8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 17, 2003

Aspect Communications Corporation

(Exact name of registrant as specified in its charter)

0-18391
(Commission File Number)

                 California
(State or other jurisdiction of
incorporation) 94-2974062
(I.R.S. Employer Identification No.)

1320 Ridder Park Drive
San Jose, CA 95131
(Address of principal executive offices, with zip code)

(408) 325-2200
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

TABLE OF CONTENTS

	Item 7. Financial Statements and Exhibits
	Item 9. Regulation FD Disclosure
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 99.1

Item 7.  Financial Statements and Exhibits.

(c) Exhibits.

          99.1 Press Release of Aspect Communications Corporation dated July 17, 2003 (earnings results for second quarter 2003).

Item 9.  Regulation FD Disclosure.

     In accordance with SEC Release No. 33-8126, the following information, which is intended to be furnished under Item 12, “Results of Operations and Financial Condition,” is instead being furnished under Item 9, “Regulation FD Disclosure.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

     On July 17, 2003, Aspect Communications Corporation issued a press release of the financial results for the fiscal quarter ended June 30, 2003. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated into this Form 8-K by reference.

-2-

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Aspect Communications Corporation
Date: July 17, 2003	By:	/s/ Beatriz V. Infante
		Beatriz V. Infante,
		Chairman, President, and Chief
		Executive Officer

-3-

ASPECT COMMUNICATIONS CORPORATION
INDEX TO EXHIBITS

Exhibit
Number	Description
99.1	Press Release of Aspect Communications Corporation dated July 17, 2003 (earnings results for second quarter 2003).

EX-99.1 3 f91534exv99w1.htm EXHIBIT 99.1

Exhibit - 99.1

ASPECT COMMUNICATIONS REPORTS SECOND QUARTER 2003
FINANCIAL RESULTS

Company Reports Second Quarter EPS of $0.06 and Operating Margins of 10%

SAN JOSE, Calif., July 17, 2003 — Aspect Communications Corporation (Nasdaq: ASPT), the leading provider of enterprise customer contact solutions, today reported financial results for the quarter ended June 30, 2003.

SECOND QUARTER FINANCIAL RESULTS:

Revenues for the second quarter of 2003 totaled $89.4 million compared to $84.4 million for the first quarter of 2003 and $98.1 million for the second quarter last year. Software License revenues in the second quarter of 2003 were $16.3 million compared to $15.0 million for the first quarter of 2003 and $17.8 million for the second quarter last year. Hardware revenues totaled $11.2 million in the second quarter compared to $9.2 million for the first quarter and $17.8 million for the second quarter last year. Software License Updates & Product Support revenues totaled $53.7 million in the second quarter compared to $52.3 million for the first quarter and $53.1 million for the second quarter last year. Professional Services & Education revenues in the second quarter were $8.3 million compared to $8.0 million for the first quarter and $9.4 million for the second quarter last year.

Net income for the second quarter of 2003 was $6.5 million. Net income attributable to common shareholders for the second quarter was $4.5 million or a profit of $0.06 per share on a basic and fully diluted basis. This compares with a net income attributable to common shareholders of $1.7 million or a profit of $0.02 per share for the first quarter of 2003 and a net loss of $14.3 million or a loss of $0.27 per share for the same period last year.

“I am extremely pleased that we have improved our operating margin to 10%. This is a significant milestone for the company as we continue progress towards our steady-state

-more-

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2003, page 2

operating model,” said Beatriz Infante, Aspect’s Chairman, President and CEO. “We achieved our highest gross margin and operating margin since the third quarter of 1998, have delivered three consecutive quarters of continuously improving profitability and 6 quarters in a row of positive cash flow from operations, and are in a strong financial position. Naturally I am disappointed at our year-over-year revenue performance; however, revenues did strengthen in Q2 after a disruption in Q1 as a result of the political climate.”

For the second quarter of 2003, gross margins were 56.5%. This compares to 53.0% for the first quarter of 2003 and 44.7% for the second quarter of 2002. Operating expenses were $41.4 million for the second quarter of 2003 compared to $37.7 million in the first quarter of 2003 and $54.6 million for the same period last year.

Cash, cash equivalents, and short-term investments totaled $223.3 million as of June 30, 2003. This compares to $200.6 million as of March 31, 2003. During the quarter, the company generated $25.4 million in cash from operations. Accounts receivable at quarter-end totaled $43.3 million and days sales outstanding were 38 days compared to 39 days at March 31, 2003.

SECOND QUARTER OPERATIONAL HIGHLIGHTS:

During the quarter, the company added several new customers to its platinum customer base, including: Exelon Corp., National Asset Recovery Services, Network Omni, RC Wiley, Option One Mortgage, Chela Financial, Fossil, Phillips Medical Systems, Halifax Cetelem, Debeka Bausparkasse and Nuon Holland.

Aspect’s installed base of customers continued to be an important source for new product revenues. The company received significant revenue from these existing Aspect customers: Centrix, Pay Pal, Sprint, Centerpoint Energy, Inc., AT&T, Comcast, AOL, RMH Teleservices, Royal Bank of Scotland, HSBC, Direct Line, CJ Garland & Co. LTD, Arvato and Bertelsman.

During the quarter, Aspect completed a 13 city seminar series in North America, Maximize Your Contact Center ROI, that focused on how leading companies are leveraging technology from Aspect. Partners in this series included Deloitte Consulting, Bearing Point, Onyx, Oracle, SAP, Siebel, and Speechworks. Over 700 attendees at the seminars learned how to improve their contact center to provide superior customer service at the highest ROI and lowest TCO.

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2003, page 3

BUSINESS OUTLOOK:

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

• While the company does see some increased stability in the business environment, our planning assumption is that revenue for the third quarter will remain flat from the second quarter.

• The company is planning for gross margins to be consistent with the second quarter. Variability in gross margin percentages is dependent upon, among other factors, the mix and volume of revenues.

• Operating expenses for the third quarter are expected to be flat from the second quarter, exclusive of non-recurring items from the second quarter.

• The company expects to continue to generate positive cash flow from operations. After the redemption of the Convertible Subordinated Debentures, the company expects to maintain a minimum cash level of $90 million through the remainder of the year.

The company will host a conference call and web-cast today at 2:00 pm Pacific Time to discuss second quarter 2003 results. A replay of the conference call will be available from July 17, 2003 at 5:00 pm Pacific Time through July 24, 2003 at 8:59 pm Pacific Time by calling 800-283-9429 or 402-220-0871. The web-cast and replay of the conference call may be accessed from the company’s home page at www.aspect.com.

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 the future profitability of the company, and expected third quarter revenues, gross margins, operating expenses, cash flow from operations and minimum cash balances 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

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2003, page 4

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 and its Form 10-Q for the quarter ended March 31, 2003, both 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.

About Aspect Communications

Aspect Communications Corporation is the leading provider of business communications solutions that help companies improve customer satisfaction, reduce operating costs, gather market intelligence and increase revenue. Aspect is a trusted mission-critical partner with more than two-thirds of the Fortune 50, daily managing more than 3 million customer sales and service professionals worldwide. Aspect is the only company that provides the mission-critical software platform, development environment and applications that seamlessly integrate voice-over-IP, traditional telephony, e-mail, voicemail, Web, fax and wireless business communications, while guaranteeing investment protection in a company’s front-office, back-office, Internet and telephony infrastructures. Aspect’s leadership in business communications solutions is based on more than 18 years of experience and more than 8,000 implementations deployed worldwide. The company is headquartered in San Jose, Calif., with offices around the world and an extensive global network of systems integrators, independent software vendors and distribution partners. For more information, visit Aspect’s Web site at http://www.aspect.com or call (877) 621-3692.

Aspect Communications Announces Financial Results for the Quarter ended June 30, 2003, page 5

###

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						Six months ended
			June 30,						March 31,						June 30,
			2003			2002			2003			2002			2003			2002
Net revenues:
	Software License		$	16,329		$	17,780		$	14,952		$	22,939		$	31,281		$	40,719
	Hardware			11,159			17,829			9,165			17,733			20,324			35,562
	Software License Updates & Product Support			53,656			53,054			52,304			51,252			105,960			104,306
	Professional Services & Education			8,281			9,432			7,987			12,597			16,268			22,029
		Services		61,937			62,486			60,291			63,849			122,228			126,335
	Total net revenues			89,425			98,095			84,408			104,521			173,833			202,616
Cost of revenues:
	Cost of software license revenues			2,416			1,882			2,393			1,645			4,809			3,527
	Cost of hardware revenues			10,074			14,023			8,977			18,534			19,051			32,557
	Cost of services revenues			25,218			34,548			27,024			34,188			52,242			68,736
	Amortization of intangible assets and stock-based compensation			1,211			3,763			1,243			3,764			2,454			7,527
	Total cost of revenues			38,919			54,216			39,637			58,131			78,556			112,347
Gross margin				50,506			43,879			44,771			46,390			95,277			90,269
Operating expenses:
	Research and development			12,414			14,749			12,888			15,408			25,302			30,157
	Sales and marketing			20,269			29,230			20,355			31,777			40,624			61,007
	General and administration			5,524			10,086			4,315			10,594			9,839			20,680
	Restructuring charges			2,997			—			—			—			2,997			—
	Amortization of intangible assets and stock-based compensation			211			581			147			547			358			1,128
Total operating expenses				41,415			54,646			37,705			58,326			79,120			112,972
Income (loss) from operations				9,091			(10,767	)		7,066			(11,936	)		16,157			(22,703	)
Interest and other income (expense), net				(1,373	)		(8,996	)		(1,766	)		(235	)		(3,139	)		(9,231	)
Income (loss) before income taxes				7,718			(19,763	)		5,300			(12,171	)		13,018			(31,934	)
	Provision (benefit) for income taxes			1,250			(5,460	)		1,247			(22,919	)		2,497			(28,379	)
Net income (loss) before cumulative effect of change in accounting principle				6,468			(14,303	)		4,053			10,748			10,521			(3,555	)
	Cumulative effect of change in accounting principle			—			—			(777	)		(51,431	)		(777	)		(51,431	)
Net income (loss)				6,468			(14,303	)		3,276			(40,683	)		9,744			(54,986	)
	Less preferred stock dividend, accretion, and amortization			(2,013	)		—			(1,539	)		—			(3,552	)		—
Net Income (loss) attributable to Common Shareholders			$	4,455		$	(14,303	)	$	1,737		$	(40,683	)	$	6,192		$	(54,986	)
Earnings (loss) per share before cumulative effect of change in accounting principle			$	0.06		$	(0.27	)	$	0.04		$	0.21		$	0.10		$	(0.07	)
Cumulative effect of change in accounting principle				—			—			(0.01	)		(0.99	)		(0.01	)		(0.98	)
Basic earnings (loss) per share(1)			$	0.06		$	(0.27	)	$	0.02		$	(0.78	)	$	0.08		$	(1.05	)
Basic weighted average shares outstanding				53,576			52,400			53,315			52,065			53,446			52,233
Diluted earnings (loss) per share			$	0.06		$	(0.27	)	$	0.02		$	(0.37	)	$	0.08		$	(1.05	)
Diluted weighted average shares outstanding				54,914			57,058			54,591			100,580			54,753			56,890

(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 would allocate approximately 70% of the current earnings to Common Shareholders and yield $0.06 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 $0.08. The Company will be filing a 10-Q/A for the first quarter ended March 31, 2003, reflecting this “two class” method.

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

			June 30,		March 31,		December 31,		June 30,
			2003		2003		2002		2002
Assets
Current assets:
	Cash, cash equivalents and short-term investments		$	223,258	$	200,556	$	146,100	$	147,292
	Accounts receivable, net			43,311		41,845		51,145		73,282
	Inventories			9,084		9,907		6,839		6,596
	Other current assets			17,351		15,294		13,664		20,428
		Total current assets		293,004		267,602		217,748		247,598
Property and equipment, net				76,709		81,712		86,528		99,393
Intangible assets, net				9,954		11,225		12,497		55,601
Other assets				8,545		10,597		8,949		8,508
		Total assets	$	388,212	$	371,136	$	325,722	$	411,100
Liabilities, redeemable convertible preferred stock, and shareholders’ equity
Current liabilities:
	Short-term borrowings		$	6,972	$	7,020	$	7,186	$	4,641
	Accounts payable			7,351		5,907		6,798		14,840
	Accrued compensation and related benefits			15,769		15,707		16,051		20,178
	Other accrued liabilities			54,907		59,700		67,370		67,982
	Deferred revenues			51,637		41,631		30,220		33,605
	Convertible subordinated debentures			122,981		121,178		124,983		—
		Total current liabilities		259,617		251,143		252,608		141,246
Long term borrowings				37,733		39,500		41,243		39,485
Deferred taxes				—		—		—		3,186
Other long-term liabilities				14,014		11,157		10,174		10,008
Convertible subordinated debentures				—		—		—		144,353
		Total liabilities		311,364		301,800		304,025		338,278
Redeemable convertible preferred stock				30,672		28,594		—		—
Shareholders’ equity				46,176		40,742		21,697		72,822
		Total liabilities, redeemable convertible preferred stock, and shareholders’ equity	$	388,212	$	371,136	$	325,722	$	411,100

ASPECT COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousand - unaudited)

				Three months ended						Six months ended
				June 30,						June 30,
				2003			2002			2003			2002
Cash flows from operating activities:
	Net income (loss)			$	6,468		$	(14,303	)	$	9,744		$	(54,986	)
	Reconciliation of net income (loss) to cash provided by operating activities:
		Depreciation			6,302			9,381			12,733			18,780
		Amortization of intangible assets			1,271			4,170			2,543			8,337
		Amortization of stock-based compensation			155			187			273			321
		Loss on disposal of property			24			648			24			648
		Loss (Gain) on extinguishment of debt			—			(2,069	)		17			(4,146	)
		Cumulative effect of change in accounting principle			—			—			777			51,431
		Impairment of long term investment			—			8,859			—			8,859
		Non-cash interest expense on debentures			1,803			2,359			3,607			4,975
		Deferred taxes			127			(196	)		141			82
	Changes in operating assets and liabilities
		Accounts receivable			24			10,940			9,758			6,181
		Inventories			998			800			(2,000	)		5,448
		Other current assets and other assets			288			27,635			(2,997	)		3,737
		Accounts payable			1,445			2,069			1,648			8,852
		Accrued compensation and related benefits			(87	)		(596	)		(464	)		1,262
		Other accrued liabilities			(2,731	)		(1,278	)		(12,566	)		(5,712	)
		Deferred revenues			9,340			2,091			20,748			3,829
			Net cash provided by operating activities		25,427			50,697			43,986			57,898
Cash flows from investing activities:
	Short-term investment purchases				(48,078	)		(33,548	)		(103,344	)		(63,497	)
	Short-term investment sales and maturities				65,219			35,739			112,687			58,076
	Property and equipment purchases				(913	)		(3,889	)		(1,960	)		(7,502	)
			Net cash provided by (used in) investing activities		16,228			(1,698	)		7,383			(12,923	)
Cash flows from financing activities:
	Proceeds from issuance of common stock, net				222			289			1,120			2,331
	Proceeds from issuance of preferred stock, net				(172	)		—			43,564			—
	Payments on capital lease obligations				(132	)		(187	)		(311	)		(372	)
	Proceeds from borrowings				—			—			—			2,000
	Payments on borrowings				(1,683	)		(567	)		(3,413	)		(1,143	)
	Payments on repurchase of convertible subordinated debentures				—			(30,523	)		(5,612	)		(40,649	)
			Net cash provided by (used in) financing activities		(1,765	)		(30,988	)		35,348			(37,833	)
	Effect of exchange rate changes on cash and cash equivalents				278			(317	)		146			(209	)
Net increase in cash and cash equivalents					40,168			17,694			86,863			6,933
Cash and cash equivalents:
	Beginning of period				112,746			61,803			66,051			72,564
	End of period				152,914			79,497			152,914			79,497
Short-term investments at the end of period					70,344			67,795			70,344			67,795
Cash, cash equivalents and short-term investments				$	223,258		$	147,292		$	223,258		$	147,292
Supplemental disclosure of cash flow information:
	Cash paid for interest			$	756		$	678		$	1,520		$	1,401
	Cash paid for income taxes			$	121		$	—		$	356		$	—
Supplemental schedule of noncash investing and financing activities Accrued preferred stock dividend and amortization of redemption premium				$	1,669		$	—		$	2,943		$	—
	Amortization of beneficial conversion feature			$	344		$	—		$	609		$	—

-----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

Exhibit 99.1