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Aspen Technology, Inc. ("AspenTech") has many registered trademarks including aspenONE and Aspen Plus. All other trademarks, trade names and service marks appearing in this Transition Report on Form 10-KT are the property of their respective owners.
We approved a change to our fiscal year end from September 30 to June 30. References to a specific fiscal year are the nine-month period ended June 30, 2022 ("fiscal 2022"), and our fiscal years 2021 and 2020 are for the twelve months ended September 30, 2021 and September 30, 2020 unless otherwise noted.
Explanatory Note
On May 16, 2022 (the “Closing Date”), the transaction contemplated by the Transaction Agreement and Plan of Merger, as amended by Amendment No. 1, dated as of March 23, 2022 (as it may be further amended from time to time, the “Transaction Agreement”) was consummated between Aspen Technology, Inc. ("Heritage AspenTech") and Emerson Electric Co. (“Emerson”) and certain of its subsidiaries, pursuant to which, among other matters, Emerson and its subsidiaries contributed Heritage AspenTech shareholders $6,014,000,000 in cash and its Open Systems International, Inc. business (the "OSI business") and Geological Simulation Software business, which we have renamed as Subsurface Science & Engineering (the “SSE business”) in exchange for 55% of our outstanding common stock (on a fully diluted basis) (the “Transaction”). The combined business of Heritage AspenTech, the OSI business and the SSE business are referred to herein as “New AspenTech.”
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Transition Report on Form 10-KT and documents incorporated by reference herein contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 ("Securities Act") and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” "may,” “potential,” “should,” “target,” "would," or the negative of these terms or other similar words. These statements are only predictions and are based on current expectations of management. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our, our customer’ or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements, to differ. “Item 1. Business,” “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as other sections in this Transition Report on Form 10-KT, discuss some of the factors that could contribute to these differences. The forward-looking statements made in this Transition Report on Form 10-KT relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in “Item 1A. Risk Factors.” You should read this Transition Report on Form 10-KT completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Item 1. Business.
Overview
We are a global leader in asset optimization software that enables industrial manufacturers to design, operate, and maintain their operations for maximum performance. We combine decades of modeling, simulation, and optimization capabilities with industrial operations expertise and apply advanced analytics to improve the profitability and sustainability of production assets. Our purpose-built software is proven to drive value creation for our customers; improving operational efficiency and maximizing productivity, reducing unplanned downtime and safety risks, and minimizing energy consumption and emissions.
Our technology is at the center of our customers' sustainability and decarbonization programs, enabling circularity through improved industrial technologies and more degradable and recyclable plastics, and supporting the broader energy transition with advanced solutions for power transmission and distribution, carbon capture, storage and utilization, batteries and energy storage. Cybersecurity is foundational in the design of our software.
Emerson Transaction
On May 16, 2022, we consummated the Transaction. The Transaction has been accounted for as a business combination in accordance with U.S. GAAP, with the OSI business and the SSE business combined treated as the acquirer and Heritage AspenTech treated as the acquiree. By combining the software capabilities, deep domain expertise and leadership of Heritage AspenTech with the OSI and SSE businesses, we have created a company that we believe will deliver superior value to
customers across diverse end markets including energy, chemicals, power transmission and distribution, engineering, procurement, construction, pharmaceuticals, and metals and mining, among others.
About AspenTech
Heritage AspenTech was founded over 40 years ago with a focus on industrial process efficiency and optimization. As a global leader in asset optimization software, Heritage AspenTech combines decades of modeling and operations expertise with big data, artificial intelligence, and advanced analytics. Heritage AspenTech’s unique asset lifecycle approach and market-leading solutions help customers achieve new levels of efficiency, accelerate innovation and reduce emissions and waste, without compromising safety.
Heritage AspenTech has developed its applications to design and optimize industrial operations across three principal business areas: engineering, manufacturing and supply chain, and asset performance management. Heritage AspenTech is the recognized technology leader in providing process optimization and asset performance management software for each of these business areas. With its mission to digitally transform the industries we serve by optimizing their assets to run safer, greener, longer and faster, we believe that Heritage AspenTech is also a global leader in helping companies achieve their sustainability goals while achieving operational excellence.
Customers use our solutions to help advance sustainability technology pathways in improving resource efficiencies, such as energy, water or feedstock; supporting energy transition and decarbonization initiatives, including integrating renewable and alternative energy sources, such as biofuels; innovating new approaches for the hydrogen economy and carbon capture; and, enabling recycling efficiencies for waste reduction throughout operations with advanced simulation and scale-up solutions.
OSI Business (Digital Grid Management)
Our OSI business offers operational technology (OT) solutions that enable electric, gas, and water utilities and asset operators to manage and optimize the digital grid, incorporating all types of generation, industrial cogeneration, transmission, distribution, and microgrids. Our OSI business’ systems are also crucial in expanding electrification as the world’s power demand is anticipated to double by 2050 under International Energy Agency (IEA) and U.S. Energy Information Administration (EIA) scenarios. Utilities, industry, and institutions use OSI solutions to transform and digitize the grid to seamlessly incorporate renewable energy and storage, to achieve reliability, maximize cybersecurity, and minimize peak loading.
Our OSI business' energy management solution (EMS) monitors, controls, and optimizes the increasingly interconnected transmission networks and generation fleets to manage grid stability and ensure security and regulatory compliance. Our advanced distribution management solution (ADMS), distributed energy resource management solution (DERMS) and Outage Management offerings provide system resiliency, efficiency, and safety by monitoring, controlling and modeling the distribution network as utilities seek to increase reliability, predict and react to increasingly dynamics supply and demand patterns, resolve outages faster and in a more automated manner, and manage field service digitally.
SSE Business (Subsurface Science & Engineering)
Our SSE business is a global provider of geoscience and modeling software for optimization across subsurface engineering and operations. With over 30 years of technology leadership in geophysics, petrophysics, geological and reservoir modeling, SSE software empowers decision makers to reduce uncertainty, improve confidence, minimize risk, and support responsible asset management. Used extensively by the global energy industry, SSE solutions also have applications that extend into geothermal energy and carbon capture and storage.
Our SSE business provides end-to-end workflows from seismic analysis and interpretation to reservoir and production simulation and from asset appraisal to operational planning and execution, to optimize production and utilization and minimize energy use, water use, and fugitive emissions. SSE software is also employed to screen and assess oil and saline aquifer reservoirs for CO2 sequestration and to monitor CO2 storage.
Change in Fiscal Year
In connection with the Transaction, we approved a change in our fiscal year end from September 30 to June 30. Our results of operations, cash flows, and all transactions impacting shareholders' equity presented in this Transition Report on
Form 10-KT are for the nine-month period ended June 30, 2022 ("fiscal 2022" or "fiscal year 2022"), and our fiscal years 2021 and 2020 are for the twelve months ended September 30, 2021 and September 30, 2020 unless otherwise noted.
Industries We Serve: Challenges and Opportunities
Our primary customers are in capital-intensive industries, including the Energy market (Oil & Gas Exploration & Production or Upstream; Oil & Gas Processing & Distribution or Midstream, and Downstream Refining and Marketing); Bulk & Specialty Chemicals; Power Transmission & Distribution, Engineering & Construction; Metals & Mining, and Pharmaceuticals. These capital-intensive industries consist of companies that operate complex assets to produce and distribute a wide range of end products that are critical to society and quality of life. Examples include:
•manufacture of finished products by applying a controlled chemical process either to a raw material that is fed continuously through the facility or to a specific batch of raw material;
•management and operation of an increasingly complex electrical grid resulting from the growth in renewable power sources; and
•production of mined resources and their processing to produce the finished metal.
Capital-intensive industry characteristics and dynamics are complex, and the scale of operation is very large; therefore, any small improvement in their design, operation, or reliability, can have a significant impact on the efficiency of the assets and productivity of the personnel. As a result, operators, as well as the engineering and construction firms that partner with them, have extensive technical requirements and need sophisticated, integrated software to help design, operate and maintain their complex assets. The unique characteristics associated with operations and manufacturing create special demands for business applications that frequently exceed the capabilities of generic software packages and tools.