8. 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.

Phase II Business Transformation

During 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 during the fiscal year ended January 31, 2011, reducing its annualized operating costs. During the three months ended April 30, 2011, Comverse commenced and, during the three months ended July 31, 2011, continued, the implementation of 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 is in the process of restructuring its operations into new business units (BSS, VAS, Mobile Internet and Global Services) 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 leadership in VAS and implementing further cost savings through operational efficiencies and strategic focus. In relation to the Phase II Business Transformation, the Company recorded severance-related costs of $6.1 million during the six months ended July 31, 2011, of which $5.8 million were paid during such fiscal period with the remaining costs of $0.3 million expected to be substantially paid by January 31, 2012. The Company is currently in the process of evaluating the implementation of certain measures as part of the Phase II Business Transformation which may result in additional charges and, accordingly, the total cost thereof cannot be currently estimated.

Netcentrex 2010 Initiative

During the fiscal year ended January 31, 2011, Comverse's management, as part of initiatives to improve focus on its core business and to maintain its ability to face intense competitive pressures in its markets, began pursuing a wind down of the Netcentrex business. In connection with the wind down, Comverse's management approved the first phase of a restructuring plan to eliminate staff positions primarily located in France. As of July 31, 2011, the remaining amount for the first phase was $0.2 million.

During the six months ended on July 31, 2011, the Company began the second phase of its Netcentrex restructuring plan. In relation to this second phase, the Company recorded severance-related costs of $7.3 million and paid $1.3 million of such costs during the six months ended on July 31, 2011. The remaining costs of $6.0 million relating to the Netcentrex second phase are expected to be substantially paid by January 31, 2012.

As an alternative to a wind down, management continues to evaluate restructuring and other strategic options for the Netcentrex business.

The roll forward of the workforce reduction and restructuring activities under various plans is presented below:


	Netcentrex 2010 Initiative					Comverse Third Quarter 2010 Initiative ⁽¹⁾						Comverse First Quarter 2010 Initiative						Pre 2010 initiatives
	Severance Related			Facilities Related		Severance Related			Facilities Related			Severance Related			Facilities Related			Severance Related			Facilities Related			Total
	(In thousands)
For the Six Months Ended July 31, 2011
January 31, 2011	$	2,910		$	—	$	2,462		$	86		$	6		$	94		$	227		$	29		$	5,814
Charges		6,692			—		6,128			17			—			13			272			80			13,202
Change in assumptions		(12	)		—		(140	)		—			(3	)		—			1			2			(152	)
Translation adjustments		514			—		—			—			—			—			—			—			514
Paid or utilized		(3,871	)		—		(7,134	)		(68	)		(3	)		(107	)		(500	)		(96	)		(11,779	)

July 31, 2011	$	6,233		$	—	$	1,316		$	35		$	—		$	—		$	—		$	15		$	7,599


	Comverse First Quarter 2010 Initiative						Pre 2010 initiatives						Verint Initiatives
	Severance Related			Facilities Related			Severance Related			Facilities Related			Severance Related			Facilities Related		Total
	(In thousands)
For the Six Months Ended July 31, 2010
January 31, 2010	$	—		$	—		$	699		$	4,487		$	116		$	—	$	5,302
Charges		5,779			1,006			7			184			—			—		6,976
Paid or utilized		(5,366	)		(530	)		(356	)		(2,717	)		(116	)		—		(9,085	)

July 31, 2010	$	413		$	476		$	350		$	1,954		$	—		$	—	$	3,193

(1)	Includes costs and payments associated with the Phase II Business Transformation.