EX-99.1 2 y78358exv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
(PRESS RELEASE LOGO)
 
Amdocs Limited Reports Quarterly Revenue of $690 Million
Key highlights:
  •   Third quarter revenue of $690 million, within the $670-$690 million guidance range
 
  •   Third quarter non-GAAP operating income of $124 million; non-GAAP operating margin of 18.0%; GAAP operating income of $93 million
 
  •   Third quarter diluted non-GAAP EPS of $0.53, excluding acquisition-related costs and equity-based compensation expense, net of related tax effects
 
  •   Diluted GAAP EPS of $0.42 for the third quarter
 
  •   Free cash flow of $96 million for the third quarter
 
  •   12-month backlog of $2.37 billion at the end of the third quarter
 
  •   Fourth quarter fiscal 2009 guidance: Expected revenue of approximately $670-$690 million and diluted non-GAAP EPS of $0.47-$0.51, excluding acquisition-related costs and approximately $0.04-$0.05 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.34-$0.39
St. Louis, MO — July 22, 2009 — Amdocs Limited (NYSE: DOX) today reported that for its fiscal third quarter ended June 30, 2009, revenue was $690.3 million, a decrease of 15.9% from last year’s third quarter and down 2.9% sequentially. Net income on a non-GAAP basis was $108.6 million, or $0.53 per diluted share, compared to non-GAAP net income of $132.5 million, or $0.61 per diluted share, in the third quarter of fiscal 2008. Non-GAAP net income excludes amortization of purchased intangible assets and equity-based compensation expenses of $23.0 million, net of related tax effects, in the third quarter of fiscal 2009 and excludes such amortization, in-process research and development write-off and equity-based compensation expenses of $31.8 million, net of related tax effects, in the third quarter of fiscal 2008. The Company’s GAAP net income for the third quarter of fiscal 2009 was $85.5 million,

 

 

or $0.42 per diluted share, compared to GAAP net income of $100.7 million, or $0.46 per diluted share, in the prior year’s third quarter.
“We are pleased with our results for the third fiscal quarter, particularly in light of the on-going strain in the global economy. Favorable foreign currency movements increased third quarter revenue and EPS relative to our expectations for the quarter. Even without currency benefits, our results were at or above the mid-point of our guidance ranges. Additionally, backlog remained stable and we continued to meet our profit and cash flow objectives, all of which are encouraging,” said Dov Baharav, chief executive officer of Amdocs Management Limited.
Baharav continued, “Demand conditions, however, remain weak, particularly for large transformational projects, as our customers manage their budgets tightly. As a result, we anticipate that our revenue may continue to trend down sequentially, albeit at a moderating pace, until we see demand improve. This view is reflected in our fourth fiscal quarter guidance, and we believe this trend could persist into early fiscal 2010.”
Baharav concluded, “While the pace of new deal activity is still slow, we signed important deals in the third quarter. We saw relative strength in our cable, managed services and Interactive domains, highlighted by several key wins.”
  •   For J:COM, Japan’s largest multiple system and channel operator, Amdocs is fully modernizing the customer’s billing system and replacing a competitor’s CRM system, all based on the CES 7.5 product platform.
 
  •   Amdocs signed a six-year managed services contract with Elisa, a Finnish service provider, to consolidate eight billing systems across Elisa’s wireless, wireline, Internet and cable TV lines of business onto the Amdocs Billing platform, as well as, deploy Amdocs Enterprise Product Catalog 7.5 to centralize information from five different existing catalogs. The new contract builds on an existing relationship with the customer, where Amdocs billing, ordering and CRM systems were previously deployed to support Elisa’s wireless operations.

 

 

  •   Within Interactive, Amdocs signed several contracts during the third quarter, including two within the emerging markets. In Latin America, Amdocs signed a key contract with a large service provider to support its wireless portal development, digital commerce and personalization across all of its affiliates. Importantly, the deal included products based on both the QPass and ChangingWorlds technologies, demonstrating early synergies within our Interactive portfolio. Amdocs also signed two additional ChangingWorlds contracts, both in the Asia-Pacific region.
Free cash flow was $96 million for the quarter, comprised of cash flow from operations of $114 million less approximately $18 million in net capital expenditures and other.
Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was $2.37 billion at the end of the third quarter of fiscal 2009.
Financial Outlook
Amdocs expects that revenue for the fourth quarter of fiscal 2009 will be approximately $670-$690 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the fourth quarter to be $0.47-$0.51, excluding acquisition-related costs and approximately $0.04-$0.05 per share of equity-based compensation expense, net of related tax effects. Amdocs estimates GAAP diluted earnings per share for the fourth quarter will be $0.34-$0.39.
Amdocs will host a conference call on July 22, 2009 at 5 p.m. Eastern Time to discuss the Company’s third quarter results. The call will be carried live on the Internet via the Amdocs website, www.amdocs.com.

 

 

Non-GAAP Financial Measures
This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes and non-GAAP net income. These non-GAAP measures exclude the following items:
  •   amortization of purchased intangible assets;
 
  •   in-process research and development write-off;
 
  •   restructuring charges;
 
  •   equity-based compensation expense; and
 
  •   tax effects related to the above.
These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs’ results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs’ results of operations in conjunction with the corresponding GAAP measures.
Amdocs believes that the presentation of non-GAAP diluted earnings per share and other financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes and non-GAAP net income, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations, as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.
For its internal budgeting process and in monitoring the results of the business, Amdocs’ management uses financial statements that do not include amortization of purchased

 

 

intangible assets, in-process research and development write-off, restructuring charges, equity-based compensation expense, and related tax effects. Amdocs’ management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Amdocs. In addition, Amdocs believes that significant groups of investors exclude these non-cash expenses in reviewing its results and those of its competitors, because the amounts of the expenses between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the expenses.
Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of service, research and development, selling, general and administrative, operating income, income taxes and net income), it is useful to investors to understand how these specific line items in the Consolidated Statements of Income are affected by these adjustments.
Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.
About Amdocs
Amdocs is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and the intentional customer experienceTM — at every point of service. Amdocs provides solutions that deliver customer experience excellence, combining the software, service and expertise to help its customers execute their strategies and achieve service, operational and financial excellence. A global company with revenue of $3.16 billion in fiscal 2008, Amdocs has approximately 17,000 employees and serves customers in more than 50 countries around the world. For more information, visit Amdocs at www.amdocs.com.
This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon

 

 

reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs ability to grow in the business markets that it serves, Amdocs ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the Company’s products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future; however, the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company’s filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2008 filed on December 8, 2008 and in our quarterly 6-K furnished on February 9, 2009 and May 12, 2009.
Contact:
Thomas G. O’Brien
Treasurer and Vice President of Investor Relations
Amdocs Limited
314-212-8328
E-mail: dox_info@amdocs.com

 

 

AMDOCS LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
                                 
    Three months ended     Nine months ended  
    June 30,     June 30,  
    2009     2008     2009     2008  
 
                                
Revenue:
                                
License
   $ 26,075     $ 35,244     $ 107,879     $ 93,570  
Service
     664,190       785,044       2,047,309       2,243,249  
 
                        
 
     690,265       820,288       2,155,188       2,336,819  
Operating expenses:
                                
Cost of license
     537       555       2,097       2,267  
Cost of service
     441,777       528,437       1,381,825       1,493,134  
Research and development
     51,134       56,137       160,113       168,240  
Selling, general and administrative
     81,732       104,632       256,305       300,963  
Amortization of purchased intangible assets
     21,839       22,796       63,594       66,302  
Restructuring charges and in-process research and development (1)
     —       1,780       20,780       1,780  
 
                        
 
     597,019       714,337       1,884,714       2,032,686  
 
                        
Operating income
     93,246       105,951       270,474       304,133  
 
                                
Interest income (expense) and other, net
     2,514       6,159       (1,014 )     23,797  
 
                        
Income before income taxes
     95,760       112,110       269,460       327,930  
 
                                
Income taxes
     10,212       11,438       29,035       31,735  
 
                        
Net income
   $ 85,548     $ 100,672     $ 240,425     $ 296,195  
 
                        
Basic earnings per share
   $ 0.42     $ 0.49     $ 1.19     $ 1.43  
 
                        
Diluted earnings per share (2)
   $ 0.42     $ 0.46     $ 1.16     $ 1.36  
 
                        
Basic weighted average number of shares outstanding
     202,750       206,329       202,624       207,069  
 
                        
Diluted weighted average number of shares outstanding
     203,515       219,120       208,514       220,315  
 
                        
 
(1)   Restructuring charges and in-process research and development for the nine months ended June 30, 2009 includes restructuring charges of $15,140, and in-process research and development of $5,640.
 
(2)   To reflect the impact of assumed conversion of the convertible notes, $0 and $1,486, representing interest expense and amortization of issuance costs, were added back to net income for the three and nine months ended June 30, 2009, respectively, and $985 and $2,955 were added back to net income for the three and nine months ended June 30, 2008, respectively, for the purpose of computing diluted earnings per share.

 

 

AMDOCS LIMITED
Selected Financial Metrics
(in thousands, except per share data)
                                 
    Three months ended   Nine months ended
    June 30,   June 30,
    2009   2008   2009   2008
 
Revenue
   $ 690,265     $ 820,288     $ 2,155,188     $ 2,336,819  
Non-GAAP operating income
     124,482       146,608       388,179       415,925  
Non-GAAP net income
     108,555       132,463       329,680       382,400  
Non-GAAP diluted earnings per share (1)
   $ 0.53     $ 0.61     $ 1.59     $ 1.75  
Diluted weighted average number of shares outstanding
     203,515       219,120       208,514       220,315  
 
(1)   To reflect the impact of assumed conversion of the convertible notes, $0 and $1,486, representing interest expense and amortization of issuance costs, were added back to net income for the three and nine months ended June 30, 2009, respectively, and $985 and $2,955 were added back to net income for the three and nine months ended June 30, 2008, respectively, for the purpose of computing diluted earnings per share.

 

 

AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
                                         
    Three months ended
    June 30, 2009
            Reconciliation items    
            Amortization of   Equity based        
            purchased   compensation        
    GAAP   intangible assets   expense   Tax effect   Non-GAAP
     
Operating expenses:
                                        
Cost of license
   $ 537     $ —     $ —     $ —     $ 537  
Cost of service
     441,777       —       (6,115 )     —       435,662  
Research and development
     51,134       —       (1,238 )     —       49,896  
Selling, general and administrative
     81,732       —       (2,044 )     —       79,688  
Amortization of purchased intangible assets
     21,839       (21,839 )     —       —       —  
     
 
                                        
Total operating expenses
     597,019       (21,839 )     (9,397 )     —       565,783  
     
 
                                        
Operating income
     93,246       21,839       9,397       —       124,482  
     
 
                                        
Income taxes
     10,212       —       —       8,229       18,441  
     
 
                                        
Net income
   $ 85,548     $ 21,839     $ 9,397     $ (8,229 )   $ 108,555  
     
                                                 
    Three months ended
    June 30, 2008
            Reconciliation items    
            Amortization of   In-process   Equity based        
            purchased   research and   compensation        
    GAAP   intangible assets   development   expense   Tax effect   Non-GAAP
     
 
                                                
Operating expenses:
                                                
Cost of license
   $ 555     $ —     $ —     $ —     $ —     $ 555  
Cost of service
     528,437       —       —       (5,998 )     —       522,439  
Research and development
     56,137       —       —       (1,104 )     —       55,033  
Selling, general and administrative
     104,632       —       —       (8,979 )     —       95,653  
Amortization of purchased intangible assets
     22,796       (22,796 )     —       —       —       —  
Restructuring charges and in-process research and development
     1,780       —       (1,780 )     —       —       —  
     
Total operating expenses
     714,337       (22,796 )     (1,780 )     (16,081 )     —       673,680  
     
 
                                                
Operating income
     105,951       22,796       1,780       16,081       —       146,608  
     
 
                                                
Income taxes
     11,438       —       —       —       8,866       20,304  
     
 
                                                
Net income
   $ 100,672     $ 22,796     $ 1,780     $ 16,081     $ (8,866 )   $ 132,463  
     

 

 

AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
                                                 
    Nine months ended
    June 30, 2009
            Reconciliation items    
                    Restructuring            
                    charges and            
            Amortization of   in-process   Equity based        
            purchased   research and   compensation        
    GAAP   intangible assets   development   expense   Tax effect   Non-GAAP
     
 
                                                
Operating expenses:
                                                
Cost of license
   $ 2,097     $ —     $ —     $ —     $ —     $ 2,097  
Cost of service
     1,381,825       —       —       (16,776 )     —       1,365,049  
Research and development
     160,113       —       —       (3,277 )     —       156,836  
Selling, general and administrative
     256,305       —       —       (13,278 )     —       243,027  
Amortization of purchased intangible assets
     63,594       (63,594 )     —       —       —       —  
Restructuring charges and in-process research and development
     20,780       —       (20,780 )     —       —       —  
     
Total operating expenses
     1,884,714       (63,594 )     (20,780 )     (33,331 )     —       1,767,009  
     
 
                                                
Operating income
     270,474       63,594       20,780       33,331       —       388,179  
     
 
                                                
Income taxes
     29,035       —       —       —       28,450       57,485  
     
 
                                                
Net income
   $ 240,425     $ 63,594     $ 20,780     $ 33,331     $ (28,450 )   $ 329,680  
     
                                                 
    Nine months ended
    June 30, 2008
            Reconciliation items    
            Amortization of   In-process   Equity based        
            purchased   research and   compensation        
    GAAP   intangible assets   development   expense   Tax effect   Non-GAAP
     
 
                                                
Operating expenses:
                                                
Cost of license
   $ 2,267     $ —     $ —     $ —     $ —     $ 2,267  
Cost of service
     1,493,134       —       —       (17,711 )     —       1,475,423  
Research and development
     168,240       —       —       (3,626 )     —       164,614  
Selling, general and administrative
     300,963       —       —       (22,373 )     —       278,590  
Amortization of purchased intangible assets
     66,302       (66,302 )     —       —       —       —  
Restructuring charges and in-process research and development
     1,780       —       (1,780 )     —       —       —  
     
Total operating expenses
     2,032,686       (66,302 )     (1,780 )     (43,710 )     —       1,920,894  
     
 
                                                
Operating income
     304,133       66,302       1,780       43,710       —       415,925  
     
 
                                                
Income taxes
     31,735       —       —       —       25,587       57,322  
     
 
                                                
Net income
   $ 296,195     $ 66,302     $ 1,780     $ 43,710     $ (25,587 )   $ 382,400  
     

 

 

AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
                 
    As of  
    June 30,     September 30,  
    2009     2008  
 
                
ASSETS
                
 
                
Current assets
                
Cash, cash equivalents and short-term interest-bearing investments
   $ 1,280,289     $ 1,244,378  
Accounts receivable, net, including unbilled of $44,439 and $48,264 respectively
     507,507       573,764  
Deferred income taxes and taxes receivable
     106,906       84,515  
Prepaid expenses and other current assets
     95,224       102,930  
 
            
Total current assets
     1,989,926       2,005,587  
 
                
Equipment and leasehold improvements, net
     279,247       317,081  
Goodwill and other intangible assets, net
     1,790,572       1,796,922  
Other noncurrent assets
     439,104       459,473  
 
            
Total assets
   $ 4,498,849     $ 4,579,063  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities
                
Accounts payable and accruals
   $ 429,533     $ 600,285  
Short-term portion of financing arrangements
     1,037       1,660  
Deferred revenue
     185,097       197,851  
Deferred income taxes and taxes payable
     24,358       30,228  
 
            
Total current liabilities
     640,025       830,024  
 
                
0.50% Convertible notes
     1,020       450,000  
Long-term loan
     300,000       —  
Noncurrent liabilities and other
     483,135       493,848  
Shareholders’ equity
     3,074,669       2,805,191  
 
            
Total liabilities and shareholders’ equity
   $ 4,498,849     $ 4,579,063  
 
            

 

 

AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands)
                 
    Nine months ended June 30,  
    2009     2008  
 
                
Cash Flow from Operating Activities:
                
Net income
   $ 240,425     $ 296,195  
Reconciliation of net income to net cash provided by operating activities:
                
Depreciation and amortization
     147,869       143,978  
In-process research and development
     5,640       1,780  
Loss (gain) on sale of equipment
     67       (55 )
Equity-based compensation expense
     33,331       43,710  
Deferred income taxes
     13,097       6,378  
Gain on repurchase of convertible notes
     (2,185 )     —  
Excess tax benefit from equity-based compensation
     (10 )     (209 )
Loss from short-term interest-bearing investments
     5,821       1,771  
Net changes in operating assets and liabilities, net of amounts acquired:
                
Accounts receivable
     63,843       (148,472 )
Prepaid expenses and other current assets
     6,875       8,166  
Other noncurrent assets
     2,263       (40,420 )
Accounts payable, accrued expenses and accrued personnel
     (139,466 )     (20,728 )
Deferred revenue
     8,815       12,283  
Income taxes payable
     (12,638 )     (25,429 )
Noncurrent liabilities and other
     (38,268 )     26,590  
 
            
 
                
Net cash provided by operating activities
     335,479       305,538  
 
            
 
                
Cash Flow from Investing Activities:
                
Proceeds from sale of equipment and leasehold improvements
     429       1,103  
Payments for purchase of equipment and leasehold improvements
     (65,474 )     (101,530 )
Proceeds from sale of short-term interest-bearing investments
     601,844       575,602  
Purchase of short-term interest-bearing investments
     (676,472 )     (513,462 )
Net cash paid for acquisition
     (61,890 )     (56,970 )
 
            
 
                
Net cash used in investing activities
     (201,563 )     (95,257 )
 
            
 
                
Cash Flow from Financing Activities:
                
Borrowing under long-term financing arrangements
     450,000       —  
Payments under long-term financing arrangements
     (150,000 )     —  
Redemption of convertible notes
     (330,780 )     (174 )
Repurchase of convertible notes
     (116,015 )     —  
Repurchase of shares
     (20,014 )     (172,339 )
Payments under capital lease and short-term financing arrangements
     (3,632 )     —  
Borrowing under short-term financing arrangements
     540       —  
Proceeds from employee stock options exercised
     2,026       33,755  
Excess tax benefit from equity-based compensation
     10       209  
 
            
 
                
Net cash used in financing activities
     (167,865 )     (138,549 )
 
            
 
                
Net (decrease) increase in cash and cash equivalents
     (33,949 )     71,732  
Cash and cash equivalents at beginning of period
     718,850       615,501  
 
            
 
                
Cash and cash equivalents at end of period
   $ 684,901     $ 687,233  
 
            

 

 

AMDOCS LIMITED
Supplementary Information
(in millions)
                                         
    Three months ended  
                    December 31,     September 30,     June 30,  
    June 30, 2009     March 31, 2009     2008     2008     2008  
North America
   $ 527.7     $ 539.8     $ 561.6     $ 558.7     $ 570.5  
Europe
     84.4       105.0       111.4       150.9       133.0  
Rest of World
     78.2       66.3       80.8       115.7       116.8  
 
                              
Total Revenue
   $ 690.3     $ 711.1     $ 753.8     $ 825.3     $ 820.3  
 
                              
                                         
    Three months ended  
                    December 31,     September 30,     June 30,  
    June 30, 2009     March 31, 2009     2008     2008     2008  
Customer Experience Systems
   $ 647.9     $ 668.0     $ 701.0     $ 756.5     $ 756.9  
Directory
     42.4       43.1       52.8       68.8       63.4  
 
                              
Total Revenue
   $ 690.3     $ 711.1     $ 753.8     $ 825.3     $ 820.3  
 
                              
                                         
    As of  
                    December 31,     September 30,     June 30,  
    June 30, 2009     March 31, 2009     2008     2008     2008  
12-Month Backlog
   $ 2,370     $ 2,370     $ 2,400     $ 2,420     $ 2,420