EXHIBIT 99.1
ASPECT COMMUNICATIONS REPORTS FOURTH QUARTER AND
FISCAL YEAR 2003 FINANCIAL RESULTS
Company Reports a Fourth Quarter Net Income Increase of 151% Year-Over-Year
SAN JOSE, CALIF., JANUARY 22, 2004 -- Aspect Communications Corporation (Nasdaq:
ASPT), the leading provider of enterprise customer contact solutions, today
reported financial results for the fourth quarter and fiscal year ended December
31, 2003.
FOURTH QUARTER FINANCIAL RESULTS:
Revenues for the fourth quarter of 2003 totaled $97.4 million compared to $92.6
million for the third quarter of 2003 and $96.9 million for the fourth quarter
last year. Software License revenues in the fourth quarter of 2003 were $21.5
million compared to $18.7 million for the third quarter of 2003 and $20.6
million for the fourth quarter last year. Hardware revenues totaled $11.1
million in the fourth quarter compared to $11.6 million for the third quarter
and $14.2 million for the fourth quarter last year. Software License Updates &
Product Support revenues totaled $55.8 million in the fourth quarter compared to
$54.6 million for the third quarter and $51.7 million for the fourth quarter
last year. Professional Services & Education revenues in the fourth quarter were
$9.0 million compared to $7.8 million for the third quarter and $10.5 million
for the fourth quarter last year.
Net income for the fourth quarter of 2003 was $16.7 million. Net income
attributable to common shareholders for the fourth quarter was $14.6 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 $8.2 million or a
profit of $0.11 per share for the third quarter of 2003 and a net income of $6.7
million or a profit of $0.13 per share for the fourth quarter of 2002.
"We are extremely pleased with our performance this quarter," said Gary Barnett,
Aspect Interim President and CEO. "We are creating a great company focused on
strong growth and profitability and we are confident in the strength of our
market, our strategy, our products and our employees."
- more -
ASPECT COMMUNICATIONS ANNOUNCES FINANCIAL RESULTS FOR THE QUARTER AND FISCAL
YEAR ENDED DECEMBER 31, 2003, PAGE 2
For the fourth quarter of 2003, gross margins were 62%. This compares to 57% for
the third quarter of 2003 and 55% for the fourth quarter of 2002. Operating
expenses were $41.4 million for the fourth quarter of 2003 compared to $39.1
million in the third quarter of 2003 and $44.4 million for the same period last
year.
Cash, cash equivalents, and short-term investments totaled $164.0 million as of
December 31, 2003. This compares to $126.7 million as of September 30, 2003.
During the fourth quarter, the company generated $30.6 million in cash from
operations. Accounts receivable at quarter-end totaled $39.6 million and days
sales outstanding were 34 days compared to 36 days at September 30, 2003.
FISCAL YEAR 2003 FINANCIAL RESULTS:
Revenues for the full fiscal year ended December 31, 2003 totaled $363.8 million
compared to $396.1 million for fiscal year 2002. Software License revenues in
2003 were $71.5 million compared to $82.8 million in fiscal year 2002. Hardware
revenues in 2003 were $43.0 million compared to $65.8 million in fiscal year
2002. Software License Updates and Product Support revenues in 2003 totaled
$216.3 million compared to $205.7 million in fiscal year 2002. Professional
Services & Education revenues totaled $33.1 million in 2003 compared to $41.7
million for fiscal year 2002.
Net income for the full fiscal year 2003 was $36.7 million. Net income
attributable to common shareholders for the full fiscal year 2003 was $29.0
million or a profit of $0.40 per share. This compares with a net loss
attributable to common shareholders of $108.3 million or a loss of $1.08 per
share on a fully diluted basis, for the 2002 fiscal year.
For 2003, gross margin was 57%, compared to 39%, for 2002. Gross margin for 2002
includes a $37.6 million write-off of intangible assets.
Operating expenses totaled $159.6 million in 2003, including $3.8 million of
non-recurring charges. This compares to operating expenses of $230.0 million in
2002, including $22.4 million of non-recurring charges.
ASPECT COMMUNICATIONS ANNOUNCES FINANCIAL RESULTS FOR THE QUARTER AND FISCAL
YEAR ENDED DECEMBER 31, 2003, PAGE 3
FOURTH QUARTER OPERATIONAL HIGHLIGHTS:
Aspect received significant revenue from customers across a variety of industry
segments. Some of these Aspect customers included: AOL, Accent Marketing,
Countrywide Financial Corporation, Cox Communications, DaimlerChrysler, Lloyds
TSB Retail, Royal Bank of Scotland, State of New York, Worker's Compensation
Board and Sykes Enterprises.
As further indication of the company's comprehensive product offering, Aspect
Iphinity Call Center was named Product of the Year by Technology Marketing
Corporation's Customer Inter@ction Solutions and Internet Telephony magazines.
In addition, the company was also named workforce management software
market-share leader in Saddletree Research's report "The U.S. Workforce
Management Software Market: 2003-2007."
BUSINESS OUTLOOK:
The following statements are forward-looking, and actual results may differ
materially:
- The company is planning for a seasonal decline of 4% to 7% in
first quarter revenue from the fourth quarter. This would
represent a substantial growth from the first quarter of 2003.
- The company expects gross margins to be lower in the first
quarter, consistent with lower revenue volume. Variability in
gross margin percentages is dependent upon, among other factors,
the mix and volume of revenues.
- Operating expenses for first quarter are expected to decrease from
the fourth quarter.
- While the seasonal decline in revenues will yield a lower earnings
per share compared to the fourth quarter of 2003, we expect to
maintain the momentum the company has achieved over the last year.
The company will host a conference call and web-cast today at 2:00 pm Pacific
Time to discuss fourth quarter and fiscal year 2003 results. A replay of the
conference call will be available from January 22, 2004 at 5:00 pm Pacific Time
through January 29, 2004 at 8:59
ASPECT COMMUNICATIONS ANNOUNCES FINANCIAL RESULTS FOR THE QUARTER AND FISCAL
YEAR ENDED DECEMBER 31, 2003, PAGE 4
pm Pacific Time by calling 800-839-4013 or 402-220-2982. 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 (Nasdaq: ASPT) is the world's largest company
focused exclusively on contact center solutions, and the only one that unifies
workforce, information and communications to deliver exceptional customer
service. The Aspect brand is trusted by more than 75 percent of the Fortune 50,
and more than 3 million customer sales and service professionals worldwide rely
on Aspect's mission-critical business communications solutions. The company's
leadership is based on 19 years of expertise gained from more than 8,000
successful implementations worldwide. Aspect is headquartered in San Jose,
Calif., with 24 offices in 11 countries around the world. For more information,
visit Aspect's Web site at www.aspect.com or call (877) 621-3692.
NOTES ON FINANCIAL PRESENTATION: Actual financial results are prepared in
accordance with U.S. generally accepted accounting principles.
The statements contained in the Business Outlook Section, including but not
limited to, statements relating to expected first quarter revenues, gross
margins, operating expenses, and earnings 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 for the year ended December 31,
2002, its Form 10-Q/A for the quarter ended March 31, 2003, and its Form 10-Qs
for the quarters ended June 30, 2003 and
ASPECT COMMUNICATIONS ANNOUNCES FINANCIAL RESULTS FOR THE QUARTER AND FISCAL
YEAR ENDED DECEMBER 31, 2003, PAGE 5
September 30, 2003, 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
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,
2003 2002 2003 2002 2003 2002
---- ---- ---- ---- ---- ----
NET REVENUES:
Software License $ 21,469 $20,589 $ 18,710 $ 21,529 $ 71,461 $ 82,837
Hardware 11,076 14,182 11,582 16,047 42,981 65,791
Software License Updates & Product Support 55,796 51,697 54,558 49,742 216,313 205,744
Professional Services & Education 9,045 10,476 7,779 9,183 33,093 41,689
--------- ------- -------- -------- -------- ---------
Services 64,841 62,173 62,337 58,925 249,406 247,433
--------- ------- -------- -------- -------- ---------
TOTAL NET REVENUES 97,386 96,944 92,629 96,501 363,848 396,061
--------- ------- -------- -------- -------- ---------
COST OF REVENUES:
Cost of software license revenues 2,515 2,625 1,663 2,113 8,987 8,265
Cost of hardware revenues 9,128 10,665 9,314 12,655 37,493 55,877
Cost of services revenues 24,582 29,041 25,328 29,832 102,152 127,609
Amortization of intangible assets
and stock-based compensation 725 1,257 1,238 2,926 4,417 11,711
Impairment of intangible assets - - 2,000 37,556 2,000 37,556
--------- ------- -------- -------- -------- ---------
TOTAL COST OF REVENUES 36,950 43,588 39,543 85,082 155,049 241,018
--------- ------- -------- -------- -------- ---------
GROSS MARGIN 60,436 53,356 53,086 11,419 208,799 155,043
OPERATING EXPENSES:
Research and development 11,284 12,635 12,189 13,424 48,775 56,216
Sales and marketing 20,813 20,821 19,598 25,812 81,035 107,640
General and administration 8,412 11,131 7,091 9,174 25,342 40,985
Restructuring charges 818 (295) - 22,699 3,814 22,404
Amortization of intangible assets
and stock-based compensation 32 129 205 396 595 1,653
Impairment of intangible assets - - - 1,076 - 1,076
--------- ------- -------- -------- -------- ---------
TOTAL OPERATING EXPENSES 41,359 44,421 39,083 72,581 159,561 229,974
--------- ------- -------- -------- -------- ---------
INCOME (LOSS) FROM OPERATIONS 19,077 8,935 14,003 (61,162) 49,238 (74,931)
Interest and other income (expense), net (342) (1,696) (1,182) 1,560 (4,665) (9,366)
INCOME (LOSS) BEFORE INCOME TAXES 18,735 7,239 12,821 (59,602) 44,573 (84,297)
Provision (benefit) for income taxes 2,000 573 2,575 377 7,071 (27,429)
--------- ------- -------- -------- -------- ---------
NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 16,735 6,666 10,246 (59,979) 37,502 (56,868)
Cumulative effect of change in accounting principle - - - - (777) (51,431)
--------- ------- -------- -------- -------- ---------
NET INCOME (LOSS) 16,735 6,666 10,246 (59,979) 36,725 (108,299)
Less preferred stock dividend, accretion, and amortization (2,095) - (2,053) - (7,700) -
--------- ------- -------- -------- -------- ---------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 14,640 $ 6,666 $ 8,193 $(59,979) $ 29,025 $(108,299)
========= ======= ======== ======== ======== =========
Earnings (loss) per share before cumulative effect of change in
accounting principle $ 0.19 $ 0.13 $ 0.11 $ (1.14) $ 0.40 $ (1.08)
Cumulative effect of change in accounting principle $ - $ - $ - $ - $ (0.01) $ (0.98)
Basic earnings (loss) per share (1) $ 0.19 $ 0.13 $ 0.11 $ (1.14) $ 0.39 $ (2.06)
Basic weighted average shares outstanding 56,309 52,932 54,612 52,678 54,453 52,519
Diluted earnings (loss) per share $ 0.19 $ 0.13 $ 0.11 $ (1.14) $ 0.39 $ (1.08)
Diluted weighted average shares outstanding 84,974 55,979 81,967 55,596 78,874 56,339
(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, 2003 would allocate
approximately 72% of the current earnings to Common Shareholders and yield $0.19
earnings per share per Common Shareholder, as shown above. This calculation for
the twelve months ended December 31, 2003 would allocate approximately 72% of
the current earnings to Common Shareholders and yield $0.39 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 earnings per Common share would be $0.20 for
the three months ended December 31, 2003 and $0.47 for the twelve months ended
December 31, 2003.
ASPECT COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands - unaudited)
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2003 2003 2002
------------ ------------- ------------
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 163,992 $ 126,730 $ 146,100
Accounts receivable, net 39,561 45,569 51,145
Inventories 6,176 7,964 6,839
Other current assets 16,145 14,761 13,664
------------ ------------- ------------
TOTAL CURRENT ASSETS 225,874 195,024 217,748
Property and equipment, net 68,599 71,953 86,528
Intangible assets, net 7,930 8,687 12,497
Other assets 8,182 7,962 8,949
------------ ------------- ------------
TOTAL ASSETS $ 310,585 $ 283,626 $ 325,722
============ ============= ============
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK,
AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 7,036 $ 7,038 $ 7,186
Accounts payable 4,936 6,753 6,798
Accrued compensation and related benefits 17,773 16,338 16,051
Other accrued liabilities 64,790 61,744 67,370
Deferred revenues 50,200 50,449 30,220
Convertible subordinated debentures - 956 124,983
------------ ------------- ------------
TOTAL CURRENT LIABILITIES 144,735 143,278 252,608
Long term borrowings 34,132 35,902 41,243
Other long-term liabilities 11,021 12,263 10,174
------------ ------------- ------------
TOTAL LIABILITIES 189,888 191,443 304,025
Redeemable convertible preferred stock 34,820 32,726 -
Shareholders' equity 85,877 59,457 21,697
------------ ------------- ------------
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK, AND SHAREHOLDERS' EQUITY $ 310,585 $ 283,626 $ 325,722
============ ============= ============
ASPECT COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Cash flows from operating activities:
Net income (loss) $ 16,735 $ 6,666 $ 36,725 $ (108,299)
Reconciliation of net income (loss) to cash provided by
operating activities:
Depreciation 6,086 7,178 24,635 33,992
Amortization of intangible assets 757 1,271 4,567 12,810
Amortization of stock-based compensation - 110 446 553
Loss on disposal of property 108 350 405 2,810
Loss (Gain) on extinguishment of debt - - 17 (7,249)
Cumulative effect of change in accounting principle - - 777 51,431
Impairment of long term investment - - - 8,859
Impairment of intangible assets - - 2,000 38,631
Non-cash interest expense on debentures 14 1,831 4,423 8,814
Changes in operating assets and liabilities
Accounts receivable 7,077 11,422 14,722 31,274
Inventories 2,028 (1,939) 1,146 5,546
Other current assets and other assets (1,298) 2,117 (3,167) 6,282
Accounts payable (1,830) (4,666) (764) 773
Accrued compensation and related benefits 1,251 (3,066) 1,389 (3,084)
Other accrued liabilities 922 (12,108) (6,507) (8,718)
Deferred revenues (1,276) (5,206) 18,305 (445)
---------- ---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 30,574 3,960 99,119 73,980
Cash flows from investing activities:
Short-term investment purchases (69,075) (50,874) (203,290) (203,105)
Short-term investment sales and maturities 48,929 49,930 194,413 185,449
Property and equipment purchases (2,595) (1,231) (5,740) (10,694)
---------- ---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (22,741) (2,175) (14,617) (28,350)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 10,450 25 16,843 2,827
Proceeds from issuance of preferred stock, net - - 43,564 -
Payments on capital lease obligations (33) (196) (375) (788)
Proceeds from borrowings - - - 27,000
Payments on borrowings (1,739) (1,685) (6,886) (21,821)
Payments on repurchase of convertible subordinated debentures (970) - (129,409) (59,769)
---------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,708 (1,856) (76,263) (52,551)
Effect of exchange rate changes on cash and cash equivalents 1,644 155 1,363 408
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,185 84 9,602 (6,513)
Cash and cash equivalents:
BEGINNING OF PERIOD 58,468 65,967 66,051 72,564
---------- ---------- ---------- ----------
END OF PERIOD 75,653 66,051 75,653 66,051
SHORT-TERM INVESTMENTS AT THE END OF PERIOD 88,339 80,049 88,339 80,049
---------- ---------- ---------- ----------
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS $ 163,992 $ 146,100 $ 163,992 $ 146,100
========== ========== ========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 616 $ 711 $ 2,811 $ 2,742
Cash paid for income taxes $ 520 $ - $ 916 $ -
Supplemental schedule of noncash investing and financing activities
Accrued preferred stock dividend and amortization of
redemption premium $ 1,742 $ - $ 6 ,389 $ -
Amortization of beneficial conversion feature $ 353 $ - $ 1,311 $ -
Beneficial conversion feature $ - $ - $ 17,583 $ -