Comverse Technology, Inc. ("CTI") (Nasdaq:CMVT) today announced its
results for the three months ended October 31, 2011.
Consolidated Highlights: Below is selected
consolidated financial information for the three months ended
October 31, 2011 and 2010 prepared in accordance with generally
accepted accounting principles ("GAAP") and, where indicated, not
in accordance with GAAP ("non-GAAP").
- Revenue increased 6.5% to $453.1 million.
- GAAP net income attributable to CTI of $35.7 million.
- GAAP basic and diluted earnings per share attributable to CTI's
shareholders of $0.17.
- Non-GAAP net income attributable to CTI¹ increased from $6.3
million to $35.2 million.
- Basic non-GAAP earnings per share attributable to CTI's
shareholders increased from $0.03 to $0.17.
- Diluted non-GAAP earnings per share attributable to CTI's
shareholders increased from $0.01 to $0.17.
CTI is a holding company that conducts business through its
subsidiaries, principally its wholly-owned subsidiary, Comverse,
Inc. ("Comverse"), and its majority-owned subsidiaries, Verint
Systems Inc. ("Verint"), Starhome B.V. ("Starhome") and, prior to
its sale during fiscal 2010, Ulticom, Inc. For the current fiscal
periods, CTI's reportable segments were Comverse Business Support
Systems ("BSS"), Comverse Value-Added Services ("VAS"), and Verint.
The results of operations of all the other operations of the
company, including the Comverse Mobile Internet operating segment
("Comverse MI"), Comverse's Netcentrex operations, Comverse's
global corporate functions that support its business units,
Starhome B.V. and its subsidiaries, miscellaneous operations and
CTI's holding company operations are included in the column
captioned "All Other" in the business segment information
provided.
Comverse Subsidiary Highlights: Below is
selected financial information for the three and nine months ended
October 31, 2011 and 2010 for the company's Comverse
subsidiary.
Comverse Subsidiary: ² |
Three Months
Ended October 31, |
Nine Months Ended
October 31, |
(Dollars in thousands) |
2011 |
2010 |
2011 |
2010 |
Total revenue |
$ 243,797 |
$ 228,901 |
$ 589,616 |
$ 627,019 |
Gross margin |
40.9% |
51.7% |
38.0% |
43.5% |
Income (loss) from operations |
$ 29,501 |
$ (9,119) |
$ 1,417 |
$ (76,576) |
Operating margin |
12.1% |
(4.0%) |
0.2% |
(12.2%) |
Comverse performance |
$ 43,405 |
$ 40,851 |
$ 54,022 |
$ 30,290 |
Comverse performance margin |
17.8% |
17.8% |
9.2% |
4.8% |
Charles Burdick, Chairman and Chief Executive Officer of CTI
said, "We achieved profitability and positive operating cash flow
in each of our three subsidiaries, and have a solid financial
foundation to support our future success. Our Comverse subsidiary
is experiencing increasing recognition for its leadership in the
emerging converged billing BSS segment, with new Comverse ONE
customer wins, and endorsements from network operators and other
industry thought leaders. Comverse also continues to reinforce its
leading market position in value-added services with the
introduction of its new IP messaging platform and Service
Enablement Middleware cloud-based solution. Our majority-owned
Verint and Starhome subsidiaries again delivered strong operating
and market performance."
1"Non-GAAP net income (loss) attributable to
Comverse Technology, Inc." and "Non-GAAP earnings (loss) per share
attributable to Comverse Technology, Inc.'s shareholders" have not
been prepared in accordance with GAAP. See "Presentation of
Non-GAAP Financial Measures" and "Consolidated Reconciliation of
GAAP to Non-GAAP Financial Measures" below. |
2For additional information concerning the
presentation of financial information for the company's Comverse
subsidiary and the computation of "Comverse Performance," see
"Financial Results—Comverse Subsidiary—Comverse Performance" and
"Supplemental Financial Information" below. Comverse performance
margin reflects Comverse performance as a percentage of total
revenue. |
Comverse and Starhome Highlights: Below is
selected financial information for the three and nine months ended
October 31, 2011 and 2010 for the company's Comverse BSS and
Comverse VAS segments, as well as Comverse Other and Starhome:
|
Three Months
Ended October 31, |
Nine Months Ended
October 31, |
(Dollars in thousands) |
2011 |
2010 |
2011 |
2010 |
Comverse BSS |
|
|
|
Total and segment revenue |
$ 117,731 |
$ 90,906 |
$ 278,403 |
$ 242,151 |
Income from operations |
30,413 |
26,018 |
56,261 |
36,879 |
|
|
|
|
|
Comverse VAS |
|
|
|
|
Total and segment revenue |
$ 112,655 |
$ 121,141 |
$ 276,234 |
$ 341,001 |
Income from operations |
48,372 |
55,893 |
99,017 |
118,975 |
|
|
|
|
|
Comverse Other 1 |
|
|
|
|
Total revenue 2 |
$ 13,411 |
$ 16,854 |
$ 34,979 |
$ 43,867 |
Loss from operations |
(49,284) |
(91,030) |
(153,861) |
(232,430) |
|
|
|
|
|
Starhome |
|
|
|
|
Total revenue 3 |
$ 10,983 |
$ 10,713 |
$ 32,654 |
$ 27,912 |
Income from operations |
1,984 |
1,899 |
5,765 |
2,884 |
|
|
|
|
|
1Relates to all the operations of
the company's Comverse Subsidiary, other than the company's
Comverse BSS and Comverse VAS segments. |
|
|
|
|
2 Total revenue for Comverse
Other includes intercompany revenue of $0.7 million and $2.4
million for the three and nine months ended October 31, 2011,
respectively, and $0.6 million and $1.6 million for the three and
nine months ended October 31, 2010, respectively. |
|
|
|
|
3 Total revenue for Starhome
includes intercompany revenue of $0.4 million and $1.6 million for
the three and nine months ended October 31, 2011,
respectively, and $0.2 million and $0.6 million for the three and
nine months ended October 31, 2010, respectively. |
|
|
|
|
Financial Results
Comverse Subsidiary
Comverse Subsidiary Total Revenue
Total revenue for the company's Comverse subsidiary (including
intercompany revenue) was $243.8 million for the current fiscal
quarter, an increase of 6.5% compared to the $228.9 million for the
prior year fiscal quarter. Total revenue for the company's Comverse
subsidiary was $589.6 million for the nine months ended October 31,
2011, a decrease of 6.0% compared to the $627.0 million for the
corresponding prior year period. Comverse's revenue for the three
and nine months ended October 31, 2011 includes $39.0 million and
$41.2 million, respectively, of additional revenue recognized due
to the adoption of new accounting guidance. This includes $33.9
million recognized in the current fiscal quarter resulting from the
material modifications of certain existing contracts.
Comverse's revenue from customer solutions was $160.6 million
for the current fiscal quarter, an increase of $19.3 million, or
13.7%, compared to the prior year fiscal quarter. Comverse's
revenue from customer solutions was $344.9 million for the nine
months ended October 31, 2011, a decrease of $34.9 million, or
9.2%, compared to the corresponding prior year period.
Comverse's revenue from maintenance was $83.2 million for the
current fiscal quarter, a decrease of $4.4 million, or 5.1%,
compared to the prior year fiscal quarter. Comverse's revenue from
maintenance was $244.7 million for the nine months ended October
31, 2011, a decrease of $2.5 million, or 1.0%, compared to the
corresponding prior year period.
Comverse Subsidiary Income (Loss) from Operations
Income from operations for the company's Comverse subsidiary was
$29.5 million for the current fiscal quarter, compared to loss from
operations of $9.1 million for the prior year fiscal
quarter. BSS and VAS segment operating income of $30.4 million
and $48.4 million, respectively, do not include corporate overhead
allocations. Such expenses are included in Comverse Other operating
loss, which was $49.3 million.
Comverse Performance
Comverse performance was $43.4 million for the current fiscal
quarter, representing a Comverse performance margin of 17.8%,
compared to $40.9 million for the prior year fiscal quarter, also
representing a segment performance margin of 17.8%.
Comverse performance represents the operating results of the
company's Comverse subsidiary without the impact of significant
expenditures incurred by Comverse in connection with the efforts to
become or remain current in periodic reporting obligations under
the federal securities laws which are expected to be eliminated
over time, certain noncash charges, and certain other gains and
charges.
Comverse BSS Revenue
Comverse BSS revenue from customer solutions and maintenance was
$117.7 million for the current fiscal quarter, an increase of $26.8
million, or 29.5%, compared to the prior year fiscal quarter.
Revenue from Comverse BSS customer solutions was $82.3 million for
the current fiscal quarter, an increase of $30.2 million, or
58.0%, compared to the prior year fiscal quarter. The increase in
revenue from Comverse BSS customer solutions in the current fiscal
quarter was primarily attributable to material modifications of
certain existing contracts that allowed the recognition of
additional revenue of approximately $33.5 million. Comverse BSS
maintenance revenue was $35.4 million for the current fiscal
quarter, a decrease of $3.4 million, or 8.7%, compared to the
prior year fiscal quarter.
Comverse BSS revenue from customer solutions and maintenance was
$278.4 million for the nine months ended October 31, 2011, an
increase of $36.3 million, or 15.0%, compared to the corresponding
prior year period.
Comverse VAS Revenue
Comverse VAS revenue from customer solutions and maintenance was
$112.7 million for the current fiscal quarter, a decrease of $8.5
million, or 7.0%, compared to the prior year fiscal quarter.
Revenue from Comverse VAS customer solutions was $69.8 million for
the current fiscal quarter, a decrease of $5.9 million, or 7.8%,
compared to the prior year fiscal quarter. Comverse VAS maintenance
revenue was $42.9 million for the current fiscal quarter, a
decrease of $2.6 million, or 5.6%, compared to the prior year
fiscal quarter.
Comverse VAS revenue from customer solutions and maintenance was
$276.2 million for the nine months ended October 31, 2011, a
decrease of $64.8 million, or 19.0%, compared to the corresponding
prior year period.
Comverse Other Revenue
Comverse Other revenue from customer solutions and maintenance
was $13.4 million for the current fiscal quarter, a decrease of
$3.4 million, or 20.4%, compared to the prior year fiscal
quarter. Comverse Other revenue was $35.0 million for the nine
months ended October 31, 2011, a decrease of $8.9 million, or
20.3%, compared to the corresponding prior year period.
Starhome Revenue
Starhome's revenue from customer solutions and maintenance
(including intercompany revenue) was $11.0 million for the current
fiscal quarter, an increase of $0.3 million, or 2.5%, compared
to the prior year fiscal quarter. Starhome's revenue from customer
solutions and maintenance was $32.7 million for the nine months
ended October 31, 2011, an increase of $4.7 million, or 17.0%,
compared to the corresponding prior year period.
Financial Condition of CTI and its Comverse
Subsidiary
As of October 31, 2011, CTI and its Comverse subsidiary had
combined cash, cash equivalents, bank time deposits and restricted
cash of approximately $342.6 million, compared to approximately
$374.2 million as of July 31, 2011. During the current fiscal
quarter, CTI and Comverse made significant disbursements
aggregating approximately $36.5 million, primarily related to $20.0
million paid under a class action settlement agreement, $10.4
million in professional fees, $4.0 million in restructuring
payments, and $2.1 million in payments made in connection with a
separation agreement with CTI's former President and Chief
Executive Officer. In addition, during such period, CTI's holding
company operations experienced negative cash flows from operations.
These decreases were partially offset primarily by positive cash
flows from operations at Comverse.
Restricted cash aggregated $61.8 million as of October 31, 2011,
compared to $78.5 million as of July 31, 2011. Cash, cash
equivalents, bank time deposits and restricted cash excludes ARS.
As of October 31, 2011 and July 31, 2011, CTI had $68.7
million and $68.9 million aggregate principal amount of ARS,
respectively, with a carrying amount on each such date of
approximately $50.3 million and $51.9 million, respectively.
Proceeds from sales and redemptions of ARS (including interest
thereon) were restricted under the terms of the consolidated
shareholder class action settlement agreement.
Subsequent to October 31, 2011, CTI paid all remaining amounts
under the settlement agreement aggregating $91.3 million, of which
$82.5 million was paid using CTI shares of common stock and the
remaining $8.8 million in cash. Following such payment, all ARS and
cash proceeds from sales of ARS became unrestricted. In addition,
in November 2011, CTI sold ARS with an aggregate principal amount
of approximately $61.2 million and a carrying amount of $50.0
million for approximately $49.2 million.
As of October 31, 2011 and July 31, 2011, CTI and its Comverse
subsidiary had combined indebtedness of approximately $2.2
million.
Verint Segment
Verint is a majority-owned subsidiary of CTI. Its common stock
is traded on the NASDAQ Global Market under the symbol "VRNT."
For additional information concerning Verint's results for the
three and nine months ended October 31, 2011, please see the press
release issued by Verint on December 7, 2011, which is available on
Verint's website, www.verint.com and is included as an exhibit to
the Current Report on Form 8-K filed by Verint with the Securities
and Exchange Commission (the "SEC"), and Verint's quarterly report
on Form 10-Q for the three months ended October 31, 2011.
Conference Call Information
We will be conducting a conference call today at 8:30 am to
discuss our results for the third quarter. An on-line,
real-time webcast of the conference call will be available on our
website at www.cmvt.com. The conference call can also be accessed
live via telephone at 1-678-825-8369. Please dial in 5-10
minutes prior to the scheduled start time.
A replay of the call will be available, beginning at
approximately 11:00 am on December 9, 2011, for thirty days, at
1-404-537-3406, and archived via webcast at www.cmvt.com. The
replay access code is 34995666.
Segment Performance
CTI evaluates its business by assessing the performance of each
of its operating segments. CTI's Chief Executive Officer is its
chief operating decision maker ("CODM"). The CODM uses segment
performance, as defined below, as the primary basis for assessing
the financial results of the operating segments and for the
allocation of resources. Segment performance, as the company
defines it in accordance with the Financial Accounting Standard
Board's ("FASB") guidance relating to segment reporting, is not
necessarily comparable to other similarly titled captions of other
companies. Segment performance, as defined by management,
represents operating results of a segment without the impact of
significant expenditures incurred by the segment in connection with
the efforts to become or remain current in periodic reporting
obligations under the federal securities laws which are expected to
be eliminated over time, certain non-cash charges, and certain
other insignificant gains and charges.
Segment performance is computed by management as income (loss)
from operations adjusted for the following: (i) stock-based
compensation expense; (ii) amortization of acquisition-related
intangibles; (iii) compliance-related professional fees; (iv)
compliance-related compensation and other expenses; (v) impairment
charges; (vi) litigation settlements and related costs; (vii)
acquisition-related charges; (viii) restructuring and integration
charges; and (ix) certain other gains and charges.
Compliance-related professional fees and compliance-related
compensation and other expenses recorded for fiscal periods ended
on or before July 31, 2011 relate to fees and expenses incurred in
connection with (a) the company's efforts to complete current and
previously issued financial statements and audits of such financial
statements, and (b) the company's efforts to become current in its
periodic reporting obligations under the federal securities laws.
Compliance-related professional fees and compliance-related
compensation and other expenses recorded for the three months ended
October 31, 2011 relate to fees and expenses incurred in connection
with the timely filing of the company's Quarterly Report on Form
10-Q for the fiscal quarter ended July 31, 2011 and CTI's efforts
to remediate material weaknesses in internal control over financial
reporting that are expected to be eliminated over time.
In evaluating each segment's performance, management uses
segment revenue, which consists of revenue generated by the
segment, including intercompany revenue. Certain segment
performance adjustments relate to expenses included in the
calculation of income (loss) from operations, while, from time to
time, certain segment performance adjustments may be presented as
adjustments to revenue. In calculating Verint's segment performance
for the three and nine months ended October 31, 2011, the
presentation of segment revenue gives effect to segment revenue
adjustments that represent the impact of fair value adjustments
required under the FASB's guidance relating to acquired customer
support contracts that would have otherwise been recognized as
revenue on a standalone basis with respect to acquisitions
consummated by Verint during the periods presented. Verint did not
have a segment revenue adjustment for the three or nine months
ended October 31, 2010.
Presentation of Non-GAAP Financial Measures
CTI provides Non-GAAP net income (loss) attributable to Comverse
Technology, Inc. and Non-GAAP earnings (loss) per share
attributable to Comverse Technology, Inc.'s shareholders as
additional information for its operating results. These measures
are not in accordance with, or alternatives for, GAAP financial
measures and may be different from, or not comparable to similarly
titled or other non-GAAP financial measures used by other
companies. CTI believes that the presentation of these non-GAAP
financial measures provides useful information to investors
regarding certain additional financial and business trends relating
to its results of operations as viewed by management in monitoring
the company's businesses. In addition, management uses these
non-GAAP financial measures for reviewing financial results and for
planning purposes. See "Comverse Technology, Inc. and Subsidiaries
Consolidated Reconciliation of GAAP to Non-GAAP Financial Measures"
below.
About Comverse Technology, Inc.
Comverse Technology, Inc., through its wholly-owned subsidiary
Comverse, is the world's leading provider of software and systems
enabling converged billing and active customer management and
value-added voice, messaging and mobile Internet services.
Comverse's extensive customer base spans more than 125 countries
and covers over 450 communication service providers serving more
than two billion subscribers. CTI also holds majority ownership
positions in Verint (Nasdaq:VRNT) and privately-held Starhome.
The Comverse Technology logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7454
Forward-Looking Statements
Certain statements appearing in this press release constitute
"forward-looking statements." Forward-looking statements include
financial projections, statements of plans and objectives for
future operations, statements of future economic performance, and
statements of assumptions relating thereto. In some cases,
forward-looking statements can be identified by the use of
terminology such as "may," "expects," "plans," "anticipates,"
"estimates," "believes," "potential," "projects," "forecasts,"
"intends," or the negative thereof or other comparable terminology.
By their very nature, forward-looking statements involve known and
unknown risks, uncertainties and other important factors that could
cause actual results, performance and the timing of events to
differ materially from those anticipated, expressed or implied by
the forward-looking statements in this press release. These and
other risks, uncertainties and other important factors are
described in CTI's filings with the SEC, including, without
limitation, in Item 1A, "Risk Factors" of its Annual Report on Form
10-K for the fiscal year ended January 31, 2011 (the "2010 Form
10-K") and in Part II, Item 1A, "Risk Factors" of subsequently
filed Quarterly Reports on Form 10-Q, and include, among other
things, the following risks and uncertainties:
- the risk of diminishment in our capital resources as a result
of, among other things, future negative cash flows from operations
at Comverse or the continued incurrence of significant expenses by
CTI and Comverse in connection with the filing by CTI of periodic
reports under the federal securities laws and the remediation of
material weaknesses in internal control over financial
reporting;
- the continuation of material weaknesses or the discovery of
additional material weaknesses in our internal control over
financial reporting and any delay in the implementation of remedial
measures;
- the review of the periodic reports of CTI and Verint Systems by
the staff of the SEC could result in amendments to our and Verint
Systems' financial information or other disclosures;
- the risk that, if CTI ceases to maintain a majority ownership
of Verint Systems' outstanding equity securities and ceases to
maintain control over Verint's operations, it may be required to no
longer consolidate Verint's financial statements within its
consolidated financial statements and, in such event, the
presentation of CTI's consolidated financial statements would be
materially different from the presentation for the fiscal periods
covered by this Quarterly Report and for the fiscal years covered
by the 2010 Form 10-K;
- we may need to recognize further impairment of intangible
assets or financial assets and goodwill;
- the effects of any potential decline or weakness in the global
economy (due to among other things, the downgrade of the U.S.
credit rating and European sovereign debt crisis) on the
telecommunications industry, which may result in reduced
information technology spending and reduced demand for our
subsidiaries' products and services;
- disruption in the credit and capital markets may limit our
ability to access capital;
- potential loss of business opportunities due to continued
concern on the part of customers, partners, investors and employees
about our financial condition and CTI's previous extended delay in
becoming current in its periodic reporting obligations under the
federal securities laws;
- rapidly changing technology in our subsidiaries' industries and
our subsidiaries' ability to enhance existing products and develop
and market new products;
- our subsidiaries' dependence on contracts for large systems and
large installations for a significant portion of their sales and
operating results including, among other things, the lengthy and
complex bidding and selection process, the difficulty predicting
their ability to obtain particular contracts and the timing and
scope of these opportunities;
- the difficulty in predicting operating results as a result of
lengthy and variable sales cycles, focus on large customers and
installations, short delivery windows required by customers, and
the high percentage of orders typically generated late in the
fiscal quarter;
- the deferral or loss of one or more significant orders or
customers or a delay in an expected implementation of such an order
could materially and adversely affect our results of operations in
any fiscal period, particularly if there are significant sales and
marketing expenses associated with the deferred, lost or delayed
sales;
- the potential incurrence by our subsidiaries of significant
costs to correct previously undetected operational problems in
their complex products;
- our subsidiaries' dependence on a limited number of suppliers
and manufacturers for certain components and third-party software
could cause a supply shortage and/or interruptions in product
supply;
- the risk that increased competition could force our
subsidiaries to lower their prices or take other actions to
differentiate their products and changes in the competitive
environment in the telecommunications industry worldwide could
seriously affect Comverse's business;
- the risk that increased costs or reduced demand for Comverse's
products resulting from compliance with evolving telecommunications
regulations and the implementation of new standards may adversely
affect our business and financial condition;
- the risk that the failure or delay in achieving
interoperability of Comverse's products with its customers' systems
could impair its ability to sell its products;
- the competitive bidding process used to generate sales requires
our subsidiaries to expend significant resources with no guarantee
of recoupment;
- our subsidiaries' inability to maintain relationships with
value-added resellers, systems integrators and other third parties
that market and sell their products could adversely impact our
financial condition and results of operations;
- third parties' infringement of our subsidiaries' proprietary
technology and the infringement by our subsidiaries of the
intellectual property of third parties, including through the use
of free or open source software;
- risks of certain contractual obligations of our subsidiaries
exposing them to uncapped or other significant liabilities;
- the impact of mergers and acquisitions, including, but not
limited to, difficulties relating to integration, the achievement
of anticipated synergies and the implementation of required
controls, procedures and policies at the acquired company;
- risks associated with significant foreign operations and
international sales, including the impact of geopolitical, economic
and military conditions in foreign countries, conducting operations
in countries with a history of corruption, entering into
transactions with foreign governments and ensuring compliance with
laws that prohibit improper payments;
- adverse fluctuations of currency exchange rates;
- risks relating to our significant operations in Israel,
including economic, political and/or military conditions in Israel
and the surrounding Middle East, and uncertainties relating to
research and development grants, tax benefits and the ability of
our Israeli subsidiaries to pay dividends;
- potential decline in the price of CTI's common stock in the
event of sales of a significant number of shares by shareholders
who received shares as part of a class action settlement and by
holders of securities awarded under CTI's equity incentive
plans;
- risks associated with Verint's significant leverage resulting
from its current debt position, including Verint's ability to
maintain compliance with the leverage ratio covenant under its
credit facility;
- the ability of Verint to pay its indebtedness as it becomes due
or refinance its indebtedness as well as comply with the financial
and other restrictive covenants contained therein;
- risks that the credit ratings of CTI and its subsidiaries could
be downgraded or placed on a credit watch based on, among other
things, its financial results;
- Verint's dependence on government contracts and the possibility
that U.S. or foreign governments could refuse to purchase Verint's
Communications Intelligence solutions or could deactivate Verint's
security clearances in their countries;
- risks associated with Verint's handling, or the perception of
mishandling, of customers' sensitive information;
- Verint's ability to receive or retain necessary export licenses
or authorizations; and
- other risks described in filings with the SEC.
The documents and reports we file with the SEC are available
through CTI, or its website, www.cmvt.com, or through the SEC's
Electronic Data Gathering, Analysis, and Retrieval system (EDGAR)
at www.sec.gov. CTI undertakes no commitment to update or revise
any forward-looking statements except as required by law.
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Unaudited) |
(In thousands, except
share and per share data) |
|
|
October 31, |
January 31, |
ASSETS |
2011 |
2011 |
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 421,346 |
$ 581,390 |
Restricted cash and bank time
deposits |
60,070 |
73,117 |
Auction rate securities |
50,259 |
72,441 |
Accounts receivable, net of allowance of
$8,939 and $13,237, respectively |
314,246 |
319,628 |
Inventories, net |
53,883 |
66,612 |
Deferred cost of revenue |
36,540 |
51,470 |
Deferred income taxes |
41,956 |
39,644 |
Prepaid expenses and other current
assets |
96,712 |
91,760 |
Total current assets |
1,075,012 |
1,296,062 |
Property and equipment, net |
77,054 |
66,843 |
Goodwill |
1,046,549 |
967,224 |
Intangible assets, net |
216,317 |
196,460 |
Deferred cost of revenue |
141,273 |
158,703 |
Deferred income taxes |
18,010 |
20,766 |
Other assets |
107,001 |
107,864 |
Total assets |
$ 2,681,216 |
$ 2,813,922 |
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 381,003 |
$ 401,940 |
Convertible debt obligations |
2,195 |
2,195 |
Deferred revenue |
496,675 |
559,873 |
Deferred income taxes |
13,596 |
13,661 |
Bank loans |
6,208 |
6,000 |
Litigation settlements |
101,030 |
146,150 |
Income taxes payable |
11,858 |
11,486 |
Other current liabilities |
44,377 |
50,280 |
Total current liabilities |
1,056,942 |
1,191,585 |
Bank loans |
592,695 |
583,234 |
Deferred revenue |
260,425 |
270,934 |
Deferred income taxes |
59,795 |
52,953 |
Other long-term liabilities |
246,993 |
229,329 |
Total liabilities |
2,216,850 |
2,328,035 |
|
|
|
Commitments and
contingencies |
|
|
|
|
Equity: |
|
|
Comverse Technology, Inc.
shareholders' equity: |
|
Common stock, $0.10 par value -
authorized, 600,000,000 shares; issued 207,096,791 and 204,937,882
shares, respectively; outstanding, 206,055,795 and
204,533,916 shares, respectively |
20,710 |
20,494 |
Treasury stock, at cost, 1,040,996 and
403,966 shares, respectively |
(7,803) |
(3,484) |
Additional paid-in capital |
2,112,780 |
2,088,717 |
Accumulated deficit |
(1,770,840) |
(1,707,638) |
Accumulated other comprehensive
income |
10,094 |
14,919 |
Total Comverse Technology, Inc.
shareholders' equity |
364,941 |
413,008 |
Noncontrolling interest |
99,425 |
72,879 |
Total equity |
464,366 |
485,887 |
Total liabilities and equity |
$ 2,681,216 |
$ 2,813,922 |
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands, except
share and per share data) |
|
|
Three Months
Ended October 31, |
Nine Months Ended
October 31, |
|
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Revenue: |
|
|
|
|
Product revenue |
$ 203,587 |
$ 176,933 |
$ 511,524 |
$ 525,464 |
Service revenue |
249,491 |
248,527 |
677,418 |
667,126 |
Total revenue |
453,078 |
425,460 |
1,188,942 |
1,192,590 |
Costs and expenses: |
|
|
|
|
Product costs |
85,326 |
60,397 |
207,024 |
201,034 |
Service costs |
130,670 |
110,807 |
358,241 |
334,632 |
Selling, general and administrative |
142,466 |
163,444 |
431,435 |
525,824 |
Research and development, net |
55,768 |
63,060 |
161,706 |
193,264 |
Other operating expenses (income): |
|
|
|
|
Litigation settlements |
4,880 |
(17,350) |
4,880 |
(17,500) |
Restructuring charges |
1,838 |
21,800 |
14,888 |
28,776 |
Total costs and expenses |
420,948 |
402,158 |
1,178,174 |
1,266,030 |
Income (loss) from operations |
32,130 |
23,302 |
10,768 |
(73,440) |
Interest income |
826 |
833 |
3,493 |
2,835 |
Interest expense |
(8,192) |
(9,020) |
(25,325) |
(21,241) |
Loss on extinguishment of debt |
-- |
-- |
(8,136) |
-- |
Other (expense) income, net |
(4,144) |
1,563 |
8,253 |
7,178 |
Income (loss) before income tax benefit
(provision) |
20,620 |
16,678 |
(10,947) |
(84,668) |
Income tax benefit (provision) |
21,647 |
(47,237) |
(35,793) |
(49,463) |
|
|
|
|
|
Net income (loss) from continuing
operations |
42,267 |
(30,559) |
(46,740) |
(134,131) |
Loss from discontinued operations, net of
tax |
-- |
(947) |
-- |
(4,000) |
Net income (loss) |
42,267 |
(31,506) |
(46,740) |
(138,131) |
Less: Net income attributable to
noncontrolling interest |
(6,577) |
(10,197) |
(16,462) |
(9,620) |
Net income (loss) attributable to Comverse
Technology, Inc. |
$ 35,690 |
$ (41,703) |
$ (63,202) |
$ (147,751) |
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
205,886,126 |
205,264,632 |
205,890,586 |
205,134,765 |
Diluted |
206,729,005 |
205,264,632 |
205,890,586 |
205,134,765 |
|
|
|
|
|
Earnings (loss) per share attributable to
Comverse Technology, Inc.'s shareholders: |
|
|
|
|
Basic earnings (loss) per share |
|
|
|
|
Continuing operations |
$ 0.17 |
$ (0.20) |
$ (0.31) |
$ (0.71) |
Discontinued operations |
-- |
(0.00) |
-- |
(0.01) |
Basic earnings (loss) per share |
$ 0.17 |
$ (0.20) |
$ (0.31) |
$ (0.72) |
Diluted earnings (loss) per share |
|
|
|
|
Continuing operations |
$ 0.17 |
$ (0.21) |
$ (0.31) |
$ (0.71) |
Discontinued operations |
-- |
(0.00) |
-- |
(0.01) |
Diluted earnings (loss) per share |
$ 0.17 |
$ (0.21) |
$ (0.31) |
$ (0.72) |
Net income (loss) attributable to Comverse
Technology, Inc. |
|
|
|
|
Net income (loss) from continuing
operations |
$ 35,690 |
$ (40,929) |
$ (63,202) |
$ (144,753) |
Loss from discontinued operations, net of
tax |
-- |
(774) |
-- |
(2,998) |
Net income (loss) attributable to Comverse
Technology, Inc. |
$ 35,690 |
$ (41,703) |
$ (63,202) |
$ (147,751) |
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In
thousands) |
|
|
Nine Months Ended
October 31, |
|
2011 |
2010 |
Cash flows from operating activities: |
|
|
Net cash used in operating activities -
continuing operations |
$ (81,473) |
$ (215,440) |
Net cash used in operating activities -
discontinued operations |
-- |
(2,377) |
Net cash used in operating activities |
(81,473) |
(217,817) |
|
|
|
Cash flows from investing activities: |
|
|
Proceeds from sales and maturities of
investments |
26,275 |
57,056 |
Acquisition of businesses, net of cash
acquired |
(98,698) |
(15,292) |
Purchase of property and equipment |
(13,145) |
(15,582) |
Capitalization of software development
costs |
(2,542) |
(1,604) |
Net change in restricted cash and bank
time deposits |
11,757 |
3,197 |
Proceeds from asset sales |
-- |
27,296 |
Settlement of derivative financial
instruments not designated as hedges |
(1,134) |
(31,596) |
Other, net |
1,587 |
(12) |
Net cash (used in) provided by investing
activities - continuing operations |
(75,900) |
23,463 |
Net cash provided by investing activities -
discontinued operations |
-- |
54,673 |
Net cash (used in) provided by investing
activities |
(75,900) |
78,136 |
|
|
|
Cash flows from financing activities: |
|
|
Debt issuance costs and other
debt-related costs |
(15,280) |
(4,039) |
Proceeds from borrowings, net of original
issuance discount |
597,000 |
-- |
Repayment of bank loans, long-term debt
and other financing obligations |
(591,542) |
(22,960) |
Repurchase of common stock |
(4,319) |
(480) |
Net proceeds from issuance of common
stock by a subsidiary |
8,567 |
26,426 |
Proceeds from exercises of stock
options |
1,024 |
-- |
Other, net |
(2,004) |
-- |
Net cash used in financing activities -
continuing operations |
(6,554) |
(1,053) |
Net cash provided by financing activities -
discontinued operations |
-- |
258 |
Net cash used in financing activities |
(6,554) |
(795) |
|
|
|
Effects of exchange rates on cash and cash
equivalents |
3,883 |
1,288 |
|
|
|
Net decrease in cash and cash
equivalents |
(160,044) |
(139,188) |
Cash and cash equivalents, beginning of
period including cash of discontinued operations |
581,390 |
574,872 |
Cash and cash equivalents, end of period
including cash of discontinued operations |
$ 421,346 |
$ 435,684 |
Less: Cash and cash equivalents of
discontinued operations at end of period |
-- |
(66,880) |
Cash and cash equivalents, end of period |
$ 421,346 |
$ 368,804 |
|
|
|
Non-cash investing and financing
transactions: |
|
|
Accrued but unpaid purchases of property
and equipment |
$ 1,521 |
$ 3,058 |
Inventory transfers to property and
equipment |
$ 17,377 |
$ 4,096 |
Liabilities for contingent consideration
in business combination |
$ 33,704 |
$ 3,224 |
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
BUSINESS SEGMENT
INFORMATION |
(Unaudited) |
(In
thousands) |
|
|
Comverse BSS |
Comverse VAS |
Verint |
All Other |
Eliminations |
Consolidated |
|
(In
thousands) |
Three Months Ended October 31,
2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ 117,731 |
$ 112,655 |
$ 199,364 |
$ 23,328 |
$ -- |
$ 453,078 |
Intercompany revenue |
-- |
-- |
-- |
1,066 |
(1,066) |
-- |
Total revenue |
$ 117,731 |
$ 112,655 |
$ 199,364 |
$ 24,394 |
$ (1,066) |
$ 453,078 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
Cost of revenue |
$ 64,823 |
$ 55,632 |
$ 70,139 |
$ 25,392 |
$ 10 |
$ 215,996 |
Intercompany purchases |
-- |
-- |
-- |
1,066 |
(1,066) |
-- |
Selling, general and administrative |
7,022 |
1,865 |
82,479 |
51,088 |
12 |
142,466 |
Research and development, net |
15,458 |
6,786 |
28,464 |
5,060 |
-- |
55,768 |
Other operating expenses |
15 |
-- |
-- |
6,703 |
-- |
6,718 |
|
|
|
|
|
|
|
Total costs and expenses |
$ 87,318 |
$ 64,283 |
$ 181,082 |
$ 89,309 |
$ (1,044) |
$ 420,948 |
|
|
|
|
|
|
|
Income (loss) from operations |
$ 30,413 |
$ 48,372 |
$ 18,282 |
$ (64,915) |
$ (22) |
$ 32,130 |
|
|
|
|
|
|
|
Computation of segment
performance: |
|
|
|
|
|
|
Total revenue |
$ 117,731 |
$ 112,655 |
$ 199,364 |
$ 24,394 |
|
|
Segment revenue adjustment |
-- |
-- |
5,211 |
-- |
|
|
Segment revenue |
$ 117,731 |
$ 112,655 |
$ 204,575 |
$ 24,394 |
|
|
|
|
|
|
|
|
|
Total costs and expenses |
$ 87,318 |
$ 64,283 |
$ 181,082 |
$ 89,309 |
|
|
Segment expense adjustments: |
|
|
|
|
|
|
Stock-based compensation expense |
-- |
-- |
6,650 |
2,010 |
|
|
Amortization of acquisition-related
intangibles |
4,245 |
-- |
9,368 |
-- |
|
|
Compliance-related professional fees |
-- |
-- |
3 |
5,082 |
|
|
Compliance-related compensation and other
expenses |
(1) |
295 |
-- |
1,281 |
|
|
Impairment charges |
-- |
-- |
-- |
1,118 |
|
|
Litigation settlements and related
costs |
-- |
-- |
-- |
4,882 |
|
|
Acquisition-related charges |
-- |
-- |
2,183 |
-- |
|
|
Restructuring and integration
charges |
-- |
-- |
-- |
1,838 |
|
|
Gain on sale of land |
-- |
-- |
-- |
-- |
|
|
Other |
-- |
-- |
2,329 |
3,155 |
|
|
Segment expense adjustments |
4,244 |
295 |
20,533 |
19,366 |
|
|
Segment expenses |
83,074 |
63,988 |
160,549 |
69,943 |
|
|
Segment performance |
$ 34,657 |
$ 48,667 |
$ 44,026 |
$ (45,549) |
|
|
|
|
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (7,905) |
$ (287) |
$ -- |
$ (8,192) |
Depreciation and amortization |
$ (5,116) |
$ (1,248) |
$ (13,613) |
$ (2,422) |
$ -- |
$ (22,399) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (44) |
$ (1,118) |
$ -- |
$ (1,162) |
|
|
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
BUSINESS SEGMENT
INFORMATION (continued) |
(Unaudited) |
(In
thousands) |
|
|
Comverse BSS |
Comverse VAS |
Verint |
All Other |
Eliminations |
Consolidated |
|
(In
thousands) |
Three Months Ended October 31,
2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ 90,906 |
$ 121,141 |
$ 186,641 |
$ 26,772 |
$ -- |
$ 425,460 |
Intercompany revenue |
-- |
-- |
-- |
795 |
(795) |
-- |
Total revenue |
$ 90,906 |
$ 121,141 |
$ 186,641 |
$ 27,567 |
$ (795) |
$ 425,460 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
Cost of revenue |
$ 42,238 |
$ 44,650 |
$ 58,941 |
$ 25,386 |
$ (11) |
$ 171,204 |
Intercompany purchases |
-- |
-- |
-- |
1,232 |
(1,232) |
-- |
Selling, general and administrative |
6,937 |
6,184 |
73,244 |
77,054 |
25 |
163,444 |
Research and development, net |
15,698 |
14,405 |
24,063 |
8,894 |
-- |
63,060 |
Other operating expenses |
15 |
9 |
-- |
4,426 |
-- |
4,450 |
Total costs and expenses |
$ 64,888 |
$ 65,248 |
$ 156,248 |
$ 116,992 |
$ (1,218) |
$ 402,158 |
|
|
|
|
|
|
|
Income (loss) from operations |
$ 26,018 |
$ 55,893 |
$ 30,393 |
$ (89,425) |
$ 423 |
$ 23,302 |
|
|
|
|
|
|
|
Computation of segment performance: |
|
|
|
|
|
|
Total revenue |
$ 90,906 |
$ 121,141 |
$ 186,641 |
$ 27,567 |
|
|
Segment revenue adjustment |
-- |
-- |
-- |
-- |
|
|
Segment revenue |
$ 90,906 |
$ 121,141 |
$ 186,641 |
$ 27,567 |
|
|
|
|
|
|
|
|
|
Total costs and expenses |
$ 64,888 |
$ 65,248 |
$ 156,248 |
$ 116,992 |
|
|
Segment expense adjustments: |
|
|
|
|
|
|
Stock-based compensation expense |
-- |
-- |
13,090 |
2,744 |
|
|
Amortization of acquisition-related
intangibles |
4,641 |
-- |
7,632 |
-- |
|
|
Compliance-related professional fees |
-- |
-- |
823 |
31,144 |
|
|
Compliance-related compensation and other
expenses |
47 |
-- |
-- |
1,829 |
|
|
Litigation settlements and related
costs |
-- |
-- |
-- |
(17,258) |
|
|
Acquisition-related charges |
-- |
-- |
518 |
-- |
|
|
Restructuring and integration
charges |
-- |
-- |
-- |
21,800 |
|
|
Gain on sale of land |
-- |
-- |
-- |
(2,371) |
|
|
Other |
-- |
-- |
646 |
1,230 |
|
|
Segment expense adjustments |
4,688 |
-- |
22,709 |
39,118 |
|
|
Segment expenses |
60,200 |
65,248 |
133,539 |
77,874 |
|
|
Segment performance |
$ 30,706 |
$ 55,893 |
$ 53,102 |
$ (50,307) |
|
|
|
|
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (8,941) |
$ (79) |
$ -- |
$ (9,020) |
Depreciation and amortization |
$ (5,646) |
$ (1,104) |
$ (12,148) |
$ (2,757) |
$ -- |
$ (21,655) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (15) |
$ (272) |
$ -- |
$ (287) |
|
|
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
BUSINESS SEGMENT
INFORMATION (continued) |
(Unaudited) |
(In
thousands) |
|
|
Comverse BSS |
Comverse VAS |
Verint |
All Other |
Eliminations |
Consolidated |
|
(In
thousands) |
Nine Months Ended October 31,
2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ 278,403 |
$ 276,234 |
$ 570,655 |
$ 63,650 |
$ -- |
$ 1,188,942 |
Intercompany revenue |
-- |
-- |
-- |
3,983 |
(3,983) |
-- |
Total revenue |
$ 278,403 |
$ 276,234 |
$ 570,655 |
$ 67,633 |
$ (3,983) |
$ 1,188,942 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
Cost of revenue |
$ 154,320 |
$ 151,325 |
$ 194,597 |
$ 65,024 |
$ (1) |
$ 565,265 |
Intercompany purchases |
-- |
-- |
-- |
3,983 |
(3,983) |
-- |
Selling, general and administrative |
20,774 |
6,454 |
235,892 |
168,347 |
(32) |
431,435 |
Research and development, net |
46,967 |
19,434 |
81,640 |
13,665 |
-- |
161,706 |
Other operating expenses |
81 |
4 |
-- |
19,683 |
-- |
19,768 |
|
|
|
|
|
|
|
Total costs and expenses |
$ 222,142 |
$ 177,217 |
$ 512,129 |
$ 270,702 |
$ (4,016) |
$ 1,178,174 |
|
|
|
|
|
|
|
Income (loss) from operations |
$ 56,261 |
$ 99,017 |
$ 58,526 |
$ (203,069) |
$ 33 |
$ 10,768 |
|
|
|
|
|
|
|
Computation of segment performance: |
|
|
|
|
|
|
Total revenue |
$ 278,403 |
$ 276,234 |
$ 570,655 |
$ 67,633 |
|
|
Segment revenue adjustment |
-- |
-- |
6,173 |
-- |
|
|
Segment revenue |
$ 278,403 |
$ 276,234 |
$ 576,828 |
$ 67,633 |
|
|
|
|
|
|
|
|
|
Total costs and expenses |
$ 222,142 |
$ 177,217 |
$ 512,129 |
$ 270,702 |
|
|
Segment expense adjustments: |
|
|
|
|
|
|
Stock-based compensation expense |
-- |
-- |
20,841 |
7,240 |
|
|
Amortization of acquisition-related
intangibles |
13,241 |
-- |
25,664 |
-- |
|
|
Compliance-related professional fees |
-- |
-- |
1,011 |
32,955 |
|
|
Compliance-related compensation and other
expenses |
2,066 |
1,531 |
-- |
1,885 |
|
|
Impairment charges |
-- |
5 |
-- |
1,270 |
|
|
Litigation settlements and related
costs |
-- |
-- |
-- |
5,444 |
|
|
Acquisition-related charges |
-- |
-- |
7,377 |
-- |
|
|
Restructuring and integration
charges |
-- |
-- |
-- |
14,888 |
|
|
Gain on sale of land |
-- |
-- |
-- |
-- |
|
|
Other |
-- |
-- |
4,335 |
6,250 |
|
|
Segment expense adjustments |
15,307 |
1,536 |
59,228 |
69,932 |
|
|
Segment expenses |
206,835 |
175,681 |
452,901 |
200,770 |
|
|
Segment performance |
$ 71,568 |
$ 100,553 |
$ 123,927 |
$ (133,137) |
|
|
|
|
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (24,556) |
$ (769) |
$ -- |
$ (25,325) |
Depreciation and amortization |
$ (15,957) |
$ (3,281) |
$ (39,152) |
$ (7,333) |
$ -- |
$ (65,723) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (266) |
$ (1,275) |
$ -- |
$ (1,541) |
|
|
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
|
|
|
|
|
|
|
COMVERSE
TECHNOLOGY, INC. AND SUBSIDIARIES |
BUSINESS SEGMENT
INFORMATION (continued) |
(Unaudited) |
(In
thousands) |
|
|
Comverse BSS |
Comverse VAS |
Verint |
All Other |
Eliminations |
Consolidated |
|
(In
thousands) |
Nine Months Ended October 31,
2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ 242,151 |
$ 341,001 |
$ 539,930 |
$ 69,508 |
$ -- |
$ 1,192,590 |
Intercompany revenue |
-- |
-- |
-- |
2,271 |
(2,271) |
-- |
Total revenue |
$ 242,151 |
$ 341,001 |
$ 539,930 |
$ 71,779 |
$ (2,271) |
$ 1,192,590 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
Cost of revenue |
$ 133,811 |
$ 155,085 |
$ 177,094 |
$ 70,130 |
$ (454) |
$ 535,666 |
Intercompany purchases |
-- |
-- |
-- |
2,874 |
(2,874) |
-- |
Selling, general and administrative |
22,055 |
21,422 |
240,082 |
242,245 |
20 |
525,824 |
Research and development, net |
49,119 |
45,196 |
72,544 |
26,405 |
-- |
193,264 |
Other operating expenses |
287 |
323 |
-- |
10,666 |
-- |
11,276 |
Total costs and expenses |
$ 205,272 |
$ 222,026 |
$ 489,720 |
$ 352,320 |
$ (3,308) |
$ 1,266,030 |
|
|
|
|
|
|
|
Income (loss) from operations |
$ 36,879 |
$ 118,975 |
$ 50,210 |
$ (280,541) |
$ 1,037 |
$ (73,440) |
|
|
|
|
|
|
|
Computation of segment performance: |
|
|
|
|
|
|
Total revenue |
$ 242,151 |
$ 341,001 |
$ 539,930 |
$ 71,779 |
|
|
Segment revenue adjustment |
-- |
-- |
-- |
-- |
|
|
Segment revenue |
$ 242,151 |
$ 341,001 |
$ 539,930 |
$ 71,779 |
|
|
|
|
|
|
|
|
|
Total costs and expenses |
$ 205,272 |
$ 222,026 |
$ 489,720 |
$ 352,320 |
|
|
Segment expense adjustments: |
|
|
|
|
|
|
Stock-based compensation expense |
-- |
-- |
39,095 |
8,492 |
|
|
Amortization of acquisition-related
intangibles |
13,953 |
-- |
22,762 |
-- |
|
|
Compliance-related professional fees |
-- |
-- |
27,090 |
107,492 |
|
|
Compliance-related compensation and other
expenses |
1,617 |
326 |
-- |
804 |
|
|
Litigation settlements and related
costs |
-- |
-- |
-- |
(17,148) |
|
|
Acquisition-related charges |
-- |
-- |
1,349 |
-- |
|
|
Restructuring and integration
charges |
-- |
-- |
-- |
28,776 |
|
|
Gain on sale of land |
-- |
-- |
-- |
(2,371) |
|
|
Other |
-- |
-- |
1,199 |
269 |
|
|
Segment expense adjustments |
15,570 |
326 |
91,495 |
126,314 |
|
|
Segment expenses |
189,702 |
221,700 |
398,225 |
226,006 |
|
|
Segment performance |
$ 52,449 |
$ 119,301 |
$ 141,705 |
$ (154,227) |
|
|
|
|
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (20,825) |
$ (416) |
$ -- |
$ (21,241) |
Depreciation and amortization |
$ (17,877) |
$ (4,348) |
$ (36,100) |
$ (7,941) |
$ -- |
$ (66,266) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (238) |
$ (595) |
$ -- |
$ (833) |
|
|
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
SUPPLEMENTAL FINANCIAL
INFORMATION |
(Unaudited) |
(In
thousands) |
|
The company has revised its
segment reporting as a result of the implementation of the Phase II
Business Transformation at Comverse and the manner in which its
CODM reviews the operating performance of Comverse and allocates
resources to its operating segments. The company is providing the
following additional information, presenting the results of
operations of the previous Comverse reporting segment. The company
believes that such presentation provides useful information to
investors regarding the performance of the company's Comverse
subsidiary, including comparability to previously reported
financial information. The additional information provided is not a
replacement for or subset of business segment information presented
above. The results of operations presented in the column below
under "Comverse Other" relate to all the operations of the
Company's Comverse subsidiary, other than the company's Comverse
BSS and Comverse VAS segments and includes the Comverse MI
operating segment, Comverse's Netcentrex operations and Comverse's
global corporate functions that support its business units. The
information presented for "Comverse Other" includes unallocated
global corporate function costs that are consistent with prior
internal allocation practices. The company determined that the
operating segments of the company's Comverse subsidiary included in
"Comverse Other" do not meet the aggregation criteria under the
segment reporting guidance; specifically they do not have similar
economic characteristics, which would permit the presentation of
"Comverse Other" results of operations as a separate reportable
segment in the revised segment reporting information. Accordingly,
such results of operations of "Comverse Other" are included in the
company's "All Other" column. |
|
|
|
|
|
|
Comverse BSS |
Comverse VAS |
Comverse
Other |
Total
Comverse |
|
(In
thousands) |
Three Months Ended October 31,
2011: |
|
|
|
|
|
|
|
|
|
Revenue |
$ 117,731 |
$ 112,655 |
$ 12,757 |
$ 243,143 |
Intercompany revenue |
-- |
-- |
654 |
654 |
Total revenue |
$ 117,731 |
$ 112,655 |
$ 13,411 |
$ 243,797 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of revenue |
$ 64,823 |
$ 55,632 |
$ 23,101 |
$ 143,556 |
Intercompany purchases |
-- |
-- |
412 |
412 |
Selling, general and administrative |
7,022 |
1,865 |
34,330 |
43,217 |
Research and development, net |
15,458 |
6,786 |
3,029 |
25,273 |
Other operating expenses |
15 |
-- |
1,823 |
1,838 |
Total costs and expenses |
$ 87,318 |
$ 64,283 |
$ 62,695 |
$ 214,296 |
|
|
|
|
|
Income (loss) from operations |
$ 30,413 |
$ 48,372 |
$ (49,284) |
$ 29,501 |
|
|
|
|
|
Computation of Comverse
performance: |
|
|
|
|
Total revenue |
$ 117,731 |
$ 112,655 |
$ 13,411 |
$ 243,797 |
Total costs and expenses |
$ 87,318 |
$ 64,283 |
$ 62,695 |
$ 214,296 |
Expense adjustments: |
|
|
|
|
Stock-based compensation expense |
-- |
-- |
974 |
974 |
Amortization of acquisition-related
intangibles |
4,245 |
-- |
-- |
4,245 |
Compliance-related professional fees |
-- |
-- |
4,162 |
4,162 |
Compliance-related compensation and other
expenses |
(1) |
295 |
1,281 |
1,575 |
Impairment charges |
-- |
-- |
1,118 |
1,118 |
Litigation settlements and related
costs |
-- |
-- |
-- |
-- |
Restructuring and integration
charges |
-- |
-- |
1,838 |
1,838 |
Gain on sale of land |
-- |
-- |
-- |
-- |
Other |
-- |
-- |
(8) |
(8) |
Expense adjustments |
4,244 |
295 |
9,365 |
13,904 |
Expenses after adjustments |
|
|
|
200,392 |
Comverse performance |
|
|
|
$ 43,405 |
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (283) |
$ (283) |
Depreciation and amortization |
$ (5,116) |
$ (1,248) |
$ (2,202) |
$ (8,566) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (1,118) |
$ (1,118) |
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
|
|
|
|
|
|
|
|
|
Comverse BSS |
Comverse VAS |
Comverse
Other |
Total
Comverse |
|
(In
thousands) |
Three Months Ended October 31,
2010: |
|
|
|
|
|
|
|
|
|
Revenue |
$ 90,906 |
$ 121,141 |
$ 16,279 |
$ 228,326 |
Intercompany revenue |
-- |
-- |
575 |
575 |
Total revenue |
$ 90,906 |
$ 121,141 |
$ 16,854 |
$ 228,901 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of revenue |
$ 42,238 |
$ 44,650 |
$ 23,348 |
$ 110,236 |
Intercompany purchases |
-- |
-- |
367 |
367 |
Selling, general and administrative |
6,937 |
6,184 |
55,474 |
68,595 |
Research and development, net |
15,698 |
14,405 |
6,919 |
37,022 |
Other operating expenses |
15 |
9 |
21,776 |
21,800 |
Total costs and expenses |
$ 64,888 |
$ 65,248 |
$ 107,884 |
$ 238,020 |
|
|
|
|
|
Income (loss) from operations |
$ 26,018 |
$ 55,893 |
$ (91,030) |
$ (9,119) |
|
|
|
|
|
Computation of Comverse
performance: |
|
|
|
|
Total revenue |
$ 90,906 |
$ 121,141 |
$ 16,854 |
$ 228,901 |
Total costs and expenses |
$ 64,888 |
$ 65,248 |
$ 107,884 |
$ 238,020 |
Expense adjustments: |
|
|
|
|
Stock-based compensation expense |
-- |
-- |
858 |
858 |
Amortization of acquisition-related
intangibles |
4,641 |
-- |
-- |
4,641 |
Compliance-related professional fees |
-- |
-- |
23,134 |
23,134 |
Compliance-related compensation and other
expenses |
47 |
-- |
1,840 |
1,887 |
Impairment charges |
-- |
-- |
-- |
-- |
Litigation settlements and related
costs |
-- |
-- |
-- |
-- |
Restructuring and integration
charges |
-- |
-- |
21,800 |
21,800 |
Gain on sale of land |
-- |
-- |
(2,371) |
(2,371) |
Other |
-- |
-- |
21 |
21 |
Expense adjustments |
4,688 |
-- |
45,282 |
49,970 |
Expenses after adjustments |
|
|
|
188,050 |
Comverse performance |
|
|
|
$ 40,851 |
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (77) |
$ (77) |
Depreciation and amortization |
$ (5,646) |
$ (1,104) |
$ (2,526) |
$ (9,276) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (272) |
$ (272) |
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
|
|
|
|
|
|
|
|
|
Comverse BSS |
Comverse VAS |
Comverse
Other |
Total
Comverse |
|
(In
thousands) |
Nine Months Ended October 31,
2011: |
|
|
|
|
|
|
|
|
|
Revenue |
$ 278,403 |
$ 276,234 |
$ 32,624 |
$ 587,261 |
Intercompany revenue |
-- |
-- |
2,355 |
2,355 |
Total revenue |
$ 278,403 |
$ 276,234 |
$ 34,979 |
$ 589,616 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of revenue |
$ 154,320 |
$ 151,325 |
$ 58,212 |
$ 363,857 |
Intercompany purchases |
-- |
-- |
1,628 |
1,628 |
Selling, general and administrative |
20,774 |
6,454 |
106,608 |
133,836 |
Research and development, net |
46,967 |
19,434 |
7,589 |
73,990 |
Other operating expenses |
81 |
4 |
14,803 |
14,888 |
Total costs and expenses |
$ 222,142 |
$ 177,217 |
$ 188,840 |
$ 588,199 |
|
|
|
|
|
Income (loss) from operations |
$ 56,261 |
$ 99,017 |
$ (153,861) |
$ 1,417 |
|
|
|
|
|
Computation of Comverse
performance: |
|
|
|
|
Total revenue |
$ 278,403 |
$ 276,234 |
$ 34,979 |
$ 589,616 |
Total costs and expenses |
$ 222,142 |
$ 177,217 |
$ 188,840 |
$ 588,199 |
Expense adjustments: |
|
|
|
|
Stock-based compensation expense |
-- |
-- |
2,671 |
2,671 |
Amortization of acquisition-related
intangibles |
13,241 |
-- |
-- |
13,241 |
Compliance-related professional fees |
-- |
-- |
14,629 |
14,629 |
Compliance-related compensation and other
expenses |
2,066 |
1,531 |
1,885 |
5,482 |
Impairment charges |
-- |
5 |
1,270 |
1,275 |
Litigation settlements and related
costs |
-- |
-- |
474 |
474 |
Restructuring and integration
charges |
-- |
-- |
14,888 |
14,888 |
Gain on sale of land |
-- |
-- |
-- |
-- |
Other |
-- |
-- |
(55) |
(55) |
Expense adjustments |
15,307 |
1,536 |
35,762 |
52,605 |
Expenses after adjustments |
|
|
|
535,594 |
Comverse performance |
|
|
|
$ 54,022 |
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (754) |
$ (754) |
Depreciation and amortization |
$ (15,957) |
$ (3,281) |
$ (6,676) |
$ (25,914) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (1,275) |
$ (1,275) |
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
|
|
|
|
Comverse BSS |
Comverse VAS |
Comverse
Other |
Total
Comverse |
|
(In
thousands) |
Nine Months Ended October 31,
2010: |
|
|
|
|
|
|
|
|
|
Revenue |
$ 242,151 |
$ 341,001 |
$ 42,223 |
$ 625,375 |
Intercompany revenue |
-- |
-- |
1,644 |
1,644 |
Total revenue |
$ 242,151 |
$ 341,001 |
$ 43,867 |
$ 627,019 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of revenue |
$ 133,811 |
$ 155,085 |
$ 64,231 |
$ 353,127 |
Intercompany purchases |
-- |
-- |
908 |
908 |
Selling, general and administrative |
22,055 |
21,422 |
162,278 |
205,755 |
Research and development, net |
49,119 |
45,196 |
20,714 |
115,029 |
Other operating expenses |
287 |
323 |
28,166 |
28,776 |
Total costs and expenses |
$ 205,272 |
$ 222,026 |
$ 276,297 |
$ 703,595 |
|
|
|
|
|
Income (loss) from operations |
$ 36,879 |
$ 118,975 |
$ (232,430) |
$ (76,576) |
|
|
|
|
|
Computation of Comverse
performance: |
|
|
|
|
Total revenue |
$ 242,151 |
$ 341,001 |
$ 43,867 |
$ 627,019 |
Total costs and expenses |
$ 205,272 |
$ 222,026 |
$ 276,297 |
$ 703,595 |
Expense adjustments: |
|
|
|
|
Stock-based compensation expense |
-- |
-- |
1,640 |
1,640 |
Amortization of acquisition-related
intangibles |
13,953 |
-- |
-- |
13,953 |
Compliance-related professional fees |
-- |
-- |
63,536 |
63,536 |
Compliance-related compensation and other
expenses |
1,617 |
326 |
810 |
2,753 |
Impairment charges |
-- |
-- |
-- |
-- |
Litigation settlements and related
costs |
-- |
-- |
-- |
-- |
Restructuring and integration
charges |
-- |
-- |
28,776 |
28,776 |
Gain on sale of land |
-- |
-- |
(2,371) |
(2,371) |
Other |
-- |
-- |
(1,421) |
(1,421) |
Expense adjustments |
15,570 |
326 |
90,970 |
106,866 |
Expenses after adjustments |
|
|
|
596,729 |
Comverse performance |
|
|
|
$ 30,290 |
|
|
|
|
|
Interest expense |
$ -- |
$ -- |
$ (406) |
$ (406) |
Depreciation and amortization |
$ (17,877) |
$ (4,348) |
$ (7,225) |
$ (29,450) |
Other non-cash items (1) |
$ -- |
$ -- |
$ (595) |
$ (595) |
|
|
(1) Other non-cash items
consist primarily of write-offs and impairments of property and
equipment. |
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
CONSOLIDATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
(Unaudited) |
(In thousands, except
per share data) |
|
|
|
|
|
Table of Reconciliation from
GAAP Net Income (Loss) Attributable to Comverse Technology, Inc. to
Non-GAAP Net Income (Loss) Attributable to Comverse Technology,
Inc. |
Three Months
Ended October 31, |
Nine Months Ended
October 31, |
|
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Net income (loss) attributable to
Comverse Technology, Inc. |
$ 35,690 |
$ (41,703) |
$ (63,202) |
$ (147,751) |
Revenue adjustments related to
acquisitions |
5,211 |
-- |
6,173 |
-- |
Stock-based compensation expense |
8,660 |
15,834 |
28,081 |
47,587 |
Amortization of acquisition-related
intangibles |
13,613 |
12,273 |
38,905 |
36,715 |
Compliance-related professional fees |
5,085 |
31,967 |
33,966 |
134,582 |
Compliance-related compensation and other
expenses |
1,575 |
1,876 |
5,482 |
2,747 |
Impairment charges |
1,118 |
-- |
1,275 |
-- |
Litigation settlements and related
costs |
4,882 |
(17,258) |
5,444 |
(17,148) |
Acquisition-related charges |
2,183 |
518 |
7,377 |
1,349 |
Restructuring and integration
charges |
1,838 |
21,800 |
14,888 |
28,776 |
Other |
5,484 |
(495) |
10,585 |
(903) |
Impairment of auction rate
securities |
-- |
29 |
-- |
407 |
Impairment of UBS put |
-- |
-- |
-- |
6,696 |
Unrealized (gains) losses on derivatives,
net |
(622) |
1,117 |
(11) |
(6,337) |
Loss on extinguishment of debt |
-- |
-- |
8,136 |
-- |
Loss from discontinued operations, net of
tax |
-- |
774 |
-- |
2,998 |
Income from litigation
settlement |
-- |
-- |
(4,750) |
-- |
Tax impact on Non-GAAP adjustments
(1) |
(36,341) |
(11,358) |
(1,375) |
(68,627) |
Noncontrolling interest impact of
Non-GAAP adjustments (2) |
(13,175) |
(9,039) |
(39,385) |
(31,492) |
Total Non-GAAP adjustments |
$ (489) |
$ 48,038 |
$ 114,791 |
$ 137,350 |
Non-GAAP net income (loss) attributable
to Comverse Technology, Inc. |
$ 35,201 |
$ 6,335 |
$ 51,589 |
$ (10,401) |
|
|
|
|
|
Non-GAAP Earnings (Loss) Per
Share Attributable to Comverse Technology, Inc.'s
Shareholders |
Three Months
Ended October 31, |
Nine Months Ended
October 31, |
|
2011 |
2010 |
2011 |
2010 |
|
(In thousands, except
per share data) |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
Non-GAAP net income (loss) attributable
to Comverse Technology, Inc. - basic |
$ 35,201 |
$ 6,335 |
$ 51,589 |
$ (10,401) |
Adjustment for subsidiary stock
options |
(137) |
(4,171) |
(571) |
(1,797) |
Non-GAAP net income (loss) attributable
to Comverse Techology, Inc. - diluted |
$ 35,064 |
$ 2,164 |
$ 51,018 |
$ (12,198) |
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
Basic weighted average common shares
outstanding |
205,886 |
205,265 |
205,891 |
205,135 |
Diluted weighted average common shares
outstanding |
206,729 |
205,796 |
206,796 |
205,135 |
|
|
|
|
|
Non-GAAP earnings (loss) per share
attributable to Comverse Technology, Inc.'s shareholders |
|
|
|
|
Basic |
$ 0.17 |
$ 0.03 |
$ 0.25 |
$ (0.05) |
Diluted |
$ 0.17 |
$ 0.01 |
$ 0.25 |
$ (0.06) |
|
|
|
|
|
(1) The tax impact on the
Non-GAAP adjustments is an allocation of the tax benefit
(provision) as applied to the consolidated income (loss) before
income tax benefit (provision). |
(2) Represents the minority
shareholders' interest in Non-GAAP adjustments attributable to
Verint and Starhome. |
CONTACT: Paul D. Baker
Comverse Technology, Inc.
(212) 739-1060
Grafico Azioni Comverse Technology, Inc. (MM) (NASDAQ:CMVT)
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