Aspect Communications Reports First Quarter 2001 Financial Results

Apr 17, 2001, 01:00 ET from Aspect Communications Corporation

    SAN JOSE, Calif., April 17 /PRNewswire/ --
 Aspect Communications Corporation (Nasdaq: ASPT), the leading provider of
 contact servers for managing customer transactions across all communication
 channels, today announced quarterly revenues of $114.5 million for the first
 quarter ended March 31, 2001 compared to $144.4 million for the same period
 last year.  License revenue in the first quarter of 2001 was $31.5 million
 compared to $46.1 million for the same period last year.  Services revenue in
 the first quarter was $60.9 million compared to $61.9 million for the same
 period last year, and other revenues totaled $22.1 million in the first
 quarter compared to $36.5 million for the same period last year.
     Pro forma net loss for the first quarter of 2001, excluding the
 amortization of intangible assets, stock-based compensation and charges
 related to restructuring was $31.3 million or $0.61 per share, which is better
 than the reduced guidance of $37 to $41 million issued by the company.  This
 compares with a pro forma net income of $3.1 million or $0.06 per diluted
 share for the same period last year.  Pro forma net income for the first
 quarter of 2000 excludes the amortization of intangible assets, purchased
 in-process technology, and a net after-tax gain of $2.2 million or $0.04 per
 diluted share from the sale of marketable equity securities.
     "The operating environment in the first quarter of 2001 was one of the
 most challenging periods in Aspect history and the impact was felt globally,
 especially in North America," said Beatriz Infante, Aspect chairman,
 president, and CEO.  "Although we cannot control the timing of an economic
 recovery, we have, and will continue to do, whatever it takes to ensure
 long-term success.  The actions we took during the first quarter, combined
 with the more aggressive actions we are taking in the second quarter, enable
 us to optimize our cash resources and should result in third quarter pro forma
 operating expenses of approximately $77 million.  These actions represent a
 reduction of $12 million from Q4 2000, and also improve service gross margins
 over the next three quarters.  I firmly believe the long-term growth potential
 of our market segment remains well over 30% and we will be prepared to
 capitalize on that growth when the economy turns."
     "In addition to the previously implemented 6% workforce reduction, we are
 further reducing headcount by approximately 11% this quarter.  We have also
 made a strategic decision to transition our professional services business to
 a partner-based model over the remainder of the year, which will further
 reduce headcount by approximately 120 employees over the next three quarters.
 This should improve our gross margin and leverage the partner relationships we
 have established over the past 18 months," continued Infante.  "From a product
 and sales perspective, I remain confident in our ability to win at the
 customer level as evidenced by our increasing sales pipeline.  With these
 actions, we have significantly improved our cash flow breakeven, and our
 ability to generate profits will be accelerated when the overall economy
 improves."
     During the first quarter, Aspect won business from leading global
 companies including:  British Air, Delta, EDS, HSBC, Morgan Stanley, Sprint
 and Verizon.
     Cash, cash equivalents, short-term investments and marketable equity
 securities totaled $155.3 million as of March 31, 2001.
     For the first quarter of 2001, pro forma gross margin was $53.9 million or
 47.1% compared to $76.0 million or 52.6% in the first quarter of 2000, and pro
 forma operating expenses were $84.9 million compared to $72.0 million in the
 first quarter of 2000.
 
     BUSINESS OUTLOOK:
 
     The following statements are pro forma based.  These statements are
 forward-looking, and actual results may differ materially.  Given recent
 customer spending patterns and the continued high level of economic
 uncertainty it is difficult for the company to project its operating results
 with formal guidance and therefore is only providing the following
 assumptions:
 
     -- The company's assumption is that revenue and gross margin for the
        second quarter of 2001 will be flat to down 10% from the first quarter
        of 2001.
     -- Operating expenses, excluding the amortization of acquisition related
        intangibles, stock-based compensation and restructuring charges are
        expected to decrease by approximately $4 million in the second quarter
        to approximately $81 million.
     -- During the second quarter, the company expects to take a restructuring
        charge of approximately $10 to $12 million as a result of a planned
        workforce reduction of approximately 15% and a further consolidation of
        facilities.
     -- Third quarter pro forma operating expenses are expected to decline an
        additional $4 million from second quarter levels to approximately $77
        million.
     -- Through planned cost reductions and financing activities, the company
        expects to maintain cash, cash equivalents, short-term investments and
        marketable equity securities of approximately $120 to $125 million for
        the remainder of the year, assuming no significant change in these
        revenue and gross margin assumptions.
 
     The company will host a conference call and web-cast today at 1:45 p.m.
 PDT. to discuss first quarter 2001 results.  A replay of the conference call
 will be available from April 17, 2001 at 5:00 p.m. PDT. through May 16, 2001
 at 5:00 p.m. PDT. and can be accessed by dialing 800-633-8284 or 858-812-6440,
 with reservation number 18227856.  A web-cast of the conference call may be
 accessed from the company's home page at www.aspect.com or by clicking on
 Earnings Events at www.streetfusion.com and following the instructions.
 
     Notes on financial presentation:  Actual financial results are prepared in
 accordance with U.S. generally accepted accounting principles.   Pro forma
 financial results exclude the amortization of intangible assets, stock-based
 compensation, charges related to restructuring, purchased in-process
 technology, and gains on the sale of marketable equity securities.
 
     Aspect Communications
     Aspect Communications Corporation is the leading provider of customer
 relationship portals, contact servers for managing dynamic customer contact
 transactions across all wired and wireless communication channels.  The Aspect
 Portal contact server allows businesses to manage all customer contacts
 dynamically and turn them into relationships, opportunities and loyalty.
 Aspect is the only company today that delivers a complete multichannel contact
 center -- the core of any company's CRM strategy.  Aspect's contact server
 synchronizes all customer contact points, including live and self-service,
 with demonstrated customer return on investment.  Aspect's leadership in CRM
 is based on more than 15 years of experience and over 7,600 implementations
 deployed worldwide.  Aspect powers 78 percent of the Fortune 50.  The company
 is headquartered in San Jose, Calif., with offices in major cities around the
 world.  For more information, visit Aspect's Web site at http://www.aspect.com
 or call 877-621-3692.
     NOTE:  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.
     The statements by Beatriz V. Infante and the above statements contained in
 this Outlook, except for the historical information contained herein,
 including but not limited to, statements relating to the future revenue,
 profitability and cash position of the company, cost reduction and containment
 measures, capital spending plans, and general economic conditions 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 EPS 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 raising
 a substantial risk of variance in actual results; changes in the overall mix
 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 quarterly revenues and income
 to fall significantly short of anticipated levels.  Additional risks that
 could cause actual results to differ materially from those projected are
 discussed in Aspect's Annual Report and its filings 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 CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share data - unaudited)
 
                                                    Three Months Ended
                                                    ------------------
                                                         March 31,
                                                         ---------
                                                     2001        2000
                                                     ----        ----
     Net Revenues:
       Licenses                                     $31,503     $46,083
       Services                                      60,885      61,890
       Other                                         22,145      36,450
     Total Net Revenues                             114,533     144,423
                                                   ---------   ---------
     Cost of Revenues:
       Cost of license revenues                       1,997       2,836
       Cost of services revenues                     38,797      41,215
       Cost of other revenues                        19,806      24,350
       Amortization of intangible assets              1,238       1,221
         Total Cost of Revenues                      61,838      69,622
                                                    --------    --------
 
     Gross Margin                                    52,695      74,801
 
     Operating Expenses:
       Research and development                      23,218      24,401
       Sales and marketing                           49,892      38,390
       General and administrative                    11,784       9,223
       Restructuring charge                           6,954         ---
       In-process research and
        development                                     ---       5,018
       Amortization of intangibles
        assets and stock-based
        compensation                                  6,787       5,131
                                                     -------     -------
     Total Operating Expenses                        98,635      82,163
                                                    --------    --------
 
     Loss from operations                          (45,940)     (7,362)
 
     Interest and other
      income (expense), net                           (216)       4,119
                                                    --------     --------
 
     Loss before income taxes                      (46,156)     (3,243)
 
     Provision for income taxes                        (75)     (1,204)
                                                     --------   --------
 
     Net loss                                     ($46,231)    ($4,447)
                                                   ========    ========
 
     Basic loss per share                           ($0.90)     ($0.09)
     Diluted loss per share                         ($0.90)     ($0.09)
 
     Weighted average
      shares outstanding                             51,238      50,482
 
     Weighted average
      shares outstanding-
       assuming dilution                             51,238      50,482
 
     Pro forma net income (loss)                  ($31,252)      $3,136
 
     Basic earnings (loss) per share                ($0.61)       $0.06
     Diluted earnings (loss) per share              ($0.61)       $0.06
     Weighted average
      shares outstanding                             51,238      50,482
 
     Weighted average
      shares outstanding-
       assuming dilution                             51,238      55,181
 
 
                       ASPECT COMMUNICATIONS CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                           (in thousands - unaudited)
 
                                                    March 31,    December 31,
                                                       2001          2000
                                                  ------------   ------------
 
     Assets
     Current assets:
       Cash, cash equivalents and short-term
        investments                                  $152,974       $171,413
       Marketable equity securities                     2,281          9,545
       Accounts receivable, net                        91,830        135,243
       Inventories                                     25,800         19,940
       Other current assets                            29,667         26,925
                                                   ----------    -----------
         Total current assets                         302,552        363,066
 
     Property and equipment, net                      116,858        108,780
     Intangible assets, net                           138,515        146,394
     Other assets                                      17,312         17,258
                                                   ----------    -----------
     Total assets                                    $575,237       $635,498
                                                   ==========    ===========
 
     Liabilities and shareholders' equity
     Current liabilities:
       Accounts payable                               $29,093        $33,553
       Accrued liabilities                             84,033         96,092
       Deferred revenue                                43,114         45,041
                                                   ----------    -----------
         Total current liabilities                    156,240        174,686
 
     Capital lease                                        852            852
     Deferred taxes                                     5,015          3,394
     Convertible subordinated debentures              175,620        173,041
     Shareholders' equity                             237,510        283,525
                                                   ----------    -----------
     Total liabilities and shareholders'
      equity                                         $575,237       $635,498
                                                   ==========    ===========
 
 

SOURCE Aspect Communications Corporation
    SAN JOSE, Calif., April 17 /PRNewswire/ --
 Aspect Communications Corporation (Nasdaq: ASPT), the leading provider of
 contact servers for managing customer transactions across all communication
 channels, today announced quarterly revenues of $114.5 million for the first
 quarter ended March 31, 2001 compared to $144.4 million for the same period
 last year.  License revenue in the first quarter of 2001 was $31.5 million
 compared to $46.1 million for the same period last year.  Services revenue in
 the first quarter was $60.9 million compared to $61.9 million for the same
 period last year, and other revenues totaled $22.1 million in the first
 quarter compared to $36.5 million for the same period last year.
     Pro forma net loss for the first quarter of 2001, excluding the
 amortization of intangible assets, stock-based compensation and charges
 related to restructuring was $31.3 million or $0.61 per share, which is better
 than the reduced guidance of $37 to $41 million issued by the company.  This
 compares with a pro forma net income of $3.1 million or $0.06 per diluted
 share for the same period last year.  Pro forma net income for the first
 quarter of 2000 excludes the amortization of intangible assets, purchased
 in-process technology, and a net after-tax gain of $2.2 million or $0.04 per
 diluted share from the sale of marketable equity securities.
     "The operating environment in the first quarter of 2001 was one of the
 most challenging periods in Aspect history and the impact was felt globally,
 especially in North America," said Beatriz Infante, Aspect chairman,
 president, and CEO.  "Although we cannot control the timing of an economic
 recovery, we have, and will continue to do, whatever it takes to ensure
 long-term success.  The actions we took during the first quarter, combined
 with the more aggressive actions we are taking in the second quarter, enable
 us to optimize our cash resources and should result in third quarter pro forma
 operating expenses of approximately $77 million.  These actions represent a
 reduction of $12 million from Q4 2000, and also improve service gross margins
 over the next three quarters.  I firmly believe the long-term growth potential
 of our market segment remains well over 30% and we will be prepared to
 capitalize on that growth when the economy turns."
     "In addition to the previously implemented 6% workforce reduction, we are
 further reducing headcount by approximately 11% this quarter.  We have also
 made a strategic decision to transition our professional services business to
 a partner-based model over the remainder of the year, which will further
 reduce headcount by approximately 120 employees over the next three quarters.
 This should improve our gross margin and leverage the partner relationships we
 have established over the past 18 months," continued Infante.  "From a product
 and sales perspective, I remain confident in our ability to win at the
 customer level as evidenced by our increasing sales pipeline.  With these
 actions, we have significantly improved our cash flow breakeven, and our
 ability to generate profits will be accelerated when the overall economy
 improves."
     During the first quarter, Aspect won business from leading global
 companies including:  British Air, Delta, EDS, HSBC, Morgan Stanley, Sprint
 and Verizon.
     Cash, cash equivalents, short-term investments and marketable equity
 securities totaled $155.3 million as of March 31, 2001.
     For the first quarter of 2001, pro forma gross margin was $53.9 million or
 47.1% compared to $76.0 million or 52.6% in the first quarter of 2000, and pro
 forma operating expenses were $84.9 million compared to $72.0 million in the
 first quarter of 2000.
 
     BUSINESS OUTLOOK:
 
     The following statements are pro forma based.  These statements are
 forward-looking, and actual results may differ materially.  Given recent
 customer spending patterns and the continued high level of economic
 uncertainty it is difficult for the company to project its operating results
 with formal guidance and therefore is only providing the following
 assumptions:
 
     -- The company's assumption is that revenue and gross margin for the
        second quarter of 2001 will be flat to down 10% from the first quarter
        of 2001.
     -- Operating expenses, excluding the amortization of acquisition related
        intangibles, stock-based compensation and restructuring charges are
        expected to decrease by approximately $4 million in the second quarter
        to approximately $81 million.
     -- During the second quarter, the company expects to take a restructuring
        charge of approximately $10 to $12 million as a result of a planned
        workforce reduction of approximately 15% and a further consolidation of
        facilities.
     -- Third quarter pro forma operating expenses are expected to decline an
        additional $4 million from second quarter levels to approximately $77
        million.
     -- Through planned cost reductions and financing activities, the company
        expects to maintain cash, cash equivalents, short-term investments and
        marketable equity securities of approximately $120 to $125 million for
        the remainder of the year, assuming no significant change in these
        revenue and gross margin assumptions.
 
     The company will host a conference call and web-cast today at 1:45 p.m.
 PDT. to discuss first quarter 2001 results.  A replay of the conference call
 will be available from April 17, 2001 at 5:00 p.m. PDT. through May 16, 2001
 at 5:00 p.m. PDT. and can be accessed by dialing 800-633-8284 or 858-812-6440,
 with reservation number 18227856.  A web-cast of the conference call may be
 accessed from the company's home page at www.aspect.com or by clicking on
 Earnings Events at www.streetfusion.com and following the instructions.
 
     Notes on financial presentation:  Actual financial results are prepared in
 accordance with U.S. generally accepted accounting principles.   Pro forma
 financial results exclude the amortization of intangible assets, stock-based
 compensation, charges related to restructuring, purchased in-process
 technology, and gains on the sale of marketable equity securities.
 
     Aspect Communications
     Aspect Communications Corporation is the leading provider of customer
 relationship portals, contact servers for managing dynamic customer contact
 transactions across all wired and wireless communication channels.  The Aspect
 Portal contact server allows businesses to manage all customer contacts
 dynamically and turn them into relationships, opportunities and loyalty.
 Aspect is the only company today that delivers a complete multichannel contact
 center -- the core of any company's CRM strategy.  Aspect's contact server
 synchronizes all customer contact points, including live and self-service,
 with demonstrated customer return on investment.  Aspect's leadership in CRM
 is based on more than 15 years of experience and over 7,600 implementations
 deployed worldwide.  Aspect powers 78 percent of the Fortune 50.  The company
 is headquartered in San Jose, Calif., with offices in major cities around the
 world.  For more information, visit Aspect's Web site at http://www.aspect.com
 or call 877-621-3692.
     NOTE:  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.
     The statements by Beatriz V. Infante and the above statements contained in
 this Outlook, except for the historical information contained herein,
 including but not limited to, statements relating to the future revenue,
 profitability and cash position of the company, cost reduction and containment
 measures, capital spending plans, and general economic conditions 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 EPS 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 raising
 a substantial risk of variance in actual results; changes in the overall mix
 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 quarterly revenues and income
 to fall significantly short of anticipated levels.  Additional risks that
 could cause actual results to differ materially from those projected are
 discussed in Aspect's Annual Report and its filings 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 CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share data - unaudited)
 
                                                    Three Months Ended
                                                    ------------------
                                                         March 31,
                                                         ---------
                                                     2001        2000
                                                     ----        ----
     Net Revenues:
       Licenses                                     $31,503     $46,083
       Services                                      60,885      61,890
       Other                                         22,145      36,450
     Total Net Revenues                             114,533     144,423
                                                   ---------   ---------
     Cost of Revenues:
       Cost of license revenues                       1,997       2,836
       Cost of services revenues                     38,797      41,215
       Cost of other revenues                        19,806      24,350
       Amortization of intangible assets              1,238       1,221
         Total Cost of Revenues                      61,838      69,622
                                                    --------    --------
 
     Gross Margin                                    52,695      74,801
 
     Operating Expenses:
       Research and development                      23,218      24,401
       Sales and marketing                           49,892      38,390
       General and administrative                    11,784       9,223
       Restructuring charge                           6,954         ---
       In-process research and
        development                                     ---       5,018
       Amortization of intangibles
        assets and stock-based
        compensation                                  6,787       5,131
                                                     -------     -------
     Total Operating Expenses                        98,635      82,163
                                                    --------    --------
 
     Loss from operations                          (45,940)     (7,362)
 
     Interest and other
      income (expense), net                           (216)       4,119
                                                    --------     --------
 
     Loss before income taxes                      (46,156)     (3,243)
 
     Provision for income taxes                        (75)     (1,204)
                                                     --------   --------
 
     Net loss                                     ($46,231)    ($4,447)
                                                   ========    ========
 
     Basic loss per share                           ($0.90)     ($0.09)
     Diluted loss per share                         ($0.90)     ($0.09)
 
     Weighted average
      shares outstanding                             51,238      50,482
 
     Weighted average
      shares outstanding-
       assuming dilution                             51,238      50,482
 
     Pro forma net income (loss)                  ($31,252)      $3,136
 
     Basic earnings (loss) per share                ($0.61)       $0.06
     Diluted earnings (loss) per share              ($0.61)       $0.06
     Weighted average
      shares outstanding                             51,238      50,482
 
     Weighted average
      shares outstanding-
       assuming dilution                             51,238      55,181
 
 
                       ASPECT COMMUNICATIONS CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                           (in thousands - unaudited)
 
                                                    March 31,    December 31,
                                                       2001          2000
                                                  ------------   ------------
 
     Assets
     Current assets:
       Cash, cash equivalents and short-term
        investments                                  $152,974       $171,413
       Marketable equity securities                     2,281          9,545
       Accounts receivable, net                        91,830        135,243
       Inventories                                     25,800         19,940
       Other current assets                            29,667         26,925
                                                   ----------    -----------
         Total current assets                         302,552        363,066
 
     Property and equipment, net                      116,858        108,780
     Intangible assets, net                           138,515        146,394
     Other assets                                      17,312         17,258
                                                   ----------    -----------
     Total assets                                    $575,237       $635,498
                                                   ==========    ===========
 
     Liabilities and shareholders' equity
     Current liabilities:
       Accounts payable                               $29,093        $33,553
       Accrued liabilities                             84,033         96,092
       Deferred revenue                                43,114         45,041
                                                   ----------    -----------
         Total current liabilities                    156,240        174,686
 
     Capital lease                                        852            852
     Deferred taxes                                     5,015          3,394
     Convertible subordinated debentures              175,620        173,041
     Shareholders' equity                             237,510        283,525
                                                   ----------    -----------
     Total liabilities and shareholders'
      equity                                         $575,237       $635,498
                                                   ==========    ===========
 
 SOURCE  Aspect Communications Corporation