RESTRUCTURING

The Company reviews its business, manages costs and aligns resources with market demand and in conjunction with various acquisitions. As a result, the Company has taken several actions to improve its cash position, reduce fixed costs, eliminate redundancies, strengthen operational focus and better position itself to respond to market pressures or unfavorable economic conditions.

Comverse Initiatives

First Quarter 2010 Restructuring Initiative

During the first quarter of the fiscal year ended January 31, 2011, Comverse's management approved a restructuring plan to eliminate staff positions and close certain facilities in order to streamline Comverse's activities. The aggregate cost of the plan of $7.0 million was recorded during the fiscal year ended January 31, 2011. Severance-related and facilities-related costs of $6.0 million and $0.9 million, respectively, were paid during the fiscal year ended January 31, 2011. The remaining costs of $0.1 million were paid during the fiscal year ended January 31, 2012.

Third Quarter 2010 Restructuring Initiatives and Business Transformation

During the second half of the fiscal year ended January 31, 2011, the Company commenced certain initiatives to improve its cash position, including a plan to restructure the operations of Comverse with a view towards aligning operating costs and expenses with anticipated revenue. Comverse implemented the first phase of such plan commencing in the third quarter of the fiscal year ended January 31, 2011, reducing its annualized operating costs. During the fiscal year ended January 31, 2012, Comverse implemented a second phase of measures (the “Phase II Business Transformation”) that focuses on process reengineering to maximize business performance, productivity and operational efficiency. As part of the Phase II Business Transformation, Comverse restructured its operations into new business units that are designed to improve operational efficiency and business performance. One of the primary purposes of the Phase II Business Transformation is to solidify Comverse's leadership in BSS and leverage the growth in mobile data usage, while maintaining its leading market position in VAS and implementing further cost savings through operational efficiencies and strategic focus. In relation to these restructuring plans, the Company recorded severance-related costs of $12.6 million and $11.6 million for the fiscal years ended January 31, 2012 and 2011, respectively, and facilities-related costs of $0.2 million for each such fiscal year. During the fiscal years ended January 31, 2012 and 2011, the Company paid severance-related costs of $12.4 million and $9.1 million, respectively, and facilities-related costs of $0.3 million and $0.1 million, respectively. The remaining costs of $2.5 million are expected to be paid by January 31, 2013. The Company substantially completed its implementation of the Phase II Business Transformation. In the fiscal year ending January 31, 2013, the Company expects to continue to evaluate the implementation of certain measures of the Business Transformation.

Netcentrex 2010 Initiative

During the fiscal year ended January 31, 2011, management, as part of initiatives to improve focus on Comverse's core business and to maintain its ability to face intense competitive pressures in its markets, approved the first phase of a restructuring plan to eliminate staff positions primarily located in France. During the fiscal year ended January 31, 2012, Comverse began the second phase of its Netcentrex restructuring plan. In relation to these initiatives, the Company recorded severance-related costs of $7.6 million and $10.9 million for the fiscal years ended January 31, 2012 and 2011, respectively, and facilities-related costs of $0.1 million in the fiscal year ended January 31, 2012. During the fiscal years ended January 31, 2012 and 2011, the Company paid severance-related costs of $9.3 million and $8.0 million, respectively. The remaining costs of $1.2 million relating to the Netcentrex second phase are expected to be substantially paid by January 31, 2013. As part of its commitment to its customers, Netcentrex is providing, and is expected to continue to provide, maintenance, support and certain other services to address the ongoing needs of its existing customer base.

Comverse Pre 2010 Initiatives

During prior fiscal years, Comverse implemented a number of restructuring programs. These programs had various objectives, including changes to organizational structure and product offerings, to better align its cost structure with the business environment and to improve the efficiency of its operations through reductions in workforce, restructuring of operations, abandoning and closing certain facilities, innovations to enhance the quality of its product offerings to better meet its customers’ needs and improve delivery and service capabilities. The remaining costs related to these initiatives were paid during the fiscal year ended January 31, 2012.

Other Initiatives

During the fiscal years ended January 31, 2011 and 2010, there were various other insignificant initiatives that occurred at Verint and Starhome.

The following table represents a roll forward of the workforce reduction and restructuring activities noted above:



	Comverse Third Quarter 2010 Initiative ⁽¹⁾						Netcentrex 2010 Initiative						Comverse First Quarter 2010 Initiative						Pre 2010 initiatives
	Severance Related			Facilities Related			Severance Related			Facilities Related			Severance Related			Facilities Related			Severance Related			Facilities Related			Other Initiatives			Total
	(In thousands)
January 31, 2009	$	—		$	—		$	—		$	—		$	—		$	—		$	1,746		$	8,670		$	541		$	10,957
Charges	—			—			—			—			—			—			13,019			2,558			269			15,846
Change in assumptions	—			—			—			—			—			—			(32		)	(273		)	—			(305		)
Translation adjustments	—			—			—												—			—			—			—
Paid or utilized	—			—			—			—			—			—			(14,034		)	(6,468		)	(694		)	(21,196		)
January 31, 2010	—			—			—			—			—			—			699			4,487			116			5,302
Charges	11,600			191			10,885			—			6,035			1,007			18			314			—			30,050
Change in assumptions	—			—			—			—			—			—			(120		)	4			—			(116		)
Translation adjustments	—			—			—			—			—			—			—			—			—			—
Paid or utilized	(9,138		)	(105		)	(7,975		)	—			(6,029		)	(913		)	(370		)	(4,776		)	(116		)	(29,422		)
January 31, 2011	2,462			86			2,910			—			6			94			227			29			—			5,814
Charges	12,611			211			7,621			52			16			13			274			82			—			20,880
Change in assumptions	(140		)	—			(12		)	—			(3		)	—			1			2			—			(152		)
Translation adjustments	—			—			(7		)	—			—			—			—			—			—			(7		)
Paid or utilized	(12,447		)	(289		)	(9,334		)	(52		)	(19		)	(107		)	(502		)	(113		)	—			(22,863		)
January 31, 2012	$	2,486		$	8		$	1,178		$	—		$	—		$	—		$	—		$	—		$	—		$	3,672


(1)	Includes charges attributable to the Phase II Business Transformation.