CONSOLIDATED STATEMENT OF CASH FLOWS Aspen Technology  Inc. and Subsidiaries Consolidated Statement of Cash Flows Years Ended June 30 2001 2002 2003 (In thousands) Cash flows from operating activities: Net income (loss) $(20 375) $(77 165) $(160 833) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities— Depreciation and amortization 24 099 25 763 30 994 Goodwill impairment charge — — 74 715 Write-off of assets related to restructuring 1 159 1 169 38 732 Charges for in-process research and development 9 915 14 900 — Write-off of investments 5 000 8 923 — Deferred stock-based compensation 65 (65) — (Gain) loss on the disposal of property (257) — 288 Deferred income taxes (12 783) 896 — Research and development costs subject to common stock settlement — 924 1 082 Changes in assets and liabilities— Accounts receivable (3 399) 1 591 20 861 Unbilled services (7 277) 333 16 714 Prepaid expenses and other current assets (417) (1 400) 7 338 Long-term installments receivable (8 845) 6 816 (1 587) Accounts payable and accrued expenses 5 195 8 865 (7 184) Unearned revenue 4 323 751 (1 240) Deferred revenue (9 786) (368) (2 283) Other liabilities (675) 36 3 969 Net cash provided by (used in) operating activities (14 058) (8 031) 21 566 Cash flows from investing activities: Purchase of property and leasehold improvements (20 350) (12 940) (4 746) Proceeds on sale of property 2 438 1 725 — Capitalized computer software development costs (5 573) (7 986) (7 661) Increase in other assets (1 693) (1 940) 1 323 Decrease in short-term investments 33 884 12 257 18 535 Cash used in the purchase of businesses  net of cash acquired (21 746) (93 437) — Net cash provided by (used in) investing activities (13 040) (102 321) 7 451 Cash flows from financing activities: Issuance of common stock and common stock warrants  net of issuance costs — 47 956 — Issuance of Series B convertible preferred stock and common stock warrants  net of issuance costs — 56 588 — Payment of amounts owed to Accenture — — (8 433) Issuance of common stock under employee stock purchase plans 4 710 5 306 3 293 Exercise of stock options and warrants 11 901 1 619 150 Payments of long-term debt and capital lease obligations (1 041) (4 305) (6 603) Net cash provided by (used in) financing activities 15 570 107 164 (11 593) Effect of exchange rate changes on cash and cash equivalents (1 210) 126 572 Increase (decrease) in cash and cash equivalents (12 738) (3 062) 17 996 Cash and cash equivalents  beginning of period 49 371 36 633 33 571 Cash and cash equivalents  end of period $36 633 $33 571 $51 567 Supplemental disclosure of cash flow information: Cash paid for income taxes $2 072 $1 955 $1 695 Cash paid for interest $5 023 $4 841 $5 902 Supplemental disclosure of non-cash financing activities: Accretion of discount on Series B convertible preferred stock $— $2 209 $6 784 Preferred stock dividend due to beneficial conversion feature of Series B convertible preferred stock $— $3 232 $— Issuance of common stock in settlement of obligation subject to common stock settlement $— $18 500 $— Modification of Series B convertible preferred stock to Series B redeemable convertible preferred stock $— $— $57 537 Issuance of common stock in settlement of Series B convertible preferred stock dividend $— $— $2 662 Supplemental disclosure of cash flows related to acquisitions: The Company acquired certain companies as described in Note 4. These acquisitions are summarized as follows: Fair value of assets acquired  excluding cash $60 379 $140 141 $3 027 Payments in connection with the acquisitions  net of cash acquired (21 746) (93 437) — Value of stock issued in connection with the acquisitions (31 555) — — Charge for in-process research and development 9 915 14 900 — Liabilities assumed $16 993 $61 604 $3 027 The accompanying notes are an integral part of these consolidated financial statements. 33