Comverse Technology, Inc. ("CTI") (Nasdaq:CMVT) today announced its
results for the three months ended April 30, 2012 ("Q1").
Consolidated Highlights: Below is selected
consolidated financial information for the three months ended April
30, 2012 and 2011 prepared in accordance with generally accepted
accounting principles ("GAAP") and, where indicated, not in
accordance with GAAP ("non-GAAP").
|
Three months
ended April 30, |
(In thousands, except per share data) |
2012 |
2011 |
Revenue |
$ 343,667 |
$ 349,497 |
GAAP net loss attributable to Comverse
Technology, Inc. |
$ (53,210) |
$ (59,195) |
GAAP loss per share attributable to Comverse
Technology, Inc.'s shareholders : |
|
|
Basic and Diluted |
$ (0.24) |
$ (0.29) |
Non-GAAP loss attributable to Comverse
Technology, Inc. - basic (1) |
$ (32,011) |
$ (6,154) |
Non-GAAP loss per share attributable to
Comverse Technology, Inc.'s shareholders - basic and
diluted |
$ (0.15) |
$ (0.03) |
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") and Starhome B.V. ("Starhome"). As
previously disclosed, CTI intends to distribute 100% of the
outstanding common shares of Comverse to CTI shareholders on a pro
rata basis. CTI's reportable segments are Comverse Business Support
Systems ("Comverse BSS"), Comverse Value-Added Services ("Comverse
VAS"), and Verint. The results of operations of all of 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, miscellaneous operations and CTI's
holding company operations are included in the column captioned
"All Other" in the business segment information provided.
Charles Burdick, Chairman and Chief Executive Officer of CTI
said, "Our Comverse subsidiary's financial results continue to
reflect the timing of revenue recognition and collection milestone
triggers, and the impact of our business transformation launched
last year. We achieved growth in BSS customer solution order
activity in the first quarter on both a year-over-year and
sequential basis, as our BSS book-to-bill ratio was significantly
in excess of one, a reversal from prior quarters where product
revenue was in excess of bookings. Comverse also continues to
reinforce its leading market position in value-added services, and
its new IP messaging platform and Service Enablement Middleware
solution have attracted considerable interest among service
providers. Our majority-owned Verint and Starhome subsidiaries
again delivered strong operating and market performance.
I am also pleased to welcome Philippe Tartavull as the new
Comverse CEO, and with the successful resolution of the potential
proxy contest, as well as the imminent filing of our Form 10, the
first significant step on our Comverse spin-off timeline."
(1) "Non-GAAP net loss attributable to Comverse Technology,
Inc." and "Non-GAAP 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.
Comverse Subsidiary Highlights: Below is
selected financial information for the three months ended April 30,
2012 and 2011 for the company's Comverse subsidiary.
Comverse Subsidiary:
(2) |
Three months
ended April 30, |
(Dollars in thousands) |
2012 |
2011 |
Revenue |
$ 136,405 |
$ 163,160 |
Intercompany revenue |
1,345 |
604 |
Total revenue |
$ 137,750 |
$ 163,764 |
Costs and expenses: |
|
|
Cost of revenue |
$ 95,215 |
$ 108,493 |
Intercompany purchases |
208 |
(55) |
Research and development, net |
19,072 |
25,746 |
Selling, general and administrative |
45,458 |
56,168 |
Other operating expenses |
680 |
11,087 |
Total costs and expenses |
$ 160,633 |
$ 201,439 |
Loss from operations |
$ (22,883) |
$ (37,675) |
Expense adjustments |
$ 6,786 |
$ 31,471 |
Comverse performance |
$ (16,097) |
$ (6,204) |
|
|
|
Interest expense |
$ (196) |
$ (330) |
Depreciation and amortization |
$ (8,045) |
$ (8,499) |
Other non-cash items (a) |
$ (22) |
$ (128) |
|
|
|
Operating margin |
(16.6)% |
(23.0)% |
Comverse performance margin |
(11.7)% |
(3.8)% |
(a) Other non-cash items
consist of write-downs of property and equipment. |
|
|
Revenue from customer solutions for the three months ended April
30, 2012 and 2011 was $72.9 million, $91.8 million, respectively,
and maintenance revenue for such fiscal periods was $64.8 million
and $71.9 million, respectively.
(2) For additional information concerning the presentation of
financial information for the company's Comverse subsidiary and the
computation of "Comverse Performance," see "Supplemental Financial
Information" below.
Comverse BSS and VAS Segment Highlights: Below
is selected financial information for the three months ended April
30, 2012 and 2011 for the company's Comverse BSS and Comverse VAS
segments, as well as Comverse Other:
|
Three months
ended April 30, |
(Dollars in thousands) |
2012 |
2011 |
Comverse BSS |
|
|
Total and segment revenue |
$ 57,680 |
$ 75,201 |
Gross margin |
32.8% |
38.9% |
Income from operations |
$ 4,397 |
$ 5,059 |
Operating margin |
7.6% |
6.7% |
Segment performance |
$ 9,101 |
$ 11,619 |
Segment performance margin |
15.8% |
15.5% |
|
|
|
Comverse VAS |
|
|
Total and segment revenue |
$ 65,922 |
$ 79,475 |
Gross margin |
42.0% |
39.2% |
Income from operations |
$ 15,840 |
$ 20,786 |
Operating margin |
24.0% |
26.2% |
Segment performance |
$ 16,613 |
$ 21,987 |
Segment performance margin |
25.2% |
27.7% |
|
|
|
Comverse Other (a) |
|
|
Total revenue (b) |
$ 14,148 |
$ 9,088 |
Gross margin |
(30.4)% |
(56.0)% |
Loss from operations |
$ (43,120) |
$ (63,520) |
Operating margin |
(304.8)% |
(698.9)% |
Comverse Other performance |
$ (41,811) |
$ (39,810) |
Comverse Other performance margin |
(295.5)% |
(438.1)% |
(a) Consists of all the
operations of the company's Comverse Subsidiary, other than the
company's Comverse BSS and Comverse VAS segments. |
|
|
(b) Includes intercompany
revenue of $1.3 million and $0.6 million for the three
months ended April 30, 2012 and 2011, respectively. |
|
|
Revenue from Comverse BSS customer solutions for the three
months ended April 30, 2012 and 2011 was $26.8 million and $43.3
million, respectively, and Comverse BSS maintenance revenue for
such fiscal periods was $30.8 million and $31.9 million,
respectively.
Revenue from Comverse VAS customer solutions for the three
months ended April 30, 2012 and 2011 was $35.1 million and $42.5
million, respectively, and Comverse VAS maintenance revenue for
such fiscal periods was $30.8 million and $37.0 million,
respectively.
Revenue from customer solutions at Comverse Other for three
months ended April 30, 2012 and 2011 was $11.0 million and $6.1
million, respectively, and maintenance revenue at Comverse Other
for such fiscal periods was $3.2 million and $3.0 million,
respectively.
Starhome Highlights: Below is selected
financial information for the three months ended April 30, 2012 and
2011 for the company's Starhome subsidiary.
|
Three months
ended April 30, |
(In thousands) |
2012 |
2011 |
Starhome |
|
|
Total revenue (a) |
$ 10,835 |
$ 10,100 |
Income from operations |
$ 528 |
$ 900 |
(a) Includes intercompany
revenue of $0.2 million and $0.1 million for the three months ended
April 30, 2012 and 2011, respectively. |
Selected Balance Sheet Highlights: Below is
selected balance sheet data as of April 30, 2012 and January 31,
2012 for CTI and its Comverse subsidiary:
(In millions) |
As of April 30,
2012 |
As of January 31,
2012 |
CTI and Comverse
Subsidiary |
|
|
Cash and cash equivalents |
$ 269.5 |
$ 331.8 |
Restricted cash and bank time deposits |
$ 38.1 |
$ 38.6 |
Total |
$ 307.6 |
$ 370.4 |
Indebtedness |
$ 2.2 |
$ 2.2 |
During the three months ended April 30, 2012, CTI and Comverse
made significant disbursements, including approximately $8.8
million paid in connection with compliance-related professional
fees for the fiscal year ended on January 31, 2012, $3.9 million
paid for special retention bonus, $2.3 million paid for
professional fees and other expenses in connection with our
evaluation of strategic alternatives, and $1.1 million in
restructuring payments, including the workforce reduction
initiative at Comverse. In addition, during the three months ended
April 30, 2012, CTI's holding company operations and Comverse
experienced negative cash flows from operations.
Verint Segment
Verint is a majority-owned subsidiary of CTI. Its common stock
is traded on the NASDAQ Global Market under the symbol "VRNT." As
previously disclosed, CTI is exploring all options to maximize the
value of its equity interests in Verint for the benefit of the
shareholders of both CTI and Verint. These options include a sale
of Verint to a financial or strategic buyer, a merger of CTI and
Verint or a sale of CTI to a third party interested in buying
Verint through and initial acquisition of the controlling interest
therein. The ultimate execution of any alternative will take into
account a number of considerations, including, without limitation,
tax efficiency and, depending upon the circumstances, the separate
recommendation of Verint's directors who are not directors or
officers of CTI.
For additional information concerning Verint's results for the
three months ended April 30, 2012 and 2011, please see the press
release issued by Verint on June 6, 2012, 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 April 30, 2012.
Conference Call Information
We will be conducting a conference call today at 8:30 am Eastern
Daylight Time to discuss our results for the three months ended
April 30, 2012. 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 live webcast can be accessed at
www.cmvt.com.
A replay of the call will be available, beginning at
approximately 11:00 am on June 7, 2012, for seven days, at
1-404-537-3406, and archived via webcast at www.cmvt.com. The
replay access code is 88101903.
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 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)
strategic evaluation related costs (vi) impairment of property and
equipment (vii) litigation settlements and related costs;
(viii) acquisition-related charges; (ix) restructuring
and integration charges; and (x) certain other gains and
charges. Compliance-related professional fees and
compliance-related compensation and other expenses relate to fees
and expenses recorded in connection with the company's efforts to
(a) complete certain financial statements and audits of such
financial statements, and (b) become current in its periodic
reporting obligations under the federal securities laws, and (c)
remediate material weaknesses in internal control over financial
reporting. Strategic evaluation related costs include financial
advisory, accounting, tax, consulting and legal fees incurred in
connection with company's evaluation of strategic alternatives,
including the proposed Comverse share distribution.
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 months ended April 30, 2012 and 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 stand-alone basis with respect to acquisitions
consummated by Verint.
Presentation of Non-GAAP Financial Measures
CTI provides Non-GAAP net loss attributable to Comverse
Technology, Inc. and Non-GAAP 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 "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.
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. The
risks, uncertainties and other important factors that could cause
actual results, performance and the timing of events to differ
materially are described in CTI's filings with the SEC, including,
without limitation, in Item 1A, "Risk Factors" and Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual report on Form 10-K for the
fiscal year ended January 31, 2012 and in Part II, Item 1A, "Risk
Factors" of subsequently filed Quarterly Reports, and include
the risk of diminishment in our capital resources as a result of,
among other things, future negative cash flows from operations at
Comverse, the continued incurrence of professional fees 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 and the
costs associated with the proposed distribution by CTI of 100% of
the shares of Comverse, Inc. to CTI shareholders on a pro rata
basis (the "Comverse share distribution"); the risk that if
Comverse BSS customer solution order activity does not increase,
Comverse's revenue and profitability would likely be materially
adversely affected and we may be required to implement further cost
reduction measures to preserve or enhance our cash position; risks
related to the implementation of Comverse's strategy to expand its
BSS business and pursue primarily higher margin VAS projects that
resulted and may continue to result in lower VAS revenue, which may
not be offset by increases in BSS revenue, if any; Comverse's
advanced offerings may not be widely adopted by existing and
potential customers and increases in revenue from Comverse's
advanced offerings, if any, may not exceed or fully offset
potential declines in revenue from traditional solutions; the
potential loss of business opportunities due to continued concern
on the part of customers and partners about our financial
condition; the difficulty in predicting quarterly and annual
operating results as a result of the high percentage of orders
typically generated late in fiscal quarters and in fiscal years,
lengthy and variable sales cycles, the competitive bidding process
required by customers, focus on large customers and installations
and short delivery windows required by customers; 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; risks
associated with the proposed Comverse share distribution, including
the potential harm to our business as a result of management's
distraction from our business due to our efforts to complete the
Comverse share distribution, the incurrence of expenses in
connection therewith in excess of our expectations, and the risks
that if the Comverse share distribution is completed, each of CTI
and Comverse will be smaller companies that may be subject to
increased instability, the Comverse share distribution would
separate from us Comverse's business, which represents significant
value and almost all of our cash flow, our share price may decline
if there are excessive sales of our stock by shareholders that
invested in our company because of our holdings in Comverse and,
prior to any elimination of the CTI holding company structure, our
dependence on Comverse's performance of various transition services
agreements necessary for our ongoing operations; the risk that we
will not be able to complete the proposed Comverse share
distribution due to our inability to satisfy the requisite
conditions thereto, including, among others, completion of the
review process of the related registration statement by the SEC;
the failure of the share distribution to occur for any other
reason; the risk that, if CTI ceases to maintain a majority of the
voting power 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; the continuation of a
material weakness related to income taxes or the discovery of
additional material weaknesses in our internal control over
financial reporting and any delay in the implementation of remedial
measures; the risk of disruption in the credit and capital markets
which may limit our ability to access capital; 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, complex and highly competitive bidding and selection
process, the difficulty predicting their ability to obtain
particular contracts and the timing and scope of these
opportunities; 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 penalties if their solutions develop operational
problems and significant costs to correct previously undetected
operational problems in their complex solutions; and other risks
described in the company's 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 |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
(In thousands, except
share and per share data) |
|
|
|
|
April 30 |
January 31 |
|
2012 |
2012 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 491,023 |
$ 515,637 |
Restricted cash and bank time
deposits |
41,712 |
41,756 |
Auction rate securities |
— |
272 |
Accounts receivable, net of allowance of
$11,755 and $12,202, respectively |
288,947 |
290,599 |
Inventories, net |
50,098 |
44,405 |
Deferred cost of revenue |
39,033 |
47,203 |
Deferred income taxes |
23,746 |
23,555 |
Prepaid expenses and other current
assets |
93,274 |
100,799 |
Total current assets |
1,027,833 |
1,064,226 |
Property and equipment, net |
74,837 |
75,713 |
Goodwill |
1,062,520 |
1,057,231 |
Intangible assets, net |
192,643 |
206,264 |
Deferred cost of revenue |
113,842 |
121,392 |
Deferred income taxes |
19,016 |
19,620 |
Other assets |
99,173 |
101,455 |
Total assets |
$ 2,589,864 |
$ 2,645,901 |
LIABILITIES AND EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 377,533 |
$ 383,861 |
Convertible debt obligations |
2,195 |
2,195 |
Deferred revenue |
523,433 |
522,575 |
Deferred income taxes |
8,989 |
9,798 |
Bank loans |
6,239 |
6,228 |
Income taxes payable |
11,151 |
8,586 |
Other current liabilities |
52,904 |
41,950 |
Total current liabilities |
982,444 |
975,193 |
Bank loans |
589,392 |
591,151 |
Deferred revenue |
208,644 |
230,668 |
Deferred income taxes |
92,140 |
81,946 |
Other long-term liabilities |
194,012 |
214,191 |
Total liabilities |
2,066,632 |
2,093,149 |
Commitments and contingencies |
|
|
Equity: |
|
|
Comverse Technology, Inc. shareholders'
equity: |
|
|
Common stock, $0.10 par value -
authorized, 600,000,000 shares; issued 220,306,639 and 219,708,779
shares, respectively; outstanding, 219,045,829 and 218,636,842
shares, respectively |
22,031 |
21,971 |
Treasury stock, at cost, 1,260,810 and
1,071,937 shares, respectively |
(9,217) |
(8,011) |
Additional paid-in capital |
2,201,921 |
2,198,086 |
Accumulated deficit |
(1,819,574) |
(1,766,364) |
Accumulated other comprehensive income
(loss) |
2,340 |
(4,174) |
Total Comverse Technology, Inc.
shareholders' equity |
397,501 |
441,508 |
Noncontrolling interest |
125,731 |
111,244 |
Total equity |
523,232 |
552,752 |
Total liabilities and equity |
$ 2,589,864 |
$ 2,645,901 |
|
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(Unaudited) |
(In thousands, except
share and per share data) |
|
|
|
|
Three Months
Ended April 30, |
|
2012 |
2011 |
Revenue: |
|
|
Product revenue |
$ 144,502 |
$ 142,035 |
Service revenue |
199,165 |
207,462 |
Total revenue |
343,667 |
349,497 |
Costs and expenses: |
|
|
Product costs |
61,601 |
54,611 |
Service costs |
103,847 |
111,437 |
Research and development, net |
49,655 |
54,439 |
Selling, general and administrative |
145,312 |
151,347 |
Other operating expenses: |
|
|
Restructuring charges |
680 |
11,087 |
Total costs and expenses |
361,095 |
382,921 |
Loss from operations |
(17,428) |
(33,424) |
Interest income |
366 |
1,117 |
Interest expense |
(7,920) |
(9,128) |
Loss on extinguishment of debt |
— |
(8,136) |
Other expense, net |
(471) |
(122) |
Loss before income tax provision |
(25,453) |
(49,693) |
Income tax provision |
(20,151) |
(7,425) |
Net loss |
(45,604) |
(57,118) |
Less: Net income attributable to
noncontrolling interest |
(7,606) |
(2,077) |
Net loss attributable to Comverse Technology,
Inc. |
$ (53,210) |
$ (59,195) |
Weighted average common shares
outstanding: |
|
|
Basic and Diluted |
218,855,251 |
205,699,533 |
Loss per share attributable to Comverse
Technology, Inc.'s shareholders: |
|
|
Basic and Diluted |
$ (0.24) |
$ (0.29) |
|
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(Unaudited) |
(In
thousands) |
|
|
|
|
Three Months
Ended April 30, |
|
2012 |
2011 |
Cash flows from operating activities: |
|
|
Net cash used in operating activities |
$ (14,570) |
$ (51,804) |
Cash flows from investing activities: |
|
|
Proceeds from sales and maturities of
investments |
394 |
412 |
Acquisition of businesses including
adjustments, net of cash acquired |
(660) |
(11,958) |
Purchase of property and equipment |
(5,864) |
(4,606) |
Capitalization of software development
costs |
(1,127) |
(1,076) |
Net change in restricted cash and bank
time deposits |
(14) |
949 |
Settlement of derivative financial
instruments not designated as hedges |
(445) |
(887) |
Other, net |
265 |
201 |
Net cash used in investing activities |
(7,451) |
(16,965) |
Cash flows from financing activities: |
|
|
Debt issuance costs and other
debt-related costs |
— |
(13,952) |
Proceeds from borrowings, net of original
issuance discount |
— |
597,000 |
Repayment of bank loans, long-term debt
and other financing obligations |
(1,767) |
(589,362) |
Repurchase of common stock |
(1,206) |
(1,425) |
Net payments from repurchase of common
stock by a subsidiary |
(369) |
(502) |
Proceeds from exercises of stock
options |
1,043 |
5,122 |
Other, net |
(1,424) |
(1,804) |
Net cash used in financing activities |
(3,723) |
(4,923) |
Effects of exchange rates on cash and cash
equivalents |
1,130 |
7,603 |
Net decrease in cash and cash
equivalents |
(24,614) |
(66,089) |
Cash and cash equivalents, beginning of
period |
515,637 |
581,390 |
Cash and cash equivalents, end of period |
$ 491,023 |
$ 515,301 |
Non-cash investing and financing
transactions: |
|
|
Accrued but unpaid purchases of property
and equipment |
$ 1,028 |
$ 1,974 |
Inventory transfers to (from) property
and equipment |
$ 632 |
$ (2,895) |
Accrued but unpaid debt issuance and
other debt-related costs |
$ — |
$ 999 |
Liabilities for contingent consideration
recorded for business combination |
$ — |
$ 904 |
Leasehold improvements funded by lease
incentive |
$ 329 |
$ — |
|
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
CONSOLIDATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
(Unaudited) |
|
|
|
Table of Reconciliation from
GAAP Net Loss Attributable to Comverse Technology, Inc. to Non-GAAP
Net Loss Attributable to Comverse Technology, Inc. |
Three Months
Ended April 30, |
(In thousands) |
2012 |
2011 |
Net loss attributable to Comverse Technology,
Inc. |
$ (53,210) |
$ (59,195) |
Revenue adjustments related to
acquisitions |
3,604 |
235 |
Stock-based compensation expense |
8,146 |
11,077 |
Amortization of acquisition-related
intangibles |
14,056 |
12,694 |
Compliance-related professional fees |
8 |
19,397 |
Compliance-related compensation and other
expenses |
1,118 |
2,033 |
Strategic evaluation related costs |
4,805 |
220 |
Impairment of property and equipment |
22 |
128 |
Restructuring and integration
charges |
680 |
559 |
Acquisition-related charges |
(39) |
2,374 |
Litigation settlements and related
costs |
(230) |
11,087 |
Other |
(1,893) |
1,325 |
Unrealized (gains) losses on derivatives,
net |
(264) |
1,107 |
Loss on extinguishment of debt |
— |
8,136 |
Tax impact on Non-GAAP adjustments
(1) |
1,329 |
(1,142) |
Noncontrolling interest impact of
Non-GAAP adjustments (2) |
(10,143) |
(16,189) |
Total Non-GAAP adjustments |
21,199 |
53,041 |
Non-GAAP net loss attributable to Comverse
Technology, Inc. |
$ (32,011) |
$ (6,154) |
|
|
|
Non-GAAP Loss Per Share
Attributable to Comverse Technology, Inc.'s
Shareholders |
Three Months
Ended April 30, |
(In thousands, except per share data) |
2012 |
2011 |
Numerator: |
|
|
Non-GAAP net loss attributable to Comverse
Technology, Inc. - basic |
$ (32,011) |
$ (6,154) |
Adjustment for subsidiary stock
options |
(211) |
— |
Non-GAAP net loss attributable to Comverse
Technology, Inc. - diluted |
$ (32,222) |
$ (6,154) |
|
|
|
Denominator: |
|
|
Basic and diluted weighted average common
shares outstanding |
218,855 |
205,700 |
|
|
|
Non-GAAP loss per share attributable to
Comverse Technology, Inc.'s shareholders |
|
|
Basic and diluted |
$ (0.15) |
$ (0.03) |
(1) The tax impact on the
Non-GAAP adjustments is an allocation of the tax provision as
applied to the consolidated loss before income tax
provision. |
(2) Represents the minority
shareholders' interest in non-GAAP adjustments attributable to
Verint and Starhome. |
|
|
|
|
|
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
BUSINESS SEGMENT
INFORMATION |
(Unaudited) |
|
|
|
|
|
|
|
|
Comverse BSS |
Comverse VAS |
Verint |
All Other |
Eliminations |
Consolidated |
|
(In
thousands) |
Three Months Ended April 30,
2012: |
|
|
|
|
|
|
Revenue |
$ 57,680 |
$ 65,922 |
$ 196,635 |
$ 23,430 |
$ — |
$ 343,667 |
Intercompany revenue |
— |
— |
— |
1,553 |
(1,553) |
— |
Total revenue |
$ 57,680 |
$ 65,922 |
$ 196,635 |
$ 24,983 |
$ (1,553) |
$ 343,667 |
Costs and expenses: |
|
|
|
|
|
|
Cost of revenue |
$ 38,733 |
$ 38,245 |
$ 68,328 |
$ 20,034 |
$ 108 |
$ 165,448 |
Intercompany purchases |
— |
— |
— |
1,553 |
(1,553) |
— |
Research and development, net |
9,829 |
9,632 |
28,403 |
1,791 |
— |
49,655 |
Selling, general and administrative |
4,721 |
2,205 |
78,921 |
59,469 |
(4) |
145,312 |
Other operating expenses |
— |
— |
— |
680 |
— |
680 |
Total costs and expenses |
$ 53,283 |
$ 50,082 |
$ 175,652 |
$ 83,527 |
$ (1,449) |
$ 361,095 |
Income (loss) from operations |
$ 4,397 |
$ 15,840 |
$ 20,983 |
$ (58,544) |
$ (104) |
$ (17,428) |
Computation of segment
performance: |
|
|
|
|
|
|
Total revenue |
$ 57,680 |
$ 65,922 |
$ 196,635 |
24,983 |
|
|
Segment revenue adjustment |
— |
— |
3,604 |
— |
|
|
Segment revenue |
$ 57,680 |
$ 65,922 |
$ 200,239 |
$ 24,983 |
|
|
Total costs and expenses |
$ 53,283 |
$ 50,082 |
$ 175,652 |
$ 83,527 |
|
|
Segment expense adjustments: |
|
|
|
|
|
|
Stock-based compensation expense |
— |
— |
5,711 |
2,435 |
|
|
Amortization of acquisition-related
intangibles |
4,074 |
— |
9,982 |
— |
|
|
Compliance-related professional fees |
— |
— |
— |
8 |
|
|
Compliance-related compensation and other
expenses |
630 |
773 |
— |
(285) |
|
|
Strategic evaluation related costs |
— |
— |
911 |
3,894 |
|
|
Impairment of property and equipment |
— |
— |
— |
22 |
|
|
Litigation settlements and related
costs |
— |
— |
— |
(230) |
|
|
Restructuring and integration
charges |
— |
— |
— |
680 |
|
|
Other |
— |
— |
(1,759) |
(173) |
|
|
Segment expense adjustments |
4,704 |
773 |
14,845 |
6,351 |
|
|
Segment expenses |
48,579 |
49,309 |
160,807 |
77,176 |
|
|
Segment performance |
$ 9,101 |
$ 16,613 |
$ 39,432 |
$ (52,193) |
|
|
Interest expense |
$ — |
$ — |
$ (7,718) |
$ (202) |
$ — |
$ (7,920) |
Depreciation and amortization |
$ (4,863) |
$ (1,201) |
$ (14,096) |
$ (2,198) |
$ — |
$ (22,358) |
Other non-cash items (1) |
$ — |
$ — |
$ (606) |
$ (22) |
$ — |
$ (628) |
(1) Other non-cash items consist
of write-downs of property and equipment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
BUSINESS SEGMENT
INFORMATION (CONTINUED) |
(Unaudited) |
|
|
|
|
|
|
|
|
Comverse BSS |
Comverse VAS |
Verint |
All Other |
Eliminations |
Consolidated |
|
(In
thousands) |
|
|
|
|
|
Three Months Ended April 30,
2011: |
|
|
|
|
|
|
Revenue |
$ 75,201 |
$ 79,475 |
$ 176,332 |
$ 18,489 |
$ — |
$ 349,497 |
Intercompany revenue |
— |
— |
— |
699 |
(699) |
— |
Total revenue |
$ 75,201 |
$ 79,475 |
$ 176,332 |
$ 19,188 |
$ (699) |
$ 349,497 |
Costs and expenses: |
|
|
|
|
|
|
Cost of revenue |
$ 45,967 |
$ 48,293 |
$ 55,349 |
$ 16,453 |
$ (713) |
$ 165,349 |
Intercompany purchases |
— |
— |
— |
699 |
— |
699 |
Research and development, net |
16,607 |
7,062 |
26,368 |
4,402 |
— |
54,439 |
Selling, general and administrative |
7,568 |
3,334 |
75,781 |
64,686 |
— |
151,369 |
Other operating expenses |
— |
— |
— |
11,087 |
(22) |
11,065 |
Total costs and expenses |
$ 70,142 |
$ 58,689 |
$ 157,498 |
$ 97,327 |
$ (735) |
$ 382,921 |
Income (loss) from operations |
$ 5,059 |
$ 20,786 |
$ 18,834 |
$ (78,139) |
$ 36 |
$ (33,424) |
Computation of segment
performance: |
|
|
|
|
|
|
Total revenue |
$ 75,201 |
$ 79,475 |
$ 176,332 |
$ 19,188 |
|
|
Segment revenue adjustment |
— |
— |
235 |
— |
|
|
Segment revenue |
$ 75,201 |
$ 79,475 |
$ 176,567 |
$ 19,188 |
|
|
Total costs and expenses |
$ 70,142 |
$ 58,689 |
$ 157,498 |
$ 97,327 |
|
|
Segment expense adjustments: |
|
|
|
|
|
|
Stock-based compensation expense |
— |
— |
7,550 |
3,527 |
|
|
Amortization of acquisition-related |
4,498 |
— |
8,196 |
— |
|
|
intangibles |
|
|
|
|
|
|
Compliance-related professional fees |
— |
— |
991 |
18,406 |
|
|
Compliance-related compensation and other
expenses |
2,062 |
1,201 |
— |
(1,230) |
|
|
Strategic evaluation related costs |
— |
— |
|
220 |
|
|
Impairment of property and equipment |
— |
— |
— |
128 |
|
|
Litigation settlements and related
costs |
— |
— |
— |
559 |
|
|
Acquisition-related charges |
— |
— |
2,374 |
— |
|
|
Restructuring and integration
charges |
— |
— |
— |
11,087 |
|
|
Other |
— |
— |
1,335 |
(10) |
|
|
Segment expense adjustments |
6,560 |
1,201 |
20,446 |
32,687 |
|
|
Segment expenses |
63,582 |
57,488 |
137,052 |
64,640 |
|
|
Segment performance |
$ 11,619 |
$ 21,987 |
$ 39,515 |
$ (45,452) |
|
|
Interest expense |
$ — |
$ — |
$ (8,794) |
$ (334) |
$ — |
$ (9,128) |
Depreciation and amortization |
$ (5,466) |
$ (936) |
$ (12,954) |
$ (2,319) |
$ — |
$ (21,675) |
Other non-cash items (1) |
$ — |
$ — |
$ (203) |
$ (128) |
$ — |
$ 331 |
(1) Other non-cash items
consist of write-downs of property and equipment. |
|
|
|
|
|
|
|
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
SUPPLEMENTAL FINANCIAL
INFORMATION |
(Unaudited) |
|
|
|
|
|
The company revised its
reportable segments as a result of the implementation of the Phase
II Business Transformation at Comverse and the manner in which its
CODM reviews the financial results of Comverse and allocates
resources to the Company's operating segments. The company is
providing the following additional information, presenting the
results of operations of the previous Comverse reportable 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 a 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 reportable 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 results of operations
of "Comverse Other" are included in the company's "All Other"
column. |
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, certain
non-cash charges, and certain other gains and charges. |
|
|
|
|
|
|
Comverse
BSS |
Comverse
VAS |
Comverse
Other |
Total |
|
(In
thousands) |
Three Months Ended April 30,
2012: |
|
|
|
|
Revenue |
$ 57,680 |
$ 65,922 |
$ 12,803 |
$ 136,405 |
Intercompany revenue |
— |
— |
1,345 |
1,345 |
Total revenue |
$ 57,680 |
$ 65,922 |
$ 14,148 |
$ 137,750 |
Costs and expenses: |
|
|
|
|
Cost of revenue |
$ 38,733 |
$ 38,245 |
$ 18,237 |
$ 95,215 |
Intercompany purchases |
— |
— |
208 |
208 |
Research and development, net |
9,829 |
9,632 |
(389) |
19,072 |
Selling, general and administrative |
4,721 |
2,205 |
38,532 |
45,458 |
Other operating expenses |
— |
— |
680 |
680 |
Total costs and expenses |
$ 53,283 |
$ 50,082 |
$ 57,268 |
$ 160,633 |
Income (loss) from operations |
$ 4,397 |
$ 15,840 |
$ (43,120) |
$ (22,883) |
Computation of Comverse
performance: |
|
|
|
|
Total revenue |
$ 57,680 |
$ 65,922 |
$ 14,148 |
$ 137,750 |
Total costs and expenses |
$ 53,283 |
$ 50,082 |
$ 57,268 |
$ 160,633 |
Expense adjustments: |
|
|
|
|
Stock-based compensation expense |
— |
— |
1,431 |
1,431 |
Amortization of acquisition-related
intangibles |
4,074 |
— |
— |
4,074 |
Compliance-related professional fees |
— |
— |
(136) |
(136) |
Compliance-related compensation and other
expenses |
630 |
773 |
(285) |
1,118 |
Impairment of property and equipment |
— |
— |
22 |
22 |
Litigation settlements and related
costs |
— |
— |
(230) |
(230) |
Restructuring and integration
charges |
— |
— |
680 |
680 |
Other |
— |
— |
(173) |
(173) |
Expense adjustments |
4,704 |
773 |
1,309 |
6,786 |
Expenses after adjustments |
|
|
|
153,847 |
Comverse performance |
|
|
|
$ (16,097) |
Interest expense |
$ — |
$ — |
$ (196) |
$ (196) |
Depreciation and amortization |
$ (4,863) |
$ (1,201) |
$ (1,981) |
$ (8,045) |
Other non-cash items (1) |
$ — |
$ — |
$ (22) |
$ (22) |
(1) Other
non-cash items consist of write-downs of property and
equipment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMVERSE TECHNOLOGY,
INC. AND SUBSIDIARIES |
SUPPLEMENTAL FINANCIAL
INFORMATION (CONTINUED) |
(Unaudited) |
|
|
|
|
|
|
Comverse BSS |
Comverse VAS |
Comverse Other |
Total |
|
(In
thousands) |
Three Months Ended April 30,
2011: |
|
|
|
|
Revenue |
$ 75,201 |
$ 79,475 |
$ 8,484 |
$ 163,160 |
Intercompany revenue |
— |
— |
604 |
604 |
Total revenue |
$ 75,201 |
$ 79,475 |
$ 9,088 |
$ 163,764 |
Costs and expenses: |
|
|
|
|
Cost of revenue |
$ 45,967 |
$ 48,293 |
$ 14,233 |
$ 108,493 |
Intercompany purchases |
— |
— |
(55) |
(55) |
Research and development, net |
16,607 |
7,062 |
2,077 |
25,746 |
Selling, general and administrative |
7,568 |
3,334 |
45,266 |
56,168 |
Other operating expenses |
— |
— |
11,087 |
11,087 |
Total costs and expenses |
$ 70,142 |
$ 58,689 |
$ 72,608 |
$ 201,439 |
Income (loss) from operations |
$ 5,059 |
$ 20,786 |
$ (63,520) |
$ (37,675) |
Computation of Comverse
performance: |
|
|
|
|
Total revenue |
$ 75,201 |
$ 79,475 |
$ 9,088 |
$ 163,764 |
Total costs and expenses |
$ 70,142 |
$ 58,689 |
$ 72,608 |
$ 201,439 |
Expense adjustments: |
|
|
|
|
Stock-based compensation expense |
— |
— |
668 |
668 |
Amortization of acquisition-related
intangibles |
4,498 |
— |
— |
4,498 |
Compliance-related professional fees |
— |
— |
12,609 |
12,609 |
Compliance-related compensation and other
expenses |
2,062 |
1,201 |
(1,230) |
2,033 |
Impairment of property and equipment |
— |
— |
128 |
128 |
Litigation settlements and related
costs |
— |
— |
475 |
475 |
Restructuring and integration
charges |
— |
— |
11,087 |
11,087 |
Other |
— |
— |
(27) |
(27) |
Expense adjustments |
6,560 |
1,201 |
23,710 |
31,471 |
Expenses after adjustments |
|
|
|
169,968 |
Comverse performance |
|
|
|
$ (6,204) |
Interest expense |
$ — |
$ — |
$ (330) |
$ (330) |
Depreciation and amortization |
$ (5,466) |
$ (936) |
$ (2,097) |
$ (8,499) |
Other non-cash items (1) |
$ — |
$ — |
$ (128) |
$ (128) |
(1) Other non-cash items
consist of write-downs of property and equipment. |
|
|
|
|
|
|
|
CONTACT: Paul D. Baker
Comverse Technology, Inc.
(212) 739-1060
Comverse Technology, Inc. (MM) (NASDAQ:CMVT)
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