Aspect Communications (ASPT) 8-K Aspect Communications Reports Second Quarter 2004 Financial Results

Exhibit 99.1

ASPECT COMMUNICATIONS REPORTS SECOND QUARTER 2004
FINANCIAL RESULTS

Company Reports Second Quarter Total Revenue of $91 Million and Software
License Revenue Growth of 16 Percent from the Second Quarter of 2003 and 14
Percent from the First Quarter of 2004

SAN JOSE, Calif., July 15, 2004 —Aspect Communications Corporation (Nasdaq: ASPT), a leading provider of enterprise customer contact solutions, today reported financial results for the second quarter ended June 30, 2004.

SECOND QUARTER FINANCIAL RESULTS:

Revenues for the second quarter of 2004 totaled $91.0 million compared to $89.4 million for the second quarter last year and $91.5 million for the first quarter of 2004. Product revenue in the second quarter of 2004 was $29.9 million compared to $27.5 million for the second quarter last year and $28.1 million for the first quarter of 2004. Services revenue totaled $61.1 million in the second quarter compared to $61.9 million for the second quarter last year and $63.4 million for the first quarter of 2004.

Net income attributable to common shareholders for the second quarter was $12.2 million or a profit of $0.15 per share on a basic and fully diluted basis. This compares with a net income attributable to common shareholders of $4.5 million or a profit of $0.06 per share for the second quarter of 2003 and a net income attributable to common shareholders of $13.4 million or a profit of $0.17 per share for the first quarter of 2004.

“While it is still a complex economic environment, I am pleased with the strong growth we demonstrated this quarter in software revenues, both sequentially and year-over-year,” said Gary Barnett, Aspect President and CEO. “We are also pleased with important new customer wins made possible by key new products delivered this quarter. This represents the beginning of the rollout of our Uniphi solution that will continue through the remainder of the year.”

For the second quarter of 2004, gross margins were 60%. This compares to 56% for the second quarter of 2003 and 61% for the first quarter of 2004. Operating expenses were

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Aspect Communications Announces Financial Results for the Quarter ended June 30, 2004, page 2

$38.4 million for the second quarter of 2004 compared to $41.4 million for the same period last year and $37.9 million in the first quarter of 2004.

Cash, cash equivalents, and short-term investments totaled $212.4 million as of June 30, 2004. This compares to $195.0 million as of March 31, 2004. During the second quarter, the company generated $21.7 million in cash from operations. Accounts receivable at quarter-end totaled $37.3 million and days sales outstanding were 30 days compared to 33 days at March 31, 2004.

SECOND QUARTER OPERATIONAL HIGHLIGHTS:

During the first quarter Aspect received significant revenue from customers across a variety of industry segments. Some of these Aspect customers included: Accent Marketing Services, AMICA Insurance, CitiCorp North America, Comcast Cable, Garlands, Gerling, HealthNet, Royal Bank of Scotland, StarTek, Inc., and Washington Mutual.

BUSINESS OUTLOOK:

The following statements are forward-looking, and actual results may differ materially:

• The company is planning for third quarter total revenue to be the same as or grow slightly from the second quarter.

• The company expects Q3 gross margins to remain generally consistent with Q2 levels. Variability in gross margin percentages is dependent upon, among other factors, the mix and volume of revenues.

• Operating expenses for the third quarter are expected to be in a range of $37 million to $39 million.

The company will host a conference call and web-cast today at 2:00 pm Pacific Time to discuss second quarter 2004 results. A replay of the conference call will be available from July 15, 2004 at 5:00 pm Pacific Time through July 22, 2004 at 8:59 pm Pacific Time by calling 800-839-4012 or 402-220-2981. The web-cast and replay of the conference call may be accessed from the company’s home page at www.aspect.com.

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2004, page 3

About Aspect Communications

Aspect Communications Corporation is a leading provider of contact center solutions and services that enable businesses to manage and optimize customer communications. Aspect’s global customer base includes more than two-thirds of theFortune50 and leading corporations in a range of industries, including transportation, financial services, insurance, telecommunications, retail and outsourcing, as well as large government agencies. The company’s leadership is based on 18 years of expertise. Aspect is headquartered in San Jose, Calif., with 24 offices in 11 countries around the world.

Notes on financial presentation:Actual financial results are prepared in accordance with U.S. generally accepted accounting principles.

Certain statements contained in this press release, including but not limited to, statements relating to expected product rollout, third quarter total revenue, gross margins, and operating expenses are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and are made under its safe-harbor provisions. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Specific factors that may cause actual revenue and earnings per share results to differ include: the significant percentage of Aspect’s quarterly sales consummated in the last few days of the quarter and the potential for delays in closing of sales or product deliveries make financial predictions especially difficult and raise a substantial risk of variance in actual results; changes in the overall mix and volume of product line revenues can have a significant impact on gross margin and profitability; fluctuations in our North American and International business levels and/or economic conditions, the hiring and retention of key employees, insufficient, excess or obsolete inventory and variations in valuation, and foreign exchange rate fluctuations can all cause revenues and income to fall significantly short of anticipated levels. The economic, political and other uncertainties caused in the United States and throughout other regions of the world add to these challenges. Additional risks that could cause actual results to differ materially from those projected are discussed in Aspect’s Form 10-K/A for the year ended December 31, 2003 and Form 10-Q for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. Aspect undertakes no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2004, page 4

     Aspect, the Aspect logo and the phrases and marks relating to other Aspect products and services discussed in this press release constitute one or both of the following: (1) registered trademarks and/or service marks of Aspect Communications Corporation in the United States and/or other countries or (2) intellectual property subject to protection under common law principles. All other names and marks mentioned in this document are properties of their respective owners.

Carrie Kovac
Director, Investor Relations
Aspect Communications
(408) 325-2437
carrie.kovac@aspect.com

ASPECT COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts — unaudited)

	Three months ended						Three months ended						Six months ended
	June 30,						March 31,						June 30,
	2004			2003			2004			2003			2004			2003
Net revenues:
Software License	$	18,961		$	16,329		$	16,605		$	14,952		$	35,566		$	31,281
Hardware		10,885			11,159			11,530			9,165			22,415			20,324
Software License Updates & Product Support		52,566			53,656			54,257			52,304			106,823			105,960
Professional Services & Education		8,573			8,281			9,095			7,987			17,668			16,268
Services		61,139			61,937			63,352			60,291			124,491			122,228
Total net revenues		90,985			89,425			91,487			84,408			182,472			173,833
Cost of revenues:
Cost of software license revenues		2,299			2,416			1,555			2,393			3,854			4,809
Cost of hardware revenues		8,252			10,074			8,331			8,977			16,583			19,051
Cost of services revenues		25,273			25,218			25,239			27,024			50,512			52,242
Amortization of intangible assets and stock-based compensation		725			1,211			725			1,243			1,450			2,454
Total cost of revenues		36,549			38,919			35,850			39,637			72,399			78,556
Gross margin		54,436			50,506			55,637			44,771			110,073			95,277
Operating expenses:
Research and development		11,169			12,414			11,343			12,888			22,512			25,302
Sales and marketing		19,517			20,269			19,599			20,355			39,116			40,624
General and administration		7,221			5,524			6,940			4,315			14,161			9,838
Restructuring charges		—			2,997			—			—			—			2,997
Amortization of intangible assets and stock-based compensation		523			211			17			147			540			358
Total operating expenses		38,430			41,415			37,899			37,705			76,329			79,119
Income from operations		16,006			9,091			17,738			7,066			33,744			16,158
Interest and other income (expense), net		377			(1,373	)		(54	)		(1,766	)		323			(3,140	)
Income before income taxes		16,383			7,718			17,684			5,300			34,067			13,018
Provision for income taxes		1,955			1,250			2,110			1,247			4,065			2,497
Net income before cumulative effect of change in accounting principle		14,428			6,468			15,574			4,053			30,002			10,521
Cumulative effect of change in accounting principle		—			—			—			(777	)		—			(777	)
Net income		14,428			6,468			15,574			3,276			30,002			9,744
Less preferred stock dividend, accretion, and amortization		(2,180	)		(2,013	)		(2,136	)		(1,539	)		(4,316	)		(3,552	)
Net Income attributable to Common Shareholders	$	12,248		$	4,455		$	13,438		$	1,737		$	25,686		$	6,192
Earnings per share before cumulative effect of change in accounting principle	$	0.15		$	0.06		$	0.17		$	0.04		$	0.32		$	0.10
Cumulative effect of change in accounting principle		—			—			—			(0.01	)		—			(0.01	)
Basic earnings per share (1)	$	0.15		$	0.06		$	0.17		$	0.02		$	0.32		$	0.08
Basic weighted average shares outstanding		58,756			53,576			57,740			53,315			58,248			53,446
Diluted earnings per share	$	0.15		$	0.06		$	0.17		$	0.02		$	0.32		$	0.08
Diluted weighted average shares outstanding		85,792			54,914			86,181			54,591			85,987			54,753

(1) Pursuant to GAAP, the Company is required to present earnings per share “as if” all earnings were distributed to Common and Preferred Shareholders. Under this “two class” method, earnings are allocated to Common and Preferred Shareholders in proportion to their respective ownership interests. This calculation for the three months ended June 30, 2004 would allocate approximately 73% of the current earnings to Common Shareholders and yield $0.15 earnings per share per Common Shareholder, as shown above. The calculation for the six months ended June 30, 2004 would allocate approximately 72% of the current earnings to Common Shareholders and yield $0.32 earnings per share per Common Shareholder, as shown above. However, the Company has not in the past, and does not currently intend to, declare a distribution of earnings. Absent this “as if” apportionment, diluted earnings per Common share would be $0.17 for the three months ended June 30, 2004 and $0.35 for the six months ended June 30, 2004.

ASPECT COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands — unaudited)

	June 30,		March 31,		December 31,		June 30,
	2004		2004		2003		2003
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	212,409	$	194,999	$	163,992	$	223,258
Accounts receivable, net		37,252		39,062		39,561		43,311
Inventories		5,931		5,607		6,176		9,084
Other current assets		17,982		20,663		19,145		17,351
Total current assets		273,574		260,331		228,874		293,004
Property and equipment, net		65,364		66,225		68,599		76,709
Intangible assets, net		6,463		7,187		7,930		9,954
Other assets		5,401		5,528		5,182		8,545
Total assets	$	350,802	$	339,271	$	310,585	$	388,212
Liabilities, redeemable convertible preferred stock, and shareholders’ equity
Current liabilities:
Short-term borrowings	$	123	$	143	$	1,732	$	6,972
Accounts payable		6,273		6,590		4,936		7,351
Accrued compensation and related benefits		19,503		19,518		17,773		15,769
Other accrued liabilities		56,032		56,568		64,790		54,907
Deferred revenues		61,448		63,407		50,200		51,637
Convertible subordinated debentures		—		—		—		122,981
Total current liabilities		143,379		146,226		139,431		259,617
Long term borrowings		40,037		40,013		39,436		37,733
Other long-term liabilities		7,538		9,219		11,021		14,014
Total liabilities		190,954		195,458		189,888		311,364
Redeemable convertible preferred stock		37,998		35,817		33,681		30,672
Shareholders’ equity		121,850		107,996		87,016		46,176
Total liabilities, redeemable convertible preferred stock, and shareholders’ equity	$	350,802	$	339,271	$	310,585	$	388,212

ASPECT COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands — unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2004			2003			2004			2003
Cash flows from operating activities:
Net income	$	14,428		$	6,468		$	30,002		$	9,744
Reconciliation of net income to cash provided by operating activities:
Depreciation		5,741			6,302			11,846			12,733
Amortization of intangible assets		724			1,271			1,467			2,543
Non-cash compensation and services expenses		523			155			523			273
Loss on disposal of property		10			24			19			24
Loss on extinguishment of debt		—			—			—			17
Loss on short-term investments, net		531			—			798			—
Cumulative effect of change in accounting principle		—			—			—			777
Non-cash interest expense on debentures		—			1,803			—			3,607
Deferred taxes		—			127			—			141
Changes in operating assets and liabilities
Accounts receivable		1,881			24			2,087			9,758
Inventories		(333	)		998			174			(2,000	)
Other current assets and other assets		2,888			288			2,156			(2,997	)
Accounts payable		(336	)		1,445			1,322			1,648
Accrued compensation and related benefits		(16	)		(87	)		1,725			(464	)
Other accrued liabilities		(2,293	)		(2,731	)		(12,470	)		(12,566	)
Deferred revenues		(2,045	)		9,340			11,033			20,748
Net cash provided by operating activities		21,703			25,427			50,682			43,986
Cash flows from investing activities:
Short-term investments purchases		(49,447	)		(48,078	)		(110,501	)		(103,344	)
Short-term investments sales and maturities		32,101			65,219			65,418			112,687
Property and equipment purchases		(4,791	)		(913	)		(8,618	)		(1,960	)
Net cash provided by (used in) investing activities		(22,137	)		16,228			(53,701	)		7,383
Cash flows from financing activities:
Proceeds from issuance of common stock, net		2,120			222			9,762			1,120
Proceeds from issuance of preferred stock, net		—			(172	)		—			43,564
Payments on capital lease obligations		(35	)		(132	)		(68	)		(311	)
Proceeds from borrowings		—			—			40,000			—
Payments on borrowings		—			(1,683	)		(40,979	)		(3,413	)
Payments on financing costs		(43	)		—			(1,096	)		—
Payments on repurchase of convertible subordinated debentures		—			—			—			(5,612	)
Net cash provided by (used in) financing activities		2,042			(1,765	)		7,619			35,348
Effect of exchange rate changes on cash and cash equivalents		287			278			560			146
Net increase in cash and cash equivalents		1,895			40,168			5,160			86,863
Cash and cash equivalents:
Beginning of period		78,918			112,746			75,653			66,051
End of period		80,813			152,914			80,813			152,914
Short-term investments at the end of period		131,596			70,344			131,596			70,344
Cash, cash equivalents and short-term investments	$	212,409		$	223,258		$	212,409		$	223,258
Supplemental disclosure of cash flow information:
Cash paid for interest	$	373		$	756		$	1,016		$	1,520
Cash paid for income taxes	$	915		$	121		$	3,882		$	356
Supplemental schedule of noncash investing and financing activities
Accrued preferred stock dividend and amortization of redemption premium	$	1,818		$	1,669		$	3,597		$	2,943
Amortization of beneficial conversion feature	$	362		$	344		$	719		$	609
Issuance of restricted stock	$	408		$	—		$	408		$	—