15. 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 value as of April 30, 2011 and 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 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 the three and nine months ended October 31, 2010 and 2009.

The results of Ulticom's operations included in discontinued operations for the three and nine months ended October 31, 2010 and 2009 were as follows:


	Three Months Ended October 31,						Nine Months Ended October 31,
	2010			2009			2010			2009
				(In thousands)
Total revenue	$	9,122		$	9,411		$	25,817		$	32,068

Loss before income tax benefit		(1,162	)		(4,339	)		(4,691	)		(7,298	)
Income tax benefit		215			838			691			1,608

Loss from discontinued operations, net of tax		(947	)		(3,501	)		(4,000	)		(5,690	)
Tax on discontinued operations		—			(29,062	)		—			7,781

Total loss from discontinued operations, net of tax	$	(947	)	$	(32,563	)	$	(4,000	)	$	2,091


(Loss) Income from discontinued operations, net of tax
Atributable to Comverse Technology, Inc.		(774	)		(31,872	)		(2,998	)		3,241
Attributable to noncontrolling interest		(173	)		(691	)		(1,002	)		(1,150	)

Total	$	(947	)	$	(32,563	)	$	(4,000	)	$	2,091

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 were $0.4 million and $1.0 million for the three and nine months ended October 31, 2010, respectively, and $1.4 million and $2.1 million for the three and nine months ended October 31, 2009, respectively. These amounts were eliminated in the condensed consolidated financial statements.

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


	October 31, 2010		January 31, 2010
	(in thousands)
ASSETS

Current assets:
Cash and cash equivalents	$	66,880	$	13,190
Short-term investments		10,009		65,087
Accounts receivable, net of allowance of $154 and $138, respectively		7,307		10,361
Inventories, net		833		1,018
Deferred income taxes		821		855
Prepaid expenses and other current assets		6,284		6,590

Total current assets		92,134		97,101

Property and equipment, net		1,369		1,872
Other assets		7,678		7,788

Total assets	$	101,181	$	106,761


LIABILITIES

Current liabilities:
Accounts payable and accrued expenses	$	4,726	$	6,597
Deferred revenue		3,459		2,945

Total current liabilities		8,185		9,542

Deferred revenue		3,374		3,682
Other long-term liabilities		538		1,675

Total liabilities	$	12,097	$	14,899