EXHIBIT 99.1
CONTACT: Paul D. Baker
Comverse Technology, Inc.
One Huntington Quadrangle
Melville, New York 11747
(516) 677-7226
COMVERSE TECHNOLOGY THIRD QUARTER FISCAL 2005 RESULTS:
SALES OF $298,966,000, UP 22% YEAR-OVER-YEAR; GAAP EARNINGS UP 140%
($0.18 PER DILUTED SHARE), PRO FORMA EARNINGS UP 114% ($0.17 PER DILUTED SHARE)
NEW YORK, NY, December 6, 2005 -- Comverse Technology, Inc. (NASDAQ: CMVT)
announced sales of $298,966,000 for the third quarter of fiscal year 2005, ended
October 31, 2005, an increase of 21.8% compared to sales of $245,479,000 for the
third quarter of fiscal year 2004, ended October 31, 2004. Net income on a
generally accepted accounting principles ("GAAP") basis for the third quarter of
fiscal 2005 was $38,295,000 ($0.18 per diluted share), up 140% compared to net
income of $15,959,000 ($0.08 per diluted share) for the third quarter of fiscal
2004. Net income on a pro forma basis was $37,100,000 ($0.17 per diluted share)
in the third quarter of fiscal 2005, up 114% compared to pro forma net income of
$17,368,000 ($0.08 per diluted share) in the third quarter of fiscal 2004. 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 Income.
Kobi Alexander, Chairman and CEO of Comverse Technology, stated, "We achieved
our twelfth consecutive quarter of sequential sales growth, and continued to
expand our operating margin. Comverse, our network systems division, saw demand
for its Total Communication portfolio, which enables 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 billing. Our Verint Systems unit continued to
expand its activities providing actionable intelligence for security and
business intelligence applications."
The Company ended the quarter with cash and cash equivalents, bank time deposits
and short-term investments of $2,325,046,000, working capital of $2,314,426,000,
total assets of $3,128,841,000 and stockholders' equity of $1,936,265,000, all
of which represent record levels.
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COMVERSE TECHNOLOGY THIRD QUARTER RESULTS
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DECEMBER 6, 2005
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PAGE TWO
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Financial highlights at and for the nine and three month periods ended October
31, 2005 and prior year comparisons are as follows:
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CONSOLIDATED STATEMENTS OF INCOME (GAAP BASIS)
(In thousands, except per share data)
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Nine Months Ended Three Months Ended
----------------- ------------------
(unaudited) (unaudited)
- --------------------------------------------- --------------- --------------- ------------- -------------
October 31, October 31, October 31, October 31,
----------- ----------- ----------- -----------
2004 2005 2004 2005
---- ---- ---- ----
- --------------------------------------------- --------------- --------------- ------------- -------------
Sales $ 700,301 $ 857,602 $ 245,479 $ 298,966
- --------------------------------------------- --------------- --------------- ------------- -------------
Cost of sales 279,652 342,029 96,936 121,080
- --------------------------------------------- --------------- --------------- ------------- -------------
Research and development, net 172,851 193,758 60,782 65,574
- --------------------------------------------- --------------- --------------- ------------- -------------
Selling, general and administrative 213,769 250,241 73,767 84,758
- --------------------------------------------- --------------- --------------- ------------- -------------
In-process research and development and
other acquisition-related charges 4,635 - - -
- --------------------------------------------- --------------- --------------- ------------- -------------
Workforce reduction, restructuring and
impairment charges (credits) 62 (253) (102) -
- --------------------------------------------- --------------- --------------- ------------- -------------
Income from operations 29,332 71,827 14,096 27,554
- --------------------------------------------- --------------- --------------- ------------- -------------
Interest and other income, net 24,970 57,449 9,541 23,132
- --------------------------------------------- --------------- --------------- ------------- -------------
Income before income tax provision,
minority interest and equity in the
earnings (losses) of affiliates 54,302 129,276 23,637 50,686
- --------------------------------------------- --------------- --------------- ------------- -------------
Income tax provision 9,211 17,581 4,051 6,401
- --------------------------------------------- --------------- --------------- ------------- -------------
Minority interest and equity in the
earnings (losses) of affiliates (8,804) (14,325) (3,627) (5,990)
- --------------------------------------------- --------------- --------------- ------------- -------------
Net income $ 36,287 $ 97,370 $ 15,959 $ 38,295
- --------------------------------------------- --------------- --------------- ------------- -------------
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Earnings per share:
- --------------------------------------------- --------------- --------------- ------------- -------------
Diluted $ 0.18 $ 0.45 $ 0.08 $ 0.18
- --------------------------------------------- --------------- --------------- ------------- -------------
Basic $ 0.19 $ 0.49 $ 0.08 $ 0.19
- --------------------------------------------- --------------- --------------- ------------- -------------
- --------------------------------------------- --------------- --------------- ------------- -------------
Weighted average shares:
- --------------------------------------------- --------------- --------------- ------------- -------------
Diluted 202,334 214,236 202,923 215,983
- --------------------------------------------- --------------- --------------- ------------- -------------
Basic 195,452 199,847 196,077 200,766
- --------------------------------------------- --------------- --------------- ------------- -------------
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 THIRD QUARTER RESULTS
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DECEMBER 6, 2005
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PAGE THREE
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PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
- ------------------------------------------------ ------------------------------- -----------------------
Nine Months Ended Three Months Ended
----------------- ------------------
(unaudited) (unaudited)
- ------------------------------------------------ -------------- ------------- ------------ -------------
October 31, October 31, October 31, October 31,
----------- ----------- ----------- -----------
2004 2005 2004 2005
---- ---- ---- ----
- ------------------------------------------------ -------------- ------------- ------------ -------------
Sales $ 700,301 $ 857,602 $ 245,479 $ 298,966
- ------------------------------------------------ -------------- ------------- ------------ -------------
Cost of sales 277,936 339,136 95,786 119,902
- ------------------------------------------------ -------------- ------------- ------------ -------------
Research and development, net 172,851 193,758 60,782 65,574
- ------------------------------------------------ -------------- ------------- ------------ -------------
Selling, general and administrative 210,913 246,603 72,617 83,121
- ------------------------------------------------ -------------- ------------- ------------ -------------
Income from operations 38,601 78,105 16,294 30,369
- ------------------------------------------------ -------------- ------------- ------------ -------------
Interest and other income, net 24,629 49,046 9,541 20,131
- ------------------------------------------------ -------------- ------------- ------------ -------------
Income before income tax provision, minority
interest and equity in the earnings (losses)
of affiliates 63,230 127,151 25,835 50,500
- ------------------------------------------------ -------------- ------------- ------------ -------------
Income tax provision 10,021 18,124 4,149 6,800
- ------------------------------------------------ -------------- ------------- ------------ -------------
Minority interest and equity in the earnings
(losses) of affiliates (11,509) (15,739) (4,318) (6,600)
- ------------------------------------------------ -------------- ------------- ------------ -------------
Pro forma net income $ 41,700 $ 93,288 $ 17,368 $ 37,100
- ------------------------------------------------ -------------- ------------- ------------ -------------
- ------------------------------------------------ -------------- ------------- ------------ -------------
Pro forma earnings per share:
- ------------------------------------------------ -------------- ------------- ------------ -------------
Diluted (1) $ 0.20 $ 0.43 $ 0.08 $ 0.17
- ------------------------------------------------ -------------- ------------- ------------ -------------
Basic $ 0.21 $ 0.47 $ 0.09 $ 0.18
- ------------------------------------------------ -------------- ------------- ------------ -------------
- ------------------------------------------------ -------------- ------------- ------------ -------------
Weighted average shares:
- ------------------------------------------------ -------------- ------------- ------------ -------------
Diluted 202,334 214,236 202,923 215,983
- ------------------------------------------------ -------------- ------------- ------------ -------------
Basic 195,452 199,847 196,077 200,766
- ------------------------------------------------ -------------- ------------- ------------ -------------
(1) Net income for purposes of calculating diluted earnings per share includes
the dilutive effects of subsidiary options of approximately $879 and $340
for the nine and three month periods ended October 31, 2005, respectively,
and approximately $880 and $330 for the nine and three month periods ended
October 31, 2004, respectively.
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COMVERSE TECHNOLOGY THIRD QUARTER RESULTS
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DECEMBER 6, 2005
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RECONCILIATION OF GAAP BASIS NET INCOME TO PRO FORMA BASIS NET INCOME
(In thousands)
- -------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
----------------- ------------------
(unaudited) (unaudited)
- --------------------------------------------------------------------------------------------------------
October 31, October 31, October 31, October 31,
----------- ----------- ----------- -----------
2004 2005 2004 2005
---- ---- ---- ----
- ------------------------------------------------ -------------- ------------- ------------ ------------
GAAP basis net income $ 36,287 $ 97,370 $ 15,959 $ 38,295
- ------------------------------------------------ -------------- ------------- ------------ ------------
Adjustments:
- ------------------------------------------------ -------------- ------------- ------------ ------------
Amortization of acquisition-related
intangibles 2,376 4,274 968 1,787
- ------------------------------------------------ -------------- ------------- ------------ ------------
Amortization of deferred stock-based
compensation 1,297 3,212 433 1,123
- ------------------------------------------------ -------------- ------------- ------------ ------------
In-process research and development and other
acquisition-related charges 4,635 - - -
- ------------------------------------------------ -------------- ------------- ------------ ------------
Acquisition-related charges included in cost
of sales and selling, general and
administrative 899 - 899 -
- ------------------------------------------------ -------------- ------------- ------------ ------------
Workforce reduction, restructuring and
impairment charges (credits) 62 (253) (102) -
- ------------------------------------------------ -------------- ------------- ------------ ------------
Net realized gain on investments previously
written-down - (8,530) - (3,096)
- ------------------------------------------------ -------------- ------------- ------------ ------------
Gain on extinguishment of debt (341) - - -
- ------------------------------------------------ -------------- ------------- ------------ ------------
Gain on settlement - (828) - -
- ------------------------------------------------ -------------- ------------- ------------ ------------
Income tax provision (810) (543) (98) (399)
- ------------------------------------------------ -------------- ------------- ------------ ------------
Minority interest effect of GAAP to pro forma
basis adjustments (2,705) (1,414) (691) (610)
- ------------------------------------------------ -------------- ------------- ------------ ------------
- ------------------------------------------------ -------------- ------------- ------------ ------------
Pro forma basis net income $ 41,700 $ 93,288 $ 17,368 $ 37,100
- ------------------------------------------------ -------------- ------------- ------------ ------------
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COMVERSE TECHNOLOGY THIRD QUARTER RESULTS
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DECEMBER 6, 2005
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FINANCIAL HIGHLIGHTS
(In thousands)
Balance Sheet Data:
- ------------------------------------------------------- -------------------------------------
ASSETS January 31, October 31,
2005 2005
(unaudited)
- ---------------------------------------------------------------------------------------------
CURRENT ASSETS:
- ------------------------------------------------------- ----------------- -------------------
Cash and cash equivalents, bank time deposits
and short-term investments $ 2,249,630 $ 2,325,046
- ------------------------------------------------------- ----------------- -------------------
Accounts receivable, net 199,571 278,958
- ------------------------------------------------------- ----------------- -------------------
Inventories 107,552 131,273
- ------------------------------------------------------- ----------------- -------------------
Prepaid expenses and other current assets 70,335 99,212
- ------------------------------------------------------- ----------------- -------------------
TOTAL CURRENT ASSETS 2,627,088 2,834,489
- ------------------------------------------------------- ----------------- -------------------
PROPERTY AND EQUIPMENT, net 122,174 125,906
- ------------------------------------------------------- ----------------- -------------------
OTHER ASSETS 176,024 168,446
- ------------------------------------------------------- ----------------- -------------------
- ------------------------------------------------------- ----------------- -------------------
TOTAL ASSETS $ 2,925,286 $ 3,128,841
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
- ------------------------------------------------------- ----------------- -------------------
Accounts payable and accrued expenses $ 273,861 $ 304,791
- ------------------------------------------------------- ----------------- -------------------
Convertible debt 87,253 87,253
- ------------------------------------------------------- ----------------- -------------------
Bank loans and other debt 660 8,836
- ------------------------------------------------------- ----------------- -------------------
Advance payments from customers 108,381 119,183
- ------------------------------------------------------- ----------------- -------------------
TOTAL CURRENT LIABILITIES 470,155 520,063
- ------------------------------------------------------- ----------------- -------------------
CONVERTIBLE DEBT 420,000 419,834
- ------------------------------------------------------- ----------------- -------------------
OTHER LIABILITIES 45,277 35,322
- ------------------------------------------------------- ----------------- -------------------
TOTAL LIABILITIES 935,432 975,219
- ------------------------------------------------------- ----------------- -------------------
MINORITY INTEREST 195,825 217,357
- ------------------------------------------------------- ----------------- -------------------
STOCKHOLDERS' EQUITY 1,794,029 1,936,265
- ------------------------------------------------------- ----------------- -------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,925,286 $ 3,128,841
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COMVERSE TECHNOLOGY THIRD QUARTER RESULTS
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DECEMBER 6, 2005
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PAGE SIX
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CONFERENCE CALL INFORMATION
A conference call to discuss the Company's results will be conducted
Tuesday, December 6, 2005, at 5:15 pm EST. Participants should dial
706-643-1670. A replay will be available for seven days at 706-645-9291, access
code 2848953. A live webcast can be accessed at www.cmvt.com.
The webcast will be available for replay for seven days.
ABOUT COMVERSE TECHNOLOGY, INC.
Comverse Technology, Inc. (NASDAQ: CMVT), through its Comverse
business unit, is the world's leading provider of software and systems enabling
network-based multimedia enhanced communication services. These value-added
enhanced services solutions, along with the Company's real-time billing
solutions, comprise Comverse's Total Communication(TM) portfolio. Comverse's
Total Communication portfolio addresses four primary categories: call completion
and call management solutions; advanced messaging for groups, communities and
person-to-person communication; solutions and enablers for the management and
delivery of data and content-based services; and real-time billing and account
management solutions for dynamic service environments. Other Comverse Technology
business units include: Verint Systems (NASDAQ: VRNT), a leading provider of
analytic software-based solutions for communications interception, networked
video security and business intelligence; and Ulticom (NASDAQ: ULCM), a leading
provider of service enabling signaling software for wireline, wireless and
Internet communications. Comverse Technology is an S&P 500 and NASDAQ-100 Index
company. For additional information, visit the Comverse Technology website 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: risks associated with integrating the business and employees
of the GSS division of CSG Systems, International; 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
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COMVERSE TECHNOLOGY THIRD QUARTER RESULTS
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DECEMBER 6, 2005
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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 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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