Aspect Communications (ASPT) 8-K Aspect Communications Reports Second Quarter 2005 Financial Results

Exhibit 99.1

ASPECT COMMUNICATIONS REPORTS SECOND QUARTER 2005
FINANCIAL RESULTS

SAN JOSE, Calif., August 8, 2005— Aspect Communications Corporation (Nasdaq: ASPT), a leading provider of enterprise customer contact solutions, today reported financial results for the second quarter ended June 30, 2005.

SECOND QUARTER FINANCIAL RESULTS:

Revenues for the second quarter of 2005 totaled $85.6 million compared to $90.6 million for the first quarter of 2005 and $91.0 million for the second quarter last year. Product revenue in the second quarter of 2005 was $24.9 million compared to $30.9 million for the first quarter of 2005 and $29.8 million for the second quarter of 2004. Services revenue totaled $60.7 million in the second quarter compared to $59.7 million for the first quarter of 2005 and $61.1 million for the second quarter of 2004.

Second quarter total revenue and earnings were within the range provided for the company’s preliminary results for the second quarter that were announced on July 5, 2005, but below the company’s guidance contained in the company’s earnings release for the first quarter of 2005 issued on April 19, 2005.

The company attributed its revenue results to several large product sales that did not close as expected within the second quarter.

“Our expense controls and successful operating model continued to drive overall profitability and generate cash,” said Gary Barnett, Aspect President and CEO. “As a company we have focused on creating shareholder value through the introduction of new products and the advancement of existing product lines, as we believe this is the best way to meet our customers’ changing needs. We are pleased with our announcement on July 5, 2005, of the transaction between Aspect and Concerto and we believe this transaction will enable us to better serve customers and to compete more effectively in our consolidating industry.”

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2005, page 2

For the second quarter of 2005, the company’s international business was approximately 36 percent of total revenues. This is in-line with the company’s historical revenue distribution of approximately two-thirds domestic and one-third international.

MARGINS AND EXPENSES

For the second quarter of 2005, gross margins were 58 percent. This compares to 60 percent for the first quarter of 2005 and 60 percent for the second quarter of 2004. The decrease in gross margins for the second quarter of 2005 is attributed to fixed product costs and lower revenues.

On a GAAP basis, operating expenses were $40.9 million for the second quarter of 2005, including a restructuring charge of $3.9 million for the consolidation of the company’s San Jose facilities. This compares to operating expenses of $40.3 million for the first quarter of 2005 and $38.4 million in the second quarter of 2004. Operating expenses, excluding the restructuring charge, decreased compared to the first quarter of 2005, due primarily to reductions in general and administrative expenses.

INCOME

Operating income in the second quarter of 2005 was $8.4 million, compared with $14.1 million in the previous quarter, and $16.0 million in the second quarter of 2004. This quarter’s lower result when compared to the first quarter of 2005 is due to the lower revenue and the $3.9 million restructuring charge incurred during the second quarter.

Net income attributable to common shareholders for the second quarter was $6.0 million or $0.07 per share on a basic and fully diluted basis. This includes a $0.04 per share impact as a result of restructuring charges related to office-space consolidations at the company’s headquarters. This compares with a net income attributable to common shareholders of $10.8 million or $0.13 per share for the first quarter of 2005 and a net income attributable to common shareholders of $12.2 million or $0.15 per share for the second quarter of 2004.

CASH AND RECEIVABLES

Cash, cash equivalents, and short-term investments totaled $227.0 million as of June 30, 2005. This compares to $219.2 million as of March 31, 2005. The company generated $14.4 million in cash from operations during the second quarter. Accounts receivable at quarter-end totaled $46.1 million and days sales outstanding were 42 days compared to 39 days at March 31, 2005.

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2005, page 3

SECOND QUARTER OPERATIONAL HIGHLIGHTS:

Aspect received revenue from customers across a variety of industry segments. Some of these customers included: Countrywide, Cinergy, eTelecare, Harrisdirect LLC, and USAgencies.

In Q2, about 17 percent of the company’s revenues, on a worldwide basis, were from indirect channels, a modest percentage decrease from prior quarters. The company’s top Q2 worldwide resellers included BT Ignite, ComputaCenter, ITFor, KPN, Norstan, Siemens, Swisscom and T-Systems.

COMPANY NEWS:

On July 5, 2005, Concerto Software Inc. and Aspect Communications Corporation announced a definitive agreement to combine the companies. Under the agreement, Aspect shareholders will receive $11.60 in cash for each share of common stock, which represents an approximate 15 percent premium to the average closing price over the last 30 trading days. The holder of Aspect Series B Preferred Stock will receive an equivalent amount of cash per share on an as-converted basis. Based on the number of shares of Aspect common stock, common stock options and Series B Preferred Stock outstanding on July 4, 2005, the transaction is valued at approximately $1.0 billion.

The transaction has been approved by Aspect’s board of directors and is anticipated to close as early as September 2005, subject to customary conditions, including regulatory approvals and approval by Aspect shareholders. Upon closing, Aspect will no longer be publicly traded. The new company will be privately held by Concerto’s investors, Golden Gate Capital, Oak Investment Partners and management.

As a result of this announcement, and because of its potentially disruptive effect on customer purchasing decisions which the Company cannot predict with certainty, as well as the Company’s weaker than expected second quarter operating results, the Company is refraining from providing forward-looking outlook for the third quarter.

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2005, page 4

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 the Fortune 50 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 two decades of expertise. Aspect is headquartered in San Jose, Calif., with offices in 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 regarding the consummation and benefits of the pending acquisition, 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 include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to: failure to satisfy any of the conditions to complete the acquisition, including the obtaining of Aspect shareholder approval of the transaction and obtaining of regulatory approvals; and failure to complete the acquisition for any reason. 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 for the year ended December 31, 2004, and Form 10-Q for the quarter ended March 31, 2005, 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, 2005, page 5

ADDITIONAL INFORMATION

Aspect has filed a proxy statement and other documents regarding the proposed transaction described in this document with the Securities and Exchange Commission. INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND SUCH OTHER MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT ASPECT AND THE PROPOSED TRANSACTION. A definitive proxy statement will be sent to shareholders of Aspect seeking their approval of the transaction. Investors and shareholders may obtain a free copy of the definitive proxy statement (when available) and other documents filed by Aspect with the SEC at the SEC’s Web site at www.sec.gov. In addition to the proxy statement, Aspect files annual, quarterly, and special reports, proxy statement and other information with the Securities and Exchange Commission. Investors and security holders may obtain a free copy of the proxy statement and any other documents filed by Aspect free of charge at the Securities and Exchange Commission’s Web site athttp://www.sec.gov and directly from Aspect by directing a request to Aspect Investor Relations at 408-325-2200.

Aspect’s directors and executive officers may be deemed, under Securities and Exchange Commission rules, to be participants in the solicitation of proxies from the Aspect shareholders in connection with the proposed transaction. Information about Aspect’s directors and officers can be found in Aspect’s Proxy Statements and Annual Reports on Form 10-K filed with the SEC. Additional information regarding the interests of those persons may be obtained by reading the proxy statement and other documents regarding the proposed transaction.

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,
	2005			2004			2005			2004			2005			2004
Net revenues:
Software license	$	14,023		$	18,961		$	19,127		$	16,605		$	33,150		$	35,566
Hardware		10,914			10,885			11,737			11,530			22,651			22,415
Services:
Software license updates and product support		51,852			52,566			51,555			54,257			103,407			106,823
Professional services and education		8,814			8,573			8,184			9,095			16,998			17,668
Services		60,666			61,139			59,739			63,352			120,405			124,491
Total net revenues		85,603			90,985			90,603			91,487			176,206			182,472
Cost of revenues:
Cost of software license revenues		1,649			2,299			2,768			1,555			4,417			3,854
Cost of hardware revenues		8,318			8,252			7,133			8,331			15,451			16,583
Cost of services revenues		25,597			25,273			25,561			25,239			51,158			50,512
Amortization of intangible assets		723			725			724			725			1,447			1,450
Total cost of revenues		36,287			36,549			36,186			35,850			72,473			72,399
Gross margin		49,316			54,436			54,417			55,637			103,733			110,073
Operating expenses:
Research and development		10,910			11,169			11,400			11,343			22,310			22,512
Sales and marketing		19,331			19,517			19,011			19,599			38,342			39,116
General and administrative		6,679			7,221			8,965			6,940			15,644			14,161
Restructuring charges		3,931			—			411			—			4,342			—
Amortization of intangible assets and stock-based compensation		84			523			507			17			591			540
Total operating expenses		40,935			38,430			40,294			37,899			81,229			76,329
Income from operations		8,381			16,006			14,123			17,738			22,504			33,744
Interest and other income (expense), net		1,165			377			758			(54	)		1,923			323
Income before income taxes		9,546			16,383			14,881			17,684			24,427			34,067
Provision for income taxes		1,147			1,955			1,786			2,110			2,933			4,065
Net income		8,399			14,428			13,095			15,574			21,494			30,002
Less preferred stock dividend, accretion, and amortization		(2,361	)		(2,180	)		(2,314	)		(2,136	)		(4,675	)		(4,316	)
Net income attributable to common shareholders	$	6,038		$	12,248		$	10,781		$	13,438		$	16,819		$	25,686
Basic earnings per share(1)	$	0.07		$	0.15		$	0.13		$	0.17		$	0.20		$	0.32
Basic weighted average shares outstanding		61,337			58,756			60,757			57,740			61,047			58,248
Diluted earnings per share	$	0.07		$	0.15		$	0.13		$	0.17		$	0.20		$	0.32
Diluted weighted average shares outstanding		64,300			85,792			86,138			86,181			86,330			85,987

(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, 2005 would allocate approximately 73% of the current earnings to Common Shareholders and yield $0.07 earnings per share per Common Shareholder, as shown above. The calculation for the six months ended June 30, 2005 would allocate approximately 73% of the current earnings to Common Shareholders and yield $0.20 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 $0.09 for the three months ended June 30, 2005 and $0.25 for the six months ended June 30, 2005.

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

	June 30,		March 31,		December 31,		June 30,
	2005		2005		2004		2004
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	227,028	$	219,168	$	202,631	$	212,409
Accounts receivable, net		46,071		48,012		49,163		37,252
Inventories		3,621		3,745		3,340		5,931
Other current assets		15,291		17,058		13,138		17,982
Total current assets		292,011		287,983		268,272		273,574
Property and equipment, net		64,906		62,277		62,494		65,364
Intangible assets, net		3,568		4,292		5,015		6,463
Other assets		3,918		4,273		4,723		5,401
Total assets	$	364,403	$	358,825	$	340,504	$	350,802
Liabilities, redeemable convertible preferred stock, and shareholders’ equity
Current liabilities:
Short-term borrowings	$	101	$	124	$	150	$	123
Accounts payable		7,378		5,403		7,491		6,273
Accrued compensation and related benefits		16,668		19,357		19,252		19,503
Other accrued liabilities		60,063		58,562		61,954		56,032
Deferred revenues		52,844		55,670		48,003		61,448
Total current liabilities		137,054		139,116		136,850		143,379
Long term borrowings		103		138		155		40,037
Other long-term liabilities		2,383		4,523		5,793		7,538
Total liabilities		139,540		143,777		142,798		190,954
Redeemable convertible preferred stock		47,166		44,804		42,490		37,998
Shareholders’ equity		177,697		170,244		155,216		121,850
Total liabilities, redeemable convertible preferred stock, and shareholders’ equity	$	364,403	$	358,825	$	340,504	$	350,802

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

	Three months ended						Six months ended
	June 30,						June 30,
	2005			2004			2005			2004
Cash flows from operating activities:
Net income	$	8,399		$	14,428		$	21,494		$	30,002
Reconciliation of net income to cash provided by operating activities:
Depreciation		4,091			5,741			8,102			11,846
Amortization of intangible assets		723			724			1,447			1,467
Non-cash compensation and services expenses		84			523			591			523
Tax benefit from employee stock option plans		74			—			1,211			—
Loss on disposal of property		461			10			463			19
Loss on short-term investment, net		293			531			692			798
Changes in operating assets and liabilities:
Accounts receivable, net		1,263			1,881			1,580			2,087
Inventories		59			(333	)		(398	)		174
Other current assets and other assets		1,972			2,888			(1,617	)		2,156
Accounts payable		1,980			(336	)		(88	)		1,322
Accrued compensation and related benefits		(2,586	)		(16	)		(2,358	)		1,725
Other accrued liabilities		(52	)		(2,293	)		(4,056	)		(12,470	)
Deferred revenues		(2,397	)		(2,045	)		5,576			11,033
Cash provided by operating activities		14,364			21,703			32,639			50,682
Cash flows from investing activities:
Purchase of investments		(35,236	)		(49,447	)		(64,630	)		(110,501	)
Proceeds from sales and maturities of investments		35,538			32,101			63,505			65,418
Property and equipment purchases		(7,238	)		(4,791	)		(11,141	)		(8,618	)
Cash used in investing activities		(6,936	)		(22,137	)		(12,266	)		(53,701	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net		1,722			2,120			5,371			9,762
Payments on capital lease obligations		(58	)		(35	)		(101	)		(68	)
Proceeds from borrowings		—			—			—			40,000
Payments on borrowings		—			—			—			(40,979	)
Payments on financing costs		—			(43	)		—			(1,096	)
Cash provided by financing activities		1,664			2,042			5,270			7,619
Effect of exchange rate changes on cash and cash equivalents		(1,074	)		287			(1,495	)		560
Net increase in cash and cash equivalents		8,018			1,895			24,148			5,160
Cash and cash equivalents:
Beginning of period		105,380			78,918			89,250			75,653
End of period		113,398			80,813			113,398			80,813
Short-term investments at the end of period		113,630			131,596			113,630			131,596
Cash, cash equivalents and short-term investments	$	227,028		$	212,409		$	227,028		$	212,409
Supplemental disclosure of cash flow information:
Cash paid for interest	$	139		$	373		$	310		$	1,016
Cash paid for income taxes	$	1,935		$	915		$	3,259		$	3,882
Supplemental schedule of noncash investing and financing activities:
Accrued preferred stock dividend and amortization of redemption premium	$	1,980		$	1,818		$	3,919		$	3,597
Amortization of beneficial conversion feature	$	381		$	362		$	756		$	719
Issuance (cancellation) of restricted stock	$	—		$	408		$	—		$	408

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ASPECT COMMUNICATIONS CORPORATION
REVENUE SEGMENT REPORTING
(in thousands — unaudited)

	Three months ended
	June 30,
	2005		2004
Software license:
Call Center (ACD)	$	6,319	$	8,763
Workforce Productivity		4,992		5,777
Contact Center Integration		1,928		2,630
Customer Self Service (IVR)		388		912
Other		396		879
Total software license		14,023		18,961
Hardware		10,914		10,885
Services:
Software license updates and product support		51,852		52,566
Professional services and education		8,814		8,573
Total services		60,666		61,139
Total net revenues	$	85,603	$	90,985

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ASPECT COMMUNICATIONS CORPORATION
REGULATION G RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands — unaudited)

	June 30,		March 31,		June 30,
	2005		2005		2004
Operating expense
GAAP	$	40,935	$	40,294	$	38,430
Restructuring charge		3,931		411		—
non-GAAP	$	37,004	$	39,883	$	38,430

Further discussion of the use of the non-GAAP financial measures is presented in the Company’s 8-K filing on August 8, 2005.

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