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Related Party Transactions
6 Months Ended
Jul. 31, 2010
Related Party Transactions  
Related Party Transactions

19. RELATED PARTY TRANSACTIONS

Ulticom's 2009 Special Cash Dividend and Stock Option Modification

In April 2009, Ulticom, Inc. paid a special cash dividend of $199.6 million to its shareholders, including CTI. Ulticom, Inc.'s minority shareholders were paid $64.3 million and an additional $0.2 million was payable to holders of deferred stock units awarded under Ulticom, Inc.'s equity incentive plan upon each issuance of common stock subject to such awards. As of July 31, 2010 $0.1 million remained payable to holders of the deferred stock units.

Effective as of April 21, 2009, the exercise prices of outstanding options to purchase 2,982,104 shares of Ulticom Inc.'s common stock were reduced in connection with the payment of the special cash dividend of $4.58 per share. These reductions in the option exercise prices resulted in no change in Ulticom's share-based payment expense.

 

Sonus Networks, Inc.

Dr. Nottenburg, a member of CTI's Board of Directors, served as the President and Chief Executive Officer of Sonus Networks, Inc., a telecommunications company, from June 13, 2008 until October 12, 2010. Sonus Networks, Inc. is a customer of Comverse and Verint. The Company had a well-established and ongoing business relationship with Sonus Networks, Inc. prior to the appointment of Dr. Nottenburg to CTI's Board of Directors. For the six months ended July 31, 2010 and 2009, the revenue derived by Comverse from Sonus Networks, Inc. was de minimus. Comverse had no accounts receivable outstanding as of July 31, 2010. As of January 31, 2010, Comverse had accounts receivable from Sonus Networks, Inc. of $0.3 million. Verint derived no revenue from Sonus Networks, Inc. for the three and six months ended July 31, 2010 and 2009 and had no accounts receivable therefrom as of July 31, 2010 and January 31, 2010.

Verint Series A Convertible Perpetual Preferred Stock

On May 25, 2007, in connection with Verint's acquisition of Witness, CTI entered into a Securities Purchase Agreement with Verint (the "Securities Purchase Agreement"), whereby CTI purchased, for cash, an aggregate of 293,000 shares of Verint's Series A Convertible Perpetual Preferred Stock ("preferred stock"), which represents all of Verint's outstanding preferred stock, for an aggregate purchase price of $293.0 million. Proceeds from the issuance of the preferred stock were used to partially finance the acquisition. The preferred stock is eliminated in consolidation. Through July 31, 2010 and January 31, 2010, cumulative, undeclared dividends on the preferred stock were $39.2 million and $32.9 million, respectively. As of July 31, 2010 and January 31, 2010, the liquidation preference of the preferred stock was $332.2 million and $325.9 million, respectively.

Originally, the preferred stock did not confer on CTI voting rights and was not convertible into Verint Systems' common stock. On October 5, 2010, Verint Systems' stockholders approved in a special stockholders meeting the issuance of the Verint Systems' common stock underlying the preferred stock and accordingly, on such date, the preferred stock became voting and convertible into Verint Systems' common stock. Each share of preferred stock is entitled to a number of votes equal to the number of shares of common stock into which such share of preferred stock is convertible using the conversion rate that was in effect upon the issuance of the preferred stock in May 2007, on all matters voted upon by Verint Systems' common stockholders. The conversion rate was set at 30.6185 shares of common stock for each share of preferred stock. If it were convertible as of July 31, 2010 and January 31, 2010, the preferred stock could be converted into approximately 10.2 million and 10.0 million shares of Verint Systems' common stock, respectively.