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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1 TO
FORM 10-K/A
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 000-24786
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ASPEN TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 04-2739697
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
TEN CANAL PARK 02141
CAMBRIDGE, MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 949-1000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)OF THE ACT: COMMON STOCK,
$.10 PAR VALUE PER SHARE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of September 20, 1999, the aggregate market value of Common Stock (the
only outstanding class of common equity of the registrant) held by nonaffiliates
of the registrant was $249,425,489 , based on a total of 24,041,011 shares of
Common Stock held by nonaffiliates and on a closing price of $10.375 for the
Common Stock as reported on the Nasdaq National Market.
As of September 20, 1999, 25,174,385 shares of Common Stock were
outstanding.
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The undersigned registrant hereby amends the following item of its Annual
Report on Form 10-K for the fiscal year ended June 30, 1999, as filed by the
registrant on September 28, 1999, as set forth in the pages attached hereto:
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INTRODUCTORY NOTE
This Amendment No. 1 on Form 10-K/A amends the registrant's Annual Report
on Form 10-K for the fiscal year ended June 30, 1999, as filed by the registrant
on September 28, 1999, and is being filed principally to reflect changes in the
name of one of the registrant's software products and in the lists of platforms
on which several of the registrant's software products can operate. All of the
changes are set forth under the headings "Item 1. Business -- Software and
Service Solution -- Focused Solutions."
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ASPEN PLUS, ASPENTECH, MIMI, RT-OPT and SPEEDUP are registered trademarks
of the Company, and 1STQUALITY, ASPEN ADVISOR, ASPEN PIMS, BATCH PLUS, CIMVIEW,
CIMWORK, DMCPLUS, DYNAPLUS, INFOPLUS.21, OTISS and PLANTELLIGENCE are trademarks
of the Company.
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This Amendment on Form 10-K/A contains "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, which are intended to be covered by the safe
harbors created thereby. For this purpose, any statements contained herein that
are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," and similar expressions are intended to identify
forward-looking statements. Readers are cautioned that all forward-looking
statements involve risks and uncertainties, many of which are beyond our
control, including the factors set forth under "Item. 1A. Risk Factors" in the
Form 10-K amended hereby. Although we believe that the assumptions underlying
the forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate and there can be no assurance that actual
results will be the same as those indicated by the forward-looking statements
included in this Amendment on Form 10-K/A. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our objectives and plans will be achieved. Moreover, we
assume no obligation to update these forward-looking statements to reflect
actual results, changes in assumptions or changes in other factors affecting
such forward-looking statements.
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PART I
ITEM 1. 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 enterprises. The process industries include manufacturers of
petroleum products, petrochemicals, polymers, specialty chemicals,
pharmaceuticals, pulp and paper, electric power, food and beverages, consumer
products, metals and minerals and semiconductors. We offer a comprehensive set
of focused solutions, integrated plant-wide solutions and enterprise
optimization solutions that help process manufacturers enhance profitability by
improving efficiency, productivity, capacity utilization, safety and
environmental compliance throughout the entire manufacturing life-cycle, from
research and development to engineering, planning and scheduling, procurement,
production and distribution. In addition to our software solutions, we offer
systems implementation, advanced process control, real-time optimization and
other consulting services through our staff of more than 460 project engineers.
As part of our strategy to offer the broadest, most integrated suite of process
manufacturing enterprise optimization solutions, we have acquired businesses
from time to time to obtain technologies and expertise that complement or
enhance its core solutions. We currently have more than 1,000 customers
worldwide, including 46 of the 50 largest chemical companies, 22 of the 25
largest petroleum refiners and 16 of the 20 largest pharmaceutical companies.
INDUSTRY BACKGROUND
Companies in the process industries manufacture products in the form of
bulk solids, liquids, gases, powders, and films by using production methods
involving chemical reactions, combustion, mixing, separation, heating, cooling
and similar processes. The process industries encompass manufacturers of
petroleum products, petrochemicals, polymers, specialty chemicals,
pharmaceuticals, pulp and paper, electric power, food and beverages, consumer
products, metals and minerals and semiconductors. Companies in a number of other
industries, also utilize production techniques with characteristics similar to
those underlying process manufacturing.
In recent years, companies in the process industries have faced several
challenges, which have placed increased pressure on their profitability. These
challenges include intensifying global competition, growth, fluctuating
commodity prices, and more stringent environmental and safety regulations. The
industry has responded to these challenges in several ways. First, they have
rationalized and globalized their production processes through acquisitions,
divestitures, mergers and joint ventures. Second, they have reduced their
overhead expenses by re-engineering the work processes that support their
business and downsizing their supporting organizations. Third, they have
invested in information technology to support reengineered business processes.
The profitability of these companies depends substantially upon the costs
of raw materials, energy and capital; accordingly, the management and
utilization of these inputs significantly affect the companies' financial
results. Unlike labor-intensive businesses, which can materially change the
scale of their business operations by adjusting the sizes of their labor forces,
process manufacturers must focus on improving their production methods in order
to increase output, lower costs and reduce waste. Because of the large volumes
typically produced by process manufacturers, even a relatively small reduction
in raw material or energy requirements or a relatively small improvement in
throughput or product yields can have a dramatic impact on the profitability of
the manufacturing process.
Improvement of production methods in the process industries requires a
thorough understanding of chemical engineering analysis, the fundamental
discipline underlying the manufacturing processes. Due to the number of
variables involved, chemical engineering analysis is complex and calculation
intensive. Because of this complexity and because many process manufacturers
have significantly reduced their engineering staffs, many process manufacturers
are seeking technology-based solutions to aid them in their process
manufacturing decisions, with the objective of moving toward optimization of
their production processes and manufacturing enterprises under existing process
and equipment constraints.
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Increasingly sophisticated process manufacturing optimization solutions
have been introduced to assist process manufacturers in optimizing the design,
operation and management of their manufacturing processes and to help them
coordinate and optimize multiple manufacturing facilities across their
enterprise. In designing manufacturing processes, engineers use tools on desktop
computers to simulate a new or existing process and to optimize tradeoffs
between variables such as capital investment and operating costs. During
operation of the manufacturing process, plant operators rely on automation
systems installed in the plant to control and optimize the manufacturing process
by, for example, accepting a lower yield to increase overall throughput. To
manage the production process, plant managers use information systems to perform
tasks such as planning and scheduling of production, analysis and reporting of
performance, and yield accounting. To optimize multiple manufacturing facilities
planners use supply chain management systems that help them optimize and manage
their production facilities throughout the enterprise. Although early versions
of process manufacturing optimization solutions were limited in scope and
complicated to use, the availability of increasingly powerful, affordable
computers and networks and sophisticated intuitive graphical user interfaces has
expanded the capabilities of the solutions and the market of potential users.
Process manufacturing optimization solutions include applications to
address a broad range of manufacturing activities, including the following:
<TABLE>
<CAPTION>
DESIGN OPERATE MANAGE
<S> <C> <C>
Process Modeling Advanced Process Control Process Information Management
Design Analysis & Optimization Real-time Optimization Production Scheduling &
Process Improvements Operator Training Planning
Plant Retrofits Quality Assurance
Supply Chain Management
Environmental, Health & Safety
Compliance
</TABLE>
Many process manufacturers have implemented solutions to automate processes
outside the actual methods of production. For many years, companies in the
process industries have sought to control their production processes by
deploying 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. More recently,
process manufacturers have automated key business processes through the
implementation of enterprise resource planning, or ERP, solutions that enhance
their ability to manage resources across the enterprise and enable them to
integrate front- and back-office business functions. DCS and ERP solutions
generally do not, however, incorporate the detailed chemical engineering
knowledge of the manufacturing process or data on the performance of the plant
either to optimize the operation and management of the production process, or
manage relationships with suppliers and customers.
Process manufacturers are increasingly seeking a complete, integrated
family of process manufacturing optimization software products and services that
can be used to improve their efficiency and productivity throughout the entire
manufacturing life-cycle, while at the same time establishing links with the
process manufacturers' existing DCS and ERP solutions and with their customers
and suppliers.
THE ASPENTECH ADVANTAGE
We are the leading supplier of software and service solutions that enable
companies in the process industries to optimize the design, operation and
management of their manufacturing processes and business enterprises. Our
comprehensive suite of solutions helps process manufacturers enhance
profitability by improving efficiency, productivity, capacity utilization,
safety and environmental compliance throughout the entire manufacturing
life-cycle. We believe our customers increasingly view their investments in our
solutions as strategic because of the substantial potential economic benefits
these solutions offer and the broad range of production issues they address. Our
competitive advantage is based on the following key attributes:
TECHNOLOGY LEADERSHIP. We believe we are the technology leader among
providers of process manufacturing optimization solutions. We have achieved this
technology leadership through internal research and development, strategic
acquisitions, and partnerships. For example, we obtained the leading advanced
process control and optimization technologies through our acquisitions of
Dynamic Matrix Control Corporation and
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Setpoint, Inc. in 1996. In 1997, we introduced Batch Plus, a commercialized
version of recipe-based simulation functionality developed in collaboration with
Merck & Co., Inc. We have integrated acquired technologies with existing
products in order to offer solutions that include the best features and
functionality of both. Moreover, we have designed our software solutions to
operate on all major operating system platforms used by process manufacturers
and to be compatible with all major distributed control systems.
BROADEST SUITE OF INTEGRATED SOLUTIONS. We believe our solutions represent
the most complete suite of integrated software and services available for the
design, operation and management of manufacturing processes in the process
industries. Process manufacturers are able to use our solutions across every
stage of the manufacturing life-cycle, from research and development to
engineering, planning and scheduling, procurement, production and distribution.
We are continuing to integrate our software products in order to further
increase the ability of our customers to share models and data across our
different software solutions. In October 1997, we announced the introduction of
Plantelligence, the name for our integrated suite of plant-wide best-in-class
products. Plantelligence is based on the Aspen Framework, software which serves
as a base for integrating our products so they work together in ways that
support specific business processes such as production planning or purchasing
raw material feedstocks. Plantelligence is being further developed to permit,
for example, a buyer for a petroleum refinery to determine how much it will cost
to refine a specific boatload of crude oil under then-current operating
conditions. This information can then be used to help the buyer decide whether
it is economically desirable to purchase that crude oil at then-prevailing
prices. The buyer can perform these analyses using a single graphical user
interface, without needing to understand our individual software solutions used
to perform the analysis. In August 1999, we announced the successful completion
of a technically complex Plantelligence implementation at Equistar's Matagorda
County, Texas facility.
UNPARALLELED PROCESS INDUSTRY EXPERTISE. Over the past 18 years, we have
established a reputation as a leading source of process manufacturing enterprise
optimization expertise. Our significant base of chemical engineering and process
manufacturing experience and knowledge serves as the foundation for the
proprietary solution methods, physical property models and data estimation
techniques embodied in our software solutions. We have enhanced our knowledge
and understanding of process manufacturing optimization solutions over time
through extensive interaction with our customers, which have performed millions
of simulations using our software. These customer relationships have also
enabled us to identify and develop or acquire solutions that best meet the needs
of our customers. To complement our software expertise, we have assembled a
staff of more than 460 project engineers to provide implementation, advanced
process control, real-time optimization and other consulting services to our
customers. We believe our large engineering team provides an important source of
competitive differentiation.
LARGE INSTALLED CUSTOMER BASE. We currently have more than 1,000 customers
worldwide, including 46 of the 50 largest chemical companies, 22 of the 25
largest petroleum refiners and 16 of the 20 largest pharmaceutical companies. We
also have leading customers in other vertical markets such as consumer products,
electric power, pulp and paper, metals and minerals and semiconductors. In
addition, all of the leading engineering and construction firms use our design
software. We consider our relationships with our existing customers to be an
important competitive advantage.
STRATEGY
Our principal objective is to extend our leadership in providing enterprise
optimization solutions for process manufacturers that allow them to optimize the
design, operation and management of their manufacturing processes and
enterprises. The industries we serve produce products that touch people every
day, such as the gasoline that fuels automobiles, the clothes people wear, and
the medicines that improve people's health. By helping process manufacturers
optimize their enterprises we believe we can help improve the quality of some of
these basic products in a way that preserves the environment and makes these
products
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available to greater numbers of people worldwide. Our strategy to achieve these
objectives includes the following key elements:
MAINTAIN OUR LEADERSHIP POSITION IN FOCUSED TECHNOLOGIES. We believe that
we offer the most technologically advanced solutions available for the design,
operation and management of manufacturing processes, particularly in the areas
of process simulation, advanced process control, real-time optimization,
scheduling and planning, process information management and supply chain
management. In order to extend the technological leadership of our individual
software solutions, we intend to continue to recruit and develop outstanding
technical talent, to focus on understanding customer needs, to keep abreast of
technological advances in software and communications and engineering, and to
focus on creating products that are easy to use. We will continue to invest in
research and development and to prioritize product development in accordance
with market needs and with our strategy. From time to time we may pursue
strategic acquisitions of complementary technologies and expertise. We believe
that the use of our individual software solutions in recent years has provided
process manufacturers with increased evidence of the economic benefits that may
be obtained from implementation of these focused solutions.
PROVIDE INTEGRATED PLANT-WIDE SOLUTIONS AND ENTERPRISE OPTIMIZATION. We
believe that process manufacturers can derive substantial additional value
through the integration of our focused solutions. Our strategy is to integrate
our focused solutions to support business processes that cut across many
disciplines both within the plant and across the manufacturing enterprise. In
many situations business processes involve multiple uses of our focused
solutions. For example, in a specialty chemical plant one of the business
processes is to create the production schedule for the coming week. This
business process might involve the our supply chain management products to solve
the scheduling problem, and our simulation and production accounting
technologies to generate data about the status of inventories. By integrating
these technologies and using consistent data and models the planner can perform
the business process more efficiently and accurately without an in-depth
understanding of each of the supporting focused solutions. We believe that
integrated solutions provide value for customers in many ways, including
improving human performance, improving plant performance, increasing product
quality and lowering information technology costs. We continue to invest in the
integration of our products. Specifically, one development effort, the Aspen
Framework, is designed to integrate all of our products. The Aspen Framework is
based on Microsoft Distributed InterNet Architecture, or DNA. We believe we are
well positioned to offer integrated solutions because we own many of the leading
technologies in the industry and can therefore make the required changes in each
of these products needed to achieve an integrated solution.
CONTINUE THE DEVELOPMENT AND IMPLEMENTATION OF THE ASPEN FRAMEWORK. We
plan to continue to develop and implement the Aspen Framework as the backbone of
our Plantelligence solution. The Aspen Framework enables integration between a
plant's enterprise resource planning system, our products and existing plant
software systems. The Aspen Framework is built on the Microsoft DNA and
simplifies the deployment of complex solutions by integrating a plant's
manufacturing and business processes. As customers increasingly demand
integration of their technology to support integrated business and manufacturing
processes, the Aspen Framework will be available as the technology base to
enable this integration.
FOCUS ON OUR CORE VERTICAL MARKETS. We believe that our customers' needs
vary significantly across vertical industries. In order to achieve the full
benefits of our focused and integrated solutions, we believe that we will need
to offer solutions that are tailored to the needs of our customers within
specific vertical industries. In December 1998 we created four industry business
units to facilitate the creation of vertically-focused solutions for several of
the markets we serve. These industry business units will focus on refining,
chemicals and petrochemicals, polymers, and life sciences and specialty
chemicals. Our strategy is to define and deliver the integrated solution for
each major vertical industry that we serve. We plan to create initial
first-of-a-kind implementations of our integrated technologies and then refine
and develop our strategy for penetrating each vertical market in conjunction
with our partners. The implementation of our Plantelligence solution at
Equistar's Matagorda County, Texas polymer production facility in August 1999 is
an example of a first-of-a-kind implementation.
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EXPAND OUR NETWORK OF PARTNERS. We plan to expand our network of partners
to assist in the sale and implementation of our integrated plant solutions and
enterprise optimization solutions. We expect this effort will include working
with our customers, hardware vendors, complementary software vendors, business
consultants, process licensors, engineering and construction firms, and systems
integrators. We believe that these business partners will be helpful in
developing, selling, implementing and maintaining our solutions. For example, we
have entered into an alliance agreement with Equistar Chemicals, L.P., Lyondell
Chemical Company, and BP Amoco, p.l.c. for enterprise optimization, a partnering
agreement with Yokagawa Electric Corporation for the provision of optimization
solutions to their customers, and collaboration and partnering agreements with
OLI Systems, Refining Process Services, Inc., SRI Consulting and Intergraph
Corporation for the provision of software solutions.
INCORPORATE THE INTERNET IN SOLUTION DEVELOPMENT, SALE AND DELIVERY. We
believe that the Internet is an important component of the development, sale and
delivery of our focused solutions, Plantelligence, and enterprise optimization
solutions. Some of our software products, including the Aspen Framework, are
already web-enabled, and a product development web initiative has been
undertaken to direct the web-enablement of our solutions. A core part of our
Internet strategy is the development of electronic commerce, or e-commerce, to
market, sell and deliver our products over the Internet through our website and
the websites of our partners and complementary technology providers. We
currently offer customers the ability to download software patches from our
website as part of customer support and we are developing additional on-line
technical support as part of the enhancement of our customer support service. We
believe that the Internet will enable our customers to use our technology on a
collaborative basis within their own enterprise, and with their suppliers and
customers, and are otherwise exploring new business models which may be made
possible by the Internet.
SOFTWARE AND SERVICE SOLUTIONS
We offer a comprehensive suite of software and service solutions that
enable process manufacturers to optimize their enterprises and the design,
operation and management of their manufacturing processes. Our solutions capture
process knowledge in consistent, accurate and reliable models that customers can
use as the basis for decision-making across the entire manufacturing life-cycle
and provide vital functionality for elements of the manufacturing process that
other software applications, such as ERP and DCS software, do not address. A
number of our software solutions can be linked with ERP solutions and DCS to
improve a customer's ability to gather, analyze and use information across the
entire process manufacturing life-cycle. To enable our customers to take full
advantage of our software solutions, we also offer comprehensive expert
consulting, training and support services. Our solutions can be grouped into
three categories: focused solutions, integrated plant solutions and enterprise
optimization solutions. Our strategy is to provide a migration path for our
customers. So, for example, a customer can start with a single AspenTech focused
solution, add additional focused solutions, integrate these solutions through
our services and integrated products, and finally incorporate our supply chain
solution and optimize their business processes to achieve enterprise
optimization. This migration path provides a means by which each customer can
implement and absorb technology and improve their business processes at their
own rate in accordance with their own pressures and business environment. The
following descriptions explain each of our three product categories in greater
detail.
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FOCUSED SOLUTIONS. We refer to our individual products and services as our
focused solutions, which allow process manufacturers to improve specific aspects
of the design, operation and management of their manufacturing enterprises.
These products are the building blocks for our integrated plant solutions and
enterprise optimization solutions. In many cases these technologies are the
market leaders. The reputation of these products for quality and leading-edge
technology has been a hallmark of our history. The following tables describe our
principal focused software solutions and their applications for the design,
operation and management of manufacturing enterprises:
DESIGN:
<TABLE>
<CAPTION>
SOFTWARE SOLUTION DESCRIPTION APPLICATIONS
- ----------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Aspen Plus.......... Rigorous steady-state modeling Used to design processes, evaluate
system for simulating chemical or process changes and analyze
petroleum based manufacturing "what-if" scenarios.
processes involving vapors,
liquids, solids and electrolytes
with a library of equipment and
physical property models.
Aspen Dynamics/Aspen Rigorous modeling system for Used to examine process
Custom Modeler.... simulating processes under operability, safety and control as
changing (dynamic) conditions with operating parameters fluctuate
a library of equipment and during plant startup and shutdown
controller models. and other transient conditions.
Batch Plus.......... Batch process modeling system for Used to scale-up and design new
recipe-based processes. processes, and to analyze the
production of one batch or an
entire batch plant.
Aspen Zyqad......... System for integrating, automating Used to integrate and automate
and managing data, applications work flow between engineers
and activities in the engineering designing new process plants or
work process. improving existing facilities.
</TABLE>
We also provide an integrated suite of process design and modeling
technology, known as the Aspen Engineering Suite or AES. AES is comprised of
eight of our products, including Aspen Plus and Aspen Zyqad.
Layered on top of these core, focused solutions are a number of separately
licensed modules that focus on specialized types of analysis for modeling
polymer processes, heat exchanger equipment, separation systems, batch
distillation columns, adsorption processes and other complex systems. All of
these process design software solutions can operate in Windows. Aspen Plus also
runs on DEC VMS and UNIX.
We typically license our process design software solutions for a term of
three to five years. The annual cost for a single user of one of our process
design software solutions ranges from $10,000 to $30,000, depending on the
solution, the license term and the number of licensed users. The license fee
includes a separate maintenance component that covers customer support,
upgrades, revisions and enhancements during the term of the license.
Implementation of our process design software solutions does not typically
require substantial consulting services, although services may be provided for
customized model designs and process synthesis.
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OPERATION:
<TABLE>
<CAPTION>
SOFTWARE SOLUTION DESCRIPTION APPLICATIONS
- ----------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Aspen RT-Opt.. Real-time optimization system. Used to identify optimal plant
setpoints in order to maximize
operating margins on a real-time
basis.
Aspen IQ...... Inferential sensor modeling and Used to infer infrequently measured
online implementation technology. properties from continuous
measurements for environmental
monitoring and advanced control.
DMCplus....... Advanced process control system using Used to tightly control actual plant
multi-variable model-predictive operations at multiple operating
control technology. constraints.
OTISS......... System for developing operator Used to train operators to better
training simulators. manage daily plant operations and
respond to abnormal situations.
</TABLE>
Aspen RT-Opt operates on Windows, DEC VMS and UNIX. DMCplus operates on
Windows, DEC VMS and UNIX. OTISS operates on UNIX, Hewlett-Packard and Sun
Solaris.
We typically license our process operation software solutions for terms of
99 years. The list price for a 99-year license of Aspen RT-Opt or DMCplus
generally ranges from $50,000 to $200,000, depending on the solution and on
whether the license covers a single process unit or an entire facility. The list
price for a 99-year license of OTISS is approximately $50,000. Maintenance of
process operation software solutions is available under separate contracts.
Implementation of our process operation software solutions typically
requires substantial consulting services.
MANAGEMENT:
<TABLE>
<CAPTION>
SOFTWARE SOLUTION DESCRIPTION APPLICATIONS
- ----------------- ---------------------------------- ----------------------------------
<S> <C> <C>
InfoPlus.21...... Process information management Used to compare real-time and
system with a real-time database historical information generated
of historical information. by plant systems to present a
unified view of plant operations.
Aspen MIMI....... Supply chain management system, Used to identify best supply chain
including demand management, decisions to maximize asset
inventory control and utilization, minimize raw material
available-to-promise. costs, maximize product values and
control inventories.
Aspen PIMS....... Linear programming-based economic Used to identify short-term and
planning and scheduling system. strategic decisions on feedstock
purchases, capacity utilization
and production planning.
Aspen Advisor.... Yield-accounting solution. Used to track inventory and
material movements into, through
and out of processing plants, in
order to enable manufacturers to
report production data accurately
to ERP and other business systems.
1stQuality....... System to address issues in Used to integrate the management,
polymer manufacturing. usage and monitoring of operating
conditions to reduce transition
time, improve product consistency
and monitor process compliance.
</TABLE>
All of our process management software solutions can operate in Windows.
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We typically license InfoPlus.21, MIMI, Aspen Advisor and 1stQuality for
terms of 99 years and typically license Aspen PIMS for a term of 5 years or 25
years. The list price for an entry-level 99-year InfoPlus.21 license is
approximately $40,000 and varies depending on the number of points of data being
collected. The list price for an entry-level 99-year multi-user site license for
Aspen MIMI is approximately $220,000. The list price for a license of Aspen PIMS
modules ranges from $10,000 to $200,000, depending on the solution and the
license term. The list price for an entry-level 99-year Aspen Advisor license
ranges from $100,000 to $200,000, depending on the number of nodes, and the list
price for an entry-level 99-year 1stQuality license is approximately $150,000
per plant.
Implementation of our process management software solutions typically
requires consulting services, although not to the same extent as process
operation software solutions.
INTEGRATED PLANT SOLUTIONS. Our suite of integrated plant solutions, which
are marketed under the Plantelligence name, enables process manufacturers to
drive their plant operations to higher levels of profitability. Plantelligence
incorporates our focused solutions, and uses the Aspen Framework as a vehicle
for integrating these products so they work together to support specific
business processes. The Aspen Framework facilitates integration of our products
by allowing the various applications to communicate with common databases of
design information, real-time information and documents. The Aspen Framework is
based on Microsoft DNA technology and includes web-enabled features such as XML
and Active Server pages. Plantelligence is designed to integrate with a plant's
hardware systems, enterprise resource planning system, and existing information
technology systems to optimize operation of the plant.
By uniting our products in a common framework, Plantelligence provides a
comprehensive set of business improvements to process plants. We believe the
benefits of integration are an essential part of helping process manufacturers
become more competitive. Integration of the focused technologies enables process
manufacturers to integrate the design, operation and management of their process
plants. Integrating the technologies which support business processes can help
process manufacturers align their people, their resources, and their business
processes to drive their manufacturing enterprises to higher levels of
productivity and overall performance. The value of this integration is enhance
through the ability of different technology products to share the model of the
manufacturing process. By running plants on consistent models that reflect true
economic, chemical and physical constraints, manufacturers obtain the critical
knowledge they need to develop, execute and evaluate their manufacturing plan
and make improvements with each production cycle.
ENTERPRISE OPTIMIZATION. Our enterprise optimization solutions build on
Plantelligence with the addition of our supply chain technology and management
of changed business processes. We believe customers can run their enterprises
more efficiently and effectively by utilizing our integrated technologies to
tightly link their manufacturing operations to the management of their business
with their suppliers and customers. Our enterprise optimization solutions enable
customers with a wide array of manufacturing plants and assets to coordinate
their operations and enable their plants to work together toward common
operating and business goals.
In many cases manufacturing facilities have been overlooked as companies
pursued large business process reengineering projects over the last decade. To a
large extent, the manufacturing plants continue to act as silos that maximize
their own efficiency and productivity. However, as the process industries become
increasingly global and interconnected, we believe that process manufacturers
will need to change their business processes at the plant so that they can
optimize their entire manufacturing enterprise rather than the specific plants
that comprise their enterprise. Our enterprise optimization solutions are
designed to enable process manufacturers to adapt to rapid changes in demand and
their business environment, to respond quickly to these changes, act as a single
enterprise, optimize use of resources, meet customer requirements and operate
more profitably.
CONSULTING SERVICES. We offer implementation, advanced process control,
real-time optimization and other consulting services in order to provide our
customers with complete solutions. Customers can frequently use our focused
process design software solutions without assistance from us or our partners.
However, many of the projects in which customers deploy our focused process
operation software solutions and process management software solutions are
sufficiently complex that customers require assistance from us and our
9
<PAGE> 11
partners in order to take full advantage of the benefits of those solutions. Our
integrated plant solutions and enterprise optimization solutions also require
assistance from us and our partners.
Customers that obtain consulting services from us typically engage us to
provide such services over periods of between 1 day and 24 months. We generally
charge customers for consulting services on a fixed-price basis, but charge
customers for certain services, primarily on-site advanced process control and
optimization services, on a time-and-materials basis.
We employ a staff of more than 460 project engineers to provide consulting
services to our customers. We believe this large team of experienced and
knowledgeable project engineers provides an important source of competitive
differentiation. We primarily hire as project engineers individuals who have
obtained doctoral or master's degrees in chemical engineering or a related
discipline or who have significant relevant industry experience. Our employees
include experts in fields ranging from thermophysical properties, distillation,
adsorption processes, polymer processes, industrial reactor modeling, the
identification of empirical models for process control or analysis, large-scale
optimization, supply distribution systems modeling and scheduling methods.
Historically, most licensees of our planning and scheduling solutions and a
limited number of licensees of our process information management and supply
chain management systems have obtained implementation consulting services from
third-party vendors. Our strategy is to continue to develop and expand
relationships with third-party consultants in order to provide a secondary
channel of consulting services to support our process management software
solutions and to provide complementary services.
ACQUISITIONS OF SOFTWARE AND SERVICE SOLUTIONS. As part of our strategy to
offer the broadest, most integrated suite of software and service solutions for
the design, operation and management of manufacturing processes, from time to
time we acquire businesses to obtain technologies and expertise that complement
or enhance our core solutions. We typically combine acquired technologies with
our pre-existing products in order to offer solutions that include the best
features and functionality of both. We provide an upward migration path and
support for any discontinued products.
We have completed 17 acquisitions that have provided us with, or
significantly enhanced, our capabilities in the areas of process information
management, advanced process control and optimization, advanced planning and
scheduling, and supply chain management. We have successfully integrated the
operations of these acquired businesses. The following table describes
AspenTech's acquisitions to date:
<TABLE>
<CAPTION>
BUSINESS ACQUIRED DATE ACQUIRED SOLUTION ACQUIRED OR ENHANCED
- ----------------- ------------------ ------------------------------------
<S> <C> <C>
Prosys Technology Limited................. October 16, 1991 SPEEDUP
Industrial Systems, Inc................... May 25, 1995 Components of InfoPlus.21
Dynamic Matrix Control Corporation........ January 5, 1996 Components of DMCplus and Aspen
RT-Opt
Setpoint, Inc............................. February 9, 1996 Components of DMCplus, Aspen RT-Opt
and InfoPlus.21
B-JAC International, Inc.................. October 1, 1996 Heat exchanger modeler
Process Control Division of Cambridge
Control Limited......................... October 8, 1996 Consulting service capabilities for
advanced process control and
optimization
Basil Joffe Associates, Inc. and PIMS
division of Bechtel Corporation......... December 31, 1996 Aspen PIMS
NeuralWare, Inc........................... August 27, 1997 Neural network technology and tools
integrated with Aspen Plus, DMCplus
and InfoPlus.21
The SAST Corporation Limited.............. August 28, 1997 OTISS and consulting service
capabilities
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
BUSINESS ACQUIRED DATE ACQUIRED SOLUTION ACQUIRED OR ENHANCED
- ----------------- ------------------ ------------------------------------
<S> <C> <C>
Cimtech S.A./N.V.......................... February 27, 1998 Components of InfoPlus.21
Contas Process Control S.r.L. ............ February 27, 1998 Consulting service capabilities for
advanced process control and
optimization
IISYS, Inc................................ March 6, 1998 Aspen ADVISOR
Zyqad Limited............................. March 16, 1998 Aspen Zyqad
Chesapeake Decision Sciences, Inc......... May 27, 1998 Aspen MIMI
Treiber Controls, Inc..................... May 29, 1998 Software and consulting service
capabilities for advanced process
control and optimization
Process Optimization and Emissions
Monitoring Division of Callidus
Technologies, Inc. ..................... September 14, 1998 Consulting services capabilities for
process optimization and predictive
emissions monitoring
Syllogistics, Inc. ....................... October 14, 1998 Logistics management software
</TABLE>
TECHNOLOGY AND PRODUCT DEVELOPMENT
Our software and services solutions combine three of our core competencies:
our sophisticated modeling capabilities based on fundamental chemical
engineering principles, our extensive experience with a broad variety of
manufacturing processes in the chemicals, petrochemicals, petroleum,
pharmaceuticals, and other industries, and our understanding of how to optimize
and streamline key business processes in these same industries. Our technology
enables customers to optimize the business processes involved in three main
value chains: process innovation, supply chain, and manufacturing operations.
To deliver business process optimization software we focus our product
development in three areas. First, we build software that enables our customers
to model and manage their manufacturing process. We support sophisticated
empirical models generated from advanced mathematical algorithms developed by
our employees. In addition, we support rigorous models of chemical manufacturing
process and the equipment used in those manufacturing processes. We believe that
the development and refinement of highly accurate empirical and rigorous models
such as those developed by us require a deep understanding both of the
fundamental chemistry underlying the manufacturing process and the technology of
modeling. Our models employ advanced mathematical algorithms developed by our
employees and others, such as the dynamic matrix control algorithm for
multi-variable, model-based predictive control and the inside-out algorithm for
simulating distillation. We have used these advanced algorithms to develop
proprietary models that provide highly accurate representations of the chemical
and physical properties of a broad range of materials typically encountered in
the chemicals, petroleum, and other process industries. Second, we develop
software which models key customer work processes and automates the workflow of
these processes. This software integrates our broad product line such that the
data used in the work process is seamlessly passed between the applications used
in each step of the business process. In addition, we have a unique user
interface that intuitively guides the user through the business process. Third,
we are investing significantly in supply chain and data management software.
This software embeds sophisticated optimization technology allowing customers to
optimize their entire corporate supply chain and manufacturing activities. In
addition, this software embeds key knowledge about the details of how
manufacturing and supply chain operations in the process industry function.
Our product development activities are currently focused on strengthening
the integration of our key products, expanding the set of business processes our
software covers, exploiting web technology, and enhancing and simplifying the
user interface. As of June 30, 1999, we employed a product development staff of
more than 290 persons.
11
<PAGE> 13
CUSTOMERS
Our software solutions are installed at more than 1,000 customers
worldwide. The following table sets forth a selection of our customers, whose
agreements with us produced at least $250,000 in fees to AspenTech in fiscal
1998 or 1999:
CHEMICALS AND PETROCHEMICALS
Air Products & Chemicals, Inc.
Allied Signal, Inc.
BASF AG
Bridgestone/Firestone, Inc.
Borealis Exploration Limited
Celanese
Condea Vista Company
DSM N.V.
The Dow Chemical Company
E.I. du Pont de Nemours & Company, Inc.
Elf Atochem
Equistar Chemicals LP
Formosa Petrochemical Corp.
Huntsman Corporation
Kuraray Co., Ltd.
Messer Griesheim GmbH
Mitsubishi Chemical Corporation
Mitsui Chemicals
Nova Chemicals, Ltd.
PCS Systemtechnik GmbH
Reliance Industries Ltd.
Repsol S.A.
Sasol Industries (Pty.) Ltd.
Shell International Chemie Mij B.V.
Sinopec
Union Carbide Chemicals and Plastics Company, Inc
Westlake Management Services Corporation
LIFE SCIENCES AND SPECIALTY CHEMICALS
AstraZeneca
Aventis Research & Technologies
Bayer Corporation
Cabot Corporation
E.I. du Pont de Nemours & Company, Inc.
Eli Lilly
Engelhard Corporation
Genentech, Inc.
Hercules, Inc.
Hoffman-LaRoche, Inc.
Imperial Chemical Industries plc
Merck & Co., Inc.
Novartis Pharma A.G.
Owens Corning
SmithKline Beecham Pharmaceutical
UCB Chemicals
REFINING, OIL AND GAS
AB OMV
Abu Dhabi National Oil Company
Agip Petroli S.p.A.
Amoco Corporation
Arco Products Company
Bharat Petroleum co. Ltd.
BP Amoco plc
Chevron Corporation
Citgo Petroleum Corporation
Conoco Inc
Equilon Enterprises LLC
Exxon Company U.S.A.
Kuwaiti National Petroleum Company
Lyondell Citgo Refining Company Ltd.
Magyar Olaj LS
Mobil Oil Corporation
Motiva Enterprises LLC
Pemex Gas y Petroquimica Basica
Petroleos de Venezuela, S.A.
Phillips Petroleum Company
Repsol Petroleo SA
Shell Oil Company
Star Enterprise
Statoil
Sunoco Inc.
Total-Fina
Valero Refining Company
CPG AND FOODS AND BEVERAGES
Ben & Jerry's Homemade, Inc.
Cargill, Incorporated
General Mills, Inc.
Nestle S.A.
Procter & Gamble
Unilever plc
SEMICONDUCTORS
Mitsubishi Silicon America
Motorola, Inc.
Rockwell Semiconductor Systems
Vishay Silconix
12
<PAGE> 14
METALS AND MINERALS
Alcoa of Australia, Ltd.
Gulf States Steel, Inc.
LTV Corporation
Nippon Steel Chemical Co., Ltd.
Sollac S.A.
Wabash Alloys
ENGINEERING AND CONSTRUCTION
ABB Lummus
Bechtel Group
Chiyoda Corporation
Fluor Corporation
Foster Wheeler Corporation
Jacobs Engineering Group Inc.
Johnson Matthey plc
Kellogg Brown & Root/Halliburton
Kvaerner E & C
Linde AG
Lurgi AG
Raytheon Engineers & Constructors
Snamprogetti SpA
Technip Italy SpA
PULP AND PAPER
Buckeye Cellulose Corporation
Weyerhaeuser
Consolidated Papers, Inc.
POWER AND NUCLEAR
ABB Group
Electrabel SA/NV
Electricite de France
The SGN Group
Westinghouse Electric Corporation
For fiscal 1997, 1998 and 1999, international revenues accounted for
approximately 50.0% 45.4%, and 53.4 %, respectively, of our total revenues. No
individual customer represented more than 10% of our total revenues in fiscal
1997, 1998 or 1999. There can be no assurance that any of the customers listed
above will continue to license software or purchase services from us beyond the
term of any existing agreement.
SALES AND MARKETING
We employ a value-based sales approach, offering customers a comprehensive
suite of software and service solutions that enhance the efficiency and
productivity of their process manufacturing operations. We have increasingly
focused on selling our solutions as a strategic investment by our customers and
therefore targets our principal sales efforts at senior management levels,
including chief executive officers and senior decision-makers in manufacturing,
operations and technology.
Because the complexity and cost of our solutions often result in a sales
cycle of between six and nine months, we believe that the development of
long-term, consultative relationships with our customers is essential to a
successful selling strategy. To develop these relationships, we have organized
our worldwide sales force by industry and have appointed a single sales account
manager to be responsible for our relationship with each customer. In order to
market the specific functionality and other complex technical features of our
software solutions, each sales account manager leads a specialized team of
regional account managers, technical sales engineers and product specialists
organized for each sales and marketing effort. Our technical sales engineers
typically have advanced degrees in chemical engineering or related disciplines
and actively consult with the customer's plant engineers who would be the
ultimate users of our solutions. Product specialists share their detailed
knowledge of the specific features of our software solutions. Each sales team
also includes participants from our business development group who determine the
scope and price of service solutions offered to customers.
We believe that our seasoned direct sales force, consisting of more than
100 individuals as of June 30, 1999, and our ability to sell at senior levels
within customer organizations are important competitive advantages. We have
established direct sales offices in key geographic areas where there are high
concentrations of potential business, including New Jersey, Texas, Brussels,
Cambridge (England), Dusseldorf, Hong Kong, Paris, Singapore and Tokyo. In
geographic areas of lower customer concentration, we use sales agents and other
resellers to leverage our direct sales force and to provide local coverage and
first-line support.
We also supplement our direct sales efforts with a variety of marketing
initiatives, including public relations activities, campaigns to promote
awareness among industry analysts, user groups and our triennial conference,
AspenWorld. AspenWorld has become a prominent forum for industry participants,
including process manufacturing executives and analysts, to discuss emerging
technologies and other process engineering solutions and to attend seminars led
by industry experts. The AspenWorld 97 conference, held in
13
<PAGE> 15
October 1997, attracted more than 1,400 participants. The AspenWorld 2000
conference has been scheduled to be held in February 2000.
We also license our software solutions at a substantial discount to
universities that agree to use its solutions in teaching and research. We
believe that students' familiarity with our solutions will stimulate future
demand once the students enter the workplace. Currently, more than 550
universities use our software solutions in undergraduate instruction.
COMPETITION
We face three primary sources of competition: commercial vendors of
software products for one or more elements in the design, operation and
management of manufacturing processes; vendors of hardware that offer software
solutions in order to add value to their proprietary distributed control system;
and large companies in the process industries that have developed their own
proprietary software solutions. We believe that suppliers of individual software
solutions are under intensifying pressure to offer integrated functionality
beyond their traditional applications and that, at the same time, process
manufacturers are increasingly concluding that it is no longer efficient or
economical for them to continue to develop or support internally developed
software. Certain competitors also supply related hardware products to our
existing and potential customers and may have established relationships that
afford those competitors an advantage in supplying software and services to
those customers. We believe, however, that customers prefer to select
best-in-class software solutions, independent of their selection of underlying
industrial automation hardware platforms. We do not offer our solutions with any
particular hardware and we design our software products to operate effectively
on systems manufactured by all major hardware vendors. As the market for
manufacturing enterprise optimization solutions consolidates further, we believe
that our exclusive focus on developing and marketing best-in-class software and
services will continue to provide a competitive advantage.
Because of the breadth of its software and service offerings, we face
competition from different vendors depending on the solution in question. We
compete with respect to the largest number of its solutions with Simulation
Sciences, Inc., a subsidiary of Invensys plc. With respect to particular
software solutions, we also compete with Chemstations, Inc., AEA Technology
Engineering Software (a subsidiary of AEA Technology plc), OSI Software, Inc.,
The Foxboro Company and Wonderware Corporation (both of which are subsidiaries
of Invensys plc), the Simcon division of ABB Asea Brown Boveri (Holding) Ltd.,
and several smaller competitors, such as Pavilion Technologies, Inc. With
respect to its supply chain management solutions we compete with vendors such as
i2 Technologies, Inc. and Manugistics Group, Inc.
A number of vendors of ERP software products, such as Baan Company N.V.,
J.D. Edwards Inc., Oracle Corporation, PeopleSoft, Inc. and SAP A.G., are
expanding their presence in the market for supply chain management solutions via
internal research and development, acquisitions and sales and marketing
agreements with independent vendors of supply chain management solutions. We
expect to encounter increasing competition from these companies and from DCS
vendors, such as Honeywell Inc., as they expand their software and service
offerings to include additional aspects of process manufacturing.
In recent years, there has been consolidation in the markets in which we
compete that has expanded the breadth of product and service offerings by
certain of our competitors, such as the acquisitions by Invensys plc of
Simulation Sciences, Inc. the Foxboro Company and Wonderware Corporation. 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
with which we collaborate on other occasions, such as Honeywell Inc. and
Invensys plc. There can be no assurance that our efforts to compete and
cooperate simultaneously with these or other companies will be successful. The
further consolidation of existing competitors or the emergence of new
competitors could have a material adverse effect on our business, operating
results and financial condition.
Our continued success depends on our ability to compete effectively with
our commercial competitors and to persuade our prospective customers to use our
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 can be no assurance that we will be able to maintain our
competitive position.
14
<PAGE> 16
INTELLECTUAL PROPERTY
We regard our software as proprietary and 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. We
have United States patents for the expert guidance system in our proprietary
graphical user interface, the simulation and optimization methods in our
optimization software, a process flow diagram generator in our planning and
scheduling software, and a process simulation apparatus in our polymers
software. We have registered or applied to register certain of our significant
trademarks in the United States and in certain other countries.
We generally enter into non-disclosure agreements with our employees and
customers, and historically have restricted access to our software products'
source codes, which we regard as proprietary information. In a few cases, we
have provided copies of the source code for certain products to customers solely
for the purpose of special customization of the products and have 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, we rely
on nondisclosure and other contractual provisions to protect our proprietary
rights.
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 the
laws of the United States. The laws of many countries in which we license our
products protect trademarks solely on the basis of registration. We currently
possesses a limited number of trademark registrations in certain foreign
jurisdictions and do not possess, and have not applied for, any foreign
copyright or patent registrations. In fiscal 1997, 1998 and 1999, we derived
approximately 50.0%, 45.4% and 53.4% of our total revenues, respectively, from
customers outside the United States.
There can be no assurance that the steps taken by us to protect our
proprietary rights will be adequate to deter misappropriation of our technology
or independent development by others of technologies that are substantially
equivalent or superior to our technology. Any such misappropriation of our
technology or development of competitive technologies could have a material
adverse effect on our business, operating results and financial condition. We
could incur substantial costs in protecting and enforcing our 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 us. In such an event, we 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 we pay damages or obtain
a license of a third party's proprietary rights in order to continue licensing
our products as currently offered or, if such a license is required, that it
will be available on terms acceptable to the Company.
We believe that, due to the rapid pace of innovation within the industry,
factors such as the technological and creative expertise of our personnel, the
quality of our products, the quality of our technical support and training
courses, and the frequency of software product enhancements are more important
to establishing and maintaining a technology leadership position within the
industry than the various legal protections for our software products and
technology. See "Item 1A. Risk Factors -- Dependence on Proprietary Technology."
EMPLOYEES
As of June 30, 1999, we had a total of 1,448 full-time employees. None of
our employees is represented by a labor union. We have experienced no work
stoppages and believe that our employee relations are good.
While we substantially expanded the breadth and depth of our management
team in recent years, our future success depends to a significant extent on the
continued service of Lawrence B. Evans, the principal founder of AspenTech and
our Chairman and Chief Executive Officer, our other executive officers, and
certain engineering, technical, managerial, sales and marketing personnel. We
believe that our future success will also depend on our continuing ability to
attract, motivate and retain additional highly skilled engineering, technical,
managerial and marketing personnel. Competition for such personnel is intense,
and there can be no assurance that we will be successful in attracting,
assimilating and retaining the personnel we require to continue to grow and
operate profitably.
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<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Cambridge, Commonwealth of Massachusetts, as of October 4, 1999.
ASPEN TECHNOLOGY, INC.
By: /s/ LAWRENCE B. EVANS
------------------------------------
Lawrence B. Evans
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of October 4, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ LAWRENCE B. EVANS Chairman of the Board and Chief Executive
- -------------------------------------------------------- Officer (Principal Executive Officer)
Lawrence B. Evans
* Chief Financial Officer
- -------------------------------------------------------- (Principal Financial and Accounting Officer)
Lisa W. Zappala
* Director
- --------------------------------------------------------
Joseph F. Boston
* Director
- --------------------------------------------------------
Gresham T. Brebach, Jr.
* Director
- --------------------------------------------------------
Douglas R. Brown
* Director
- --------------------------------------------------------
Joan C. McArdle
* Director
- --------------------------------------------------------
Alison Ross
*By: /s/ LAWRENCE B. EVANS
---------------------------------------------------
Lawrence B. Evans
Attorney-in-Fact
</TABLE>
16
