CONTACT: Paul D. Baker
Comverse
Technology, Inc.
(516)
677-7226
Comverse
Technology Second Quarter Fiscal 2004 Results: Sales Of $233,427,000, Up 24% Year-Over-Year;
GAAP Earnings Per Diluted Share Of $0.06,
Pro
Forma Earnings Per Diluted Share Of $0.07
WOODBURY, NY, September 8, 2004 -- Comverse Technology, Inc. (NASDAQ: CMVT) announced sales of $233,427,000 for the second quarter of fiscal year 2004, ended July 31, 2004, an increase of 23.9% compared to sales of $188,468,000 for the second quarter of fiscal year 2003, ended July 31, 2003. Net income on a generally accepted accounting principles (“GAAP”) basis for the second quarter of fiscal 2004 was $13,327,000, ($0.06 per diluted share) compared to a net loss of $1,058,000 ($0.01 per share) for the second quarter of fiscal 2003. Net income on a pro forma basis was $13,725,000 ($0.07 per diluted share) in the second quarter of fiscal 2004 compared to a pro forma net loss of $6,132,000 ($0.03 per share) in the second quarter of fiscal 2003. A reconciliation between results on a GAAP basis and results on a pro forma basis is provided in a table immediately following the Pro Forma Consolidated Statements of Operations.
Kobi Alexander, Chairman and CEO of Comverse Technology, stated, “Each of our three major operating units increased its profitability and achieved both sequential and year-over-year revenue growth in the second quarter. Comverse, our network systems division, saw activity in solutions enabling a broad range of telecommunications applications, including call answering and call completion services, advanced messaging and other data applications such as wireless content delivery, and real-time prepaid billing. Our Verint Systems unit continued to expand its activities providing actionable intelligence for security and surveillance, and business intelligence applications. Our Ulticom division saw demand for its service enabling software across several application areas, including prepaid billing for wireless voice and data services, and IP softswitching.”
The Company ended the quarter with cash and cash equivalents, bank time deposits and short-term investments of $2,186,761,000, working capital of $2,128,473,000, total assets of $2,801,539,000 and stockholders' equity of $1,719,138,000.
Page Two
Financial
highlights at and for the six and three month periods ended July 31, 2004 and
prior year comparisons are as follows:
Consolidated
Statements of Operations (GAAP basis)
(In thousands,
except per share data) |
||||
|
|
Six Months Ended
(unaudited) |
Three Months
Ended
(unaudited) |
||
|
July 31, 2003 |
July 31, 2004 |
July 31, 2003 |
July 31, 2004 |
|
|
Sales |
$ 369,020 |
$ 454,822 |
$ 188,468 |
$ 233,427 |
|
Cost
of sales |
161,697 |
182,716 |
81,324 |
93,124 |
|
Research
and development, net |
108,292 |
112,069 |
53,804 |
56,527 |
|
Selling,
general and administrative |
125,065 |
140,002 |
62,993 |
71,507 |
|
In-process
research and development and other acquisition-related charges |
- |
4,635 |
- |
- |
|
Workforce
reduction, restructuring and impairment charges (credits) |
(233) |
164 |
(233) |
(534) |
|
Income
(loss) from operations |
(25,801) |
15,236 |
(9,420) |
12,803 |
|
Interest
and other income, net |
25,054 |
15,429 |
11,718 |
7,784 |
|
Income
(loss) before income tax provision, minority interest and equity in the earnings
(losses) of affiliates |
(747) |
30,665 |
2,298 |
20,587 |
|
Income
tax provision |
4,206 |
5,160 |
2,226 |
3,668 |
|
Minority
interest and equity in the earnings (losses) of affiliates |
(1,924) |
(5,177) |
(1,130) |
(3,592) |
|
Net
income (loss) |
$ (6,877) |
$ 20,328 |
$ (1,058) |
$ 13,327 |
|
|
|
|
|
|
|
Earnings
(loss) per share: |
|
|
|
|
|
Diluted
(1) |
$ (0.04) |
$ 0.10 |
$ (0.01) |
$ 0.06 |
|
Basic |
$ (0.04) |
$ 0.10 |
$ (0.01) |
$ 0.07 |
|
|
|
|
|
|
|
Weighted
average shares: |
|
|
|
|
|
Diluted |
188,531 |
201,773 |
188,844 |
201,817 |
|
Basic |
188,531 |
195,136 |
188,844 |
195,467 |
(1) Net income
for purposes of calculating diluted earnings per share includes the dilutive effects
of subsidiary options of approximately $394 and $243 for the six and three
month periods ended July 31, 2004, respectively.
Comverse Technology provides pro forma net
income (loss) and pro forma earnings (loss) per share data as additional
information for its operating results.
These measures are not in accordance with, or an alternative for, GAAP
and may be different from pro forma measures used by other companies. The Company believes that this presentation
of pro forma data provides useful information to management and investors
regarding certain additional financial and business trends relating to its
financial condition and results of operations.
In addition, the Company’s management uses these measures for reviewing
the financial results of the Company and for budget planning purposes.
Page Three
Pro Forma Consolidated Statements of Operations
(In thousands,
except per share data) |
||||
|
|
Six Months Ended
(unaudited) |
Three Months
Ended
(unaudited) |
||
July 31,
2003
|
July 31,
2004
|
July 31,
2003
|
July 31,
2004
|
|
|
Sales |
$ 369,020 |
$ 454,822 |
$ 188,468 |
$ 233,427 |
|
Cost
of sales |
161,697 |
182,150 |
81,324 |
92,713 |
|
Research
and development, net |
108,292 |
112,069 |
53,804 |
56,527 |
|
Selling,
general and administrative |
125,065 |
138,296 |
62,993 |
70,567 |
|
Income
(loss) from operations |
(26,034) |
22,307 |
(9,653) |
13,620 |
|
Interest
and other income, net |
18,447 |
15,088 |
6,877 |
7,687 |
|
Income
(loss) before income tax provision, minority interest and equity in the
earnings (losses) of affiliates |
(7,587) |
37,395 |
(2,776) |
21,307 |
|
Income
tax provision |
4,206 |
5,872 |
2,226 |
3,733 |
|
Minority
interest and equity in the earnings (losses) of affiliates |
(1,924) |
(7,191) |
(1,130) |
(3,849) |
|
Pro
forma net income (loss) |
$ (13,717) |
$ 24,332 |
$ (6,132) |
$ 13,725 |
|
|
|
|
|
|
|
Pro
forma earnings (loss) per share: |
|
|
|
|
|
Diluted |
$ (0.07) |
$ 0.12 |
$ (0.03) |
$ 0.07 |
|
Basic |
$ (0.07) |
$ 0.12 |
$ (0.03) |
$ 0.07 |
|
|
|
|
|
|
|
Weighted
average shares: |
|
|
|
|
|
Diluted |
188,531 |
201,773 |
188,844 |
201,817 |
|
Basic |
188,531 |
195,136 |
188,844 |
195,467 |
|
Reconciliation of GAAP basis net income
(loss) to pro forma basis net income (loss): |
||||
|
GAAP
basis net income (loss) |
$
(6,877) |
$
20,328 |
$
(1,058) |
$
13,327 |
|
Adjustments: |
|
|
|
|
|
Amortization
of acquisition-related intangibles |
- |
1,408 |
- |
918 |
|
Amortization
of deferred stock-based compensation |
- |
864 |
- |
433 |
|
In-process
research and development and other acquisition-related charges |
- |
4,635 |
- |
- |
|
Workforce
reduction, restructuring and impairment charges (credits) |
(233) |
164 |
(233) |
(534) |
|
Write-down
of investments |
2,607 |
- |
1,564 |
- |
|
Gain
on extinguishment of debt |
(9,214) |
(341) |
(6,405) |
(97) |
|
Income
tax provision |
- |
(712) |
- |
(65) |
|
Minority
interest effect of GAAP to pro forma basis adjustments |
- |
(2,014) |
- |
(257) |
|
|
|
|
|
|
|
Pro
forma basis net income (loss) |
$
(13,717) |
$
24,332 |
$
(6,132) |
$
13,725 |
Page Four
Financial Highlights(In thousands) Balance Sheet Data: |
||
|
ASSETS |
|
|
|
January 31, 2004 |
July 31, 2004 (unaudited) |
|
|
CURRENT ASSETS: |
||
|
Cash and
cash equivalents |
$ 1,530,995 |
$ 1,808,641 |
|
Bank
time deposits and short-term investments |
667,504 |
378,120 |
|
Accounts receivable, net |
158,236 |
197,830 |
|
Inventories |
54,751 |
66,691 |
|
Prepaid
expenses and other current assets |
50,798 |
54,898 |
|
TOTAL CURRENT ASSETS |
2,462,284 |
2,506,180 |
|
PROPERTY AND EQUIPMENT, net |
125,023 |
124,222 |
|
OTHER ASSETS |
140,735 |
171,137 |
|
|
|
|
|
TOTAL ASSETS |
$ 2,728,042 |
$ 2,801,539 |
|
|
||
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
||
|
CURRENT LIABILITIES: |
||
|
Accounts payable and accrued expenses |
$ 229,296 |
$ 269,304 |
|
Bank
loans and other debt |
2,649 |
8,827 |
|
Advance
payments from customers |
89,062 |
99,576 |
TOTAL CURRENT LIABILITIES
|
321,007 |
377,707 |
|
CONVERTIBLE DEBT |
544,723 |
507,253 |
|
OTHER LIABILITIES |
28,288 |
19,261 |
|
TOTAL LIABILITIES |
894,018 |
904,221 |
|
MINORITY INTEREST |
161,478 |
178,180 |
|
STOCKHOLDERS’ EQUITY |
1,672,546 |
1,719,138 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ 2,728,042 |
$ 2,801,539 |
Page Five
Conference Call Information
A conference call
to discuss the Company’s results will be conducted Wednesday, September 8,
2004, at 5:15 pm EDT. Participants
should dial 706-643-1670. A replay will
be available for seven days at 706-645-9291, access code 9783995. A live webcast can be accessed at
cmvt.com. The webcast will be available
for replay for seven days.
About Comverse Technology, Inc.
Comverse Technology, Inc.
(NASDAQ: CMVT) is the world’s leading provider of software and systems enabling
network-based multimedia enhanced communications services. More than 400 wireless and wireline
telecommunications network operators, in more than 100 countries, have selected
Comverse’s enhanced services systems and software, which enable the provision
of revenue-generating value-added services including call answering with
one-touch call return, short messaging services, IP-based unified messaging
(voice, fax, and email in a single mailbox), 2.5G/3G multimedia messaging
(MMS), wireless instant messaging, wireless information and entertainment services,
voice-controlled dialing, messaging and browsing, prepaid wireless services,
and additional personal communication services.
Other Comverse Technology business units include: Verint Systems
(NASDAQ: VRNT), a leading provider of
analytic solutions for communications interception, digital video security and
surveillance, and enterprise business intelligence; and Ulticom (NASDAQ:
ULCM), a leading provider of service enabling network software for wireless,
wireline, and Internet communications.
Comverse Technology is an S&P 500 and NASDAQ-100 Index Company. For additional
information, visit the Comverse Technology web site at www.cmvt.com.
Note: This release may contain “forward-looking
statements” under the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties. There
can be no assurances that forward-looking statements will be achieved, and
actual results could differ materially from forecasts and estimates. Important factors that could cause actual
results to differ materially include:
changes in the demand for the Company’s products; changes in capital
spending among the Company’s current and prospective customers; the risks
associated with the sale of large, complex, high capacity systems and with new
product introductions as well as the uncertainty of customer acceptance of
these new or enhanced products from either the Company or its competition;
risks associated with rapidly changing technology and the ability of the
Company to introduce new products on a timely and cost-effective basis;
aggressive competition may force the Company to reduce prices; a failure to
compensate any decrease in the sale of the Company’s traditional products with
a corresponding increase in sales of new products; risks associated with
changes in the competitive or regulatory environment in which the Company
operates; risks associated with prosecuting or defending allegations or claims
of infringement of intellectual property rights; risks associated with significant
foreign operations and international sales and investment activities, including
fluctuations in foreign currency exchange rates, interest rates, and valuations
of public and private equity; the volatility of macroeconomic and industry
conditions and the international marketplace; risks associated with the
Company’s ability to retain existing personnel and recruit and retain qualified
personnel; and other risks described in filings with the Securities and
Exchange
Page Six
Commission. These risks and uncertainties, as well as others, are discussed in greater detail in the filings of the Company with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. These documents are available through the Company, or its website, www.cmvt.com, or through the SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov. The Company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.
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