-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FsbJPmJhU+WPDb2kCr0ASKR0ihRSlTZ0GNRLhYApEzJPuW9F/CdwwO+FFW1Ax3Zn L2I5u9IAAlCa1NSG3RWtpw== 0000891618-97-002361.txt : 19970520 0000891618-97-002361.hdr.sgml : 19970520 ACCESSION NUMBER: 0000891618-97-002361 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASPECT TELECOMMUNICATIONS CORP CENTRAL INDEX KEY: 0000779390 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 953962471 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18391 FILM NUMBER: 97609043 BUSINESS ADDRESS: STREET 1: 1730 FOX DR CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084412200 MAIL ADDRESS: STREET 1: 1730 FOX DRIVE CITY: SAN JOSE STATE: CA ZIP: 95131 10-Q 1 FORM 10-Q FOR PERIOD ENDED 3/31/97 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 10-Q (Mark One) [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to ------ ------ Commission file number: 0-18391 ASPECT TELECOMMUNICATIONS CORPORATION (Exact name of registrant as specified in its charter) California 94-2974062 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1730 Fox Drive, San Jose, California 95131-2312 (Address of principal executive offices and zip code) Registrant's telephone number: (408) 325-2200 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares outstanding of the Registrant's Common Stock, $.01 par value, was 49,022,416 at April 30, 1997. 2 ASPECT TELECOMMUNICATIONS CORPORATION INDEX
Description Page Number ----------- ----------- Cover Page 1 Index 2 Part I: Financial Information Item 1: Financial Statements Condensed Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Income for the Three Month Periods Ended March 31, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows for the Three Month Periods Ended March 31, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II: Other Information Item 1: Legal Proceedings 12 Item 6: Exhibits and Reports on Form 8-K 13 Signature 14
2 3 ASPECT TELECOMMUNICATIONS CORPORATION PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
ASSETS March 31, December 31, 1997 1996 ----------- ------------ (unaudited) ** Current assets: Cash and cash equivalents $ 58,820 $ 47,996 Short-term investments 68,086 67,801 Accounts receivable, net 63,272 53,211 Inventories 13,311 15,485 Other current assets 13,253 14,731 --------- --------- Total current assets 216,742 199,224 Property and equipment, net 53,325 51,348 Intangible assets, net 27,929 28,888 Other assets 3,680 3,633 --------- --------- Total assets $ 301,676 $ 283,093 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 11,393 $ 8,187 Accrued compensation and related benefits 10,565 8,896 Other accrued liabilities 26,668 22,581 Customer deposits and deferred revenue 18,624 19,481 --------- --------- Total current liabilities 67,250 59,145 Note payable 4,500 4,500 Shareholders' equity: Preferred stock, $.01 par value: 2,000,000 shares authorized, none outstanding in 1997 and 1996 -- -- Common stock, $.01 par value: 100,000,000 shares authorized, shares outstanding: 48,972,936 in 1997 and 48,806,580 in 1996 129,211 128,186 Net unrealized gain on available-for-sale securities 2,055 2,534 Accumulated translation adjustments (1,339) (45) Retained earnings 99,999 88,773 --------- --------- Total shareholders' equity 229,926 219,448 --------- --------- Total liabilities and shareholders' equity $ 301,676 $ 283,093 ========= ========= ** Derived from audited financial statements.
See accompanying notes. 3 4 ASPECT TELECOMMUNICATIONS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except per share amounts)
Three Months Ended March 31, ---------------------------- 1997 1996 ------- ------- Net revenues: Product $67,552 $50,574 Customer support 24,066 16,451 ------- ------- Total net revenues 91,618 67,025 Cost of revenues: Cost of product revenues 23,205 16,537 Cost of customer support revenues 17,226 11,804 ------- ------- Total cost of revenues 40,431 28,341 ------- ------- Gross margin 51,187 38,684 Operating expenses: Research and development 10,962 7,337 Selling, general and administrative 23,384 18,189 ------- ------- Total operating expenses 34,346 25,526 ------- ------- Income from operations 16,841 13,158 Interest income, net 1,413 237 ------- ------- Income before income taxes 18,254 13,395 Provision for income taxes 7,028 4,970 ------- ------- Net income $11,226 $ 8,425 ======= ======= Primary earnings per share: Net income per share (a) $ 0.21 $ 0.18 ======= ======= Shares used in per share computations (a) 52,471 45,953 ======= ======= Fully diluted earnings per share: Net income per share (a) $ 0.21 $ 0.17 ======= ======= Shares used in per share computations (a) 52,471 51,843 ======= =======
(a) Share and per share data for all periods presented reflect a two-for-one stock split effective January 28, 1997. See accompanying notes. 4 5 ASPECT TELECOMMUNICATIONS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands)
Three Months Ended March 31, ---------------------------- 1997 1996 -------- -------- Cash flows from operating activities: Net income $ 11,226 $ 8,425 Reconciliation of net income to cash provided by operating activities: Depreciation and amortization 3,862 3,078 Changes in: Accounts receivable (10,776) (5,229) Inventories 2,180 (1,942) Other current assets and other assets 376 (416) Accounts payable 3,229 1,613 Accrued compensation and related benefits 1,686 (156) Other accrued liabilities 4,896 3,802 Customer deposits and deferred revenue (690) 1,799 -------- -------- Cash provided by operating activities 15,989 10,974 Cash flows from financing activities: Common stock transactions 1,025 1,471 -------- -------- Cash provided by financing activities 1,025 1,471 Cash flows from investing activities: Short-term investment purchases (19,903) (16,430) Short-term investment sales and maturities 19,790 24,431 Property and equipment purchases (5,972) (4,887) -------- -------- Cash provided by (used in) investing activities (6,085) 3,114 Effect of exchange rate changes on cash and cash equivalents (105) 781 -------- -------- Increase in cash and cash equivalents 10,824 16,340 Cash and cash equivalents: Beginning of period 47,996 22,102 -------- -------- End of period $ 58,820 $ 38,442 ======== ========
See accompanying notes. 5 6 ASPECT TELECOMMUNICATIONS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Basis of Presentation The consolidated financial statements include the accounts of Aspect Telecommunications Corporation and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated financial statements and notes thereto included in the Company's 1996 Annual Report to Shareholders. Per Share Information Per share information for the periods presented is computed using the weighted average number of common and common-equivalent shares outstanding. For primary earnings per share calculations, common-equivalent shares consist of the incremental shares issuable upon the assumed exercise of dilutive stock options using the treasury stock method. The fully diluted earnings per share calculation for the three months ended March 31, 1997 is computed in a manner similar to the primary earnings per share calculations. For the fully diluted earnings per share calculation for the three months ended March 31, 1996, common-equivalent shares also include the dilutive effect of incremental shares issuable upon the conversion of the 5% convertible subordinated debentures, and net income is adjusted for the interest expense, net of income taxes, related to the debentures. On October 15, 1996, the Company converted all $55 million of its convertible subordinated debentures into approximately 5.7 million shares of the Company's common stock. Inventories Inventories, valued at the lower of cost (first-in, first-out) or market, consist of:
(in thousands) March 31, December 31, 1997 1996 ------- ------- Raw materials $10,549 $ 9,598 Work-in-progress 457 541 Finished goods 2,305 5,346 ------- ------- Total $13,311 $15,485 ======= =======
New Accounting Pronouncement In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). The Company is required to adopt SFAS 128 in 6 7 ASPECT TELECOMMUNICATIONS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS the fourth quarter of fiscal 1997 and will restate at that time earnings per share (EPS) data for prior periods to conform with SFAS 128. Earlier application is not permitted. SFAS 128 replaces current EPS reporting requirements and requires dual presentation of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income by the weighted average of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. If SFAS 128 had been in effect during the current and prior year periods, basic EPS would have been $0.23 and $0.20 for the quarters ended March 31, 1997 and 1996, respectively. Diluted EPS under SFAS 128 would have been the same as the fully diluted EPS currently reported for the periods. Contingencies Periodically, the Company negotiates with third parties to establish patent license or cross-license agreements, and the Company is currently in such negotiations. There can be no assurance that current or future negotiations will result in the Company obtaining a license on satisfactory terms or at all. On March 5, 1997, Lucent Technologies Inc. ("Lucent") filed a lawsuit in the United States District Court for the Eastern District of Pennsylvania alleging that the Company infringes four of Lucent's patents (the "Lucent patents"). In its complaint, Lucent is seeking to enjoin the Company from allegedly continuing to infringe the Lucent patents and is seeking an unspecified amount of compensatory damages, treble damages for alleged willful infringement, and interest, expenses and attorneys' fees. On May 2, 1997, the Company filed an answer in response to the Lucent complaint, asserting that the Lucent patents are invalid and denying the alleged patent infringement. The Company believes that it has meritorious defenses to the asserted claims and intends to defend the litigation vigorously. Although the Company does not believe that any of its products infringe any valid claims of the Lucent patents, the outcome of litigation is inherently unpredictable, and there can be no assurance that the results of these proceedings will be favorable to the Company or that they will not have a material adverse effect on the Company's business, operating results or financial condition. Regardless of the ultimate outcome, the Lucent litigation could result in substantial expense to the Company and significant diversion of effort by the Company's technical and managerial personnel. If the court determines that the Company infringes the Lucent patents and that the Lucent patents are valid and enforceable, it could issue an injunction prohibiting the Company from making, using or selling certain products and it could assess significant damages against the Company. Accordingly, an adverse determination in the proceeding could subject the Company to significant liabilities and require the Company to seek a license from Lucent. Although intellectual property disputes are often settled through licensing or similar arrangements, costs associated with such arrangements may be substantial, and there can be no assurance that a license from Lucent, if required, would be available to the Company on acceptable terms or at all. 7 8 ASPECT TELECOMMUNICATIONS CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I - -- Item 1 of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management's Discussion and Analysis in the Company's 1996 Annual Report to Shareholders. Aspect Telecommunications Corporation (the Company) is a global provider of comprehensive business solutions for companies with mission-critical call centers that exist to generate revenue, service customers, and handle inquiries. The Company's products include automatic call distributors, interactive response systems, call center management information and reporting tools, call center planning and forecasting packages, and computer-telephony integration tools and software. The Company also provides services vital to call center environments, including business applications consulting, systems integration, and training. In 1996, the Company completed two acquisitions: Envoy Holdings Limited (Envoy) on September 30, 1996, and Prospect Software, Inc. (Prospect), on October 21, 1996. Envoy provides call center and telebusiness solutions designed to improve customer service through consulting services, software, and systems integration. Prospect is a provider of application development tools for building connectivity to a variety of call center systems and network-based computer applications. Both acquisitions were accounted for as pooling of interests and all financial results for 1996 reflect the acquisitions. As the historical operations of Envoy and Prospect were not significant to any year presented, the Company's financial statements for years prior to 1996 have not been restated and the financial effects of the prior years' results of operations for both acquired companies have been accounted for as increases to retained earnings in 1996. On December 20, 1996, the Company announced that its Board of Directors approved a two-for-one stock split effective January 28, 1997, for shareholders of record as of January 6, 1997. All share and per share amounts in this Form 10-Q reflect the stock split. The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Specifically, the Company wishes to alert readers that, except for the historical information contained herein, the following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements regarding the Company's expectations, beliefs, intentions, or future strategies, which are dependent on certain risks and uncertainties that may cause actual results to differ materially from those expressed in these or any other forward-looking statements made by or on behalf of the Company. These risks and uncertainties include variability and uncertainty of revenues and operating results; volatility of stock price; product concentration, technological change, and new products; competition; intellectual property/litigation; management of growth; dependence on key personnel; limited sources of component supply; licenses from third parties; geographic concentration; acquisitions and investments; international operations; regulatory requirements; and expansion of distribution channels. For a more detailed description of these risks and uncertainties, see the section titled "Management's Discussion and Analysis - Risk Factors" in the Company's 1996 Annual Report to Shareholders. 8 9 ASPECT TELECOMMUNICATIONS CORPORATION RESULTS OF OPERATIONS Net Revenues Total net revenues for the first quarter of 1997 were $92 million, representing an increase of 37% when compared with total net revenues of $67 million for the same period of 1996. Product revenues for the first quarter of 1997 were $68 million, representing an increase of 34% when compared with product revenues of $51 million for the same period of 1996. The increase in product revenues was primarily attributable to increased demand for the Company's products, as both the volume of new system sales and the volume of add-ons and upgrades increased from the same period of 1996. Average selling prices on new systems remained relatively unchanged across the periods. Customer support revenues for the first quarter of 1997 were $24 million, representing an increase of 46% when compared with customer support revenues of $16 million for the same period of 1996. The increase in customer support revenues resulted primarily from the growth in the Company's installed base. Customer support revenues include charges for providing contractually agreed-upon ongoing system service and maintenance, which typically commences twelve months from the date a system is first installed; charges to install products at customer sites; consulting and systems integration revenue; and other support services provided to the Company's customers. Contract support revenues are largely dependent on renewable customer support contracts and will be primarily affected by the general growth in the installed base. Installation revenue will generally follow product revenue fluctuations, although no installation revenue is ordinarily received for product sales to the Company's distributors. In 1996, the Company established the Aspect Consulting and Systems Integration (C&SI) business unit. C&SI revenues are dependent on the Company's ability to obtain contracts for suitable projects and successfully complete these projects. Since most of the costs associated with providing customer support are fixed, quarterly fluctuations in customer support revenues can have a significant impact on the related gross margin. Gross Margin on Product Revenues Product gross margin decreased to 66% for the first quarter of 1997 from 67% for the same period of 1996. The decrease in product gross margin primarily reflects higher revenues from sales to the United States government, which typically have lower than average margins, and other factors. On a forward-looking basis, the Company expects that the following factors, among others, could have a material impact on product gross margins: the mix of products sold; the channel of distribution; the portion of systems revenues related to accounts purchasing multiple systems; the mix and level of third-party product included as part of systems integration projects; and the results of newly acquired subsidiaries and newly established business units. Gross Margin on Customer Support Revenues Customer support gross margin was 28% for both the first quarter of 1997 and the same period of 1996. On a forward-looking basis, the Company anticipates that customer support margins will vary from quarter to quarter due to fluctuations in customer support revenues, since most of the costs associated with providing customer support are fixed, the expansion of its customer support infrastructure, and the Company's ability to build a successful C&SI business unit. 9 10 ASPECT TELECOMMUNICATIONS CORPORATION Research and Development Expenses Research and development ("R&D") expenses were $11 million for the first quarter of 1997, representing an increase of 49% when compared with R&D expenses of $7 million for the same period of 1996. The increase primarily reflects increased personnel and other infrastructure costs. As a percentage of net revenues, R&D spending was 12% for the first quarter of 1997 compared to 11% for the same period of 1996. The Company continues to believe that significant investment in R&D is required to remain competitive and anticipates, on a forward-looking basis, that such expenses will increase in terms of absolute dollars for 1997 as a whole, when compared to 1996, although such expenses as a percentage of net revenues may fluctuate on a quarterly basis. Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses were $23 million for the first quarter of 1997, representing an increase of 29% when compared with SG&A expenses of $18 million for the same period of 1996. The increase was primarily related to increased personnel, costs related to the expansion of the Company's foreign and domestic operations, and increased infrastructure costs. As a percentage of net revenues, SG&A decreased to 26% for the first quarter of 1997 from 27% for the same period of 1996. SG&A expenses for the first quarter of 1997 decreased 1% when compared to SG&A expenses of $24 million for the fourth quarter of 1996. The decrease reflects fluctuations in costs for facilities and corporate development activities, as well as the donation of appreciated equity securities in lieu of cash to fund the Company's corporate giving program. The Company anticipates, on a forward-looking basis, that SG&A expenses will increase in terms of absolute dollars for 1997 as a whole, when compared to 1996, although such expenses as a percentage of net revenues may fluctuate on a quarterly basis. In addition, on a forward-looking basis, legal expenses are expected to increase in future periods due to the Lucent Technologies Inc. litigation (see Part II, Item 1. Legal Proceedings). Net Interest Income Net interest income (interest income, net of interest expense) increased to $1.4 million for the first quarter of 1997 from $0.2 million for the same period of 1996. The increase was primarily due to higher earning balances and the conversion of the Company's $55 million of convertible subordinated debentures in October 1996. Income Taxes The Company's effective income tax rate for the first quarter of 1997 was 38.5%, up from 37.1% for the same period of 1996. The increase reflects expanding international operations, the anticipated expiration of the R&D tax credit, and other factors. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1997, the Company's principal source of liquidity consisted of cash, cash equivalents, and short-term investments totaling $127 million, which represented 42% of total assets. The primary sources of cash during the first quarter of 1997 consisted of cash provided by operating activities of $16 million and proceeds from the issuance of common stock under various stock plans of $1 million. The primary use of cash during the first quarter of 1997 consisted of $6 million for purchases of property and equipment. 10 11 ASPECT TELECOMMUNICATIONS CORPORATION As of March 31, 1997, the Company's outstanding borrowings consisted of a $4.5 million note payable incurred in connection with the acquisition of TCS (see Note 2 to the Company's 1996 Consolidated Financial Statements). The Company believes, on a forward-looking basis, that its cash, cash equivalents, and short-term investments and anticipated cash flow from operations will be sufficient to meet the Company's presently anticipated cash requirements during at least the next twelve months. NEW ACCOUNTING PRONOUNCEMENT In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). The Company is required to adopt SFAS 128 in the fourth quarter of fiscal 1997 and will restate at that time earnings per share (EPS) data for prior periods to conform with SFAS 128. Earlier application is not permitted. The requirements of SFAS 128 and the pro forma effect of adopting SFAS 128 are disclosed in the Notes to Condensed Consolidated Financial Statements. 11 12 ASPECT TELECOMMUNICATIONS CORPORATION Part II: Other Information ITEM 1. LEGAL PROCEEDINGS The segment of the telecommunications market that includes the Company's products has been characterized by extensive litigation regarding patents and other intellectual property rights. As is common in the telecommunications industry, the Company has been in the past and may in the future be notified of claims that its products or services are subject to patents or other proprietary rights of other parties. Although the Company attempts to ensure that its products and processes do not infringe such third-party patents or proprietary rights, there can be no assurance that infringement or invalidity claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against the Company. Periodically, the Company negotiates with third parties to establish patent license or cross-license agreements, and the Company is currently in such negotiations. There can be no assurance that current or future negotiations will result in the Company obtaining a license on satisfactory terms or at all. Moreover, license agreements with third parties may not include all intellectual property rights that may be issued to or owned by the licensors, and thus future disputes with these companies are possible. In the event an intellectual property dispute is not settled through a license, litigation could ensue. Any litigation, or interference proceedings that may be declared by the United States Patent and Trademark Office to determine the priority of inventions, could result in substantial expense to the Company and significant diversion of effort by the Company's technical and managerial personnel. An adverse determination in such litigation or proceeding, including without limitation the Lucent litigation discussed below, could prevent the Company from making, using or selling certain of its products, and subject the Company to damage assessments, all of which could have a material adverse effect on the Company's business, operating results or financial condition. On March 5, 1997, Lucent Technologies Inc. ("Lucent") filed a lawsuit in the United States District Court for the Eastern District of Pennsylvania alleging that the Company infringes four of Lucent's patents (the "Lucent patents"). In its complaint, Lucent is seeking to enjoin the Company from allegedly continuing to infringe the Lucent patents and is seeking an unspecified amount of compensatory damages, treble damages for alleged willful infringement, and interest, expenses and attorneys' fees. On May 2, 1997, the Company filed an answer in response to the Lucent complaint, asserting that the Lucent patents are invalid and denying the alleged patent infringement. The Company believes that it has meritorious defenses to the asserted claims and intends to defend the litigation vigorously. Although the Company does not believe that any of its products infringe any valid claims of the Lucent patents, the outcome of litigation is inherently unpredictable, and there can be no assurance that the results of these proceedings will be favorable to the Company or that they will not have a material adverse effect on the Company's business, operating results or financial condition. Regardless of the ultimate outcome, the Lucent litigation could result in substantial expense to the Company and significant diversion of effort by the Company's technical and managerial personnel. If the court determines that the Company infringes the Lucent patents and that the Lucent patents are valid and enforceable, it could issue an injunction prohibiting the Company from making, using or selling certain products and it could assess significant damages against the Company. Accordingly, an adverse determination in the proceeding could subject the Company to significant liabilities and require the Company to seek a license from Lucent. Although intellectual property disputes are often settled through licensing or similar arrangements, costs associated with such arrangements may be substantial, and there can be no assurance that a license from Lucent, if required, would be available to the Company on acceptable terms or at all. In the future, the Company could become involved in other types of litigation, such as shareholder lawsuits for alleged violations of securities laws, claims asserted by current or former employees, and product liability claims. An adverse outcome in such litigation could have a material adverse effect on the Company's business, operating results or financial condition. Regardless of merit, source, or outcome of the litigation, it could result in substantial cost to and diversion of effort by the Company. 12 13 ASPECT TELECOMMUNICATIONS CORPORATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. EXHIBITS Exhibit 11.1 Statement re: Computation of Earnings Per Share Exhibit 27 Financial Data Schedule B. REPORTS ON FORM 8-K Reports on Form 8-K filed during the quarter ended March 31, 1997: Form 8-K dated January 15, 1997 Item 5. Other Events - Announcement of earnings and results of operations for the quarter and fiscal year ended December 31, 1996. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits - Aspect Telecommunications Corporation Press Release dated January 15, 1997. Form 8-K dated March 10, 1997 Item 5. Other Events - Announcement of notification of patent infringement complaint filed by Lucent Technologies Inc. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits - Aspect Telecommunications Corporation Press Release dated March 6, 1997. 13 14 ASPECT TELECOMMUNICATIONS CORPORATION SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Aspect Telecommunications Corporation (Registrant) Date: May 14, 1997 By /s/ Eric J. Keller -------------------------------------------- Eric J. Keller Vice President, Finance and Chief Financial Officer (Duly Authorized and Principal Financial and Accounting Officer) 14 15 EXHIBIT INDEX
Exhibit No. Description - ------- ----------- 11.1 Statement re: Computation of Earnings Per Share 27 Financial Data Schedule
EX-11.1 2 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE 1 ASPECT TELECOMMUNICATIONS CORPORATION EXHIBIT 11.1: Statement re: Computation of Earnings Per Share (in thousands, except per share amounts)
Three Months Ended March 31, ---------------------------- 1997 1996 ------- ------- Primary: Weighted average common shares outstanding during the period 48,893 42,452 Common share equivalents: Dilutive effect of stock options 3,578 3,501 ------- ------- Total 52,471 45,953 ======= ======= Net income $11,226 $ 8,425 ======= ======= Primary earnings per share $ 0.21 $ 0.18 ======= =======
Three Months Ended March 31, ---------------------------- 1997 1996 ------- ------- Fully Diluted: Weighted average common shares outstanding during the period 48,893 42,452 Common share equivalents: Dilutive effect of stock options 3,578 3,732 Weighted average shares issuable upon assumed conversion of debt - 5,659 ------- ------- Total 52,471 51,843 ======= ======= Net income $11,226 $ 8,425 Interest expense during the period on convertible subordinated debentures, net of tax - 461 ------- ------- Net income adjusted for fully diluted calculations $11,226 $ 8,886 ======= ======= Fully diluted earnings per share $ 0.21 $ 0.17 ======= =======
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDING MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 58,820 68,086 64,886 1,614 13,311 216,742 101,557 48,232 301,676 67,250 4,500 0 0 129,211 100,715 301,676 67,552 91,618 23,205 40,431 34,346 0 27 18,254 7,028 11,226 0 0 0 11,226 0.21 0.21
-----END PRIVACY-ENHANCED MESSAGE-----