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Aspen Technology Announces Financial Results For The Second Quarter Of Fiscal 2013

Stocks in this article: AZPN

Forward-Looking Statements

The second and third paragraphs of this press release contain forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may vary significantly from AspenTech’s expectations based on a number of risks and uncertainties, including, without limitation: AspenTech’s failure to develop new software products, enhance existing products and services, or penetrate new vertical markets; demand for, or usage of, aspenONE software declines for any reason; unfavorable economic and market conditions or a lessening demand in the market for process optimization software; risks associated with operations outside the United States; weaknesses in AspenTech’s internal controls; and other risk factors described from time to time in AspenTech’s periodic reports filed with the Securities and Exchange Commission. AspenTech cannot guarantee any future results, levels of activity, performance, or achievements. AspenTech expressly disclaims any current intention to update forward-looking statements after the date of this press release.

 
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share data)
             
Three Months Ended Six Months Ended
December 31, December 31,
2012 2011 2012 2011
Revenue:
Subscription and software $ 59,457 $ 46,502 $ 113,537 $ 78,412
Services and other   17,852     20,053     35,229     39,368  
Total revenue   77,309     66,555     148,766     117,780  
Cost of revenue:
Subscription and software 3,100 2,622 6,290 5,346
Services and other   9,273     10,303     18,421     21,400  
Total cost of revenue   12,373     12,925     24,711     26,746  
Gross profit   64,936     53,630     124,055     91,034  
Operating expenses:
Selling and marketing 23,303 22,318 44,894 45,764
Research and development 15,039 12,767 30,805 26,536
General and administrative 11,671 11,490 24,439 27,377
Restructuring charges   (6 )   14     34     (59 )
Total operating expenses   50,007     46,589     100,172     99,618  
Income (loss) from operations 14,929 7,041 23,883 (8,584 )
Interest income 955 2,034 2,054 4,265
Interest expense (116 ) (1,015 ) (373 ) (2,107 )
Other expense, net   (57 )   (425 )   (334 )   (2,457 )
Income (loss) before provision for (benefit from) income taxes 15,711 7,635 25,230 (8,883 )
Provision for (benefit from) income taxes   5,774     3,799     10,880     (983 )
Net income (loss) $ 9,937   $ 3,836   $ 14,350   $ (7,900 )
Net Income (loss) per common share:
Basic $ 0.11 $ 0.04 $ 0.15 $ (0.08 )
Diluted $ 0.10 $ 0.04 $ 0.15 $ (0.08 )
Weighted average shares outstanding:
Basic 93,512 93,902 93,470 93,983
Diluted 95,463 96,267 95,541 93,983
 
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share data)
         
December 31, June 30,
2012 2012
 
ASSETS
Current assets:
Cash and cash equivalents $ 175,224 $ 165,242
Accounts receivable, net 39,531 31,450
Current portion of installments receivable, net 20,923 33,184
Collateralized receivables - 6,297
Unbilled services 1,006 1,592
Prepaid expenses and other current assets 7,990 16,219
Prepaid income taxes 133 283
Current deferred tax assets   6,770     7,196  
Total current assets   251,577     261,463  
Non-current installments receivable, net 8,089 14,046
Property, equipment and leasehold improvements, net 7,727 7,037
Computer software development costs, net 1,618 1,689
Goodwill 19,851 19,399
Non-current deferred tax assets 49,173 58,559
Other non-current assets   7,403     6,142  
Total assets $ 345,438   $ 368,335  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Secured borrowings $ - $ 10,756
Accounts payable 4,502 2,566
Accrued expenses and other current liabilities 29,248 37,989
Income taxes payable 295 598
Current deferred revenue 141,538 143,578
Current deferred tax liabilities   232     232  
Total current liabilities   175,815     195,719  
Non-current deferred revenue 50,358 43,595
Other non-current liabilities 14,968 15,429
Commitments and contingencies
Series D redeemable convertible preferred stock, $0.10 par value—
Authorized— 3,636 shares at December 31, 2012 and June 30, 2012
Issued and outstanding— none at December 31, 2012 and June 30, 2012 - -
Stockholders’ equity:
Common stock, $0.10 par value— Authorized—210,000,000 shares
Issued— 98,294,064 shares at December 31, 2012 and 96,663,580 shares at June 30, 2012
Outstanding— 93,615,934 shares at December 31, 2012 and 93,465,955 shares at June 30, 2012 9,829 9,666
Additional paid-in capital 559,983 547,546
Accumulated deficit (380,729 ) (395,079 )
Accumulated other comprehensive income 8,702 8,095
Treasury stock, at cost—4,678,130 shares of common stock at December 31, 2012 and 3,197,625 at June 30, 2012   (93,488 )   (56,636 )
Total stockholders’ equity   104,297     113,592  
Total liabilities and stockholders' equity $ 345,438   $ 368,335  
 
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
         
Three Months Ended Six Months Ended
December 31, December 31,
2012 2011 2012 2011
Cash flows from operating activities:
Net income (loss) $ 9,937 $ 3,836 $ 14,350 $ (7,900 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 1,370 1,281 2,687 2,693
Net foreign currency (gain) loss (183 ) (57 ) (304 ) 1,218
Stock-based compensation 3,453 3,071 7,768 6,779
Deferred income taxes 5,636 3,044 9,858 (2,310 )
Provision for bad debts 65 (553 ) 162 (403 )
Other non-cash activities 25 - 28 13
Changes in assets and liabilities:
Accounts receivable (16,852 ) (13,662 ) (7,957 ) (8,068 )
Unbilled services 568 1,294 606 1,905
Prepaid expenses, prepaid income taxes, and other assets 1,462 (419 ) 5,905 768
Installments and collateralized receivables 14,071 18,399 25,101 26,728
Accounts payable, accrued expenses, income taxes payable and other liabilities 4,750 (1,694 ) (8,503 ) (8,592 )
Deferred revenue   11,377     8,467     4,439     15,449  
Net cash provided by operating activities   35,679     23,007     54,140     28,280  
Cash flows from investing activities:
Purchase of property, equipment and leasehold improvements (767 ) (536 ) (2,567 ) (922 )
Insurance proceeds - - 2,222 -
Purchase of technology intangibles - - (527 ) -
Capitalized computer software development costs   (435 )   (192 )   (435 )   (392 )
Net cash used in investing activities   (1,202 )   (728 )   (1,307 )   (1,314 )
Cash flows from financing activities:
Exercise of stock options and warrants 5,072 1,874 9,120 4,106
Proceeds from secured borrowings - 3,574 - 4,982
Repayments of secured borrowings (5,616 ) (18,188 ) (11,010 ) (20,420 )
Repurchases of common stock (19,689 ) (11,068 ) (36,852 ) (20,240 )
Payment of tax withholding obligations related to restricted stock   (2,312 )   (582 )   (4,288 )   (1,769 )
Net cash used in financing activities (22,545 ) (24,390 ) (43,030 ) (33,341 )
Effects of exchange rate changes on cash and cash equivalents   (71 )   10     179     (355 )
Increase (decrease) in cash and cash equivalents 11,861 (2,101 ) 9,982 (6,730 )
Cash and cash equivalents, beginning of period   163,363     145,356     165,242     149,985  
Cash and cash equivalents, end of period $ 175,224   $ 143,255   $ 175,224   $ 143,255  
 
Supplemental disclosure of cash flow information:
Income tax paid (refunded), net $ 778 $ (293 ) $ 1,812 $ 338
Interest paid 116 1,015 373 2,107
 
 
ASPEN TECHNOLOGY, INC. AND SUBSIDIARIES
GAAP Results Reconciled to Non-GAAP Results
The following table reflects selected Aspen Technology GAAP results reconciled to non-GAAP results.

(Unaudited and in thousands, except per share data)

             
Three Months Ended

December 31,

Six Months Ended

December 31,

2012 2011 2012 2011

Total expenses

GAAP total expenses (a) $ 62,380 $ 59,514 $ 124,883 $ 126,364
Less:
Stock-based compensation (b) (3,453 ) (3,071 ) (7,768 ) (6,779 )
Restructuring charges 6 (14 ) (34 ) 59
Amortization of purchased intangibles (199 ) - (302 ) -
                       
Non-GAAP total expenses         $ 58,734     $ 56,429     $ 116,779     $ 119,644  
 

Income (loss) from operations

GAAP income (loss) from operations $ 14,929 $ 7,041 $ 23,883 $ (8,584 )
Plus:
Stock-based compensation (b) 3,453 3,071 7,768 6,779
Restructuring charges (6 ) 14 34 (59 )
Amortization of purchased intangibles 199

 

- 302 -
                       
Non-GAAP income (loss) from operations         $ 18,575     $ 10,126     $ 31,987     $ (1,864 )
 

Net income (loss)

GAAP net income (loss) $ 9,937 $ 3,836 $ 14,350 $ (7,900 )
Plus:
Stock-based compensation (b) 3,453 3,071 7,768 6,779
Restructuring charges (6 ) 14 34 (59 )
Amortization of purchased intangibles 199 - 302 -
Less:
Income tax effect on Non-GAAP items (c) (1,316 ) (941 ) (2,926 ) (1,970 )
                       
Non-GAAP net income (loss)         $ 12,267     $ 5,980     $ 19,528     $ (3,150 )
 

Diluted income (loss) per share

GAAP diluted income (loss) per share $ 0.10 $ 0.04 $ 0.15 $ (0.08 )
Plus:
Stock-based compensation (b) 0.04 0.03 0.08 0.07
Restructuring charges - - - -
Amortization of intangible assets - - - -
Less:
Income tax effect on Non-GAAP items (c) (0.01 ) (0.01 ) (0.03 ) (0.02 )
                       
Non-GAAP diluted income (loss) per share         $ 0.13     $ 0.06     $ 0.20     $ (0.03 )
 
Shares used in computing diluted income (loss) per share 95,463 96,267 95,541 93,983
 
(a) GAAP total expenses
Three Months Ended

December 31,

Six Months Ended

December 31,

  2012     2011     2012     2011  
Total costs of revenue $ 12,373 $ 12,925 $ 24,711 $ 26,746
Total operating expenses   50,007     46,589     100,172     99,618  
GAAP total expenses $ 62,380 $ 59,514 $ 124,883 $ 126,364
 
(b) Stock-based compensation expense was as follows:
Three Months Ended

December 31,

  Six Months Ended

December 31,

  2012     2011     2012     2011  
Cost of services and other $ 316 $ 314 $ 659 $ 617
Selling and marketing 972 1,229 1,949 2,399
Research and development 742 353 1,483 701
General and administrative   1,423     1,175     3,677     3,062  
Total stock-based compensation $ 3,453 $ 3,071 $ 7,768 $ 6,779
 
(c) The income tax effect on Non-GAAP items for the three and six months ended December 31, 2012 is calculated utilizing an estimate of our future effective tax rate.




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