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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 27, 1999
ASPEN TECHNOLOGY, INC.
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(exact name of registrant as specified in its charter)
Delaware 0-24786 04-2739697
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
Ten Canal Park, Cambridge, Massachusetts, 02141
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(Address of principal executive office and zip code)
Registrant's telephone number, including area code: (617) 949-1000
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ITEM 5. OTHER EVENTS.
On April 27, 1999, Aspen Technology, Inc. issued a press release containing
information regarding its reported results for its third fiscal quarter of 1999
and announcement that it implemented a restructuring program intended to reduce
AspenTech's operating costs and improve productivity. A copy of the April 27,
1999 press release is filed as Exhibit 5.1 to this Current Report and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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5.1 Press release of Aspen Technology, Inc. issued April 27, 1999
reporting 1999 Third Quarter Results and announcing a
Restructuring Program Intended to Reduce Costs, Improve
Productivity
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASPEN TECHNOLOGY, INC.
Date: May 10, 1999 By: /s/ STEPHEN J. DOYLE
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Stephen J. Doyle
Senior Vice President, General
Counsel and Secretary
2
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Exhibit 5.1 to Aspen Technology, Inc. 8K filed May 10, 1999
Aspen Technology Reports 1999 Third Quarter Results
Announces Restructuring Program Intended to Reduce Costs, Improve Productivity
Cambridge, MA - April 27, 1999 -- Aspen Technology, Inc. (NASDAQ: AZPN), the
leading supplier of enterprise manufacturing optimization solutions for the
process industries, today reported results for its third quarter ended March 31,
1999. Based on these results and continuing economic pressures on customers in
the refining, chemicals and petrochemicals sectors, the Company announced it has
implemented a restructuring program intended to reduce AspenTech's operating
costs and improve productivity.
The Company reported total revenues of $54.2 million in the third quarter of
fiscal 1999, compared with $68.4 million in the same period last year. For the
three months ended March 31, 1999, software license revenue was $22.2 million,
while services revenue totaled $32.0 million. Net loss for the third quarter
totaled $5.9 million or $0.23 per share, compared with net income of $9.3
million or $0.37 per share, excluding one-time charges, for the same period in
fiscal 1998.
During the third quarter, AspenTech closed a number of software license
agreements. The Company's supply chain business performed well, closing
significant transactions in the quarter for its Aspen MIMI product with a major
European specialty chemicals company and with one of the largest aluminum
recyclers in the world. The Company sold the largest Aspen PIMS license in the
company's history to Equiva, the services group for Motiva and Equilon (the new
refining joint ventures from Texaco, Shell and Star). AspenTech also won a major
integrated Plantelligence automation project for an ethylene complex in North
America to be operated by the BASF Fina joint venture. Additional transactions
signed during the third quarter included license agreements with Aristech
Chemical, Consolidated Paper, Dow Chemical, Hoechst and Union Carbide.
"Difficult economic conditions in the refining, chemicals and petrochemicals
sectors, our core markets, along with resultant corporate restructurings and
consolidation, were the primary causes for the shortfall in third quarter
revenue," said Larry Evans, chairman and CEO of Aspen Technology. "We saw no
decline in our competitive win rate, and we continued to see solid demand for
our solutions, which help process manufacturers become more competitive.
However, decisions are taking longer and the sales cycles are more complex in
this environment. Consequently, we have taken decisive actions to adjust our
strategy and tactics accordingly, as well as our cost structure.
"First, in light of protracted weakness in our core vertical markets, we have
taken aggressive steps to significantly reduce our overall cost structure by
shrinking our headcount worldwide, streamlining operations, and consolidating
facilities. These actions should better align revenues and expenses and are
intended to enable us to return to profitability in the near term. Second, we
have made some changes within the sales organization to focus more senior
resources on day-to-day management of the sales process. And third, we are
focussing a larger proportion of our resources on supply chain and
Plantelligence opportunities, where our solutions are clearly differentiated,
and where we have seen strong market demand and recent competitive success."
In connection with this restructuring, AspenTech is reducing its staff by
approximately 200 employees, about 12 percent of the global workforce, as well
as consolidating facilities, streamlining operations and
-more-
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Aspen Tech
Page 2
rationalizing certain non-core products and activities acquired in recent years.
As a result of these measures, AspenTech expects to report a $17-19 million
restructuring charge in the fourth quarter ending June 30, 1999 and reduce
substantially its operating costs for fiscal year 2000.
"These actions have sharpened our focus on strategic initiatives. The
elimination of redundant, non-core activities will enable us to improve our
productivity, maintain customer confidence, and concentrate our investments on
innovation and customer support, the foundation of our longstanding industry
leadership," said Evans. "Longer term, I am confident that we are
well-positioned for continued market leadership, with the largest installed base
of customers, the most advanced technology base, the most integrated solutions
and the largest implementation force in the industry."
Aspen Technology, Inc. (www.aspentech.com) is a leading supplier of software and
services for the design and automation of process manufacturing plants and the
optimization of the supply chain in process industries including chemicals,
petrochemicals, petroleum refining, pulp and paper, metals and minerals,
electric power, pharmaceuticals, semiconductor, consumer packaged goods, and
food and beverage. Process manufacturers use AspenTech's solutions to improve
the way they design, operate and manage their plants and global supply chain.
These solutions enable manufacturers to reduce their raw material, energy and
capital expenses; meet environmental and safety regulations; improve customer
service levels; reduce inventory requirements; improve product quality; and
shorten the time required to get new production processes on stream. AspenTech
employs more than 1,400 and is headquartered in Cambridge, Mass., with offices
in 22 countries worldwide.
Plantelligence, AspenTech's suite of products and services, is the process
manufacturing industry's only complete solution for optimizing manufacturing
enterprises from supply chain to plant execution. Deep process knowledge,
combined with world-leading optimization expertise and integration with
enterprise resource planning (ERP) and open control systems, brings AspenTech
manufacturing customers' businesses closer to their true potential.
Except for the historical information contained herein, the matters discussed in
this news release are forward-looking statements that involve a number of risks
and uncertainties. Important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements include the
risks set forth under the caption "Risk Factors" in Aspen Technology's Amendment
No. 1 to the S-3, filed on December 23, 1998 (file number 333-68789) with the
Securities and Exchange Commission, which factors are incorporated herein by
reference. Such risk factors include without limitation the risk that the
Company's operating results are difficult to predict and may fluctuate
significantly from quarter to quarter, the Company's revenues are concentrated
in the chemicals, petrochemicals and petroleum industries, and customers may
decide not to purchase the Company's products and services, or may decide to
delay purchasing our products or services in anticipation of year 2000 computer
compliance issues.
CONTACTS:
Lisa Zappala Joshua Young
Chief Financial Officer Investor Relations
Aspen Technology, Inc. Aspen Technology, Inc.
617-949-1000 617-949-1274
[email protected]
- tables follow -
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Aspen Technology, Inc.
Consolidated Condensed Statements of Operations
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
----------------- ----------------- ----------------- ---------------
REVENUES:
<S> <C> <C> <C> <C>
Software licenses $ 22,191 $ 38,691 $ 66,868 $ 95,544
Maintenance and other services 32,001 29,697 95,688 82,500
----------------- ----------------- ----------------- ---------------
Total revenues 54,192 68,388 162,556 178,044
----------------- ----------------- ----------------- ---------------
EXPENSES:
Cost of software licenses 2,149 1,540 5,759 4,964
Cost of maintenance and other services 21,204 17,274 62,217 48,342
Selling and marketing 22,207 19,876 62,961 52,683
Research and development 12,297 10,998 35,838 31,519
General and administrative 6,235 5,309 17,335 14,650
Costs related to acquisitions - 8,947 - 9,456
----------------- ----------------- ----------------- ---------------
Total costs and expenses 64,092 63,944 184,110 161,614
----------------- ----------------- ----------------- ---------------
Income (loss) from operations (9,900) 4,444 (21,554) 16,430
Other income (expense), net (115) (162) 131 (320)
Interest income, net 1,005 1,358 3,369 4,158
----------------- ----------------- ----------------- ---------------
Income (loss) before provision for
(benefit from) income taxes (9,010) 5,640 (18,054) 20,268
Provision for (benefit from)
income taxes (3,153) 5,073 (6,318) 10,324
----------------- ----------------- ----------------- ---------------
Net income (loss) $ (5,857) $ 567 $ (11,736) $ 9,944
================= ================= ================= ===============
Net income (loss) per common and
common equivalent share $ (0.23) $ 0.02 $ (0.47) $ 0.41
================= ================= ================= ===============
Weighted average common and common
equivalent shares outstanding 24,925 25,324 24,954 24,432
================= ================= ================= ===============
</TABLE>
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Aspen Technology, Inc.
Consolidated Condensed Balance Sheet
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, June 30,
1999 1998
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ASSETS
Current Assets:
<S> <C> <C>
Cash, cash equivalents and short-term investments $ 99,900 $ 113,681
Accounts receivable and unbilled services, net 82,101 89,880
Current portion of long-term installments receivable, net 29,268 23,643
Prepaid expenses and other current assets 12,294 10,831
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Total current assets 223,563 238,035
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Long-term installments receivable, net 33,078 36,203
Equipment and leasehold improvements, net 41,848 42,736
Computer software development costs, net 5,952 5,696
Intangible assets, net 11,703 12,857
Other assets 6,602 7,355
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Total assets $ 322,746 $ 342,882
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 842 $ 2,187
Accounts payable and accrued expenses 26,123 38,545
Unearned revenue 7,316 6,008
Deferred revenue 20,501 17,888
Deferred income taxes 541 541
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Total current liabilities 55,323 65,169
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Long-term debt, less current maturities 90,376 90,635
Deferred revenue, less current portion 12,825 15,074
Other liabilities 539 914
Deferred income taxes 6,076 6,074
------------------ -----------------
Total stockholders' equity 157,607 165,016
------------------ -----------------
Total liabilities and stockholders' equity $ 322,746 $ 342,882
================== =================
</TABLE>
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