Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2012 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Mr. Mark Sullivan, Chief Financial Officer. Sir, you may begin your conference.

Okay, thank you, operator. Good afternoon, everyone, and thank you for joining us to review our fourth quarter and full year fiscal 2012 results for the period ended June 30, 2012. I'm Mark Sullivan, CFO of AspenTech. And with me on the call today is Mark Fusco, President and CEO. Before we begin, I will make the usual Safe Harbor statement, that during the course at this call, we may make projections or other forward statements about the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from such projections or statements. Factors that might cause such differences include, but are not limited to, those discussed in today's call and in our Form 10-K for the fiscal year 2012, which is now on file with the SEC. Also, please note that the following information is related to our current business conditions and our outlook as of today, August 21, 2012. Consistent with our prior practice, we expressly disclaim any obligation to update this information. The structure of today's call will be as follows: I'll begin with a review of our financial results for the fourth quarter and fiscal year, and then Mark will discuss some additional business highlights before we open up the call for Q&A. Let me begin by reviewing the supplemental metrics that we provide. Starting with our term contract value, or TCV metric, which measures the renewal value of our multiyear term contracts. Growing TCV is a key focus for us, and we increase the value of the metric by adding customers, expanding product usage and increasing prices across our customer base. Our license-only TCV was $1.46 billion at the end of the quarter, which was up 14.5% compared to the end of fiscal 2011, and up 4.6% on a sequential basis. As a reminder, beginning in fiscal 2010, maintenance is generally included as part of our subscription and term contracts. Including the value of bundled maintenance, total term contract value was $1.68 billion at the end of the quarter, which was up 17.7% compared to the end of fiscal 2011 and up 5.4% sequentially. Our annual spend, which is a proxy for the value of our recurring term license business at the end of each period, specifically, the annualized value of our term license and maintenance revenue, was approximately $304 million at the end of the quarter, which is an increase of approximately 12.7% on a year-over-year basis and 4.4% sequentially. As a reminder, the growth of our annual spend metric should be slightly lower than the growth of our license TCV metric. License TCV is calculated using each contract's terminal year annual payment, and therefore takes into consideration the total price escalation over the course of a multiyear time period, whereas annual spend only takes into consideration the current year's level of spend. Future cash collections is the sum of the company's billings backlog, accounts receivable and the undiscounted value of installments and collateralized receivables. The company's future cash collections at the end of the fourth quarter were $888 million, an increase from $841 million at the end of last quarter and $791 million at the end of the year-ago period. The largest component of our future cash collections is billings backlog, which was $799 million at the end of the quarter, an increase from the $739 million level at the end of last quarter and $641 million at the end of the year-ago period. We've shared for the past year that billings backlog in future cash collections were transitory metrics, introduced at the launch of our new aspenONE subscription model. To help provide investors with increased visibility into our future cash flow potential and to provide support that we could scale our cash flow from the $30 million range to the mid-$90 million range in just a few years. As I'll review in greater detail in a few minutes, our fiscal year 2012 free cash flow was $100 million. As such, and consistent with our disclosure for the past year, there's no longer a need to provide billings backlog and future cash collections starting with the first quarter of fiscal 2013. Now let me turn to our financial results on a GAAP basis. Total revenue of $64 million, was up 22% from $52.6 million in the prior-year period, and exceeded the high end of our guidance range. Looking at revenue by line item, subscription and software revenue was $45.8 million for the fourth quarter, which is an increase from $28.7 million in the prior-year period and $42.4 million last quarter. In order to provide further transparency into our consolidated subscription and software line, we provide additional details on the components within subscription and software that will have quarter-to-quarter variability. During the fourth quarter, we had $2.1 million of revenue related to legacy term license arrangements not recognized on a daily basis, and approximately $100,000 related to perpetual license agreements. Our growing subscription business positively impacts our deferred revenue balance, which was $187.2 million at the end of the fourth quarter, representing a 45% increase compared to the end of the year-ago period. Finally, services and other revenue was $18.2 million compared to $23.9 million in the year-ago period, and $18.9 million last quarter. Consistent with our previous commentary, maintenance revenue is increasingly being reported within the subscription revenue line and as more contracts are converted to the aspenONE licensing model. As a result, we continue to expect the run rate in our services and other revenue line to be variable quarter-to-quarter, but trend downward as our revenue model transition completes. Turning to profitability. Gross profit was $50.9 million in the quarter, with a gross margin of 80%, which compares to $37.5 million and a gross margin of 71.2% in the prior-year period. Operating expenses for the quarter were $54.5 million. Total GAAP costs, including costs of revenue, were $67.6 million, which was down from $71 million in the year-ago period. Expenses were up from $64.2 million last quarter due to typical expense seasonality at the end of the fiscal year, including increased sales compensation. For the year, total operating expenses were $258.1 million, which was below the low end of our guidance range. With a long history of solid expense management and it's something that we'll remain focused on as we move forward. Operating loss was $3.6 million for the fourth quarter of fiscal 2012, an improvement compared to an operating loss of $18.3 million in the year-ago period. Net loss for the quarter was $5.4 million, or $0.06 per share compared to a net income of $41.7 million or $0.43 per share in the fourth quarter of fiscal 2011. However, recall that our fourth quarter fiscal 2011 net income was positively impacted by a $57.3 million net tax benefit related to the reversal of a valuation allowance against our deferred tax assets. Turning to non-GAAP results. Excluding the impact of stock-based compensation expense, restructuring charges, and amortization of intangibles associated with acquisitions, we reported a non-GAAP operating loss for the fourth quarter of $859,000, and a non-GAAP net loss of $3.5 million. This represents an improvement from a non-GAAP operating and net loss of $16.1 million and $19 million, respectively, in the year-ago period. Our non-GAAP loss per share was $0.04 in the fourth quarter of fiscal 2012, based on 93.6 million basic shares outstanding, compared to a non-GAAP loss per share of $0.20, based on 96.6 million diluted shares outstanding in the fourth quarter of fiscal 2011. The difference in shares on a year-over-year basis was due to the fact that we reported a GAAP profit in the fourth quarter last year, and therefore, we used fully diluted share count. A reconciliation of GAAP to non-GAAP results is provided in the tables within our press release, which is also available on our website. For the full fiscal year, revenue was $243.1 million. It was 23% higher on a year-over-year basis. GAAP operating loss of $15 million improved from a loss of $54.6 million in fiscal 2011, while non-GAAP operating loss of $2.8 million improved from $45.1 million in fiscal 2011. We expect continued improvement across these metrics in fiscal 2013, as we complete the fourth year of our 5- to 6-year revenue model transition. Turning to the balance sheet and cash flow. The company ended the fourth quarter with $165.2 million in cash, a decrease of $17.3 million from the end of the prior quarter. We used $14 million of cash to repurchase common shares during the fourth quarter and continue to reduce our secured borrowings balance, as I'll detail in a moment. From a cash flow perspective, the company generated $21.7 million of cash from operations during the fourth quarter, and $18.6 million of free cash flow, bringing the full year total to $104.6 million in cash from operations and approximately $100 million in free cash flow, both of which were above our guidance. Free cash flow grew from $58.5 million in fiscal 2011. The company once again did not sell any receivables to raise cash during the fourth quarter of fiscal 2012, and we ended the quarter with total secured borrowings of approximately $11 million, which was down $22.6 million compared to the end of the third quarter. We expect that we will fully retire our secured borrowings during fiscal 2013, which will be another milestone event highlighting the successful transformation of the company's business model. Finally, I'd like to mention that, as you know, a few weeks ago, we issued a press release announcing the favorable resolution of our arbitration with ATME, our former reseller in the Middle East. We were pleased to receive the news that the arbitrators not only found that AspenTech rightfully terminated the reseller agreement, but also that our former reseller owed AspenTech $25 million in damages and interest. We have not recorded any amount associated with this settlement in our financial statements. We do not plan to do so until we have received a payment. And currently, we do not have any visibility as to when that might happen. Most significant is that this process is now behind us, and we can enhance our focus on running the business, serving our customers and gaining market share in this region of the world. With that, let me turn it over to Mark Fusco. Mark?

Thanks, Mark, and thanks to everyone for joining us today. The fourth quarter was a strong finish to a record year for AspenTech. We outperformed across each metric that we guided to for fiscal 2012. Revenue, expense management, total license contract value growth and free cash flow. In the 3 years since we introduced our new licensing model, we have successfully transformed the company into one with a highly attractive financial profile that is characterized by recurring revenue, attractive growth rates and very strong free cash flow generation. In addition, when our revenue model transition is completed, we expect our P&L to display best-in-class profit margins as well. During fiscal 2012, our free cash flow reached $100 million for the first time in the company's history, and represented more than $1 per share. This was a full year ahead of our original goal. We are also very pleased by the trends we are seeing in total license contract value. While we have not guided to accelerating growth in our business historically, and we did not when we established guidance for fiscal 2013, the fact is, total license contract value growth increased from 10% in fiscal 2010 to 12% in fiscal 2011, and up to 14.5% in fiscal 2012. Our performance in the fourth quarter in fiscal 2012 is particularly impressive, in light of the increasing global economic headwinds we have all read about. While no company is immune to macroeconomic pressures, our fourth quarter results are evidence that we have not seen a negative impact on our business to this point. We have shared in the past that our business does not typically experience a material increase or decrease in demand due solely to changes in economic growth. This is due to a combination of our long-term contracts, mission-critical and highly sticky applications, as well as our strong market position. Our business remains strong in our big 3 verticals and across our major product lines. Energy, chemicals and engineering and construction continued to represent 90% or more of the company's business during the fourth quarter, with the engineering and construction vertical representing our largest vertical contributor, followed closely by energy. At the end of fiscal year 2012, energy represented 39% of total license contract value, chemicals represented 27%, and engineering and construction represented 28% of our key LTV. From a geographic perspective, we do not get overly focused on quarterly results because our detailed metrics vary quarter-to-quarter based on the timing of a relatively small number of sizable transactions. That said, I can share that our business and momentum remains solid on a global basis. At the end of fiscal 2012, North America represented 43% of total license contract value. Europe represented 33%, and other international regions represented 24% of our TLCV, which further illustrates the global distribution of our business. In addition, considering the volatility in global exchange rates, it is worth pointing out that while over half of our business comes from outside of the U.S., nearly 80% of our business is based in U.S. dollars. Looking at our 10 largest transactions in the quarter, there was again a mix of engineering and manufacturing and supply chain-driven deals. Demand was solid across our major products for both the quarter and the fiscal year, with our suite of engineering solutions representing 71% of our total license contract value and our suite of manufacturing and supply chain solutions representing 29% of our TLCV at the end of fiscal 2012. This mix is influenced by the fact that we have had our manufacturing and supply chain solutions on a term model, for a shorter period of time, as compared to our engineering solutions. If we looked at the total license contract value closed during fiscal 2012, the mix was 60% engineering, and 40% manufacturing and supply chain, which again is a strong performance on both sides of the business. As we presented in detail on our Analyst Day in June, customers are embracing our aspenONE subscription licensing model, which offers customers access to all of our software modules within our product suites. We have made it simpler for our customers to adopt our market-leading solutions and to discover for themselves how products can make -- how our products can make their business more efficient. It makes our job simpler as well, if the customers already have access to all of our products. Our focus is then making them aware of the breadth of capabilities they have in their hands, what they aren't using that other are, and how we can drive improved business performance with enhanced levels of product usage. We have a growing number of examples where customers have increased their usage level at the time of moving to our new subscription licensing model, and then come back shortly afterward to pay for a higher level of usage because they're using more products within the suite and also have more users accessing our software. We still have a significant under-penetrated opportunity within our install base of customers, and we are highly focused on continuing to make our software even easier to use, to integrate workflows and business processes better across our end-to-end suite, and to deliver new functionality and capabilities, all of which contribute to increased usage among our customers. We believe that we have an attractive runway for growth and can do so in a responsible and scalable manner. In fiscal 2012, we were able to generate mid-teens TLCV growth on what was essentially a flat expense base. We expect modest expense growth in fiscal 2013. And believe that the combination of our vertical market focus, long-term contracts and new subscription model will enable us to continue running our business at a high efficiency level. With room for some additional gross margin expansion as we complete the licensing model transition, and opportunity for improved productivity in our sales force, we believe that we are well-positioned to deliver non-GAAP operating margin in the 30% to 35% range, when our revenue model transition is complete. This is consistent with our increased long-term model that we shared at our Analyst Day. We are also in an excellent position to use our significant and growing free cash flow to enhance shareholder value, to your [ph] capital returns. We repurchased nearly $50 million of AspenTech common stock during fiscal 2012, which was up from $10.5 million of share repurchases in fiscal 2011. We are mindful that the cash we generate ultimately belongs to our shareholders, and we are committed to utilizing it in ways that we believe will maximize shareholder returns. With that, I'll turn it back to Mark.

Okay. I'd like to close with some additional thoughts regarding our financial outlook for fiscal 2013, which we initially provided at our Analyst Day this past June. We're continuing to target full year fiscal 2013 revenue of $280 million to $290 million. From a mix perspective, we continue to expect the subscription and software line to be in the mid- to upper 70% range of our total revenue for the full fiscal year 2013, with our services and other line representing the remainder of our total revenue. From an expense perspective, we continue to expect total GAAP costs and expenses of approximately $265 million to $280 million for the full year. Taken together, we expect GAAP operating income in the range of $5 million of $15 million for fiscal 2013, which is an improvement on the loss of $15 million we reported from fiscal 2012. We currently expect GAAP net income of approximately $5 million to $10 million or $0.05 to $0.10 per share. From a non-GAAP perspective, we currently expect non-GAAP operating income in the range of $20 million of $30 million for full year fiscal 2013. This would lead to non-GAAP earnings per share in the range of $0.16 the $0.21 for the full fiscal year. Although we're now past the halfway point of our revenue model transition, I'd like to reiterate that our P&L is still not a meaningful indicator of our business performance and it won't be until our revenue model transition is complete in fiscal 2015. With respect to total license contract value growth, in fiscal 2013, we continue to target double-digit growth rate over fiscal 2012, and remain optimistic about our outlook based on continued high customer interest levels as we enter the new fiscal year. From a cash flow perspective, we continue to target free cash flow of $115 million, which we communicated at our Analyst Day. Our cash flow continues to be positively impacted by the underlying momentum in our business, along with our focus on expense and working capital management. We expect the same type of seasonality to our cash flow that we've seen in prior years, including fiscal 2012. We expect our free cash flow to be heavily weighted to the back half of the fiscal year, with the third quarter being the largest contributor to free cash flow. This is due to the timing of when we invoice customers and their annual payments become due. As it relates to the first quarter, we expect revenue in the range of $64 million to $66 million, non-GAAP operating income of $4 million to $6 million, and non-GAAP EPS of $0.01 to $0.02. On a GAAP basis, we expect operating income of negative $500,000 to positive $1.5 million and a loss per share of $0.01 to $0.02. To summarize, we're pleased with the underlying momentum in our business and the improving profitability and cash flow generating characteristics of the company. With that, we're now happy to take your questions. Operator, let's begin the Q&A.

[Operator Instructions] Your first question comes from Tom Ernst of Deutsche Bank.

This is Stan Zlotsky sitting in for Tom. This was the first year of the big sales force change in their incentive structure. And obviously, went very well. Any plans for any other kind of reshuffling going into fiscal '13 or is this more of a steady as she goes.

No, it's fundamentally the same. Last year at the beginning of fiscal '12, we did change the sales force compensation to a heavy growth component of the comp plans for commission purposes, and it will remain the same going forward, at least for fiscal '13.

Okay. And you mentioned there's the macro headlines and you obviously guys are not immune to it. But you certainly did a pretty good job of navigating around it. One of the worries is China slows and Asia have really sort of takes it on the header. What are your -- the companies that you're working with, what are they seeing out of Asia? And the reason I'm asking it is because the component of your revenue base that's coming from the rest of the world, it looks to me like it declined a little bit from last year as a proportion of overall revenue. So I'm just trying to figure out what's happening there.

Yes. The metric is a little bit different. From what we've given out on the past. In the past, we've given out revenue metrics and bookings metrics and things. This is the first year that we're really been fixated in giving out pure growth numbers and annual spend numbers. So the number that we gave out this year was, what is the overall percentage of the total license contract value. So that's 1 -- $1.46 billion worth of licenses that are in force and what percentage of the business came from non North America or Europe. So it's a bit of a different metric. So, it's not an apples-to-apples comparison. That said, we have very good performance in all parts of the world in fiscal '12. And so far, we're partway through the first quarter, we haven't seen any particular change in demand levels. It was a solid year across all the different geographies. We're not seeing any particular change by vertical or by the horizontal suites. So far, so good in the business. I mean it does bounce around quarter-to-quarter as we've said in our prepared remarks. But we haven't seen any buying patterns change as of yet.

Your next question comes from Brendan Barnicle of Pacific Crest Securities.

Mark, you guys of shared some ASP data at the Analyst Day. Now that the fiscal year is over, did you have anything -- any additional color you could share on how -- you mentioned some of it in your repair remarks, but any additional metrics you could share on that ASP lift or change you're seeing from the move to aspenONE?

Yes, we really -- although we do track bookings internally, it's not, and it was a very good bookings year. We don't give out the number anymore. The ASP has become a bit meaningless and we really don't keep track of it . We do keep track of how much software is sold on average by each salesperson, new business metrics and those sorts of things. We thought about, as we started the fiscal '12, whether we'd be giving out number of deals over $1 million and that sort of thing. And it really, that would drag us back into the bookings part of the world, and I don't think it really makes that much sense. So we think the metrics that we give you, Brendan, are the right ones. And as you can see from the expense line, that we have -- we are growing nicely with our, basically a flat expense structure for the past several years. And we're committed to being mindful of our expense structure and making sure that we're getting leverage across the business, while we're continuing to invest in different parts of the world where we see more opportunities. So we don't give you the ASP data anymore. I don't think it's particularly meaningful given that we don't give out bookings.

And then just a follow-up, you mentioned the strength you see -- or you hadn't seen any change in Geos or in verticals. Any color you could give us about how Pharma this quarter and then, Middle East, particularly post settlement?

Yes. Middle East, post the settlement, that's only a couple of weeks old. So that one's a relatively new one. Pharma did okay in the year. It's still a real small part of our overall business. It won't impact the financials of the business meaningfully one way or the other on a quarter-to-quarter basis. We're committed to it and we think we're going to do well with it over time, but we continue to focus on the core verticals that we serve. From a geographic perspective, as it relates to the Middle East, we did pretty well. The growth wasn't as good as we wanted it to be, as we built our team and really fully staffed out over the past year to 18 months or so. I expect that we'll start to see some accelerated growth there over time. But the rest of the verticals did well and our inside sales team did well additionally. So overall, it was very broad-based performance across the world and I kept looking for softness in different parts of the world as I read the headlines like everybody else but we didn't see them.

Your next question comes from Richard Davis of Canaccord.

It's actually DJ on the line for Richard. When we talk to our energy guys, they talk about a huge nat gas infrastructure build out driven by the shale opportunity in the U.S. So how does Aspen play into this? Is that a meaningful opportunity? Any color you could give us there.

I think, clearly, and over the past couple of years, our North American guys have seen an uptick in the business that they're doing with the natural gas companies. We are not a subsurface company, we are a surface company. So we get the benefit, as there's more drilling, there'll be more need for our software to model out, gathering networks and things. That said, we start to see and I could see the rig counts start to drop in nat gas. We've seen a huge drop in natural gas prices over the past several years. It's now bounced back into the -- almost $3 I guess now. But I think we'll see continued demand and I think it will depend on some of the politics in the country as to how this gets built out over a period of time. Our belief is that there'll be demand also, potentially, from LNG terminals, as our customers decide to try to export LNG to other parts of the world to take advantage of our cost advantage here in the United States and profit opportunity. It will be engineering and construction business and lots of other things. Clearly, we're getting the benefit of lots of interest in energy. Oil prices are pretty high, natural gas prices are low, but people believe they'll come back, and we've had major investments over the past few years in some of our customers in nat gas. So I think there'll be opportunity for us there, and we're clearly getting some benefit from that over the past several years.

Got it. And then I guess, you always talk about the business within existing accounts being meaningfully under-penetrated. I mean, when you step back and think about as the software becomes easier to use, you're going to sell it to more people within the organization. How big does it feel like, from a revenue standpoint, it could get, just within the existing customers? Is it $700 million, is it $1 billion, I mean, how do you kind of back into that map?

Without putting too fine a point on it, a number of years ago we thought we could double our business. And we still think we could still double our business with the applications that we have in the verticals that we serve. So we think we've got a good runway of business here to go after in the core markets that we serve. We'll clearly be looking at some other things and maybe expanding the footprint of things that we do with our own R&D folks and investment there and potentially through some tuck-in small acquisitions as well. So we think there's lots of opportunity to get more users using more software in the core business that we have. We think we've got lots of runway.

Your next question comes from Bhavan Suri of William Blair & Company.

Just one for you Mark, to start off with. Could you provide just some color on sort of the new customer wins? As we look at the growth in TCV, what's being driven by new customers that you're seeing in Asia and some of these emerging markets versus sort of the existing base?

As normal with Aspen and in all the different presentations we've done, we've got most of the big companies for customers and they do use some of our software. We continue to work to penetrate them. There are JVs and other things in different parts of the world, Middle East and Asia, that we're working to penetrate as well. So most of the growth of the company comes from the big customers that we have and the penetration that we have with them. We certainly get the benefit as oil prices are high and the energy business is strong. Our E&C customers benefit to greater or lesser extent. So we're really focused around the core things that we do provide [ph] and the core customers that we serve. We could see lots of open, white space there to go after. And lots of additional application use in the engineering space as well. So this is where we're focused and all the different R&D and investment that we make around making the products easier to use, making them available, building new applications and bringing them to market quickly and I think you have seen us release software on a quarterly basis, finding [ph] a material amount of new functionality has come out. We're going to continue to release software on a quarterly basis to get new apps into the hands of our customers and we just did our first little acquisition a few months ago. We're, clearly, working hard to integrate that into our product line and get that out to the customers. So we're really focused around the core customers that we serve in the verticals and we think there's lots of opportunity there.

Great, and then that just sort of piggybacks nicely to my second question, which is obviously with SolidSim, have you seen any greater traction in Pharma with that acquisition given sort of how much sort of solid process manufacturing they do? And then is it applicable to the core business too or is it largely in the Pharma?

No. It's really more of a specialty kind of chemicals and specialty chemicals focus. It's not released yet in the Aspen suite. So it's out there and there's 20 plus customers that are using the old SolidSim technology. We're not selling it at the moment. We want to sell it in the Aspen suite and have it integrated into our products. We have not given a release date but it will be soon. And we want to then get that out to our all of our core chemical customers and specialty chemical customers for their use. We're in the midst of it and it's going quite well. And we expect to release it soon. But it will be important as we -- to the core chemical business, we will sell it of course in Pharma as well. But it's really a chemical, specialty chemical play.

Okay. That's helpful. And then someone touched on this earlier about the sales comp structure. And if I recall, you changed this fiscal '11, fiscal '12, I guess, just as you look at fiscal '13 and sort of reaching over those targets to drive more growth and incentives. Is this something where you feel you're hitting a cap or a wall? Or do you think it's something that you can fine tune a little bit each year to further sort of enhance behavior?

Well, we change comp plans every year a little bit. Last year was -- beginning of fiscal '12 was a bigger comp plan change, because we went away from bookings and went to pure growth. So that was a material change of the comp. We didn't modify it too much this year. We changed things here and there. But we think we have it right. We think we have our folks in the entire company focused on growing the business, creating value and extra profit for our customers through the use of our applications. And that's the way our customers get the benefit, the salespeople get the benefit and, ultimately, the company and the shareholders get the benefit. So I think we're in alignment about how we go to market and how would compensate folks. And so we did modify it, but not too much.

Your next question from Peter Goldmacher of Cowen and Company.

Joe for Peter here. So Mark, you reversed the trend towards flat expenses for next year. What are you investing in? Can we get some color on that?

As I've mentioned a little bit earlier, you can't grow forever without some sort of increase in expenses over a period of time. That said, if you look back over a period of time, our expenses are down materially from what they were 5 or 6 years ago. And we're really modeling out modest increases in expenses. We're adding folks to the staff. For first time in -- I don't remember, it certainly [indiscernible] me, we have a university hiring program. And we hired a bunch of undergrad chemmies, computer science guys. We also hired some Masters and Ph.D.'s to supplement our staff. The company, as it's transitioned over the last few years, we really start -- now, starting to think about in the long-term, what we want the demographics of the business to look like from an employee perspective. And we thought it was the right time to start to invest in some folks out of school, change the company up a little bit. All that stuff is baked into the guidance. You would've seen probably a press release out that we opened up or about to open up a new facility, about 20 miles from here in New Hampshire. That is of course baked into the guidance and it's not all new hires. But we're keeping an eye on our expense structure, Joe. But clearly, if you're going to continue to grow and you're going to bring more and more new products and new applications to the market, it takes folks to do that. And we want to make sure that we have the right people in the right place and make sure we're investing appropriately. But it's all baked into the guidance.

The next question comes from Sterling Auty of JPMorgan.

It's Saket here for Sterling. First, Mark Sullivan, non-GAAP taxes I think came it a little bit higher than what we were expecting. I know that can bounce around a little bit, but can you just talk about anything that happened there in the quarter, and how we should model non-GAAP taxes going forward?

Well, I think it's going to be hard to model for a while. Our effective tax rate is not going to be that meaningful, because, as you say, it does bounce around. The primary driver is, at the moment, we're very close to break-even. So the normalized tax rate, they get applied to income or loss, represents a very small expense or benefit, depending on which side of breakeven you're on. And we have these small, relatively small permanent, temporary differences, things like FIN 48 and other things that sort of bounce through there that are relatively small discrete items, but it can cause variability on a quarter-to-quarter basis. So it must be very hard to -- the underlying tax rate in our business we put on in the U.S. will be 30% to 35% or so, but it will not -- it will vary around based on the discrete items.

Okay. And there was a dollar amount but maybe we should think about sort of a minimum for 2013 and 2014, was there?

No. We haven't given out anything that, that's precise. Again, we've continued to talk about the fact that our cash taxes are still relatively small number in the single-digit millions, predominantly foreign and we're not going to pay any cash taxes for another couple of years. But the reported tax rate, tax number is a bit hard to model. And we haven't given out a specific numbers.

Got it. Got it. Okay. And then as we start to model out to the completion of the model transition in fiscal '15, do you expect revenue to grow linearly to your normalized level? Or do you think there are going to be any years, whether it's '13, '14 or '15, that should grow faster because of renewals or any timing issues as such?

Well, the revenue will be a function of when we get to start taking revenue on renewed contracts. But I would say that, in general, it would be broadly speaking linear. That's not going to be precise but there's nothing really unusual if you look at the history, that's going to cause big discontinuities.

Okay. And then lastly, just to kind of clarify the target for non-GAAP operating margins, 30% to 35%. Is it feasible to reach that in the first year, where you hit normalized revenue or do think you need more scale beyond that to hit that target?

Yes. I think we pretty much said that when the revenue normalizes, we expect to be achieving those types of numbers. So that's going to be fiscal '15, when pretty much all the remnants of the revenue transition are behind us.

Your next question comes from Mark Schappel of The Benchmark Company.

Mark, at the June Analyst Day, you touched on a relatively new sales initiative at the company, that I believe targeted the small and medium-sized customers. I was wondering if you could just fill us in on a few of the more details around this initiative, such as what these customers might look at and what they might look like as far as size and characteristics?

Yes. We've got a bunch of -- we've got 300-plus big companies that drive the overall business on a quarter-to-quarter basis. We, obviously, we got about 1,500 customers, so that implies we've got over 1,000 sort of little ones. And there's small engineering and construction shops or small owner-operators and it's primarily what we're focused on selling there is our engineering suite. And we do it through a telesales force, which is new for us this year. We just started it partway through the year. They had a very good year. A very good sort of half year. We've got it kicked off around January. So it's really just the small little guys. And it's really an attempt to do 2 things: One, service them through telesales, which would be a lower cost structure and a bit more scalable; and we also have an aspenONE for small companies, which is a little bit different from what the big guys get. They don't need all the products, et cetera. So we do things a little bit differently in that space, but it was a good first start and we are very pleased with how it went and we believe we were right in doing it, but we're still in early days.

The next question comes from Richard Williams of Cross Research.

Could you guys give us a little color on which parts of your footprint you'd be investing in as opposed to making tuck-in acquisitions?

Really, part of it depends on what's available. We look at a whole bunch of companies and we've said we're focused on smaller, tuck-in technology acquisitions like the SolidSim one that we did, which fits nicely with us. There may or may not be a company available to be purchased and we certainly look at a whole bunch of them and talk to lots of folks. And then there are some other things that in all parts of the suite, whether it's the engineering suite or the manufacturing supply chain suite, where there are things that we don't do that other companies do that we may want include in our suite and we'll build it ourselves if we think it's the right thing to do. So I guess it's partly opportunistic and partly strategic, depending on what we feel the investment will be on either side and how quickly we want to take it to market, et cetera. So we're a bit opportunistic about it. But I guess we would say we generally have a bias to build as opposed to buy. But there are going to be some things that we don't have knowledge of and folks that we're interested in being part of our company like we did with SolidSim. So it really just depends.

And also, could you provide a little bit color on the supply chain business around the geographies?

Yes. We had a very good year this year, as I've mentioned in my prepared remarks. About 40% of what we sold this year was manufacturing and supply chain. We are fixated on this. And it really was broad-based. We are selling it all over the world. And we're making big investments in our R&D in both parts of the business. But especially in some of the manufacturing supply chain applications. There'll be lots of new things coming out in the future here. So it's very broad-based, we compete well in this space. I think you'll see us be more and more fixated and focused on this, in developing out and getting as much of the white spaces of our customers as possible. And this is why we're continuing to focus and convert legacy, perpetual customers to term applications to get them access to all of the aspenONE suites for manufacturing and supply chain. So, it was a good year for us. One of the best ones that I can remember. But I think it's clear that the sales force is focused on it. There's been lots of talk on the call here about sales comp. I'm sure that has something to do with it, because it is pure growth and we will continue to stay focused on it.

This concludes today's Q&A session. I will now turn the floor over back to Mr. Fusco for any closing remarks.

Thank you, operator. Thanks, everyone, for joining us in the call. I want to thank the AspenTech folks around the world for all the hard work and a great fiscal year. But we're not done. There's always more to do. But you should be proud of what the company has accomplished. I also want to thank our investors who have been with us and I look forward to seeing you in my travels and we'll do our best to continue to serve you well. Have a nice evening. Thank you.

Thank you. This concludes today's conference. You may now disconnect.