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Business Segment Information
 6 Months Ended
Jul. 31, 2010
Business Segment Information  
Business Segment Information

18. BUSINESS SEGMENT INFORMATION

The Company has three reportable segments: Comverse, Verint and All Other. The All Other segment is comprised of Starhome B.V. and its subsidiaries, miscellaneous operations and CTI's holding company operations. Ulticom was a reportable segment of the Company prior to its sale to a third party on December 3, 2010. The results of operations of Ulticom are reflected in discontinued operations, less applicable income taxes, as a separate component of net loss in the Company's condensed consolidated statements of operations for all fiscal periods presented.

The Company evaluates its business by assessing the performance of each of its segments. CTI's Chief Executive Officer is its chief operating decision maker. The chief operating decision maker uses segment performance, as defined below, as the primary basis for assessing the financial results of the segments and for the allocation of resources. Segment performance, as the Company defines it in accordance with the FASB's guidance relating to segment reporting, is not necessarily comparable to other similarly titled captions of other companies. Segment performance, as defined by management, represents operating results of a segment without the impact of significant expenditures incurred by the segment in connection with the efforts to become current in periodic reporting obligations under the federal securities laws, certain non-cash charges, and certain other insignificant gains and charges.

 

Segment Performance

Segment performance is computed by management as (loss) income from operations adjusted for the following: (i) stock-based compensation expense; (ii) amortization of acquisition-related intangibles; (iii) compliance-related professional fees; (iv) compliance-related compensation and other expenses; (v) impairment charges; (vi) litigation settlements and related costs; (vii) acquisition-related charges; (viii) restructuring and integration charges; and (ix) certain other insignificant gains and charges. Compliance-related professional fees and compliance-related compensation and other expenses relate to fees and expenses incurred in connection with (a) the Company's efforts to complete current and previously issued financial statements and audits of such financial statements, and (b) the Company's efforts to become current in its periodic reporting obligations under the federal securities laws.

The tables below present information about total revenue, total costs and expenses, (loss) income from operations, interest expense, depreciation and amortization, significant non-cash items, and segment performance for the three and six months ended July 31, 2010 and 2009:

 

     Comverse     Verint     All Other     Eliminations     Consolidated
Totals		  
     (In thousands)  

Three Months Ended July 31, 2010:

           

Revenue

    $ 221,053      $ 180,676      $ 8,513      $ —        $ 410,242   

Intercompany revenue

      494        —          205        (699 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

    $ 221,547      $ 180,676      $ 8,718      $ (699 )    $ 410,242   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total costs and expenses

    $ 234,754      $ 156,877      $ 32,540      $ (879 )    $ 423,292   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) income from operations

    $ (13,207 )    $ 23,799      $ (23,822 )    $ 180      $ (13,050 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Computation of segment performance:

           

Segment revenue

    $ 221,547      $ 180,676      $ 8,718       
  

 

 

    

 

 

    

 

 

      

Total costs and expenses

    $ 234,754      $ 156,877      $ 32,540       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments:

           

Stock-based compensation expense

      541        8,035        2,420       

Amortization of acquisition-related intangibles

      4,653        7,558        —         

Compliance-related professional fees

      20,176        6,067        17,295       

Compliance-related compensation and other expenses

      1,064        —          5       

Litigation settlements and related costs

      —          —          15       

Acquisition-related charges

      —          324        —         

Restructuring and integration charges

      1,020        —          —         

Other

      20        540        392       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments

      27,474        22,524        20,127       
  

 

 

    

 

 

    

 

 

      

Segment expenses

      207,280        134,353        12,413       
  

 

 

    

 

 

    

 

 

      

Segment performance

    $ 14,267      $ 46,323      $ (3,695 )     
  

 

 

    

 

 

    

 

 

      

Interest expense

    $ (125 )    $ (5,936 )    $ 8      $ —        $ (6,053 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Depreciation and amortization

    $ (9,790 )    $ (12,054 )    $ (245 )    $ —        $ (22,089 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Significant non-cash items (1)

   $ 72      $ 180      $ —        $ —        $ 252   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(1) Significant non-cash items consist primarily of write-offs and impairments of property and equipment.

 

     Comverse     Verint     All Other     Eliminations     Consolidated
Totals		  
     (In thousands)  

Three Months Ended July 31, 2009:

           

Revenue

    $ 195,197      $ 169,269      $ 10,252      $ —        $ 374,718   

Intercompany revenue

      167        —          —          (167 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

    $ 195,364      $ 169,269      $ 10,252      $ (167 )    $ 374,718   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total costs and expenses

    $ 233,071      $ 155,560      $ 22,649      $ (480 )    $ 410,800   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) income from operations

    $ (37,707 )    $ 13,709      $ (12,397 )    $ 313      $ (36,082 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Computation of segment performance:

           

Segment revenue

    $ 195,364      $ 169,269      $ 10,252       
  

 

 

    

 

 

    

 

 

      

Total costs and expenses

    $ 233,071      $ 155,560      $ 22,649       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments:

           

Stock-based compensation expense

      1,302        13,140        2,297       

Amortization of acquisition-related intangibles

      5,490        7,563        —         

Compliance-related professional fees

      31,882        10,203        3,504       

Compliance-related compensation and other expenses

      2,936        —          —         

Litigation settlements and related costs

      —          —          1,127       

Acquisition-related charges

      (14 )      —          —         

Restructuring and integration charges

      1,641        11        —         

Other

      852        13        897       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments

      44,089        30,930        7,825       
  

 

 

    

 

 

    

 

 

      

Segment expenses

      188,982        124,630        14,824       
  

 

 

    

 

 

    

 

 

      

Segment performance

    $ 6,382      $ 44,639      $ (4,572 )     
  

 

 

    

 

 

    

 

 

      

Interest expense

    $ (832 )    $ (6,369 )    $ (2 )    $ —        $ (7,203 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Depreciation and amortization

    $ (12,849 )    $ (12,434 )    $ (224 )    $ —        $ (25,507 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Significant non-cash items (1)

   $ 169      $ 1      $ 11      $ —        $ 181   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(1) Significant non-cash items consist primarily of write-offs and impairments of property and equipment.

 

     Comverse     Verint     All Other     Eliminations     Consolidated
Totals		  
     (In thousands)  

Six Months Ended July 31, 2010:

           

Revenue

    $ 397,049      $ 353,289      $ 16,792      $ —        $ 767,130   

Intercompany revenue

      1,069        —          407        (1,476 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

    $ 398,118      $ 353,289      $ 17,199      $ (1,476 )    $ 767,130   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total costs and expenses

    $ 465,575      $ 333,472      $ 66,915      $ (2,090 )    $ 863,872   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) income from operations

    $ (67,457 )    $ 19,817      $ (49,716 )    $ 614      $ (96,742 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Computation of segment performance:

           

Segment revenue

    $ 398,118      $ 353,289      $ 17,199       
  

 

 

    

 

 

    

 

 

      

Total costs and expenses

    $ 465,575      $ 333,472      $ 66,915       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments:

           

Stock-based compensation expense

      782        26,005        4,966       

Amortization of acquisition-related intangibles

      9,312        15,130        —         

Compliance-related professional fees

      40,402        26,267        35,946       

Compliance-related compensation and other expenses

      866        —          5       

Litigation settlements and related costs

      —          —          110       

Acquisition-related charges

      —          831        —         

Restructuring and integration charges

      6,976        —          —         

Other

      (1,442 )      553        481       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments

      56,896        68,786        41,508       
  

 

 

    

 

 

    

 

 

      

Segment expenses

      408,679        264,686        25,407       
  

 

 

    

 

 

    

 

 

      

Segment performance

    $ (10,561 )    $ 88,603      $ (8,208 )     
  

 

 

    

 

 

    

 

 

      

Interest expense

    $ (329 )    $ (11,884 )    $ (8 )    $ —        $ (12,221 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Depreciation and amortization

    $ (20,175 )    $ (23,952 )    $ (484 )    $ —        $ (44,611 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Significant non-cash items (1)

   $ 323      $ 223      $ —        $ —        $ 546   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(1) Significant non-cash items consist primarily of write-offs and impairments of property and equipment.

 

     Comverse     Verint     All Other     Eliminations     Consolidated
Totals		  
     (In thousands)  

Six Months Ended July 31, 2009:

           

Revenue

    $ 399,475      $ 344,417      $ 19,074      $ —        $ 762,966   

Intercompany revenue

      691        —          161        (852 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

    $ 400,166      $ 344,417      $ 19,235      $ (852 )    $ 762,966   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total costs and expenses

    $ 489,274      $ 294,699      $ 42,932      $ (1,618 )    $ 825,287   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) income from operations

    $ (89,108 )    $ 49,718      $ (23,697 )    $ 766      $ (62,321 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Computation of segment performance:

           

Segment revenue

    $ 400,166      $ 344,417      $ 19,235       
  

 

 

    

 

 

    

 

 

      

Total costs and expenses

    $ 489,274      $ 294,699      $ 42,932       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments:

           

Stock-based compensation expense

      2,664        19,698        4,793       

Amortization of acquisition-related intangibles

      10,914        15,592        —         

Compliance-related professional fees

      48,151        16,765        6,569       

Compliance-related compensation and other expenses

      5,341        —          —         

Litigation settlements and related costs

      —          —          2,234       

Acquisition-related charges

      (103 )      —          —         

Restructuring and integration charges

      13,280        24        128       

Other

      958        13        1,586       
  

 

 

    

 

 

    

 

 

      

Segment expense adjustments

      81,205        52,092        15,310       
  

 

 

    

 

 

    

 

 

      

Segment expenses

      408,069        242,607        27,622       
  

 

 

    

 

 

    

 

 

      

Segment performance

    $ (7,903 )    $ 101,810      $ (8,387 )     
  

 

 

    

 

 

    

 

 

      

Interest expense

    $ (1,364 )    $ (12,722 )    $ (7 )    $ —        $ (14,093 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Depreciation and amortization

    $ (25,892 )    $ (25,507 )    $ (513 )    $ —        $ (51,912 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Significant non-cash items (1)

   $ 1,710      $ (134 )    $ 19      $ —        $ 1,595   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(1) Significant non-cash items consist primarily of write-offs and impairments of property and equipment.