19. DISCONTINUED OPERATIONS

On December 3, 2010 (the "Effective Date"), Ulticom, Inc. completed a merger (the "Merger") with an affiliate of Platinum Equity Advisors, LLC ("Platinum Equity"), pursuant to the terms and conditions of a Merger Agreement, dated October 12, 2010 (the "Merger Agreement"), with Utah Intermediate Holding Corporation ("UIHC"), a Delaware corporation, and Utah Merger Corporation ("Merger Sub"), a New Jersey corporation and wholly-owned subsidiary of UIHC. As a result of the Merger, Ulticom, Inc. became a wholly-owned subsidiary of UIHC.

Immediately prior to the effective time of the Merger, Ulticom, Inc. paid a special cash dividend in the aggregate amount of $64.1 million (the "Dividend"), amounting to $5.74 per share, to its shareholders of record on November 24, 2010. CTI received $42.4 million in respect of the Dividend.

Pursuant to the terms of the Merger, Ulticom, Inc.'s shareholders (other than CTI) received $2.33 in cash, without interest, per share of common stock of Ulticom, Inc. after payment of the Dividend.

Shares of Ulticom, Inc. common stock held by CTI were purchased by an affiliate of Platinum Equity, pursuant to the terms and conditions of a Share Purchase Agreement, dated October 12, 2010, following payment of the Dividend and immediately prior to the consummation of the Merger. In consideration thereof, CTI received aggregate consideration of up to $17.2 million, amounting up to $2.33 per share, consisting of (i) approximately $13.2 million in cash and (ii) the issuance by Merger Sub to CTI of two non-interest bearing promissory notes originally in the aggregate principal amount of $4.0 million. The first promissory note, originally in the amount of $1.4 million, was subsequently reduced to $0.7 million in connection with the purchase of certain products from Ulticom and is payable to CTI 14 months after the Effective Date. The second promissory note, in the amount of $2.6 million, is payable to CTI following the determination of Ulticom's revenue for a 24-month period beginning on January 1, 2011 and is subject to reduction by 40% of the difference between $75 million and the revenue generated by Ulticom during such period. This note has no carrying amount as of January 31, 2011.

Prior to the sale, Ulticom, Inc. was a majority-owned subsidiary of CTI, and Ulticom constituted one of the Company's reporting segments. Ulticom, Inc. was not previously classified as held for sale, because the sale was not probable until December 2, 2010, the date when the noncontrolling shareholders approved the sale.

The results of operations of Ulticom, including the gain on the sale of Ulticom of $2.9 million, net of tax, are reflected in discontinued operations, less applicable income taxes, as a separate component of net loss in the Company's consolidated statements of operations for all fiscal periods presented, and the assets and liabilities of Ulticom are reflected in discontinued operations in the Company's consolidated balance sheet as of January 31, 2010.

The results of Ulticom's operations included in discontinued operations were as follows:


	Fiscal Years Ended January 31,
	2011			2010			2009
	(In thousands)
Total revenue	$	28,377		$	42,877		$	48,812
Loss before income tax (provision) benefit		(8,921	)		(8,083	)		(9,023	)
Income tax (provision) benefit		(5,045	)		627			1,652

Loss from discontinued operations, net of tax		(13,966	)		(7,456	)		(7,371	)
Gain on sale of discontinued operations		4,103			—			—
Tax on discontinued operations		(1,176	)		(35,606	)		—

		2,927			(35,606	)		—

Total loss from discontinued operations, net of tax	$	(11,039	)	$	(43,062	)	$	(7,371	)

Loss from discontinued operations, net of tax
Atributable to Comverse Technology, Inc.		(6,705	)		(41,605	)		(6,361	)
Attributable to noncontrolling interest		(4,334	)		(1,457	)		(1,010	)

Total	$	(11,039	)	$	(43,062	)	$	(7,371	)

The Company had previously entered into transactions with Ulticom for the supply of circuit boards and it is expected these transactions will continue. The purchases made by the Company from Ulticom prior to the Ulticom Sale for the fiscal years ended January 31, 2011, 2010 and 2009 were $1.1 million, $3.0 million, and $4.2 million, respectively. These amounts were eliminated in the consolidated financial statements. The purchases made by the Company from Ulticom subsequent to the Ulticom Sale in the fiscal year ended January 31, 2011 were $0.3 million, all of which were held as inventory as of January 31, 2011. Upon sale of the Company's products that utilize such circuit boards, the cost of these circuit boards will be reflected in "Product costs" in the consolidated statements of operations.

The assets and liabilities of Ulticom presented in discontinued operations in the consolidated balance sheet as of January 31, 2010 were as follows:


ASSETS	January 31, 2010
	(in thousands)
Current assets:
Cash and cash equivalents	$	13,190
Short-term investments		65,087
Accounts receivable, net of allowance of $138		10,361
Inventories, net		1,018
Deferred income taxes		855
Prepaid expenses and other current assets		6,590

Total current assets		97,101
Property and equipment, net		1,872
Other assets		7,788

Total assets	$	106,761

LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	6,597
Deferred revenue		2,945

Total current liabilities		9,542
Deferred revenue		3,682
Other long-term liabilities		1,675

Total liabilities	$	14,899