by writing, telephoning or
e-mailing our Manager of Investor Relations as follows:
Aspen Technology, Inc.
Ten Canal Park
Cambridge, Massachusetts 02141
Telephone: (617) 949-0100
E-mail: [email protected].
This prospectus is part of a Registration Statement on Form S-3 we filed with
the SEC under the Securities Act of 1933. This prospectus does not contain all
of the information contained in the Registration Statement.
15
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the Registrant
in connection with the issuance and distribution of the shares of common stock
being registered. All amounts shown are estimates except for the Securities and
Exchange Commission registration fee. The Registrant will pay all expenses in
connection with the distribution of the shares of common stock being sold by the
selling stockholders (including fees and expenses of counsel for the
Registrant), except for any commissions or discounts due to any broker or dealer
in connection with sales of shares offered by this prospectus.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee........... $ 3,161
Accounting fees and expenses.................................. 1,000
Legal fees and expenses....................................... 10,000
Printing, EDGAR formatting and mailing expenses............... 500
Miscellaneous................................................. 1,339
-------
Total................................................. $16,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article SEVENTH of the Registrant's Certificate of Incorporation, as amended
(the "Certificate of Incorporation"), provides that no director of the
Registrant shall be personally liable for any monetary damages for any breach of
fiduciary duty as a director, except to the extent that the Delaware General
Corporation Law prohibits the elimination or limitation of liability of
directors for breach of fiduciary duty.
Article EIGHTH of the Certificate of Incorporation provides that a director or
officer of the Registrant shall be indemnified by the Registrant against:
(a) all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement incurred in connection with any litigation
or other legal proceeding (other than an action by or in the right of
the Registrant) brought against him or her by virtue of his or her
position as a director or officer of the Registrant if he or she
acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and,
with respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful and
(b) all expenses (including attorneys' fees) and amounts paid in
settlement incurred in connection with any action by or in the right
of the Registrant brought against him or her by virtue of his or her
position as a director or officer of the Registrant if he or she
acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the Registrant,
except that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged to be liable
to the Registrant, unless a court determines that, despite such
adjudication but in view of all of the circumstances, he or she is
entitled to indemnification of such expenses.
Notwithstanding the foregoing, to the extent that a director or officer has been
successful, on the merits or otherwise, including the dismissal of an action
without prejudice, he or she is required to be indemnified by the Registrant
against all expenses (including attorneys' fees) incurred in connection
therewith. Expenses shall be advanced to a director or officer at his or her
request, provided that he or she undertakes to repay the amount advanced if it
is ultimately determined that he or she is not entitled to indemnification for
such expenses.
II-1
<PAGE> 18
Indemnification is required to be made unless the Registrant determines that the
applicable standard of conduct required for indemnification has not been met. In
the event of a determination by the Registrant that the director or officer did
not meet the applicable standard of conduct required for indemnification, or if
the Registrant fails to make an indemnification payment within sixty days after
such payment is claimed by such person, such person is permitted to petition the
court to make an independent determination as to whether such person is entitled
to indemnification. As a condition precedent to the right of indemnification,
the director or officer must give the Registrant notice of the action for which
indemnity is sought and the Registrant has the right to participate in such
action or assume the defense thereof.
Article EIGHTH of the Certificate of Incorporation further provides that the
indemnification provided therein is not exclusive, and provides that in the
event that the Delaware General Corporation Law is amended to expand the
indemnification permitted to directors or officers the Registrant must indemnify
those persons to the fullest extent permitted by such law as so amended.
Section 145 of the Delaware General Corporation Law provides that a corporation
has the power to indemnify a director, officer, employee or agent of the
corporation and certain other persons serving at the request of the corporation
in related capacities against amounts paid and expenses incurred in connection
with an action or proceeding to which he or she is or is threatened to be made a
party by reason of such position, if such person shall have acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, in any criminal proceeding, if such
person had no reasonable cause to believe his or her conduct was unlawful;
provided that, in the case of actions brought by or in the right of the
corporation, no indemnification shall be made with respect to any matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
The Registrant maintains a directors' and officers' insurance policy that covers
certain liabilities of directors and officers of the Registrant, including
liabilities under the Securities Act of 1933. The Registrant maintains a general
liability insurance policy that covers certain liabilities of directors and
officers of the Registrant arising out of claims based on acts or omissions in
their capacities as directors or officers.
ITEM 16. EXHIBITS
EXHIBIT NO.
- -----------
5.1* Opinion of Foley, Hoag & Eliot LLP
23.1 Consent of Arthur Andersen LLP
23.2* Consent of Foley, Hoag & Eliot LLP (included in Exhibit 5.1)
24.1 Powers of Attorney (included on page II-4)
99.1 Declaration of Registration Rights made as of April 27, 1998 by
Aspen Technology, Inc. for the benefit of former stockholders of
Chesapeake Decision Sciences, Inc. (incorporated by reference to
Exhibit 99.1 to registration statement on Form S-3, file
No. 333-63483)
- --------------
* To be filed by amendment.
II-2
<PAGE> 19
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any prospectus required to Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8, or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration, by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference to the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cambridge, Commonwealth of Massachusetts, as of
December 8, 1998.
ASPEN TECHNOLOGY, INC.
By /s/ LAWRENCE B. EVANS
-------------------------------------------------
LAWRENCE B. EVANS
Chairman of the Board and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Aspen Technology, Inc., hereby
severally constitute and appoint Lawrence B. Evans, Lisa W. Zappala and Stephen
J. Doyle, and each of them singly, our true and lawful attorneys with full power
to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, the Registration Statement on Form S-3 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and any subsequent Registration Statement for the same
offering which may be filed under Rule 462(b) under the Securities Act of 1933
and generally to do all such things in our names and on our behalf in our
capacities as officers and directors to enable Aspen Technology, Inc. to comply
with the provisions of the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto or to any subsequent
Registration Statement for the same offering which may be filed under said Rule
462(b).
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated as of December 8, 1998.
SIGNATURE TITLE
--------- -----
/s/ LAWRENCE B. EVANS Chairman of the Board and Chief Executive Officer
- ---------------------------- (Principal Executive Officer)
LAWRENCE B. EVANS
/s/ LISA W. ZAPPALA Chief Financial Officer
- ---------------------------- (Principal Financial and Accounting Officer)
LISA W. ZAPPALA
/s/ JOSEPH F. BOSTON Director
- ----------------------------
JOSEPH F. BOSTON
/s/ GRESHAM T. BREBACH, JR. Director
- ----------------------------
GRESHAM T. BREBACH, JR.
/s/ DOUGLAS R. BROWN Director
- ----------------------------
DOUGLAS R. BROWN
/s/ JOAN C. MCARDLE Director
- ----------------------------
JOAN C. MCARDLE
/s/ ALISON ROSS Director
- ----------------------------
ALISON ROSS
II-4
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our reports included
in the Annual Report on Form 10-K of Aspen Technology, Inc. for the fiscal year
ended June 30, 1998 and to the reference to our firm in this Registration
Statement.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 4, 1998
