EXHIBIT 99.1
CONTACT: Paul D. Baker
Comverse Technology, Inc.
170 Crossways Park Drive
Woodbury, New York 11797
(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.
Comverse Technology Second Quarter Results
September 8, 2004
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 Three Months Ended
(unaudited) (unaudited)
- ----------------------------------------- ------------------ ----------------- ------------------- ------------------
July 31, July 31, July 31, July 31,
2003 2004 2003 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.
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COMVERSE TECHNOLOGY SECOND QUARTER RESULTS
September 8, 2004
Page Three
- --------------------------------------------------------------------------------------------------------------------
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
- ------------------------------------------------ ---------------------------------- --------------------------------
Six Months Ended Three Months Ended
(unaudited) (unaudited)
- ------------------------------------------------ ---------------------------------- --------------------------------
July 31, July 31, July 31, July 31,
2003 2004 2003 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
- ------------------------------------------------ ----------------- ---------------- --------------- ----------------
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COMVERSE TECHNOLOGY SECOND QUARTER RESULTS
September 8, 2004
Page Four
- -----------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(In thousands)
Balance Sheet Data:
- -----------------------------------------------------------------------------------------------------
----------------------------------
January 31, July 31,
2004 2004
ASSETS (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
- -------------------------------------------------------------------- ------------ ------------
COMVERSE TECHNOLOGY SECOND QUARTER RESULTS
September 8, 2004
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
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COMVERSE TECHNOLOGY SECOND QUARTER RESULTS
September 8, 2004
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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