Exhibit 99.1
ASPECT COMMUNICATIONS REPORTS FOURTH QUARTER AND
FISCAL YEAR 2004 FINANCIAL RESULTS
SAN JOSE, Calif., January 27, 2005 —Aspect Communications Corporation (Nasdaq: ASPT), a leading provider of enterprise customer contact solutions, today reported financial results for the fourth quarter and fiscal year ended December 31, 2004.
FOURTH QUARTER FINANCIAL RESULTS:
Revenues for the fourth quarter of 2004 totaled $96.8 million compared to $91.2 million for the third quarter of 2004 and $97.4 million for the fourth quarter last year. Product revenue in the fourth quarter of 2004 was $33.7 million compared to $30.8 million for the third quarter of 2004 and $32.5 million for the fourth quarter of 2003. Services revenue totaled $63.0 million in the fourth quarter compared to $60.4 million for the third quarter of 2004 and $64.8 million for the fourth quarter of 2003.
Net income attributable to common shareholders for the fourth quarter was $15.5 million or a profit of $0.19 per share on a basic and fully diluted basis. This compares with a net income attributable to common shareholders of $11.3 million or a profit of $0.14 per share for the third quarter of 2004 and a net income attributable to common shareholders of $14.6 million or a profit of $0.19 per share for the fourth quarter of 2003.
“I am exceptionally pleased with our results this quarter,” said Gary Barnett, Aspect President and CEO. “What makes Aspect unique in the marketplace is the knowledge and experience that comes with our 20-year history. We have made great progress in several key areas of our business, including further strengthening our financial position, improving our market position, and introducing a number of key new solutions. We look forward to furthering the foundation we have built.”
For the fourth quarter of 2004, gross margins were 60%. This compares to 59% for the third quarter of 2004 and 62% for the fourth quarter of 2003. Operating expenses were $39.0 million for the fourth quarter of 2004 compared to $39.0 million for the third quarter of 2004 and $41.4 million in the fourth quarter of 2003.
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Aspect Communications Announces Financial Results for the Quarter and Fiscal Year ended December 31, 2004, page 2
Cash, cash equivalents, and short-term investments totaled $202.6 million as of December 31, 2004. This compares to $183.3 million as of September 30, 2004. The company generated $18.7 million in cash from operations during the fourth quarter. Accounts receivable at quarter-end totaled $49.2 million and days sales outstanding were 38 days compared to 32 days at September 30, 2004.
FISCAL YEAR 2004 FINANCIAL RESULTS:
Revenues for the full fiscal year ended December 31, 2004 totaled $370.4 million compared to $363.8 million for fiscal year 2003. Product revenue in 2004 was $122.5 million compared to $114.4 million in fiscal year 2003. Services revenue in 2004 was $247.9 million compared to $249.4 million in fiscal year 2003.
Net income attributable to common shareholders for the full fiscal year 2004 was $52.4 million or a profit of $0.65 per share. This compares with a net income attributable to common shareholders of $29.0 million or a profit of $0.39 per share on a fully diluted basis, for the 2003 fiscal year.
For 2004, gross margin was 60%, compared to 57%, for 2003.
Operating expenses totaled $154.4 million in 2004. This compares to operating expenses of $159.6 million in 2003.
FOURTH QUARTER OPERATIONAL HIGHLIGHTS:
Aspect received revenue from customers across a variety of industry segments. Some of these Aspect customers included: Ameren Corporation, ASV Direktmarketing GmbH, Comcast Corporation, National Grid Transco plc, Regence BlueCross BlueShield, UK Inland Revenue and Vivento.
Additionally, for the second consecutive year the company was also named U.S. workforce management software market-share leader in Saddletree Research’s report “The U.S. Workforce Management Software Market: 2004-2008.”
Aspect Communications Announces Financial Results for the Quarter and Fiscal Year ended December 31, 2004, page 3
BUSINESS OUTLOOK:
The following statements are forward-looking, and actual results may differ materially:
The company is planning for first quarter total revenue to be in a range of $88.0 million to $90.0 million.
First quarter operating income is expected to be in a range of $11 million to $13 million.
Earnings per share for the first quarter are expected to be in a range of $0.11 per share to $0.13 per share.
The company will host a conference call and web-cast today at 2:00 pm Pacific Time to discuss fourth quarter and fiscal year 2004 results. A replay of the conference call will be available from January 27, 2005 at 5:00 pm Pacific Time through February 3, 2005 at 8:59 pm Pacific Time by calling 800-839-5490 or 402-220-2550. The web-cast and replay of the conference call may be accessed from the company’s home page at www.aspect.com.
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 relating to expected first quarter total revenue, operating income and earnings per share 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
Aspect Communications Announces Financial Results for the Quarter and Fiscal Year ended December 31, 2004, page 4
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, operating income 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; the loss of support customers or if one or more support contracts is delayed, reduced or cancelled; 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 quarters ended March 31, 2004, June 30, 2004 and September 30, 2004, all 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, 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 | Twelve months ended | ||||||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | |||||||||||||||||||
Net revenues: | ||||||||||||||||||||||||
Software license | $ | 20,743 | $ | 21,469 | $ | 17,753 | $ | 18,710 | $ | 74,062 | $ | 71,461 | ||||||||||||
Hardware | 12,999 | 11,076 | 13,040 | 11,582 | 48,453 | 42,981 | ||||||||||||||||||
Services: | ||||||||||||||||||||||||
Software license updates and product support | 51,995 | 55,796 | 52,178 | 54,558 | 210,996 | 216,313 | ||||||||||||||||||
Professional services and education | 11,015 | 9,045 | 8,243 | 7,779 | 36,926 | 33,093 | ||||||||||||||||||
Services | 63,010 | 64,841 | 60,421 | 62,337 | 247,922 | 249,406 | ||||||||||||||||||
Total net revenues | 96,752 | 97,386 | 91,214 | 92,629 | 370,437 | 363,848 | ||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Cost of software license revenues | 2,672 | 2,515 | 2,188 | 1,663 | 8,715 | 8,987 | ||||||||||||||||||
Cost of hardware revenues | 8,308 | 9,128 | 8,849 | 9,314 | 33,739 | 37,493 | ||||||||||||||||||
Cost of services revenues | 27,377 | 24,582 | 25,316 | 25,328 | 103,204 | 102,152 | ||||||||||||||||||
Amortization of intangible assets and stock-based compensation | 724 | 725 | 724 | 1,238 | 2,898 | 4,417 | ||||||||||||||||||
Impairment of intangible assets | — | — | — | 2,000 | — | 2,000 | ||||||||||||||||||
Total cost of revenues | 39,081 | 36,950 | 37,077 | 39,543 | 148,556 | 155,049 | ||||||||||||||||||
Gross margin | 57,671 | 60,436 | 54,137 | 53,086 | 221,881 | 208,799 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Research and development | 10,624 | 11,284 | 11,314 | 12,189 | 44,450 | 48,775 | ||||||||||||||||||
Sales and marketing | 19,632 | 20,813 | 19,863 | 19,598 | 78,610 | 81,035 | ||||||||||||||||||
General and administrative | 6,499 | 8,412 | 7,744 | 7,091 | 28,405 | 25,342 | ||||||||||||||||||
Restructuring charges | — | 818 | — | — | — | 3,814 | ||||||||||||||||||
Amortization of intangible assets and stock-based compensation | 2,261 | 32 | 95 | 205 | 2,896 | 595 | ||||||||||||||||||
Total operating expenses | 39,016 | 41,359 | 39,016 | 39,083 | 154,361 | 159,561 | ||||||||||||||||||
Income from operations | 18,655 | 19,077 | 15,121 | 14,003 | 67,520 | 49,238 | ||||||||||||||||||
Interest and other income (expense), net | 743 | (342 | ) | 184 | (1,182 | ) | 1,250 | (4,665 | ) | |||||||||||||||
Net income before income taxes | 19,398 | 18,735 | 15,305 | 12,821 | 68,770 | 44,573 | ||||||||||||||||||
Provision for income taxes | 1,627 | 2,000 | 1,821 | 2,575 | 7,513 | 7,071 | ||||||||||||||||||
Net income before cumulative effect of change in accounting principle | 17,771 | 16,735 | 13,484 | 10,246 | 61,257 | 37,502 | ||||||||||||||||||
Cumulative effect of change in accounting principle | — | — | — | — | — | (777 | ) | |||||||||||||||||
Net income | 17,771 | 16,735 | 13,484 | 10,246 | 61,257 | 36,725 | ||||||||||||||||||
Less preferred stock dividend, accretion, and amortization | (2,269 | ) | (2,095 | ) | (2,223 | ) | (2,053 | ) | (8,808 | ) | (7,700 | ) | ||||||||||||
Net income attributable to common shareholders | $ | 15,502 | $ | 14,640 | $ | 11,261 | $ | 8,193 | $ | 52,449 | $ | 29,025 | ||||||||||||
Earnings per share before cumulative effect of change in accounting principle | $ | 0.19 | $ | 0.19 | $ | 0.14 | $ | 0.11 | $ | 0.65 | $ | 0.40 | ||||||||||||
Cumulative effect of change in accounting principle | — | — | — | — | — | $ | (0.01 | ) | ||||||||||||||||
Basic earnings per share(1) | $ | 0.19 | $ | 0.19 | $ | 0.14 | $ | 0.11 | $ | 0.65 | $ | 0.39 | ||||||||||||
Basic weighted average shares outstanding | 59,973 | 56,309 | 59,373 | 54,612 | 58,961 | 54,453 | ||||||||||||||||||
Diluted earnings per share | $ | 0.19 | $ | 0.19 | $ | 0.14 | $ | 0.11 | $ | 0.65 | $ | 0.39 | ||||||||||||
Diluted weighted average shares outstanding | 85,882 | 84,974 | 85,117 | 81,967 | 85,743 | 78,874 |
(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 December 31, 2004 would allocate approximately 73% of the current earnings to Common Shareholders and yield $0.19 earnings per share per Common Shareholder, as shown above. The calculation for the twelve months ended December 31, 2004 would allocate approximately 73% of the current earnings to Common Shareholders and yield $0.65 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 $0.21 for the three months ended December 31, 2004 and $0.71 for the twelve months ended December 31, 2004.
ASPECT COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands — unaudited)
December 31, | September 30, | December 31, | ||||||||||
2004 | 2004 | 2003 | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash, cash equivalents and short-term investments | $ | 202,631 | $ | 183,277 | $ | 163,992 | ||||||
Accounts receivable, net | 49,163 | 41,168 | 39,561 | |||||||||
Inventories | 3,340 | 3,981 | 6,176 | |||||||||
Other current assets | 13,138 | 15,008 | 19,145 | |||||||||
Total current assets | 268,272 | 243,434 | 228,874 | |||||||||
Property and equipment, net | 62,494 | 65,306 | 68,599 | |||||||||
Intangible assets, net | 5,015 | 5,739 | 7,930 | |||||||||
Other assets | 4,723 | 4,935 | 5,182 | |||||||||
Total assets | $ | 340,504 | $ | 319,414 | $ | 310,585 | ||||||
Liabilities, redeemable convertible preferred stock and shareholders’ equity | ||||||||||||
Current liabilities: | ||||||||||||
Short-term borrowings | $ | 150 | $ | 181 | $ | 1,732 | ||||||
Accounts payable | 7,491 | 7,309 | 4,936 | |||||||||
Accrued compensation and related benefits | 19,252 | 20,788 | 17,773 | |||||||||
Other accrued liabilities | 61,954 | 59,187 | 64,790 | |||||||||
Deferred revenues | 48,003 | 49,132 | 50,200 | |||||||||
Total current liabilities | 136,850 | 136,597 | 139,431 | |||||||||
Long term borrowings | 155 | 180 | 39,436 | |||||||||
Other long-term liabilities | 5,793 | 5,200 | 11,021 | |||||||||
Total liabilities | 142,798 | 141,977 | 189,888 | |||||||||
Redeemable convertible preferred stock | 42,490 | 40,222 | 33,681 | |||||||||
Shareholders’ equity | 155,216 | 137,215 | 87,016 | |||||||||
Total liabilities, redeemable convertible preferred stock and shareholders’ equity | $ | 340,504 | $ | 319,414 | $ | 310,585 | ||||||
ASPECT COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
Three months ended | Twelve months ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 17,771 | $ | 16,735 | $ | 61,257 | $ | 36,725 | ||||||||
Reconciliation of net income to cash provided by operating activities: | ||||||||||||||||
Depreciation | 5,807 | 6,086 | 23,335 | 24,635 | ||||||||||||
Amortization of intangible assets | 724 | 757 | 2,915 | 4,567 | ||||||||||||
Non-cash compensation and services expenses | 2,261 | — | 2,879 | 446 | ||||||||||||
Loss on disposal of property | 10 | 108 | 40 | 405 | ||||||||||||
Loss on extinguishment of debt | — | — | — | 17 | ||||||||||||
Loss on short-term investments, net | 371 | — | 1,656 | — | ||||||||||||
Cumulative effect of change in accounting principle | — | — | — | 777 | ||||||||||||
Impairment of intangible assets | — | — | — | 2,000 | ||||||||||||
Accretion of convertible debentures | — | 14 | — | 4,423 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (6,215 | ) | 7,077 | (7,977 | ) | 14,722 | ||||||||||
Inventories | 769 | 2,028 | 2,925 | 1,146 | ||||||||||||
Other current assets and other assets | 2,394 | (1,298 | ) | 7,962 | (3,167 | ) | ||||||||||
Accounts payable | 147 | (1,830 | ) | 2,505 | (764 | ) | ||||||||||
Accrued compensation and related benefits | (1,794 | ) | 1,251 | 1,213 | 1,389 | |||||||||||
Other accrued liabilities | (2,509 | ) | 922 | (14,143 | ) | (6,507 | ) | |||||||||
Deferred revenues | (1,072 | ) | (1,276 | ) | (2,364 | ) | 18,305 | |||||||||
Net cash provided by operating activities | 18,664 | 30,574 | 82,203 | 99,119 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchase of short-term investments | (36,777 | ) | (69,075 | ) | (198,748 | ) | (203,290 | ) | ||||||||
Proceeds from sales and maturities of short-term investments | 39,580 | 48,929 | 171,204 | 194,413 | ||||||||||||
Property and equipment purchases | (2,783 | ) | (2,595 | ) | (16,720 | ) | (5,740 | ) | ||||||||
Net cash provided by (used in) investing activities | 20 | (22,741 | ) | (44,264 | ) | (14,617 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from issuance of common stock, net | 2,358 | 10,450 | 15,084 | 16,844 | ||||||||||||
Proceeds from issuance of preferred stock, net | — | — | — | 43,564 | ||||||||||||
Payments on capital lease obligations | (56 | ) | (33 | ) | (213 | ) | (376 | ) | ||||||||
Proceeds from borrowings | — | — | 40,000 | — | ||||||||||||
Payments on borrowings | — | (1,739 | ) | (80,979 | ) | (6,886 | ) | |||||||||
Payments on financing costs | (32 | ) | — | (1,128 | ) | — | ||||||||||
Payments on repurchase of convertible subordinated debentures | — | (970 | ) | — | (129,409 | ) | ||||||||||
Net cash provided by (used in) financing activities | 2,270 | 7,708 | (27,236 | ) | (76,263 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,941 | 1,644 | 2,894 | 1,363 | ||||||||||||
Net increase in cash and cash equivalents | 22,895 | 17,185 | 13,597 | 9,602 | ||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Beginning of period | 66,355 | 58,468 | 75,653 | 66,051 | ||||||||||||
End of period | 89,250 | 75,653 | 89,250 | 75,653 | ||||||||||||
Short-term investments at the end of period | 113,381 | 88,339 | 113,381 | 88,339 | ||||||||||||
Cash, cash equivalents and short-term investments | $ | 202,631 | $ | 163,992 | $ | 202,631 | $ | 163,992 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||
Cash paid for interest | $ | 142 | $ | 616 | $ | 1,599 | $ | 2,811 | ||||||||
Cash paid for income taxes | $ | 16 | $ | 520 | $ | 4,908 | $ | 916 | ||||||||
Supplemental schedule of noncash investing and financing activities | ||||||||||||||||
Accrued preferred stock dividend and amortization of redemption premium | $ | 1,898 | $ | 1,742 | $ | 7,351 | $ | 6,389 | ||||||||
Amortization of beneficial conversion feature | $ | 371 | $ | 353 | $ | 1,457 | $ | 1,311 | ||||||||
Beneficial conversion feature | $ | — | $ | — | $ | — | $ | 17,583 | ||||||||
Issuance (cancellation) of restricted stock | $ | — | $ | — | $ | 408 | $ | (56 | ) |