10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2011

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

COMVERSE TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

New York	001-35303	13-3238402
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

810 Seventh Avenue

New York, New York

10019

(Address of Principal Executive Offices)

(Zip Code)

(212) 739-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

There were 209,216,315 shares of the registrant’s common stock outstanding on November 15, 2011.

TABLE OF CONTENTS

DEFINITIONS			i
FORWARD-LOOKING STATEMENTS			i
PART I	FINANCIAL INFORMATION		1
	ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	1
		CONDENSED CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 31, 2011 AND JANUARY 31, 2011	1
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2011 AND 2010	2
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED OCTOBER 31, 2011 AND 2010	3
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	4
	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	52
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	86
	ITEM 4.	CONTROLS AND PROCEDURES	86
PART II	OTHER INFORMATION		87
	ITEM 1.	LEGAL PROCEEDINGS	87
	ITEM 1A.	RISK FACTORS	88
	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	90
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	90
	ITEM 4.	REMOVED AND RESERVED	90
	ITEM 5.	OTHER INFORMATION	90
	ITEM 6.	EXHIBITS	91

DEFINITIONS

In this Quarterly Report on Form 10-Q (or Quarterly Report):

• CTI means Comverse Technology, Inc., excluding its subsidiaries;

• Comverse, Inc. means Comverse, Inc., CTI’s wholly-owned subsidiary, excluding its subsidiaries;

• Comverse means Comverse, Inc., including its subsidiaries;

• Verint Systems means Verint Systems Inc., CTI’s majority-owned subsidiary, excluding its subsidiaries;

• Verint means Verint Systems, including its subsidiaries;

• Ulticom, Inc. means Ulticom, Inc., CTI’s majority-owned subsidiary prior to its sale on December 3, 2010, excluding its subsidiaries;

• Ulticom means Ulticom, Inc., including its subsidiaries;

• Starhome B.V. means Starhome B.V., CTI’s majority-owned subsidiary, excluding its subsidiaries;

• Starhome means Starhome B.V., including its subsidiaries; and

• we, us, our, our company and similar expressions mean CTI, including its subsidiaries.

Ulticom, Inc. was a majority-owned publicly-traded subsidiary of CTI until it was sold to an affiliate of Platinum Equity Advisors, LLC (or Platinum Equity) on December 3, 2010 (referred to as the Ulticom Sale). Ulticom was a reportable segment prior to its sale. As a result of the Ulticom Sale, the results of operations of Ulticom are reflected in discontinued operations, less applicable income taxes, as a separate component of net loss in our condensed consolidated statements of operations for the three and nine months ended October 31, 2010. See note 15 to the condensed consolidated financial statements included in this Quarterly Report.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements.” Forward-looking statements include financial projections, statements of plans and objectives for future operations, statements of future economic performance, and statements of assumptions relating thereto. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “expects,” “plans,” “anticipates,” “estimates,” “believes,” “potential,” “projects,” “forecasts,” “intends,” or the negative thereof or other comparable terminology. By their very nature, forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance and the timing of events to differ materially from those anticipated, expressed or implied by the forward-looking statements in this Quarterly Report. Such risks or uncertainties may give rise to future claims and increase exposure to contingent liabilities. These risks and uncertainties arise from (among other factors) the following:

• the risk of diminishment in our capital resources as a result of, among other things, future negative cash flows from operations at Comverse or the continued incurrence of significant expenses by CTI and Comverse in connection with the filing by CTI of periodic reports under the federal securities laws and the remediation of material weaknesses in internal control over financial reporting;

• the continuation of material weaknesses or the discovery of additional material weaknesses in our internal control over financial reporting and any delay in the implementation of remedial measures;

• the review of the periodic reports of CTI and Verint Systems (including, but not limited to this Quarterly Report) by the staff of the Securities and Exchange Commission (or the SEC) could result in amendments to our and Verint Systems’ financial information or other disclosures;

• the risk that, if CTI ceases to maintain a majority ownership of Verint Systems’ outstanding equity securities and ceases to maintain control over Verint’s operations, it may be required to no longer consolidate Verint’s financial statements within its consolidated financial statements and, in such event, the presentation of CTI’s consolidated financial statements would be materially different from the presentation for the fiscal periods covered by this Quarterly Report and for the fiscal years covered by the Annual Report on Form 10-K for the fiscal year ended January 31, 2011 (referred to as the 2010 Form 10-K);

• we may need to recognize further impairment of intangible assets or financial assets and goodwill;

• the effects of any potential decline or weakness in the global economy (due to among other things, the downgrade of the U.S. credit rating and European sovereign debt crisis) on the telecommunications industry, which may result in reduced information technology spending and reduced demand for our subsidiaries’ products and services;

i

• disruption in the credit and capital markets may limit our ability to access capital;

• potential loss of business opportunities due to continued concern on the part of customers, partners, investors and employees about our financial condition and CTI’s previous extended delay in becoming current in its periodic reporting obligations under the federal securities laws;

• rapidly changing technology in our subsidiaries’ industries and our subsidiaries’ ability to enhance existing products and develop and market new products;

• our subsidiaries’ dependence on contracts for large systems and large installations for a significant portion of their sales and operating results including, among other things, the lengthy and complex bidding and selection process, the difficulty predicting their ability to obtain particular contracts and the timing and scope of these opportunities;

• the difficulty in predicting operating results as a result of lengthy and variable sales cycles, focus on large customers and installations, short delivery windows required by customers, and the high percentage of orders typically generated late in the fiscal quarter;

• the deferral or loss of one or more significant orders or customers or a delay in an expected implementation of such an order could materially and adversely affect our results of operations in any fiscal period, particularly if there are significant sales and marketing expenses associated with the deferred, lost or delayed sales;

• the potential incurrence by our subsidiaries of significant costs to correct previously undetected operational problems in their complex products;

• our subsidiaries’ dependence on a limited number of suppliers and manufacturers for certain components and third-party software could cause a supply shortage and/or interruptions in product supply;

• the risk that increased competition could force our subsidiaries to lower their prices or take other actions to differentiate their products and changes in the competitive environment in the telecommunications industry worldwide could seriously affect Comverse’s business;

• the risk that increased costs or reduced demand for Comverse’s products resulting from compliance with evolving telecommunications regulations and the implementation of new standards may adversely affect our business and financial condition;

• the risk that the failure or delay in achieving interoperability of Comverse’s products with its customers’ systems could impair its ability to sell its products;

• the competitive bidding process used to generate sales requires our subsidiaries to expend significant resources with no guarantee of recoupment;

• our subsidiaries’ inability to maintain relationships with value-added resellers, systems integrators and other third parties that market and sell their products could adversely impact our financial condition and results of operations;

• third parties’ infringement of our subsidiaries’ proprietary technology and the infringement by our subsidiaries of the intellectual property of third parties, including through the use of free or open source software;

• risks of certain contractual obligations of our subsidiaries exposing them to uncapped or other significant liabilities;

• the impact of mergers and acquisitions, including, but not limited to, difficulties relating to integration, the achievement of anticipated synergies and the implementation of required controls, procedures and policies at the acquired company;

• risks associated with significant foreign operations and international sales, including the impact of geopolitical, economic and military conditions in foreign countries, conducting operations in countries with a history of corruption, entering into transactions with foreign governments and ensuring compliance with laws that prohibit improper payments;

• adverse fluctuations of currency exchange rates;

• risks relating to our significant operations in Israel, including economic, political and/or military conditions in Israel and the surrounding Middle East, and uncertainties relating to research and development grants, tax benefits and the ability of our Israeli subsidiaries to pay dividends;

• potential decline in the price of CTI’s common stock in the event of sales of a significant number of shares by shareholders who received shares as part of a class action settlement and by holders of securities awarded under CTI’s equity incentive plans;

• risks associated with Verint’s significant leverage resulting from its current debt position, including Verint’s ability to maintain compliance with the leverage ratio covenant under its credit facility;

ii

• the ability of Verint to pay its indebtedness as it becomes due or refinance its indebtedness as well as comply with the financial and other restrictive covenants contained therein;

• risks that the credit ratings of CTI and its subsidiaries could be downgraded or placed on a credit watch based on, among other things, its financial results;

• Verint’s dependence on government contracts and the possibility that U.S. or foreign governments could refuse to purchase Verint’s Communications Intelligence solutions or could deactivate Verint’s security clearances in their countries;

• risks associated with Verint’s handling, or the perception of mishandling, of customers’ sensitive information;

• Verint’s ability to receive or retain necessary export licenses or authorizations; and

• other risks described in filings with the SEC.

The risks and uncertainties discussed above, as well as others, are discussed in greater detail in Item 1A, “Risk Factors,” of the 2010 Form 10-K, in Part II, Item 1A, “Risk Factors,” of the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 and in Part II, Item 1A, “Risk Factors” of this Quarterly Report. The documents and reports we file with the SEC are available through CTI, or its website, www.cmvt.com, or through the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) at www.sec.gov. CTI undertakes no commitment to update or revise any forward-looking statements except as required by law.

iii

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share and per share data)

	October 31, 2011			January 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	421,346		$	581,390
Restricted cash and bank time deposits		60,070			73,117
Auction rate securities		50,259			72,441
Accounts receivable, net of allowance of $8,939 and $13,237, respectively		314,246			319,628
Inventories, net		53,883			66,612
Deferred cost of revenue		36,540			51,470
Deferred income taxes		41,956			39,644
Prepaid expenses and other current assets		96,712			91,760
Total current assets		1,075,012			1,296,062
Property and equipment, net		77,054			66,843
Goodwill		1,046,549			967,224
Intangible assets, net		216,317			196,460
Deferred cost of revenue		141,273			158,703
Deferred income taxes		18,010			20,766
Other assets		107,001			107,864
Total assets	$	2,681,216		$	2,813,922
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	381,003		$	401,940
Convertible debt obligations		2,195			2,195
Deferred revenue		496,675			559,873
Deferred income taxes		13,596			13,661
Bank loans		6,208			6,000
Litigation settlements		101,030			146,150
Income taxes payable		11,858			11,486
Other current liabilities		44,377			50,280
Total current liabilities		1,056,942			1,191,585
Bank loans		592,695			583,234
Deferred revenue		260,425			270,934
Deferred income taxes		59,795			52,953
Other long-term liabilities		246,993			229,329
Total liabilities		2,216,850			2,328,035
Commitments and contingencies
Equity:
Comverse Technology, Inc. shareholders’ equity:
Common stock, $0.10 par value - authorized, 600,000,000 shares; issued 207,096,791 and 204,937,882 shares, respectively; outstanding, 206,055,795 and 204,533,916 shares, respectively		20,710			20,494
Treasury stock, at cost, 1,040,996 and 403,966 shares, respectively		(7,803	)		(3,484	)
Additional paid-in capital		2,112,780			2,088,717
Accumulated deficit		(1,770,840	)		(1,707,638	)
Accumulated other comprehensive income		10,094			14,919
Total Comverse Technology, Inc. shareholders’ equity		364,941			413,008
Noncontrolling interest		99,425			72,879
Total equity		464,366			485,887
Total liabilities and equity	$	2,681,216		$	2,813,922

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except share and per share data)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
Revenue:
Product revenue	$	203,587		$	176,933		$	511,524		$	525,464
Service revenue		249,491			248,527			677,418			667,126
Total revenue		453,078			425,460			1,188,942			1,192,590
Costs and expenses:
Product costs		85,326			60,397			207,024			201,034
Service costs		130,670			110,807			358,241			334,632
Selling, general and administrative		142,466			163,444			431,435			525,824
Research and development, net		55,768			63,060			161,706			193,264
Other operating expenses (income):
Litigation settlements		4,880			(17,350	)		4,880			(17,500	)
Restructuring charges		1,838			21,800			14,888			28,776
Total costs and expenses		420,948			402,158			1,178,174			1,266,030
Income (loss) from operations		32,130			23,302			10,768			(73,440	)
Interest income		826			833			3,493			2,835
Interest expense		(8,192	)		(9,020	)		(25,325	)		(21,241	)
Loss on extinguishment of debt		—			—			(8,136	)		—
Other (expense) income, net		(4,144	)		1,563			8,253			7,178
Income (loss) before income tax benefit (provision)		20,620			16,678			(10,947	)		(84,668	)
Income tax benefit (provision)		21,647			(47,237	)		(35,793	)		(49,463	)
Net income (loss) from continuing operations		42,267			(30,559	)		(46,740	)		(134,131	)
Loss from discontinued operations, net of tax		—			(947	)		—			(4,000	)
Net income (loss)		42,267			(31,506	)		(46,740	)		(138,131	)
Less: Net income attributable to noncontrolling interest		(6,577	)		(10,197	)		(16,462	)		(9,620	)
Net income (loss) attributable to Comverse Technology, Inc.	$	35,690		$	(41,703	)	$	(63,202	)	$	(147,751	)
Weighted average common shares outstanding:
Basic		205,886,126			205,264,632			205,890,586			205,134,765
Diluted		206,729,005			205,264,632			205,890,586			205,134,765
Earnings (loss) per share attributable to Comverse Technology, Inc.’s shareholders:
Basic earnings (loss) per share
Continuing operations	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.71	)
Discontinued operations		—			(0.00	)		—			(0.01	)
Basic earnings (loss) per share	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.72	)
Diluted earnings (loss) per share
Continuing operations	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.71	)
Discontinued operations		—			(0.00	)		—			(0.01	)
Diluted earnings (loss) per share	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.72	)
Net income (loss) attributable to Comverse Technology, Inc.
Net income (loss) from continuing operations	$	35,690		$	(40,929	)	$	(63,202	)	$	(144,753	)
Loss from discontinued operations, net of tax		—			(774	)		—			(2,998	)
Net income (loss) attributable to Comverse Technology, Inc.	$	35,690		$	(41,703	)	$	(63,202	)	$	(147,751	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Nine Months Ended October 31,
	2011			2010
Cash flows from operating activities:
Net cash used in operating activities - continuing operations	$	(81,473	)	$	(215,440	)
Net cash used in operating activities - discontinued operations		—			(2,377	)
Net cash used in operating activities		(81,473	)		(217,817	)
Cash flows from investing activities:
Proceeds from sales and maturities of investments		26,275			57,056
Acquisition of businesses, net of cash acquired		(98,698	)		(15,292	)
Purchase of property and equipment		(13,145	)		(15,582	)
Capitalization of software development costs		(2,542	)		(1,604	)
Net change in restricted cash and bank time deposits		11,757			3,197
Proceeds from asset sales		—			27,296
Settlement of derivative financial instruments not designated as hedges		(1,134	)		(31,596	)
Other, net		1,587			(12	)
Net cash (used in) provided by investing activities - continuing operations		(75,900	)		23,463
Net cash provided by investing activities - discontinued operations		—			54,673
Net cash (used in) provided by investing activities		(75,900	)		78,136
Cash flows from financing activities:
Debt issuance costs and other debt-related costs		(15,280	)		(4,039	)
Proceeds from borrowings, net of original issuance discount		597,000			—
Repayment of bank loans, long-term debt and other financing obligations		(591,542	)		(22,960	)
Repurchase of common stock		(4,319	)		(480	)
Net proceeds from issuance of common stock by a subsidiary		8,567			26,426
Proceeds from excercises of stock options		1,024			—
Other, net		(2,004	)		—
Net cash used in financing activities - continuing operations		(6,554	)		(1,053	)
Net cash provided by financing activities - discontinued operations		—			258
Net cash used in financing activities		(6,554	)		(795	)
Effects of exchange rates on cash and cash equivalents		3,883			1,288
Net decrease in cash and cash equivalents		(160,044	)		(139,188	)
Cash and cash equivalents, beginning of period including cash of discontinued operations		581,390			574,872
Cash and cash equivalents, end of period including cash of discontinued operations	$	421,346		$	435,684
Less: Cash and cash equivalents of discontinued operations at end of period		—			(66,880	)
Cash and cash equivalents, end of period	$	421,346		$	368,804
Non-cash investing and financing transactions:
Accrued but unpaid purchases of property and equipment	$	1,521		$	3,058
Inventory transfers to property and equipment	$	17,377		$	4,096
Liabilities for contingent consideration in business combination	$	33,704		$	3,224

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION

Company Background

Comverse Technology, Inc. (“CTI” and, together with its subsidiaries, the “Company”) is a holding company organized as a New York corporation in October 1984 that conducts business through its wholly-owned subsidiary, Comverse, Inc. (together with its subsidiaries, “Comverse”), and its majority-owned subsidiaries, Verint Systems Inc. (“Verint Systems” and together with its subsidiaries, “Verint”), Starhome B.V. (together with its subsidiaries, “Starhome”) and, prior to its sale to a third party on December 3, 2010, Ulticom, Inc. (together with its subsidiaries, “Ulticom”).

In September 2011, The NASDAQ Stock Market (“NASDAQ”) approved CTI’s application for the relisting of its common stock on The NASDAQ Global Select Market and trading resumed on September 23, 2011.

Comverse

Comverse is a leading provider of software-based products, systems and related services that (i) provides converged, prepaid and postpaid billing and active customer management for wireless, wireline and cable network operators (“Business Support Systems” or “BSS”) delivering a value proposition designed to ensure timely and efficient service monetization and enable real-time offers to be made to end users based on all relevant customer profile information; (ii) enables wireless and wireline (including cable) network-based Value-Added Services (“VAS”), comprised of two categories – Voice and Messaging – that include voicemail, visual voicemail, call completion, short messaging service (“SMS”) text messaging (“texting”), multimedia picture and video messaging and Internet Protocol (“IP”) communications; and (iii) provides wireless users with optimized access to mobile Internet websites, content and applications, and generate data usage and revenue for wireless operators. Comverse’s products and services are designed to generate carrier voice and data network traffic, revenue and customer loyalty, monetize network operators’ services and improve operational efficiency for more than 450 wireless and wireline network communication service provider customers in more than 125 countries, including the majority of the world’s 100 largest wireless network operators.

Verint

Verint is a global leader in Actionable Intelligence solutions and value-added services. Verint’s solutions enable organizations of all sizes to make timely and effective decisions to improve enterprise performance and enhance safety. Verint’s customers use Verint’s Actionable Intelligence solutions to capture, distill, and analyze complex and underused information sources, such as voice, video, and unstructured text.

In the enterprise market, Verint’s Enterprise Intelligence solutions help organizations enhance customer service operations in contact centers, branches and back-office environments to increase customer satisfaction, reduce operating costs, identify revenue opportunities, and improve profitability. In the security intelligence market, Verint’s Video Intelligence, public safety, and Communications Intelligence solutions are used by government and commercial organizations in their efforts to protect people and property and neutralize terrorism and crime.

Starhome

Starhome is a provider of wireless service mobility solutions that enhance international roaming. Wireless operators use Starhome’s software-based solutions to generate additional revenue and to improve profitability by directing international roaming traffic to preferred networks and by providing a wide range of services to subscribers traveling outside their home network.

Ulticom

Ulticom, Inc. was a majority-owned publicly-traded subsidiary of CTI until it was sold to an affiliate of Platinum Equity Advisors, LLC (“Platinum Equity”) on December 3, 2010 (the “Ulticom Sale”). Ulticom was a reportable segment of the Company prior to its sale. As a result of the Ulticom 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 (see Note 15, Discontinued Operations).

4

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Condensed Consolidated Financial Statements Preparation

The condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2011 (the “2010 Form 10-K”). The condensed consolidated statements of operations and cash flows for the periods ended October 31, 2011 and 2010, and the condensed consolidated balance sheet as of October 31, 2011 are not audited but reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair presentation of the results of the periods presented. The condensed consolidated balance sheet as of January 31, 2011 is derived from the audited consolidated financial statements presented in the 2010 Form 10-K. Certain information and disclosures normally included in annual consolidated financial statements have been omitted in this interim period report pursuant to the rules and regulations of the SEC. Because the condensed consolidated interim financial statements do not include all of the information and disclosures required by U.S. GAAP for annual financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the 2010 Form 10-K. The results for interim periods are not necessarily indicative of a full fiscal year’s results.

Principles of Consolidation

The accompanying condensed consolidated financial statements include CTI and its wholly-owned subsidiaries and its controlled and majority-owned subsidiaries, which include Verint Systems (in which CTI owned 41.9% of the common stock and held 52.8% of the voting power as of October 31, 2011) and Starhome B.V. (66.5% owned as of October 31, 2011). Ulticom, Inc. was a majority-owned subsidiary prior to its sale on December 3, 2010 and was included in the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows through such date. For controlled subsidiaries that are not wholly-owned, the noncontrolling interest is included as a separate component of “Net income (loss)” in the condensed consolidated statements of operations and “Total equity” in the condensed consolidated balance sheets. Verint Systems holds a 50% equity interest in a consolidated variable interest entity in which it is the primary beneficiary. The results of operations of this variable interest entity for the three and nine months ended October 31, 2011 and 2010 were not significant to the condensed consolidated statements of operations.

All intercompany balances and transactions have been eliminated.

The Company includes the results of operations of acquired businesses from the dates of acquisition.

Changes in Reportable Segments

The Company changed its reportable segments during the three months ended October 31, 2011. The Company’s reportable segments now consist of Comverse BSS, Comverse VAS, and Verint. The results of operations of all the other operations of the Company are included in the column captioned “All Other” as part of the Company’s business segment presentation. The operating segments included in “All Other” do not meet the quantitative thresholds required for a separate presentation. See Note 18, Business Segment Information. The change in reportable segments is attributable to the implementation of a second phase of restructuring measures (the “Phase II Business Transformation”) at Comverse that focuses on process reengineering to maximize business performance, productivity and operational efficiency (see Note 8, Restructuring).

As part of the Phase II Business Transformation, Comverse restructured its operations into new business units that are designed to improve operational efficiency and business performance. Comverse’s business units consist of the following:

• BSS, which conducts Comverse’s converged, prepaid and postpaid billing and active management systems business and includes groups engaged in product management, professional services, research and development and product sales;

• VAS, which conducts Comverse’s value-added services business and includes groups engaged in VAS delivery, voice product research and development, messaging product research and development and product sales; and

• Mobile Internet (“Comverse MI”), which is responsible for Comverse’s mobile Internet products and includes groups engaged in product management, solution engineering, delivery, research and development and product sales.

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

In addition, Comverse created Global Services (“Comverse GLS”), which provides customer post-delivery services and includes groups engaged in support services for BSS, VAS and mobile Internet products, services sales and product management.

Certain Comverse business operations are conducted through the following global corporate functions:

• Customer Facing Group, which is primarily engaged in providing overall customer account management and sales for all product lines;

• Operations Group, which provides centralized information technology, procurement, supply chain management and global business operations services to all business units; and

• Strategy and innovation, finance, legal and human resources groups, which continue to support all business operations.

As a result of the Phase II Business Transformation, Comverse BSS, Comverse VAS and Comverse MI became operating segments of the Company. The revenue of each of Comverse BSS, Comverse VAS and Comverse MI includes the revenue generated by Comverse GLS that is attributable to the operations of each such operating segment. The costs and expenses of each of Comverse BSS, Comverse VAS and Comverse MI are comprised of direct costs such as product materials and personnel-related costs, and costs and expenses incurred by Comverse GLS in connection with the operations of each such operating segment. The chief operating decision maker, CTI’s Chief Executive Officer, uses the segment performance of Comverse BSS, Comverse VAS and Comverse MI, after including the amounts attributable to Comverse GLS, for assessing the financial results of the segments and for the allocation of resources. The discrete financial information of Comverse GLS is not used by the CODM for the assessment of financial results or the allocation of resources.

The Company does not maintain balance sheets for the Comverse operating segments.

The Company’s new reportable segments are presented as follows:

• Comverse BSS - comprised of Comverse’s BSS operating segment;

• Comverse VAS - comprised of Comverse’s VAS operating segment; and

• Verint - comprised of Verint Systems and its subsidiaries.

All Other is comprised of all the Company’s other operations, including the Comverse MI operating segment, Comverse’s Netcentrex operations, Comverse’s global corporate functions that support its business units, Starhome B.V. and its subsidiaries, miscellaneous operations and CTI’s holding company operations.

The Company has recast the presentation of its segment information for the six months ended July 31, 2011 (which is included in the segment information for the nine months ended October 31, 2011) and for the three and nine months ended October 31, 2010 to reflect these reportable segments.

Use of Estimates

The preparation of the condensed consolidated financial statements and the accompanying notes in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses.

The most significant estimates include:

• Estimates relating to the recognition of revenue, including the determination of vendor specific objective evidence (“VSOE”) of fair value or the determination of best estimate of selling price for multiple element arrangements;

• Inventory reserves;

• Allowance for doubtful accounts;

• Fair value of stock-based compensation;

• Valuation of assets acquired and liabilities assumed in business combinations;

• Fair value of reporting units for the purpose of goodwill impairment test;

• Valuation of other intangible assets;

• Valuation of investments and financial instruments;

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

• Realization of deferred tax assets; and

• The identification and measurement of uncertain tax positions.

The Company’s actual results may differ from its estimates.

Working Capital Position and Management’s Plans

The Company incurred substantial losses and experienced declines in cash flows and working capital during the three fiscal years ended January 31, 2011 and the nine months ended October 31, 2011, and had a significant accumulated deficit as of October 31, 2011.

The Company forecasts that available cash and cash equivalents will be sufficient to meet the liquidity needs, including capital expenditures, of CTI and Comverse for at least the next 12 months. The Company’s forecast is based upon a number of assumptions, which the Company believes are reasonable. However, should one or more of the assumptions prove incorrect, or should one or more of the risks or uncertainties attendant to the Company and its business materialize, the Company’s business and operations could be materially adversely affected and, in such event, the Company may need to seek new borrowings, asset sales or the issuance of equity or debt securities. Management believes that sources of liquidity could be identified.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Implemented

Revenue Recognition

The Company reports its revenue in two categories: (i) product revenue, including hardware and software products; and (ii) service revenue, including revenue from professional services, training services and post-contract customer support (“PCS”). Professional services primarily include installation, customization and consulting services.

Revenue arrangements may include one of these single elements, or may incorporate one or more elements in a single transaction or combination of related transactions. In September 2009, the FASB issued revenue recognition guidance applicable to multiple element arrangements, which:

• applies to multiple element revenue arrangements that contain both software and hardware elements, focusing on determining which revenue arrangements are within the scope of the software revenue guidance; and

• addresses how to separate consideration related to each element in a multiple element arrangement, excluding software arrangements, and establishes a hierarchy for determining the selling price of a deliverable. It also eliminates the residual method of allocation by requiring that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method.

The Company adopted this guidance on a prospective basis for revenue arrangements entered into, or materially modified, on or after February 1, 2011.

Certain of the Company’s multiple element arrangements include hardware that functions together with software to provide the essential functionality of the product. Therefore, such arrangements entered into or materially modified on or after February 1, 2011 are no longer accounted for in accordance with the FASB’s software accounting guidance. Accordingly, the selling price used for each deliverable is based on VSOE of fair value, if available, third-party evidence (“TPE”) of fair value if VSOE is not available, or the Company’s best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. In determining the units of accounting for these arrangements, the Company evaluates whether each deliverable has stand-alone value as defined in the FASB’s guidance. For the Company’s Comverse BSS and Comverse VAS segments, the professional services performed prior to the product’s acceptance do not have stand-alone value and are therefore combined with the related hardware and software as one non-software deliverable. After determining the fair value for each deliverable, the arrangement consideration is allocated using the relative selling price method. Revenue is recognized accordingly for each deliverable once the respective revenue recognition criteria are met for that deliverable.

The Company’s Comverse BSS and Comverse VAS segments have not yet established VSOE of fair value for any element other than PCS for a portion of its arrangements. The Company’s Verint segment has established VSOE of fair value for one or more elements (installation services, training, consulting and PCS) for a majority of its arrangements. Generally, the Company is not able to

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

determine TPE because its offerings contain a significant level of differentiation such that the comparable pricing of substantially similar products or services cannot be obtained. When the Company is unable to establish fair value of its non-software deliverables using VSOE or TPE, it uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which it would transact a sale if the product or service were sold on a stand-alone basis, which requires significant judgment. The Company determines BESP for a product or service by considering multiple factors including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies and customer classes. The Company exercises judgment and uses estimates in determining the revenue to be recognized in each accounting period.

With the exception of arrangements that require significant customization of the product to meet the particular requirements of the customer, which are accounted for using the percentage-of-completion method, the initial revenue recognition for each non-software product deliverable is generally upon completion of the related professional services. The impact of implementing the guidance was significant for the nine months ended October 31, 2011. For the three and nine months ended October 31, 2011, an additional $41.0 million and $49.3 million of revenue, respectively, was recognized as a result of the adoption of the new guidance. Such additional revenue included $33.9 million and $35.7 million of additional revenue recognized under the new guidance as compared to the revenue that would have been recognized under prior accounting guidance for the three and nine months ended October 31, 2011, respectively, resulting from material modifications of certain existing contracts. For those contracts that were modified during the nine months ended October 31, 2011, deferred revenue associated with these contracts were $2.1 million and $41.2 million as of October 31, 2011 and January 31, 2011, respectively.

For all transactions entered into prior to February 1, 2011 that have not been subsequently materially modified, as well as multiple element arrangements without hardware, the Company allocates revenue to the delivered elements of the arrangement using the residual method, whereby revenue is allocated to the undelivered elements based on VSOE of fair value of the undelivered elements with the remaining arrangement fee allocated to the delivered elements and recognized as revenue assuming all other revenue recognition criteria are met. If the Company is unable to establish VSOE of fair value for the undelivered elements of the arrangement, revenue recognition is deferred for the entire arrangement until all elements of the arrangement are delivered. However, if the only undelivered element is PCS, the Company recognizes the arrangement fee ratably over the PCS period.

Other Standards Implemented

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in an active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a gross presentation of activity within the Level 3 (significant unobservable inputs) roll forward, presenting information on purchases, sales, issuance, and settlements separately. The guidance was effective for the Company for interim and annual periods that commenced February 1, 2010, except for the gross presentation of the Level 3 roll forward, which became effective for the Company for interim and annual periods that commenced February 1, 2011. Adoption of this guidance resulted in additional disclosures for the gross presentation of the Level 3 roll forward (see Note 11, Fair Value Measurements).

In December 2010, the FASB issued updated accounting guidance to clarify that pro forma disclosures should be presented as if a business combination occurred at the beginning of the prior annual period for purposes of preparing both the current reporting period and the prior reporting period pro forma financial information. These disclosures should be accompanied by a narrative description about the nature and amount of material, nonrecurring pro forma adjustments. This new accounting guidance is effective for business combinations consummated in periods beginning after December 15, 2010 and should be applied prospectively as of the date of adoption, although early adoption is permitted. The Company adopted this new guidance effective February 1, 2011. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

In December 2010, the FASB issued guidance on when to perform step two of the goodwill impairment test for reporting units with zero or negative carrying amounts. Upon adoption, if the carrying amount of the reporting unit is zero or negative, the reporting entity must perform step two of the goodwill impairment test if it is more likely than not that goodwill is impaired as of the date of adoption. In determining if it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating an impairment may exist. Goodwill impairment recognized upon adoption of the guidance should be presented as a cumulative-effect adjustment to opening retained earnings as of the adoption date reflecting a change in accounting principle. This guidance was effective for the Company for interim and annual periods that commenced on February 1, 2011. Because the carrying value of the Company’s previously defined Comverse reporting unit being negative as of February 1, 2011 and existence of adverse qualitative factors indicating potential impairment, step two of the goodwill impairment test was performed as of such date which did not result in an impairment. The Company believes that the adoption of this guidance will not have a material impact on the consolidated financial statements for the fiscal year ending January 31, 2012.

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Standards to be Implemented

In May 2011, the FASB issued updated accounting guidance to amend existing requirements for fair value measurements and disclosures. The guidance expands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value but whose fair value must be disclosed. It also clarifies and expands upon existing requirements for fair value measurements of financial assets and liabilities as well as instruments classified in shareholders’ equity. The guidance is effective beginning with the interim period ending April 30, 2012. The Company is assessing the impact that the application of this guidance may have on its condensed consolidated financial statements.

In June 2011, the FASB issued accounting guidance, which revises the manner in which entities present other comprehensive income in their financial statements. The new guidance eliminates the option to present components of other comprehensive income as part of the statement of equity. Under the new guidance, entities are required to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. The guidance is effective for the Company for interim and annual periods commencing February 1, 2012. The Company believes that the adoption of this guidance will not have a material impact on its consolidated financial statements.

In September 2011, the FASB issued new accounting guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for the Company for interim and annual periods commencing February 1, 2012. Although early adoption is permitted, the Company has not adopted the new accounting guidance. The Company believes that the adoption of this guidance will not have a material impact on its consolidated financial statements.

3. INVESTMENTS

The following is a summary of available-for-sale securities as of October 31, 2011 and January 31, 2011:

	October 31, 2011
			Included in Accumulated Other Comprehensive Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities - Student loans	$	46,150	$	12,605	$	—	$	(16,170	)	$	42,585
Auction rate securities - Corporate issuers		22,500		4,616		—		(19,442	)		7,674
Total short-term investments	$	68,650	$	17,221	$	—	$	(35,612	)	$	50,259

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	January 31, 2011
			Included in Accumulated Other Comprehensive Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities - Student loans	$	71,900	$	16,044	$	—	$	(24,181	)	$	63,763
Auction rate securities - Corporate issuers		22,500		5,619		—		(19,441	)		8,678
Total short-term investments	$	94,400	$	21,663	$	—	$	(43,622	)	$	72,441

The auction rate securities (“ARS”) have stated maturities in excess of 5 years.

Investments with original maturities of three months or less, when purchased, are included in “Cash and cash equivalents,” or in “Restricted cash and bank time deposits” in the condensed consolidated balance sheets. Such investments are not reflected in the tables above as of October 31, 2011 or January 31, 2011 and include commercial paper and money market funds totaling $160.0 million and $195.8 million as of October 31, 2011 and January 31, 2011, respectively.

As of October 31, 2011 and January 31, 2011, all the ARS (all of which were held by CTI as of such dates) were restricted pursuant to the settlement agreement of the consolidated shareholder class action CTI entered into on December 16, 2009, as amended on June 19, 2010. All cash proceeds from sales and redemptions of ARS (other than ARS that were held in an account with UBS) (including interest thereon) were restricted. Subsequent to October 31, 2011, the Company paid all remaining amounts under the settlement agreement and accordingly, all ARS and cash proceeds received from sales and redemptions of ARS became unrestricted (see Note 20, Commitments and Contingencies, and Note 21, Subsequent Events).

There were no investments in unrealized loss positions as of October 31, 2011 and January 31, 2011.

The Company received cash proceeds from sales and redemptions of investments of $0.5 million and $26.3 million for the three and nine months ended October 31, 2011, respectively, and $2.5 million and $57.1 million for the three and nine months ended October 31, 2010, respectively. In addition, in November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash.

The gross realized gains and losses on the Company’s investments for the three and nine months ended October 31, 2011 and 2010 are as follows:

	Three Months Ended October 31,				Nine Months Ended October 31,
	Gross Realized Gains		Gross Realized Losses		Gross Realized Gains		Gross Realized Losses
	(In thousands)
2011	$	120	$	—	$	8,011	$	—
2010	$	1,625	$	—	$	23,715	$	—

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The components of other comprehensive income (“OCI”) related to available-for-sale securities are as follows:

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands)
Accumulated OCI related to available-for-sale securities, beginning of the period	$	14,891		$	13,747		$	17,871		$	25,663
Unrealized gains on available-for-sale securities		(1,376	)		1,202			(287	)		3,915
Reclassification adjustment for gains included in net income/(loss)		(87	)		(57	)		(4,156	)		(15,419	)
Changes in accumulated OCI on available-for-sale securities, before tax		(1,463	)		1,145			(4,443	)		(11,504	)
Other comprehensive income attributable to noncontrolling interest		—			—			—			24
Deferred income tax benefit		—			3			—			712
Changes in accumulated OCI on available-for-sale securities, net of tax		(1,463	)		1,148			(4,443	)		(10,768	)
Accumulated OCI related to available-for-sale securities, end of the period	$	13,428		$	14,895		$	13,428		$	14,895

4. INVENTORIES, NET

Inventories as of October 31, 2011 and January 31, 2011, respectively, consist of:

	October 31, 2011			January 31, 2011
	(In thousands)
Raw materials	$	47,360		$	51,783
Work in process		23,472			30,986
Finished goods		8,116			10,252
Total inventories		78,948			93,021
Less: reserves for excess and obsolete inventories		(25,065	)		(26,409	)
Inventories, net	$	53,883		$	66,612

5. BUSINESS COMBINATIONS

Verint Segment

Vovici Acquisition

On August 4, 2011, Verint acquired all of the outstanding shares of Vovici Corporation (“Vovici”), a U.S.-based privately-held provider of online survey management and enterprise feedback solutions. This acquisition enhances Verint’s Enterprise Intelligence product suite to include comprehensive Voice of the Customer software and services offerings, designed to help organizations implement a single-vendor solution set for collecting, analyzing and acting on customer insights. The financial results of Vovici have been included in the Company’s condensed consolidated financial statements since August 4, 2011.

Verint acquired Vovici for approximately $56.1 million in cash at closing, including $0.4 million to repay Vovici’s bank debt. The consideration also included the exchange of certain unvested Vovici stock options for options to acquire approximately 42,000 shares of Verint Systems’ common stock with fair values totaling $1.0 million, of which $0.1 million represents compensation for pre-acquisition services and is included in the consideration transferred and $0.9 million is being recognized as stock-based compensation expense over the remaining future vesting periods of the awards. Verint also agreed to make potential additional cash payments of up to approximately $19.1 million, contingent upon the achievement of certain performance targets over the period ending January 31, 2013. The fair value of this contingent obligation was estimated to be $9.9 million at August 4, 2011.

The $9.9 million acquisition date fair value of the contingent consideration obligation was estimated based on the probability adjusted present value of the consideration expected to be transferred using significant inputs that are not observable in the market. Key assumptions used in this estimate include probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. At each reporting date, the contingent consideration obligation is revalued to its fair value and increases and decreases in fair value are recorded within “Selling, general and administrative” expenses in the Company’s condensed consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration obligation may result from changes in discount periods and rates, and changes in probability

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

assumptions with respect to the likelihood of achieving the performance targets. The Company recorded expense of approximately $0.3 million for the three months ended October 31, 2011, reflecting the impact of revised assessments of the probability of payment, as well as the decrease in the discount period since the acquisition date. As of October 31, 2011, the fair value of this contingent consideration obligation was approximately $10.2 million, of which $5.9 million was recorded within “Accounts payable and accrued expenses” and $4.3 million within “Other long-term liabilities”.

The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair values assigned to identifiable intangible assets acquired was determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The acquired identifiable intangible assets are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over their estimated useful lives.

Among the factors contributing to the recognition of goodwill in this transaction were synergies in products and technologies, and the addition of a skilled, assembled workforce. This goodwill is not deductible for income tax purposes.

In connection with the purchase price allocation, the estimated fair value of support obligations assumed from Vovici was determined utilizing a cost build-up approach. The cost build-up approach calculates fair value by estimating the costs relating to fulfilling these obligations plus a normal profit margin, which approximates the amount the Company believes would be required to pay a third party to assume the support obligations. The estimated costs to fulfill the support obligation were based on the historical direct costs related to providing support services. These estimated costs did not include any costs associated with selling efforts or research and development or the related margins on these costs. Profit associated with selling efforts is excluded because the selling effort on the support contracts concluded prior to the August 4, 2011 acquisition date. The estimated profit margin was 15%, which the Company believes best approximates the operating profit margin to fulfill support obligations. As a result, in allocating the purchase price, an adjustment was recorded to reduce the $5.3 million carrying value of Vovici’s deferred revenue to $2.3 million, representing the estimated fair value of the support obligations assumed. As former Vovici customers renew their support contracts, revenue will be recognized at the full contract value over the remaining term of the contracts.

Revenue attributable to Vovici from August 4, 2011 through October 31, 2011 was $2.3 million. The impact of Vovici on net income for this fiscal period was not significant.

Transaction and related costs, consisting primarily professional fees and integration expenses, directly related to the acquisition of Vovici, totaled $2.5 million for the nine months ended October 31, 2011, including $1.3 million incurred during the three months ended October 31, 2011, were expensed as incurred and recorded within “Selling, general and administrative” expenses.

Global Management Technologies Acquisition

On October 7, 2011, Verint acquired all of the outstanding shares of Global Management Technologies Corporation (“GMT”), a U.S.-based, privately-held provider of workforce management solutions whose software and services are widely used by organizations, particularly in retail branch banking environments. This acquisition adds key functionality to Verint’s Enterprise Intelligence product solutions. The financial results of GMT have been included in the Company’s condensed consolidated financial statements since October 7, 2011.

Verint acquired GMT for approximately $24.6 million in cash at closing. Verint also agreed to make potential additional cash payments of up to approximately $17.4 million, contingent upon the achievement of certain performance targets over the period ending January 31, 2014. As of October 7, 2011 the fair value of this contingent obligation was estimated to be $12.0 million, of which $2.9 million was recorded within “Accounts payable and accrued expenses” and $9.1 million within “Other long-term liabilities”.

The $12.0 million acquisition date fair value of the contingent consideration obligation was estimated based on the probability adjusted present value of the consideration expected to be transferred using significant inputs that are not observable in the market. Key assumptions used in this estimate include probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. At each reporting date, the contingent consideration obligation is revalued to its fair value and increases and decreases in fair value are recorded within “Selling, general and administrative” expenses in the Company’s condensed consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration obligation may result from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets. There was no change in the estimated fair value of the contingent consideration obligation between the acquisition date and October 31, 2011.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair values assigned to identifiable intangible assets acquired was determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The acquired identifiable intangible assets are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over their estimated useful lives.

Among the factors contributing to the recognition of goodwill in this transaction were synergies in products and technologies, and the addition of a skilled, assembled workforce. This goodwill is not deductible for income tax purposes.

In connection with the purchase price allocation, the estimated fair value of support obligations assumed from GMT was determined utilizing a cost build-up approach. The cost build-up approach calculates fair value by estimating the costs relating to fulfilling the obligations plus a normal profit margin, which approximates the amount that the Company believes would be required to pay a third party to assume the support obligations. The estimated costs to fulfill the support obligation were based on the historical direct costs related to providing support services. These estimated costs did not include any costs associated with selling efforts or research and development or the related margins on these costs. Profit associated with selling efforts is excluded because the selling effort on the support contracts was concluded prior to the October 7, 2011 acquisition date. The estimated profit margin was 20%, which the Company believes best approximates the operating profit margin to fulfill support obligations. As a result, in allocating the purchase price, an adjustment was recorded to reduce the $4.3 million carrying value of GMT’s deferred revenue to $1.2 million, representing the estimated fair value of the support obligations assumed. As former GMT customers renew their support contracts, revenue will be recognized at the full contract value over the remaining term of the contracts.

Revenue and the impact on net income attributable to GMT from October 7, 2011 through October 31, 2011 were not significant.

Transaction and related costs, primarily professional fees and integration expenses, directly related to the acquisition of GMT, totaled $1.0 million for the nine months ended October 31, 2011, almost all of which were incurred during the three months ended October 31, 2011, were expensed as incurred and recorded within “Selling, general and administrative” expenses.

Other Business Combinations

On August 2, 2011, Verint acquired all of the outstanding shares of a privately-held provider of communications intelligence solutions, data retention services, and network performance management, based in the Americas region. This acquisition expands Verint’s Communications Intelligence product portfolio and increases its presence in this region.

On March 30, 2011, Verint acquired all of the outstanding shares of a privately-held company, based in Israel. This acquisition broadened product portfolio of Verint’s video intelligence product line.

Verint acquired these two companies for combined consideration of approximately $34.1 million, including $22.0 million of combined cash paid at the closings. Verint also agreed to make potential additional cash payments aggregating up to approximately $27.3 million contingent upon the achievement of certain performance targets over periods ending January 31, 2014. The combined fair values of these contingent consideration obligations were estimated to be $11.8 million as of the respective acquisition dates.

Benefits of $0.9 million and $1.1 million were recorded within selling, general and administrative expenses for the three and nine months ended October 31 2011, respectively, for changes in the fair values of the contingent consideration obligations associated with these acquisitions, reflecting the impacts of revised assessments of the probability of payment, as well as decreases in the discount periods since the acquisition dates. As of October 31, 2011, the combined fair values of these contingent consideration obligations were $10.7 million, of which $3.1 million was recorded within “Accounts payable and accrued expenses” and $7.6 million within “Other long-term liabilities”.

The fair values assigned to identifiable intangible assets acquired in these business combinations were determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The acquired identifiable intangible assets are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over their estimated useful lives.

Among the factors contributing to the recognition of goodwill in these transactions were synergies in products and technologies, and the additions of skilled, assembled workforces. Of the $19.6 million of goodwill associated with these business combinations, $10.1 million was not deductible for income tax purposes, and $9.5 million is still being assessed for tax deductibility.

13

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

In connection with the foregoing August 2, 2011 Verint acquisition, the Company has evaluated and continues to evaluate the impact of certain liabilities associated with pre-acquisition business activities of the acquired company. Based upon this evaluation, the Company recorded liabilities of approximately $10.7 million, of which $5.5 million is classified as current and $5.2 million is classified as long-term, along with corresponding indemnification assets of the same amounts and classified in the same manner, as components of the purchase price for this acquisition, representing the Company’s best estimates of these amounts at the acquisition date. The indemnification assets recognize the selling shareholders’ contractual obligation to indemnify Verint for these pre-acquisition liabilities, and were measured on the same basis as the corresponding liabilities. As of October 31, 2011, the current and long-term liabilities were reduced to $5.0 million and $4.8 million, respectively, as a result of currency exchange rate fluctuations, with corresponding changes in the current and long-term indemnification assets. The Company is continuing to gather and assess information in this regard, and changes to the amounts recorded, if any, during the remainder of the measurement period, will be included in the purchase price allocation during the measurement period and, subsequently, in the Company’s results of operations.

Revenue and the impact on net income attributable to these acquisitions for the three and nine months ended October 31, 2011 were not significant.

Transaction and related costs, primarily professional fees and integration expenses, directly related to these acquisitions totaled $3.0 million for the nine months ended October 31, 2011, including $0.6 million incurred during the three months ended October 31, 2011, and were expensed as incurred.

Components and Allocations of Purchase Prices

The following table sets forth the components and the allocations of the purchase prices, some of which are preliminary, for business combinations completed during the nine months ended October 31, 2011:

	Vovici			GMT			Other
	(In thousands)
Components of Purchase Price:
Cash and cash equivalents	$	55,708		$	24,596		$	21,965
Fair value of contingent consideration		9,900			12,000			11,804
Fair value of stock options		60			—			—
Bank debt, prepaid at closing		435			—			—
Other purchase price adjustments		—			—			317
Total purchase price	$	66,103		$	36,596		$	34,086
Allocation of Purchase Price:
Net tangible assets (liabilities):
Accounts receivable	$	1,106		$	512		$	493
Other current assets		4,396			1,717			12,445
Other assets		912			482			5,508
Current and other liabilities		(1,794	)		(1,634	)		(15,653	)
Deferred revenue		(2,264	)		(1,234	)		(845	)
Bank debt		—			—			(3,330	)
Deferred income taxes - long-term		(2,300	)		—			—
Net tangible assets (liabilities)		56			(157	)		(1,382	)
Identifiable intangible assets:
Developed technology		11,300			7,500			6,943
Customer relationships		15,400			7,200			6,550
Trademarks and trade names		1,700			400			1,000
Other identifiable intangible assets		—			—			1,421
Total identifiable intangible assets (1)		28,400			15,100			15,914
Goodwill		37,647			21,653			19,554
Total purchase price	$	66,103		$	36,596		$	34,086

(1) The weighted-average estimated useful life of all finite-lived identifiable intangible assets is 7.5 years.

14

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The purchase price allocations for acquisitions completed during the nine months ended October 31, 2011 are preliminary and subject to revision as more detailed analyses are completed and additional information about the acquisition date fair values of assets and liabilities becomes available during the respective measurement periods. The purchase price allocations for these acquisitions as reported as of October 31, 2011 represent the Company’s best estimates of their fair values and were based upon information available to the Company.

For the acquisition of Vovici, the acquired developed technology, customer relationships, and trademarks and tradenames were assigned estimated useful lives of six years, ten years, and five years, respectively, the weighted average of which is approximately 8.1 years.

For the acquisition of GMT, the acquired developed technology, customer relationships, and trademarks and tradenames were assigned estimated useful lives of five years, ten years, and three years, respectively, the weighted average of which is approximately 7.3 years.

For other acquisitions, the acquired developed technology, customer relationships, trademarks and tradenames, and other identifiable intangible assets were assigned estimated useful lives of six years, from four years to ten years, five years, and from three years to four years, respectively, the weighted average of which is approximately 6.7 years.

For the Year Ended January 31, 2011

Iontas Limited

On February 4, 2010, Verint acquired all of the outstanding shares of Iontas Limited (“Iontas”), a privately-held provider of desktop analytics solutions which measure application usage and analyze workflows to help improve staff performance in contact center, branch, and back-office operations environments. Verint acquired Iontas, among other objectives, to expand the desktop analytical capabilities of its Enterprise Intelligence solutions. The financial results of Iontas have been included in the condensed consolidated financial statements since the acquisition date.

Verint acquired Iontas for total consideration valued at $21.7 million, including cash consideration of $17.7 million, and additional milestone-based contingent payments of up to $3.8 million tied to certain performance targets being achieved over the two-year period following the acquisition date. The acquisition-date fair value of the contingent consideration was estimated to be $3.2 million. The purchase price also included $1.5 million of prepayments for product licenses and support services procured from Iontas prior to the acquisition date, partially offset by $0.7 million of trade accounts payable to Iontas as of the acquisition date.

The consideration paid to acquire Iontas was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, which included $6.9 million for developed technology, $0.3 million for non-competition agreements, $1.7 million for tangible net assets, and $12.8 million for goodwill. The developed technology and non-competition agreements were assigned estimated useful lives of six years and three years, respectively, the weighted average of which is 5.9 years, and are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over these estimated useful lives.

Among the factors that contributed to the recognition of goodwill in this transaction were the expansion of Verint’s desktop analytical capabilities, the expansion of its suite of products and services, and the addition of an assembled workforce. This goodwill is not deductible for income tax purposes.

The Company recorded the $3.2 million acquisition-date estimated fair value of the contingent consideration as a component of the purchase price of Iontas. During the three months ended April 30, 2011, $2.0 million of the previously recorded contingent consideration was paid to the former shareholders of Iontas. The estimated fair value of the remaining contingent consideration was $1.7 million as of October 31, 2011 and was recorded within “Accounts payable and other accrued expenses.” Changes in the fair value of this contingent consideration of $0.2 million for each of the nine months ended October 31, 2011 and 2010, respectively, were recorded within “Selling, general and administrative” expenses for those fiscal periods.

Transaction costs, primarily professional fees, directly related to the acquisition of Iontas, totaled $1.3 million and were expensed as incurred and recorded within “Selling, general and administrative” expenses.

Revenue from Iontas for the three and nine months ended October 31, 2011 and 2010 was not material.

15

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Other Business Combination

In December 2010, Verint acquired certain technology and other assets in a transaction that qualified as a business combination. Total consideration for this acquisition was less than $15.0 million. The impact of this acquisition was not material to the Company’s condensed consolidated financial statements. The fair value of the liability for contingent consideration related to this acquisition increased by $1.9 million during the nine months ended October 31, 2011, resulting in a corresponding charge recorded within “Selling, general and administrative” expenses for that fiscal period. Substantially all of the increase occurred during the three months ended April 30, 2011. The earned contingent consideration related to this acquisition was paid to the sellers during the three months ended July 31, 2011.

Pro Forma Information

The following table provides unaudited pro forma total revenue and net income (loss) attributable to Comverse Technology, Inc. for the three and nine months ended October 31, 2011 and 2010, as if Vovici and GMT had been acquired on February 1, 2010. These unaudited pro forma results reflect certain adjustments related to these acquisitions, such as amortization expense on finite-lived intangible assets acquired from Vovici and GMT. The unaudited pro forma results do not include any operating efficiencies or potential cost savings which may result from these business combinations. Accordingly, such unaudited pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on February 1, 2010, nor are they indicative of future operating results. The pro forma impact of the other business combinations discussed in this note were not material to the Company’s historical consolidated operating results and is therefore not presented.

	Three Months Ended October 31,					Nine Months Ended October 31,
	2011		2010			2011			2010
	(In thousands)
Total revenue	$	457,076	$	431,737		$	1,206,577		$	1,206,022
Net income (loss) attributable to Comverse Technology Inc.	$	36,746	$	(42,268	)	$	(62,891	)	$	(151,665	)

6. GOODWILL

The changes in the carrying amount of goodwill in the Company’s reportable segments for the nine months ended October 31, 2011 are as follows:

	Comverse BSS		Comverse VAS		Verint		All Other (1)			Total
	(In thousands)
For the Nine Months Ended October 31, 2011
Goodwill, gross at January 31, 2011	$	84,050	$	66,040	$	803,971	$	169,618		$	1,123,679
Accumulated impairment losses at January 31, 2011		—		—		—		(156,455	)		(156,455	)
Goodwill, net, at January 31, 2011		84,050		66,040		803,971		13,163			967,224
Goodwill acquired:
Vovici		—		—		37,647		—			37,647
GMT		—		—		21,653		—			21,653
Other		—		—		19,554		—			19,554
Effect of changes in foreign currencies and other		28		22		420		1			471
Goodwill, net, at October 31, 2011	$	84,078	$	66,062	$	883,245	$	13,164		$	1,046,549
Balance at October 31, 2011
Goodwill, gross at October 31, 2011	$	84,078	$	66,062	$	883,245	$	169,619		$	1,203,004
Accumulated impairment losses at October 31, 2011		—		—		—		(156,455	)		(156,455	)
Goodwill, net, at October 31, 2011	$	84,078	$	66,062	$	883,245	$	13,164		$	1,046,549

(1) The amount of goodwill in “All Other” is attributable to Starhome, Comverse MI and Netcentrex. The goodwill associated with Netcentrex was impaired during the fiscal year ended January 31, 2009 and prior fiscal years.

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The Company tests goodwill for impairment annually as of November 1 or more frequently if events or circumstances indicate the potential for impairment exists. As described in Note 1, the Company changed its reportable segments during the three months ended October 31, 2011 and accordingly, allocated its goodwill to the new reportable segments on a relative fair value basis. Due to the change in reportable segments, the Company performed an interim goodwill impairment test as of October 31, 2011. Such goodwill impairment test did not result in an impairment charge during the three months ended October 31, 2011.

7. INTANGIBLE ASSETS, NET

Acquired intangible assets as of October 31, 2011 and January 31, 2011 are as follows:

	Useful Life	October 31, 2011		January 31, 2011
		(In thousands)
Gross carrying amount:
Acquired technology	2 to 7 years	$	190,272	$	164,796
Customer relationships	4 to 10 years		263,001		233,995
Trade names	1 to 10 years		15,983		12,952
Non-competition agreements	4 to 10 years		5,797		5,215
Sales backlog	3 years		843		—
Distribution network	10 years		2,440		2,440
			478,336		419,398
Accumulated amortization:
Acquired technology			130,130		110,740
Customer relationships			114,029		95,753
Trade names			13,102		12,577
Non-competition agreements			3,462		2,760
Sales backlog			5		—
Distribution network			1,291		1,108
			262,019		222,938
Total		$	216,317	$	196,460

Amortization of intangible assets was $13.6 million and $38.9 million for the three and nine months ended October 31, 2011, respectively, and $12.3 million and $36.7 million for the three and nine months ended October 31, 2010, respectively. There was no impairment of intangible assets for the three and nine months ended October 31, 2011 and 2010.

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.

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 nine months ended October 31, 2011, Comverse implemented 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 restructured its operations into new business units 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

17

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

leading market position in VAS and implementing further cost savings through operational efficiencies and strategic focus. In relation to these restructuring plans, the Company recorded severance and facilities-related costs of $7.5 million during the nine months ended October 31, 2011. Severance and facilities-related costs of $8.8 million were paid during the nine months ended October 31, 2011 with the remaining costs of $1.1 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. During the nine months ended October 31, 2011, Comverse began the second phase of its Netcentrex restructuring plan. In relation to these initiatives, the Company recorded severance-related costs of $7.1 million and paid $6.2 million of such costs during the nine months ended on October 31, 2011. The remaining costs of $4.0 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 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						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 Nine Months Ended October 31, 2011
January 31, 2011	$	2,910		$	—	$	2,462		$	86		$	6		$	94		$	227		$	29		$	5,814
Charges		7,117			—		7,359			179			16			13			274			82			15,040
Change in assumptions		(12	)		—		(140	)		—			(3	)		—			1			2			(152	)
Translation adjustments		265			—		—			—			—			—			—			—			265
Paid or utilized		(6,245	)		—		(8,602	)		(240	)		(19	)		(107	)		(502	)		(113	)		(15,828	)
October 31, 2011	$	4,035		$	—	$	1,079		$	25		$	—		$	—		$	—		$	—		$	5,139

	Netcentrex 2010 Initiative				Comverse Third Quarter  2010 Initiative					Comverse First Quarter  2010 Initiative						Pre  2010 initiatives						Verint Initiatives
	Severance Related		Facilities Related		Severance Related			Facilities Related		Severance Related			Facilities Related			Severance Related			Facilities Related			Severance Related			Facilities Related		Total
	(In thousands)
For the Nine Months Ended October 31, 2010
January 31, 2010	$	—	$	—	$	—		$	—	$	—		$	—		$	699		$	4,487		$	116		$	—	$	5,302
Charges		10,098		—		11,323			191		6,004			1,007			17			246			—			—		28,886
Change in assumptions		—		—		—			—		—			—			(110	)		—			—			—		(110	)
Paid or utilized		29		—		(2,532	)		—		(5,897	)		(804	)		(366	)		(3,820	)		(116	)		—		(13,506	)
October 31, 2010	$	10,127	$	—	$	8,791		$	191	$	107		$	203		$	240		$	913		$	—		$	—	$	20,572

18

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

9. DEBT

As of October 31, 2011 and January 31, 2011, debt is comprised of the following:

	October 31, 2011			January 31, 2011
	(In thousands)
Convertible debt obligations	$	2,195		$	2,195
Term loan		598,500			583,234
Unamortized debt discount on term loan		(2,790	)		—
Line of credit		—			6,000
Other debt		3,193			—
Total debt		601,098			591,429
Less: current portion		8,403			8,195
Total long-term debt	$	592,695		$	583,234

Convertible Debt Obligations

As of October 31, 2011 and January 31, 2011, CTI had $2.2 million aggregate principal amount of outstanding Convertible Debt Obligations (the “Convertible Debt Obligations”). The Convertible Debt Obligations are not secured by any assets of the Company and are not guaranteed by any of CTI’s subsidiaries.

Each $1,000 principal amount of the Convertible Debt Obligations is convertible, at the option of the holder upon certain circumstances, into shares of CTI’s common stock at a conversion price of $17.9744 per share (equal to a conversion rate of 55.6347 shares per $1,000 principal amount of Existing Convertible Debt Obligations), subject to adjustment for certain events.

The Convertible Debt Obligations are convertible upon the occurrence of certain events, including during any period, if following the date on which the credit rating assigned to the Convertible Debt Obligations by S&P is lower than “B-” or upon the withdrawal or suspension of the Convertible Debt Obligations rating at CTI’s request. On August 19, 2010, S&P discontinued rating the Convertible Debt Obligations at which time they became convertible. Accordingly, the Convertible Debt Obligations are classified as current liabilities as of October 31, 2011 and January 31, 2011. The required redemption obligations in the succeeding five fiscal years are not significant to the Company.

Verint Credit Facilities

On May 25, 2007, Verint entered into a $675.0 million secured credit agreement (the “Prior Facility”) with a group of banks to fund a portion of the acquisition of Witness Systems Inc. (“Witness”). The Prior Facility was comprised of a $650.0 million seven-year term loan facility and a $25.0 million six-year revolving line of credit. The borrowing capacity under the revolving line of credit was increased to $75.0 million in July 2010.

On April 29, 2011, Verint (i) entered into a credit agreement (the “New Credit Agreement”) with a group of lenders (the “Lenders”) and Credit Suisse AG, as administrative agent and collateral agent for the Lenders (in such capacities, the “Agent”) and (ii) terminated the Prior Facility.

The New Credit Agreement provides for $770.0 million of secured senior credit facilities, comprised of a $600.0 million term loan maturing in October 2017 (the “Term Loan Facility”) and a $170.0 million revolving credit facility maturing in April 2016 (the “Revolving Credit Facility”), subject to increase (up to a maximum increase of $300.0 million) and reduction from time to time according to the terms of the New Credit Agreement. As of October 31, 2011, Verint had no outstanding borrowings under the Revolving Credit Facility.

The majority of the Term Loan Facility proceeds were used to repay all $583.2 million of outstanding term loan borrowings under the Prior Facility at the closing date of the New Credit Agreement. There were no outstanding borrowings under the prior revolving credit facility at the closing date.

19

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The New Credit Agreement included an original issuance Term Loan Facility discount of 0.50%, or $3.0 million, resulting in net Term Loan Facility proceeds of $597.0 million. This discount is being amortized as interest expense over the term of the Term Loan Facility using the effective interest method.

Loans under the New Credit Agreement bear interest, payable quarterly or, in the case of Eurodollar loans with an interest period of three months or shorter, at the end of any interest period, at a per annum rate of, at Verint’s election:

(a) in the case of Eurodollar loans, the Adjusted London Interbank Offered (“LIBO”) Rate plus 3.25% (or if Verint’s corporate ratings are at least BB- and Ba3 or better, 3.00%). The “Adjusted LIBO Rate” is the greater of (i) 1.25% per annum and (ii) the product of the LIBO Rate and Statutory Reserves (both as defined in the New Credit Agreement), and

(b) in the case of Base Rate loans, the Base Rate plus 2.25% (or if Verint’s corporate ratings are at least BB- and Ba3 or better, 2.00%). The “Base Rate” is the greatest of (i) the Agent’s prime rate, (ii) the Federal Funds Effective Rate (as defined in the New Credit Agreement) plus 0.50% and (iii) the Adjusted LIBO Rate for a one month interest period plus 1.00%.

Verint incurred debt issuance costs of $14.8 million associated with the New Credit Agreement, which have been deferred and classified within “Other assets.” The deferred costs are being amortized as interest expense over the term of the New Credit Agreement. Deferred costs associated with the Term Loan Facility were $10.2 million, and are being amortized using the effective interest rate method. Deferred costs associated with the Revolving Credit Facility were $4.6 million and are being amortized on a straight-line basis.

At the closing date of the New Credit Agreement, there were $9.0 million of unamortized deferred costs associated with the Prior Facility. Upon termination of the Prior Facility and repayment of the prior term loan, $8.1 million of these fees were expensed as a loss on extinguishment of debt. The remaining $0.9 million of these fees were associated with lenders that provided commitments under both the new and the prior revolving credit facilities, which remained deferred and are being amortized over the term of the New Credit Agreement.

During the three months ended October 31, 2011, Verint incurred $0.5 million of fees to secure waivers of certain provisions of the New Credit Agreement which allowed it to structure the financing for one of its business combinations in a favorable manner, $0.2 million of which were deferred and will be amortized over the remaining term of the New Credit Agreement and $0.3 million of which were expensed as incurred.

As of October 31, 2011, the interest rate on the Term Loan Facility was 4.50%. Including the impact of the 0.50% original issuance Term Loan Facility discount and the deferred debt issuance costs, the effective interest rate on Verint’s Term Loan Facility was approximately 4.91% as of October 31, 2011.

Verint incurred interest expense on borrowings under its credit facilities of $6.9 million and $21.3 million during the three and nine months ended October 31, 2011, respectively, and $8.0 million and $18.3 million during the three and nine months ended October 31, 2010, respectively. Verint also recorded $0.7 million and $2.1 million during the three and nine months ended October 31, 2011, respectively, for amortization of deferred debt issuance costs, which is reported within interest expense. Amortization of Verint’s deferred debt issuance costs during the three and nine months ended October 31, 2010 were $0.8 million and $2.0 million, respectively.

Verint is required to pay a commitment fee with respect to undrawn availability under the Revolving Credit Facility, payable quarterly, at a rate of 0.50% per annum, and customary administrative agent and letter of credit fees.

The New Credit Agreement requires Verint to make term loan principal payments of $1.5 million per quarter through August 2017, beginning in August 2011, with the remaining balance due in October 2017. Optional prepayments of the loans are permitted without premium or penalty, other than customary breakage costs associated with the prepayment of loans bearing interest based on LIBO Rates and a 1.0% premium applicable in the event of a Repricing Transaction (as defined in the New Credit Agreement) prior to April 30, 2012. The loans are also subject to mandatory prepayment requirements with respect to certain asset sales, excess cash flow (as defined in the New Credit Agreement), and certain other events. Prepayments are applied first to the eight immediately following scheduled term loan principal payments, and then pro rata to other remaining scheduled term loan principal payments, if any, and thereafter as otherwise provided in the New Credit Agreement.

Verint Systems’ obligations under the New Credit Agreement are guaranteed by substantially all of Verint’s domestic subsidiaries and certain foreign subsidiaries that have elected to be disregarded for U.S. tax purposes and are secured by security interests in substantially all assets of Verint and its guarantor subsidiaries, subject to certain exceptions. Verint’s obligations under the New Credit Agreement are not guaranteed by CTI and are not secured by any of CTI’s assets.

20

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The New Credit Agreement contains customary negative covenants for credit facilities of this type, including limitations on Verint and its subsidiaries with respect to indebtedness, liens, nature of business, investments and loans, distributions, acquisitions, dispositions of assets, sale-leaseback transactions and transactions with affiliates. Accordingly, the New Credit Agreement precludes Verint Systems from paying cash dividends and limits its ability to make asset distributions to its stockholders, including CTI. The New Credit Agreement also contains a financial covenant that requires Verint to maintain a Consolidated Total Debt to Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (each as defined in the New Credit Agreement) leverage ratio until July 31, 2013 of no greater than 5.00 to 1.00 and, thereafter, of no greater than 4.50 to 1.00. The limitations imposed by the covenants are subject to certain exceptions. As of October 31, 2011, Verint was in compliance with such requirements.

The New Credit Agreement also contains a number of affirmative covenants, including a requirement that Verint submit consolidated financial statements to the Lenders within certain periods after the end of each fiscal year and quarter.

The New Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay principal or interest under the New Credit Agreement when due, failure to comply with covenants, any representation or warranty made by Verint proving to be inaccurate in any material respect, defaults under certain other indebtedness of Verint or its subsidiaries, a Change of Control (as defined in the New Credit Agreement) of Verint, and certain insolvency or receivership events affecting Verint or its significant subsidiaries. Upon an event of default, all of Verint’s obligations under the New Credit Agreement may be declared immediately due and payable, and the Lenders’ commitments to provide loans under the New Credit Agreement may be terminated.

Other Verint Indebtedness

In connection with Verint’s August 2, 2011 business combination, Verint assumed approximately $3.3 million of development bank and government debt in the Americas region. This debt is payable in periods through February 2017 and bears interest at varying rates. As of October 31, 2011, the majority of this debt bears interest at an annual rate of 7.00%. The carrying value of this debt was approximately $3.2 million at October 31, 2011.

Comverse Ltd. Lines of Credit

As of January 31, 2011, Comverse Ltd., a wholly-owned Israeli subsidiary of Comverse, Inc., had a $10.0 million line of credit with a bank to be used for various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. This line of credit is not available for borrowings. The line of credit bears no interest and is subject to renewal on an annual basis. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts utilized under the line of credit. In June 2011, the line of credit increased to $20.0 million with a corresponding increase in the cash balances that Comverse Ltd. is required to maintain with the bank to $20.0 million. As of October 31, 2011 and January 31, 2011, Comverse Ltd. had utilized $18.8 million and $4.0 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

As of October 31, 2011 and January 31, 2011, Comverse Ltd. had an additional line of credit with a bank for $15.0 million, to be used for borrowings, various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. The line of credit bears no interest other than on borrowings thereunder and is subject to renewal on an annual basis. Borrowings under the line of credit bear interest at an annual rate of LIBOR plus a variable margin determined based on the bank’s underlying cost of capital. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts borrowed or utilized under the line of credit. As of January 31, 2011, Comverse Ltd. had outstanding borrowings of $6.0 million under the line of credit which was repaid in full during the three months ended April 30, 2011. Accordingly, as of October 31, 2011, Comverse Ltd. had no outstanding borrowings under the line of credit. As of October 31, 2011 and January 31, 2011, Comverse Ltd. had utilized $3.2 million and $7.3 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

Other than Comverse Ltd.’s requirement to maintain cash balances with the banks as discussed above, the lines of credit have no financial covenants. These cash balances required to be maintained with the banks were classified as “Restricted cash and bank time deposits” within the condensed consolidated balance sheets as of October 31, 2011 and January 31, 2011.

21

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Debt Maturities

The Company’s debt maturities are as follows:

Fiscal Years Ending January 31:
(in thousands)
2012 (Remainder of year)	$	3,894
2013		6,069
2014		6,641
2015		6,756
2016		6,727
2017 and thereafter		573,801
	$	603,888

10. DERIVATIVES AND FINANCIAL INSTRUMENTS

The Company entered into derivative arrangements to manage a variety of risk exposures during the nine months ended October 31, 2011 and 2010, including interest rate risk associated with Verint’s Prior Facility and foreign currency risk related to forecasted foreign currency denominated payroll costs at the Company’s Comverse, Verint and Starhome subsidiaries. The Company assessed the counterparty credit risk for each party related to its derivative financial instruments for the periods presented.

Forward Contracts

During the nine months ended October 31, 2011 and 2010, Comverse entered into a series of short-term foreign currency forward contracts to limit the variability in exchange rates between the U.S. dollar (the “USD”) and the new Israeli shekel (“NIS”) to hedge probable cash flow exposure from expected future payroll expense. The transactions qualified for cash flow hedge accounting under the FASB’s guidance and there was no hedge ineffectiveness. Accordingly, the Company recorded all changes in fair value of the forward contracts as part of other comprehensive income or loss. Such amounts are reclassified to the condensed consolidated statements of operations when the effects of the item being hedged are recognized in the condensed consolidated statements of operations. The Comverse derivatives outstanding as of October 31, 2011 are short-term in nature and are due to contractually settle within the next twelve months.

Verint periodically enters into short-term foreign currency forward contracts to mitigate risk of fluctuations in foreign currency exchange rates primarily relating to compensation and related expenses denominated in currencies other than the USD, primarily the NIS and Canadian dollar. Verint’s joint venture, which has a Singapore dollar functional currency, also utilizes foreign exchange forward contracts to manage its exposure to exchange rate fluctuations related to settlement of liabilities denominated in USD. Verint also periodically utilizes foreign currency forward contracts to manage exposures resulting from forecasted customer collections to be remitted in currencies other than the applicable functional currency. Certain of these foreign currency forward contracts were not designated as hedging instruments under the FASB’s guidance and, therefore, gains and losses from changes in their fair values were reported in “Other (expense) income, net” in the condensed consolidated statements of operations. Changes in the fair value of effective forward contracts qualifying for cash flow hedge accounting under the FASB’s guidance are recorded as part of other comprehensive income or loss. Such amounts are reclassified to the condensed consolidated statements of operations when the effects of the item being hedged are recognized in the condensed consolidated statements of operations. The Verint derivatives outstanding as of October 31, 2011 are short-term in nature and generally have maturities of no longer than twelve months, although occasionally Verint will execute a contract that extends beyond twelve months, depending upon the nature of the underlying risk.

During the nine months ended October 31, 2011 and 2010, Starhome entered into short-term foreign currency forward contracts to mitigate risk of fluctuations in foreign currency exchange rates mainly relating to payroll costs denominated in the NIS. Certain of these foreign currency forward contracts were not designated as hedging instruments, and therefore, gains and losses from changes in their fair values were reported in “Other (expense) income, net” in the condensed consolidated statements of operations. The Starhome derivatives outstanding as of October 31, 2011 are short-term in nature and are due to contractually settle within the next twelve months.

22

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Interest Rate Swap Agreement

On May 25, 2007, concurrently with entry into its Prior Facility, Verint executed a pay-fixed/receive-variable interest rate swap agreement with a multinational financial institution to mitigate a portion of the risk associated with variable interest rates on the term loan under the Prior Facility. The original term of the interest rate swap agreement extended through May 2011. On July 30, 2010, Verint terminated the interest rate swap agreement in exchange for a payment of $21.7 million to the counterparty. Verint paid this obligation on August 3, 2010. The interest rate swap agreement was not designated as a hedging instrument under derivative accounting guidance, and gains and losses from changes in its fair value were therefore reported in “Other (expense) income, net” in the condensed consolidated statements of operations.

The following tables summarize the Company’s derivative positions and their respective fair values as of October 31, 2011 and January 31, 2011:

	October 31, 2011
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Assets
Derivatives not designated as hedging instruments
Short-term foreign currency forward	$	9,523	Prepaid expenses and other current assets	$	13
Derivatives designated as hedging instruments
Short-term foreign currency forward		24,036	Prepaid expenses and other current assets		814
Total assets				$	827
Liabilities
Derivatives not designated as hedging instruments
Short-term foreign currency forward		22,165	Other current liabilities	$	756
Derivatives designated as hedging instruments
Short-term foreign currency forward		49,762	Other current liabilities		670
Total liabilities				$	1,426

	January 31, 2011
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Assets
Derivatives designated as hedging instruments
Short-term foreign currency forward	$	22,390	Prepaid expenses and other current assets	$	957
Total assets				$	957
Liabilities
Derivatives not designated as hedging instruments
Short-term foreign currency forward		33,341	Other current liabilities	$	1,530
Derivatives designated as hedging instruments
Short-term foreign currency forward		21,250	Other current liabilities		396
Total liabilities				$	1,926

23

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The following tables summarize the Company’s classification of gains and losses on derivative instruments for the three and nine months ended October 31, 2011 and 2010:

	Three Months Ended October 31, 2011
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)			Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)			Recognized in Other Income (Expense), Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—		$	—		$	562
Derivatives designated as hedging instruments
Foreign currency forward		(1,126	)		(1,044	)		—
Total	$	(1,126	)	$	(1,044	)	$	562

	Three Months Ended October 31, 2010
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)		Recognized in Other Income (Expense), Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—	$	—	$	(924	)
Derivatives designated as hedging instruments
Foreign currency forward		3,175		1,003		—
Total	$	3,175	$	1,003	$	(924	)

(1) Amounts reclassified from accumulated other comprehensive income into the statement of operations are classified as operating expenses.

24

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Nine Months Ended October 31, 2011
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)		Recognized in Other (Expense) Income, Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—	$	—	$	(1,123	)
Derivatives designated as hedging instruments
Foreign currency forward		4,248		4,509		—
Total	$	4,248	$	4,509	$	(1,123	)

	Nine Months Ended October 31, 2010
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)		Recognized in Other (Expense) Income, Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—	$	—	$	(628	)
Interest rate swap		—		—		(3,102	)
Derivatives designated as hedging instruments
Foreign currency forward		2,772		619		—
Total	$	2,772	$	619	$	(3,730	)

(1) Amounts reclassified from accumulated other comprehensive income into the statement of operations are classified as operating expenses.

The components of other comprehensive income (“OCI”) related to cash flow hedges are as follows:

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands)
Accumulated OCI related to cash flow hedges, beginning of the period	$	573		$	747		$	748		$	785
Unrealized (losses) gains on cash flow hedges		(1,591	)		3,575			4,091			3,191
Reclassification adjustment for losses (gains) included in net income/(loss)		1,044			(1,003	)		(4,509	)		(619	)
Changes in accumulated OCI on cash flow hedges, before tax		(547	)		2,572			(418	)		2,572
Other comprehensive income (loss) attributable to noncontrolling interest		465			(400	)		157			(419	)
Deferred income tax benefit (provision)		41			(23	)		45			(42	)
Changes in accumulated OCI on cash flow hedges, net of tax		(41	)		2,149			(216	)		2,111
Accumulated OCI related to cash flow hedges, end of the period	$	532		$	2,896		$	532		$	2,896

25

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

11. FAIR VALUE MEASUREMENTS

Under the FASB’s guidance, fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., “the exit price”).

The FASB’s guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy consists of three levels based on the reliability of inputs as follows:

• Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access.

• Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in transfers within fair value measurement hierarchy. All transfers into and/or out of Level 3 are assumed to occur at the end of the reporting period. The Company did not have any transfers between levels of the fair value measurement hierarchy during the three and nine months ended October 31, 2011 and 2010.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value of financial instruments is estimated by the Company, using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Money Market Funds. The Company values these assets using quoted market prices for such funds.

Commercial Paper. The Company uses quoted prices for similar assets and liabilities.

ARS. The Company determines the fair value of ARS on a quarterly basis by utilizing a discounted cash flow model, which considers, among other factors, assumptions about the (i) underlying collateral, (ii) credit risk associated with the issuer, and (iii) contractual maturity. The discounted cash flow model considers contractual future cash flows, representing both interest and principal payments. Future interest payments were projected using U.S. Treasury and swap curves over the remaining term of the ARS in accordance with the terms of each specific security and principal payments were assumed to be made at an estimated contractual maturity date taking into account applicable prepayments. Yields used to discount these payments were determined based on the specific characteristics of each security. Key considerations in the determination of the appropriate discount rate include the securities’ remaining term to maturity, capital structure subordination, quality and level of collateralization, complexity of payout structure, credit rating of the issuer, and the presence or absence of additional insurance.

Contingent Consideration. The Company values contingent consideration using an estimated probability-adjusted discounted cash flow model. The fair value measurement is based on significant inputs not observable in the market. The key assumptions used in these models are discount rates and the probabilities assigned to the milestones to be achieved. The fair value of contingent consideration is re-measured at each reporting period, and any changes in fair value resulting from either the passage of time or events occurring after the acquisition date, such as changes in the probability of achieving the performance target, are recorded in earnings.

Derivative Assets and Liabilities. The fair value of derivative instruments is based on quotes or data received from counterparties and third party financial institutions. These quotes are reviewed for reasonableness by discounting the future estimated cash flows under the contracts, considering the terms and maturities of the contracts and markets rates for similar contracts using readily observable market prices thereof.

26

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The following tables present financial instruments according to the fair value hierarchy as defined by the FASB’s guidance as of October 31, 2011 and January 31, 2011:

	October 31, 2011
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Commercial paper (1)	$	—	$	9,382	$	—	$	9,382
Money market funds (1)		150,553		—		—		150,553
Auction rate securities		—		—		50,259		50,259
Derivative assets		—		827		—		827
Contingent consideration asset recorded for sale of business		—		—		780		780
	$	150,553	$	10,209	$	51,039	$	211,801
Financial Liabilities:
Derivative liabilities	$	—	$	1,426	$	—	$	1,426
Contingent consideration liability for business combination		—		—		34,623		34,623
	$	—	$	1,426	$	34,623	$	36,049

	January 31, 2011
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Commercial paper (1)	$	—	$	9,375	$	—	$	9,375
Money market funds (1)		186,414		—		—		186,414
Auction rate securities		—		—		72,441		72,441
Derivative assets		—		957		—		957
Contingent consideration asset recorded for sale of business		—		—		722		722
	$	186,414	$	10,332	$	73,163	$	269,909
Financial Liabilities:
Derivative liabilities	$	—	$	1,926	$	—	$	1,926
Contingent consideration liability for business combination		—		—		3,686		3,686
	$	—	$	1,926	$	3,686	$	5,612

(1) As of October 31, 2011, $145.9 million of commercial paper and money market funds were classified in “Cash and cash equivalents” and $14.1 million of money market funds were classified in “Restricted cash and bank deposits” within the condensed consolidated balance sheets. As of January 31, 2011, $162.4 million of commercial paper and money market funds were classified in “Cash and cash equivalents” and $33.4 million of money market funds were classified in “Restricted cash and bank time deposits” within the condensed consolidated balance sheets.

27

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The following table is a summary of changes in the fair value of the level 3 financial assets and liabilities, during the three and nine months ended October 31, 2011 and 2010:

	Level Three Financial Assets and Liabilities
	Three Months Ended October 31,											Nine Months Ended October 31,
	2011						2010					2011						2010
	Asset			Liability			Asset			Liability		Asset			Liability			Asset			Liability
	(In thousands)
Beginning balance	$	52,612		$	2,364		$	69,349		$	3,306	$	73,163		$	3,686		$	114,650		$	—
Sales and redemptions		(250	)		—			(2,522	)		—		(25,750	)		—			(57,018	)		—
Change in realized and unrealized gains included in other income, net		120			—			1,625			—		8,011			—			23,715			—
Change in unrealized losses included in other comprehensive income		(1,463	)		—			1,143			—		(4,443	)		—			(11,374	)		—
Impairment charges		—			—			(29	)		—		—			—			(407	)		—
Contingent consideration liability recorded for business combination		—			32,800			—			—		—			33,704			—			3,224
Payments of contingent consideration		—			—			—			—		—			(4,107	)		—			—
Change in fair value recorded in operating expenses		20			(541	)		—			141		58			1,340			—			223
Ending balance	$	51,039		$	34,623		$	69,566		$	3,447	$	51,039		$	34,623		$	69,566		$	3,447

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also measures certain assets and liabilities at fair value on a nonrecurring basis. The Company measures non-financial assets, including goodwill, intangible assets and property, plant and equipment, at fair value when there is an indication of impairment. The Company also elected not to apply the fair value option for non-financial assets and non-financial liabilities.

Verint’s Credit Facilities

As of October 31, 2011, the carrying amount of the Term Loan under Verint’s New Credit Agreement was $595.7 million and the estimated fair value was $585.0 million. As of January 31, 2011, the carrying amount of the term loan under the Prior Facility was $583.2 million and the estimated fair value was $586.2 million. The estimated fair values are based upon the estimated bid and ask prices as determined by the agent responsible for the syndication of Verint’s term loan.

In connection with Verint’s August 2, 2011 business combination, the Company assumed approximately $3.3 million of development bank and government debt in the Americas region. The carrying value of this debt was approximately $3.2 million at October 31, 2011, which approximates its fair value.

12. SEVERANCE

Under Israeli law, the Company is obligated to make severance payments under certain circumstances to employees of its Israeli subsidiaries on the basis of each individual’s current salary and length of employment. The Company’s liability for severance pay is calculated pursuant to Israel’s Severance Pay Law based on the most recent monthly salary of the employee multiplied by the number of years of employment, as of the balance sheet date. Employees are entitled to one month’s salary for each year of employment or a portion thereof. The gross accrued severance liability as of October 31, 2011 and January 31, 2011 is $55.0 million and $61.9 million, respectively, and is included in “Other long-term liabilities” in the condensed consolidated balance sheets. A portion of such liability is funded by monthly deposits into insurance policies, which are restricted to only be used to satisfy such severance payments. The amount of deposits is classified in “Other assets” within the condensed consolidated balance sheets as severance pay fund in the amounts of $38.1 million and $44.7 million as of October 31, 2011 and January 31, 2011, respectively.

28

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

13. STOCK-BASED COMPENSATION

Stock-based compensation expense associated with awards made by CTI and its subsidiaries are included in the Company’s condensed consolidated statements of operations as follows:

	Three Months Ended October 31,				Nine Months Ended October 31,
	2011		2010		2011		2010
	(In thousands)
Stock options:
Product costs	$	6	$	271	$	133	$	698
Service costs		41		742		268		2,265
Selling, general and administrative		376		4,743		2,443		12,960
Research and development		51		1,241		434		3,904
		474		6,997		3,278		19,827
Restricted/Deferred stock awards:
Product costs		242		234		564		694
Service costs		582		550		1,817		1,864
Selling, general and administrative		6,689		7,389		20,286		22,647
Research and development		673		664		2,136		2,555
		8,186		8,837		24,803		27,760
Total	$	8,660	$	15,834	$	28,081	$	47,587

CTI

CTI’s Restricted Period

As a result of the delinquency in the filing of periodic reports under the Exchange Act since April 2006, CTI had been ineligible to use its registration statements on Form S-8 for the offer and sale of equity securities, including equity securities issuable upon exercise of stock options by employees. Consequently, to ensure that it did not violate the federal securities laws, CTI prohibited the exercise of vested stock options from April 2006 until such time, as it was determined that CTI has filed all periodic reports required in a 12-month period and had an effective registration statement on Form S-8 on file with the SEC. This period is referred to as the “restricted period.” In October 2011, CTI resumed option exercises.

Restricted Awards and Stock Options

CTI granted restricted stock, deferred stock units (“DSU”) awards (collectively “Restricted Awards”) and stock options under its various stock incentive plans.

During the three and nine months ended October 31, 2011, CTI granted DSU awards covering an aggregate of 35,000 shares and 1,360,116 shares, respectively, of CTI’s common stock to certain executive officers and key employees.

During the three and nine months ended October 31, 2010, CTI granted DSU awards covering an aggregate of 223,607 shares and 1,602,607 shares, respectively, of CTI’s common stock to certain executive officers and key employees. The aggregate number of shares underlying DSU awards granted during the nine months ended October 31, 2010 includes a DSU award covering 300,000 shares of CTI’s common stock granted to CTI’s then-President and Chief Executive Officer and a DSU award covering 150,000 shares of CTI’s common stock granted to CTI’s then-Executive Vice President and Chief Financial Officer.

During the three and nine months ended October 31, 2011, 332,339 shares of CTI common stock were issued upon exercise of stock options under CTI’s stock incentive plans for total proceeds of $1.0 million.

As of October 31, 2011, stock options to purchase 8,655,491 shares of CTI’s common stock and Restricted Awards with respect to 1,947,376 shares of CTI’s common stock were outstanding and 1,158,119 shares of CTI’s common stock were available for future grant under CTI’s Stock Incentive Compensation Plans.

29

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The total fair value of Restricted Awards vested during the three and nine months ended October 31, 2011 was $0.4 million and $9.2 million, respectively. As of October 31, 2011, the unrecognized compensation expense related to unvested Restricted Awards was $10.7 million, which is expected to be recognized over a weighted-average period of 2.0 years.

Outstanding stock options as of October 31, 2011 include unvested stock options to purchase 137,534 shares of CTI’s common stock with a weighted-average grant date fair value of $2.34, an expected term of 4.0 years and a total fair value of $0.3 million. The unrecognized compensation cost related to the remaining unvested stock options to purchase CTI’s common stock was $0.2 million, which is expected to be recognized over a weighted-average period of 0.6 years.

The fair value of stock options to purchase CTI’s common stock vested during the three and nine months ended October 31, 2010 was $10 thousand and $0.6 million, respectively.

Verint

Stock Options

Verint Systems has generally not granted stock options subsequent to January 31, 2006. However, in connection with Verint’s acquisition of Vovici on August 4, 2011, stock options to purchase Vovici common stock were converted into stock options to purchase approximately 42,000 shares of Verint Systems’ common stock. In addition, in connection with Verint’s acquisition of Witness on May 25, 2007, stock options to purchase Witness common stock were converted into stock options to purchase approximately 3.1 million shares of Verint Systems’ common stock.

The fair values of the options granted in connection with the acquisition of Vovici were estimated using a Black-Scholes option pricing model with the weighted-average assumptions presented in the following table:

	As of August 4, 2011
Expected life (in years)		5.43
Risk-free interest rate		1.26	%
Expected volatility		50.40	%
Dividend yield		0	%

Based on the above assumptions, the weighted-average fair value of the stock options granted in connection with the acquisition of Vovici was $22.97 per option on the date of acquisition.

Stock option exercises had been suspended during Verint’s extended filing delay period. Following the filing of certain delayed periodic reports in June 2010 with the SEC, Verint’s stock option holders were permitted to resume exercising vested stock options. During the three and nine months ended October 31, 2011, approximately 55,000 and 487,000 shares of Verint Systems’ common stock were issued pursuant to stock option exercises, respectively, for total proceeds of $1.0 million and $9.7 million, respectively. During the three and nine months ended October 31, 2010, approximately 969,000 and 1,695,000 shares of Verint Systems’ common stock were issued pursuant to stock option exercises, respectively, for total proceeds of $19.0 and $30.9 million, respectively. As of October 31, 2011, Verint Systems had approximately 1.3 million stock options outstanding, of which all but 34,000 were exercisable as of such date.

Restricted Stock Awards and Restricted Stock Units

Verint Systems periodically awards shares of restricted stock, as well as restricted stock units, to its directors, officers and other employees. These awards contain various vesting conditions, and are subject to certain restrictions and forfeiture provisions prior to vesting.

During the nine months ended October 31, 2011, Verint Systems granted 0.9 million restricted stock units, substantially all of which were granted during the three months ended April 30, 2011. During the nine months ended October 31, 2010, Verint Systems granted 1.0 million combined restricted stock awards and restricted stock units, all of which were granted during the three months ended April 30, 2010. Forfeitures of restricted stock awards and restricted stock units were not significant during the period. As of October 31, 2011 and 2010, Verint Systems had 1.5 million restricted stock units and 1.9 million of combined restricted stock awards and stock units outstanding, respectively, with weighted-average grant date fair values of $30.22 and $17.23 per unit or per share, respectively.

30

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

As of October 31, 2011, there was approximately $24.7 million of total unrecognized compensation cost, net of estimated forfeitures related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 1.6 years.

Phantom Stock Units

Verint’s liability-classified awards include phantom stock awards. The values of phantom stock track the market price of Verint Systems’ common stock and are therefore subject to volatility, and are settled with cash payments equivalent to the market value of Verint Systems’ common stock upon vesting. Awards under Verint Systems’ stock bonus program, which are settled with a variable number of shares of common stock determined using a discounted average price of Verint Systems’ common stock, as defined in the program, are also liability-classified awards. Upon settlement of liability-classified awards with equity, compensation expense associated with those awards is reported within equity-classified awards.

Verint has issued phantom stock units to certain Verint non-officer employees that settle, or are expected to settle, with cash payments upon vesting. Like equity-settled awards, phantom stock units are awarded with vesting conditions and are subject to certain forfeiture provisions prior to vesting.

During the three and nine months ended October 31, 2011, phantom stock units granted by Verint Systems were not significant. During the nine months ended October 31, 2010, Verint Systems granted 0.2 million phantom stock units, all of which were granted during the three months ended April 30, 2010. Forfeitures of awards in each period were not significant. Total cash payments made upon vesting of phantom stock units were $10.3 million for the nine months ended October 31, 2011, of which an insignificant amount was paid during the three months ended October 31, 2011. Total cash payments made by Verint Systems upon vesting of phantom stock units were $6.6 million and $22.4 million for the three and nine months ended October 31, 2010, respectively. The total accrued liabilities for phantom stock units were $1.8 million and $9.8 million as of October 31, 2011 and January 31, 2011, respectively.

Stock Bonus Program

In September 2011, Verint Systems’ board of directors approved, and in December 2011 revised, a Stock Bonus Program under which eligible Verint employees may receive a portion of their bonus for the year or for the fourth quarter (depending on the employee’s bonus plan) in the form of fully vested shares of Verint Systems’ common stock. As of the date hereof, executive officers of Verint are not eligible to participate in this program. This program is subject to annual funding approval by Verint Systems’ board of directors and an annual cap on the number of shares that can be issued. Subject to these limitations, the number of shares to be issued under the program for a given year is determined using a five-day trailing average price of Verint Systems’ common stock when the awards are calculated, reduced by a discount to be determined by Verint Systems’ board of directors each year. For the fiscal year ending January 31, 2012, Verint Systems’ board of directors has approved up to 150,000 shares of Verint System’s common stock for awards under this program and a discount of 20%. To the extent that this program is not funded in a given year or the number of shares of common stock needed to fully satisfy employee enrollment exceeds the annual cap, the applicable portion of the employee bonuses will revert to being paid in cash. Shares of Verint Systems’ common stock earned under this program for the fiscal year ending January 31, 2012 are expected to be issued during the first half of the fiscal year ending January 31, 2013. All shares of Verint Systems’ common stock awarded pursuant to this program will be issued under one of Verint’s stockholder-approved equity incentive plans.

31

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

14. EQUITY ATTRIBUTABLE TO COMVERSE TECHNOLOGY, INC. AND NONCONTROLLING INTEREST

Noncontrolling interest represents minority shareholders’ interest in Verint Systems and Starhome B.V., the Company’s majority-owned subsidiaries and in Ulticom, Inc., a former CTI majority-owned subsidiary, prior to its sale to a third party on December 3, 2010. The Company recognizes noncontrolling interest as a separate component of “Total equity” in the condensed consolidated balance sheets and recognizes income attributable to the noncontrolling interest as a separate component of “Net income (loss)” in the condensed consolidated statements of operations.

Components of equity attributable to Comverse Technology, Inc.’s and its noncontrolling interest are as follows:

	Nine Months Ended October 31, 2011									Nine Months Ended October 31, 2010
	Comverse Technology, Inc.’s Shareholders’ Equity			Noncontrolling Interest			Total Equity			Comverse Technology, Inc.’s Shareholders’ Equity			Noncontrolling Interest			Total Equity
	(In thousands)
Balance, January 31	$	413,008		$	72,879		$	485,887		$	422,486		$	87,236		$	509,722
Comprehensive loss:
Net loss		(63,202	)		16,462			(46,740	)		(147,751	)		9,620			(138,131	)
Unrealized gains and losses on available-for-sale securities, net of reclassification adjustments and tax		(4,443	)		—			(4,443	)		(10,768	)		(24	)		(10,792	)
Unrealized gains and losses for cash flow hedge positions, net of reclassification adjustments and tax		(216	)		(157	)		(373	)		2,111			419			2,530
Foreign currency translation adjustment		(166	)		(1,794	)		(1,960	)		(2,018	)		(1,943	)		(3,961	)
Total comprehensive loss		(68,027	)		14,511			(53,516	)		(158,426	)		8,072			(150,354	)
Stock-based compensation expense		7,150			—			7,150			8,152			—			8,152
Exercises of stock options		1,861			—			1,861			—			—			—
Impact from equity transactions of subsidiaries and other		15,268			12,035			27,303			56,547			(5,548	)		50,999
Repurchase of common stock		(4,319	)		—			(4,319	)		(480	)		—			(480	)
Balance, October 31	$	364,941		$	99,425		$	464,366		$	328,279		$	89,760		$	418,039

15. DISCONTINUED OPERATIONS

On December 3, 2010 (the “Effective Date”), Ulticom, Inc. completed a merger (the “Merger”) with an affiliate of 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 $0.8 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 October 31, 2011 and January 31, 2011.

32

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

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.

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

	Three Months Ended October 31, 2010			Nine Months Ended October 31, 2010
	(In thousands)
Total revenue	$	9,122		$	25,817
Loss before income tax (provision) benefit		(1,162	)		(4,691	)
Income tax (provision) benefit		215			691
Loss from discontinued operations, net of tax		(947	)		(4,000	)
Tax on discontinued operations		—			—
Total loss from discontinued operations, net of tax	$	(947	)	$	(4,000	)
Loss from discontinued operations, net of tax
Attributable to Comverse Technology, Inc.		(774	)		(2,998	)
Attributable to noncontrolling interest		(173	)		(1,002	)
Total	$	(947	)	$	(4,000	)

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. These amounts were eliminated in the condensed consolidated financial statements. The purchases made by the Company from Ulticom were $0.4 million and $1.1 million, in the three and nine months ended October 31, 2011, respectively.

33

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

16. EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMVERSE TECHNOLOGY, INC.’S SHAREHOLDERS

Basic earnings (loss) per share attributable to Comverse Technology, Inc.’s shareholders is computed using the weighted average number of shares of common stock outstanding. For purposes of computing diluted earnings (loss) per share attributable to Comverse Technology, Inc.’s shareholders, shares issuable upon exercise of stock options and deliverable in settlement of unvested DSU awards are included in the weighted average number of shares of common stock outstanding, except when the effect would be antidilutive. The dilutive impact of subsidiary stock-based awards on Comverse Technology, Inc.’s reported net income is recorded as an adjustment to net income for the three months ended October 31, 2011 and as an adjustment to net loss for the nine months ended October 31, 2011 and three and nine months ended October 31, 2010, respectively, for the purposes of calculating earnings (loss) per share.

The calculation of earnings (loss) per share attributable to Comverse Technology Inc.’s shareholders for the three and nine months ended October 31, 2011 and 2010 was as follows:

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands, except per share data)
Numerator:
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - basic	$	35,690		$	(40,929	)	$	(63,202	)	$	(144,753	)
Adjustment for subsidiary stock options		(38	)		(2,027	)		(88	)		—
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - diluted	$	35,652		$	(42,956	)	$	(63,290	)	$	(144,753	)
Net loss from discontinued operations, attributable to Comverse Technology, Inc. - basic and diluted	$	—		$	(774	)	$	—		$	(2,998	)
Denominator:
Basic weighted average common shares outstanding		205,886			205,265			205,891			205,135
Convertible debt obligations		117			—			—			—
Stock options		404			—			—			—
Restricted awards		322			—			—			—
Diluted weighted average common shares outstanding		206,729			205,265			205,891			205,135
Earnings (loss) per share
Basic
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc.	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.71	)
Loss per share from discontinued operations attributable to Comverse Technology, Inc.		—			(0.00	)		—			(0.01	)
Basic earnnings (loss) per share	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.72	)
Diluted
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc.	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.71	)
Loss per share from discontinued operations attributable to Comverse Technology, Inc.		—			(0.00	)		—			(0.01	)
Diluted earnings (loss) per share	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.72	)

As a result of the Company’s net loss attributable to Comverse Technology, Inc. during the nine months ended October 31, 2011, the diluted loss per share attributable to Comverse Technology, Inc.’s shareholders computation excludes 0.9 million of contingently issuable shares, respectively, and, for the three and nine months ended October 31, 2010, such computation excludes 0.5 million and 0.7 million of contingently issuable shares, respectively, because the effect would be antidilutive.

The FASB’s guidance requires contingently convertible instruments be included in diluted earnings per share, if dilutive, regardless of whether a market price trigger has been met. The Convertible Debt Obligations meet the definition of a contingently convertible instrument. The Convertible Debt Obligations were excluded from the computation of diluted earnings per share attributable to Comverse Technology, Inc.’s shareholders because the effect would be antidilutive for the nine months ended October 31, 2011 and for the three and nine months ended October 31, 2010, respectively.

34

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

17. INCOME TAXES

The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items that occur within the periods presented. The significant differences that impact the effective tax rate relate to the difference between the U.S. federal statutory rate and the rates in foreign jurisdictions, incremental valuation allowances, investments in affiliates and tax contingencies.

For the nine months ended October 31, 2011, the Company recorded an income tax provision of $35.8 million, which represents an effective tax rate of (327.0%). The effective tax rate is negative due to the fact that the Company reported income tax expense on a consolidated pre-tax loss. The Company did not record an income tax benefit on the loss for the period, primarily because it maintains valuation allowances against certain of its U.S. and foreign net deferred tax assets. Further, the benefit of losses in other jurisdictions was offset by foreign withholding taxes, certain tax contingencies and taxes recorded with respect to investments in affiliates.

For the nine months ended October 31, 2010, the Company recorded an income tax provision of $49.5 million, which represents an effective tax rate of (58.4%). The effective tax rate is negative due to the fact that the Company reported income tax expense on a consolidated pre-tax loss, primarily due to the mix of income and losses by jurisdiction. The Company did not record an income tax benefit on the loss for the period, primarily because it maintains a valuation allowance against certain of its U.S. and foreign net deferred tax assets. The income tax provision for the period is comprised of income tax expense recorded in non-loss jurisdictions, withholding taxes, and certain tax contingencies recorded in the nine months ended October 31, 2010.

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more-likely-than-not realizable, the Company establishes a valuation allowance. The Company determined that there is sufficient negative evidence to maintain valuation allowances against certain of the Company’s federal, state and foreign deferred tax assets as a result of historical losses in the most recent three-year period in the U.S. and certain state and foreign jurisdictions. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support its reversal.

The Company regularly assesses the adequacy of the Company’s provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes. As a result, the Company may adjust the reserves for unrecognized tax benefits for the impact of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities, and lapses of statutes of limitation. As of October 31, 2011, the total amount of unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were approximately $137.8 million. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits as of October 31, 2011 could decrease by approximately $10.4 million in the next twelve months as a result of settlements of certain tax audits or lapses of statutes of limitation. Such decreases may involve the payment of additional taxes, the adjustment of deferred taxes, including the need for additional valuation allowances and the recognition of tax benefits. The Company’s income tax returns are subject to ongoing tax examinations in several jurisdictions in which the Company operates. The Company believes that it is reasonably possible that new issues may be raised by tax authorities or developments in tax audits may occur which would require increases or decreases to the balance of reserves for unrecognized tax benefits. However, an estimate of such changes cannot reasonably be made.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes in the condensed consolidated statements of operations. The Company recorded $1.2 million and $2.1 million of interest and penalties related to uncertain tax positions in its provision for income taxes for the three months ended October 31, 2011 and 2010, respectively. Accrued interest and penalties were $58.2 million and $54.9 million as of October 31, 2011 and January 31, 2011, respectively.

35

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

18. BUSINESS SEGMENT INFORMATION

The Company changed its reportable segments during the three months ended October 31, 2011. The change in reportable segments is attributable to the implementation of the Phase II Business Transformation at Comverse that focuses on process reengineering to maximize business performance, productivity and operational efficiency. For a more comprehensive discussion relating to the Phase II Business Transformation, see Note 8, Restructuring. As part of the Phase II Business Transformation, Comverse restructured its operations into new business units that are designed to improve operational efficiency and business performance. Consequently, the Company’s reportable segments now consist of Comverse BSS, Comverse VAS, and Verint. The results of operations of all the other operations of the Company are included in the column captioned “All Other” as part of the Company’s business segment presentation. The operating segments included in “All Other” do not meet the quantitative thresholds required for a separate presentation. The Company has recast the presentation of its segment information for the six months ended July 31, 2011 (which is included in the segment information for the nine months ended October 31, 2011) and for the three and nine months ended October 31, 2010 to reflect these reportable segments. The Company does not maintain balance sheets for the Comverse operating segments. For a more comprehensive discussion relating to the changes in the Company’s reportable segments, see Note 1, Basis of Presentation. Ulticom was a reportable segment of the Company prior to its sale to a third party on December 3, 2010. As a result of the Ulticom 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.

Segment Performance

The Company evaluates its business by assessing the performance of each of its operating segments. CTI’s Chief Executive Officer is its chief operating decision maker (“CODM”). The CODM uses segment performance, as defined below, as the primary basis for assessing the financial results of the operating 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 or remain current in periodic reporting obligations under the federal securities laws which are expected to be eliminated over time, certain non-cash charges, and certain other gains and charges.

Segment performance is computed by management as income (loss) 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 gains and charges. Compliance-related professional fees and compliance-related compensation and other expenses recorded for fiscal periods ended on or before July 31, 2011 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. Compliance-related professional fees and compliance-related compensation and other expenses recorded for the three months ended October 31, 2011 relate to fees and expenses incurred in connection with the timely filing of our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 and the Company’s efforts to remediate material weaknesses in internal control over financial reporting that are expected to be eliminated over time.

In evaluating each segment’s performance, management uses segment revenue, which consists of revenue generated by the segment, including intercompany revenue. Certain segment performance adjustments relate to expenses included in the calculation of income (loss) from operations, while, from time to time, certain segment performance adjustments may be presented as adjustments to revenue. In calculating Verint’s segment performance for the three and nine months ended October 31, 2011, the presentation of segment revenue gives effect to segment revenue adjustments that represent the impact of fair value adjustments required under the FASB’s guidance relating to acquired customer support contracts that would have otherwise been recognized as revenue on a standalone basis with respect to acquisitions consummated by Verint during the periods presented. Verint did not have a segment revenue adjustment for the three or nine months ended October 31, 2010.

36

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The tables below present information about total revenue, total costs and expenses, income (loss) from operations, interest expense, depreciation and amortization, other non-cash items, and segment performance for the three and nine months ended October 31, 2011 and 2010:

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Three Months Ended October 31, 2011:
Revenue	$	117,731		$	112,655		$	199,364		$	23,328		$	—		$	453,078
Intercompany revenue		—			—			—			1,066			(1,066	)		—
Total revenue	$	117,731		$	112,655		$	199,364		$	24,394		$	(1,066	)	$	453,078
Total costs and expenses	$	87,318		$	64,283		$	181,082		$	89,309		$	(1,044	)	$	420,948
Income (loss) from operations	$	30,413		$	48,372		$	18,282		$	(64,915	)	$	(22	)	$	32,130
Computation of segment performance:
Total revenue	$	117,731		$	112,655		$	199,364		$	24,394
Segment revenue adjustment		—			—			5,211			—
Segment revenue	$	117,731		$	112,655		$	204,575		$	24,394
Total costs and expenses	$	87,318		$	64,283		$	181,082		$	89,309
Segment expense adjustments:
Stock-based compensation expense		—			—			6,650			2,010
Amortization of acquisition-related intangibles		4,245			—			9,368			—
Compliance-related professional fees		—			—			3			5,082
Compliance-related compensation and other expenses		(1	)		295			—			1,281
Impairment charges		—			—			—			1,118
Litigation settlements and related costs		—			—			—			4,882
Acquisition-related charges		—			—			2,183			—
Restructuring and integration charges		—			—			—			1,838
Gain on sale of land		—			—			—			—
Other		—			—			2,329			3,155
Segment expense adjustments		4,244			295			20,533			19,366
Segment expenses		83,074			63,988			160,549			69,943
Segment performance	$	34,657		$	48,667		$	44,026		$	(45,549	)
Interest expense	$	—		$	—		$	(7,905	)	$	(287	)	$	—		$	(8,192	)
Depreciation and amortization	$	(5,116	)	$	(1,248	)	$	(13,613	)	$	(2,422	)	$	—		$	(22,399	)
Other non-cash items (1)	$	—		$	—		$	(44	)	$	(1,118	)	$	—		$	(1,162	)

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

37

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Three Months Ended October 31, 2010:
Revenue	$	90,906		$	121,141		$	186,641		$	26,772		$	—		$	425,460
Intercompany revenue		—			—			—			795			(795	)		—
Total revenue	$	90,906		$	121,141		$	186,641		$	27,567		$	(795	)	$	425,460
Total costs and expenses	$	64,888		$	65,248		$	156,248		$	116,992		$	(1,218	)	$	402,158
Income (loss) from operations	$	26,018		$	55,893		$	30,393		$	(89,425	)	$	423		$	23,302
Computation of segment performance:
Total revenue	$	90,906		$	121,141		$	186,641		$	27,567
Segment revenue adjustment		—			—			—			—
Segment revenue	$	90,906		$	121,141		$	186,641		$	27,567
Total costs and expenses	$	64,888		$	65,248		$	156,248		$	116,992
Segment expense adjustments:
Stock-based compensation expense		—			—			13,090			2,744
Amortization of acquisition-related intangibles		4,641			—			7,632			—
Compliance-related professional fees		—			—			823			31,144
Compliance-related compensation and other expenses		47			—			—			1,829
Litigation settlements and related costs		—			—			—			(17,258	)
Acquisition-related charges		—			—			518			—
Restructuring and integration charges		—			—			—			21,800
Gain on sale of land		—			—			—			(2,371	)
Other		—			—			646			1,230
Segment expense adjustments		4,688			—			22,709			39,118
Segment expenses		60,200			65,248			133,539			77,874
Segment performance	$	30,706		$	55,893		$	53,102		$	(50,307	)
Interest expense	$	—		$	—		$	(8,941	)	$	(79	)	$	—		$	(9,020	)
Depreciation and amortization	$	(5,646	)	$	(1,104	)	$	(12,148	)	$	(2,757	)	$	—		$	(21,655	)
Other non-cash items (1)	$	—		$	—		$	(15	)	$	(272	)	$	—		$	(287	)

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

38

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Nine Months Ended October 31, 2011:
Revenue	$	278,403		$	276,234		$	570,655		$	63,650		$	—		$	1,188,942
Intercompany revenue		—			—			—			3,983			(3,983	)		—
Total revenue	$	278,403		$	276,234		$	570,655		$	67,633		$	(3,983	)	$	1,188,942
Total costs and expenses	$	222,142		$	177,217		$	512,129		$	270,702		$	(4,016	)	$	1,178,174
Income (loss) from operations	$	56,261		$	99,017		$	58,526		$	(203,069	)	$	33		$	10,768
Computation of segment performance:
Total revenue	$	278,403		$	276,234		$	570,655		$	67,633
Segment revenue adjustment		—			—			6,173			—
Segment revenue	$	278,403		$	276,234		$	576,828		$	67,633
Total costs and expenses	$	222,142		$	177,217		$	512,129		$	270,702
Segment expense adjustments:
Stock-based compensation expense		—			—			20,841			7,240
Amortization of acquisition-related intangibles		13,241			—			25,664			—
Compliance-related professional fees		—			—			1,011			32,955
Compliance-related compensation and other expenses		2,066			1,531			—			1,885
Impairment charges		—			5			—			1,270
Litigation settlements and related costs		—			—			—			5,444
Acquisition-related charges		—			—			7,377			—
Restructuring and integration charges		—			—			—			14,888
Gain on sale of land		—			—			—			—
Other		—			—			4,335			6,250
Segment expense adjustments		15,307			1,536			59,228			69,932
Segment expenses		206,835			175,681			452,901			200,770
Segment performance	$	71,568		$	100,553		$	123,927		$	(133,137	)
Interest expense	$	—		$	—		$	(24,556	)	$	(769	)	$	—		$	(25,325	)
Depreciation and amortization	$	(15,957	)	$	(3,281	)	$	(39,152	)	$	(7,333	)	$	—		$	(65,723	)
Other non-cash items (1)	$	—		$	—		$	(266	)	$	(1,275	)	$	—		$	(1,541	)

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

39

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Nine Months Ended October 31, 2010:
Revenue	$	242,151		$	341,001		$	539,930		$	69,508		$	—		$	1,192,590
Intercompany revenue		—			—			—			2,271			(2,271	)		—
Total revenue	$	242,151		$	341,001		$	539,930		$	71,779		$	(2,271	)	$	1,192,590
Total costs and expenses	$	205,272		$	222,026		$	489,720		$	352,320		$	(3,308	)	$	1,266,030
Income (loss) from operations	$	36,879		$	118,975		$	50,210		$	(280,541	)	$	1,037		$	(73,440	)
Computation of segment performance:
Total revenue	$	242,151		$	341,001		$	539,930		$	71,779
Segment revenue adjustment		—			—			—			—
Segment revenue	$	242,151		$	341,001		$	539,930		$	71,779
Total costs and expenses	$	205,272		$	222,026		$	489,720		$	352,320
Segment expense adjustments:
Stock-based compensation expense		—			—			39,095			8,492
Amortization of acquisition-related intangibles		13,953			—			22,762			—
Compliance-related professional fees		—			—			27,090			107,492
Compliance-related compensation and other expenses		1,617			326			—			804
Litigation settlements and related costs		—			—			—			(17,148	)
Acquisition-related charges		—			—			1,349			—
Restructuring and integration charges		—			—			—			28,776
Gain on sale of land		—			—			—			(2,371	)
Other		—			—			1,199			269
Segment expense adjustments		15,570			326			91,495			126,314
Segment expenses		189,702			221,700			398,225			226,006
Segment performance	$	52,449		$	119,301		$	141,705		$	(154,227	)
Interest expense	$	—		$	—		$	(20,825	)	$	(416	)	$	—		$	(21,241	)
Depreciation and amortization	$	(17,877	)	$	(4,348	)	$	(36,100	)	$	(7,941	)	$	—		$	(66,266	)
Other non-cash items (1)	$	—		$	—		$	(238	)	$	(595	)	$	—		$	(833	)

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

40

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Supplemental Financial Information

As discussed above, the Company has revised its segment reporting as a result of the implementation of the Phase II Business Transformation at Comverse and the manner in which its CODM reviews the operating performance of Comverse and allocates resources to its operating segments. The Company is providing the following additional information, presenting the results of operations of the previous Comverse reporting segment. The Company believes that such presentation provides useful information to investors regarding the performance of the Company’s Comverse subsidiary, including comparability to previously reported financial information. The additional information provided is not a replacement for the business segment information presented above. The results of operations presented in the column below under “Comverse Other” relate to all the operations of the Company’s Comverse subsidiary, other than the Company’s Comverse BSS and Comverse VAS segments and includes the Comverse MI operating segment, Comverse’s Netcentrex operations and Comverse’s global corporate functions that support its business units. The information presented for “Comverse Other” includes unallocated global corporate function costs that are consistent with prior internal allocation practices. The Company determined that the operating segments of the Company’s Comverse subsidiary included in “Comverse Other” do not meet the aggregation criteria under the segment reporting guidance; specifically they do not have similar economic characteristics, which would permit the presentation of “Comverse Other” results of operations as a separate reportable segment in the revised segment reporting information. Accordingly, such results of operations of “Comverse Other” are included in the Company’s “All Other” column.

Comverse performance represents the operating results of the company’s Comverse subsidiary without the impact of significant expenditures incurred by Comverse in connection with the efforts to become or remain current in periodic reporting obligations under the federal securities laws which are expected to be eliminated over time, certain non-cash charges, and certain other gains and charges.

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Three Months Ended October 31, 2011:
Revenue	$	117,731		$	112,655		$	12,757		$	243,143
Intercompany revenue		—			—			654			654
Total revenue	$	117,731		$	112,655		$	13,411		$	243,797
Total costs and expenses	$	87,318		$	64,283		$	62,695		$	214,296
Income (loss) from operations	$	30,413		$	48,372		$	(49,284	)	$	29,501
Computation of Comverse performance:
Total revenue	$	117,731		$	112,655		$	13,411		$	243,797
Total costs and expenses	$	87,318		$	64,283		$	62,695		$	214,296
Expense adjustments:
Stock-based compensation expense		—			—			974			974
Amortization of acquisition-related intangibles		4,245			—			—			4,245
Compliance-related professional fees		—			—			4,162			4,162
Compliance-related compensation and other expenses		(1	)		295			1,281			1,575
Impairment charges		—			—			1,118			1,118
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			1,838			1,838
Gain on sale of land		—			—			—			—
Other		—			—			(8	)		(8	)
Expense adjustments		4,244			295			9,365			13,904
Expenses after adjustments											200,392
Comverse performance										$	43,405
Interest expense	$	—		$	—		$	(283	)	$	(283	)
Depreciation and amortization	$	(5,116	)	$	(1,248	)	$	(2,202	)	$	(8,566	)
Other non-cash items (1)	$	—		$	—		$	(1,118	)	$	(1,118	)

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

41

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Three Months Ended October 31, 2010:
Revenue	$	90,906		$	121,141		$	16,279		$	228,326
Intercompany revenue		—			—			575			575
Total revenue	$	90,906		$	121,141		$	16,854		$	228,901
Total costs and expenses	$	64,888		$	65,248		$	107,884		$	238,020
Income (loss) from operations	$	26,018		$	55,893		$	(91,030	)	$	(9,119	)
Computation of Comverse performance:
Total revenue	$	90,906		$	121,141		$	16,854		$	228,901
Total costs and expenses	$	64,888		$	65,248		$	107,884		$	238,020
Expense adjustments:
Stock-based compensation expense		—			—			858			858
Amortization of acquisition-related intangibles		4,641			—			—			4,641
Compliance-related professional fees		—			—			23,134			23,134
Compliance-related compensation and other expenses		47			—			1,840			1,887
Impairment charges		—			—			—			—
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			21,800			21,800
Gain on sale of land		—			—			(2,371	)		(2,371	)
Other		—			—			21			21
Expense adjustments		4,688			—			45,282			49,970
Expenses after adjustments											188,050
Comverse performance										$	40,851
Interest expense	$	—		$	—		$	(77	)	$	(77	)
Depreciation and amortization	$	(5,646	)	$	(1,104	)	$	(2,526	)	$	(9,276	)
Other non-cash items (1)	$	—		$	—		$	(272	)	$	(272	)

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

42

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Nine Months Ended October 31, 2011:
Revenue	$	278,403		$	276,234		$	32,624		$	587,261
Intercompany revenue		—			—			2,355			2,355
Total revenue	$	278,403		$	276,234		$	34,979		$	589,616
Total costs and expenses	$	222,142		$	177,217		$	188,840		$	588,199
Income (loss) from operations	$	56,261		$	99,017		$	(153,861	)	$	1,417
Computation of Comverse performance:
Total revenue	$	278,403		$	276,234		$	34,979		$	589,616
Total costs and expenses	$	222,142		$	177,217		$	188,840		$	588,199
Expense adjustments:
Stock-based compensation expense		—			—			2,671			2,671
Amortization of acquisition-related intangibles		13,241			—			—			13,241
Compliance-related professional fees		—			—			14,629			14,629
Compliance-related compensation and other expenses		2,066			1,531			1,885			5,482
Impairment charges		—			5			1,270			1,275
Litigation settlements and related costs		—			—			474			474
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			14,888			14,888
Gain on sale of land		—			—			—			—
Other		—			—			(55	)		(55	)
Expense adjustments		15,307			1,536			35,762			52,605
Expenses after adjustments											535,594
Comverse performance										$	54,022
Interest expense	$	—		$	—		$	(754	)	$	(754	)
Depreciation and amortization	$	(15,957	)	$	(3,281	)	$	(6,676	)	$	(25,914	)
Other non-cash items (1)	$	—		$	—		$	(1,275	)	$	(1,275	)

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

43

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Nine Months Ended October 31, 2010:
Revenue	$	242,151		$	341,001		$	42,223		$	625,375
Intercompany revenue		—			—			1,644			1,644
Total revenue	$	242,151		$	341,001		$	43,867		$	627,019
Total costs and expenses	$	205,272		$	222,026		$	276,297		$	703,595
Income (loss) from operations	$	36,879		$	118,975		$	(232,430	)	$	(76,576	)
Computation of Comverse performance:
Total revenue	$	242,151		$	341,001		$	43,867		$	627,019
Total costs and expenses	$	205,272		$	222,026		$	276,297		$	703,595
Expense adjustments:
Stock-based compensation expense		—			—			1,640			1,640
Amortization of acquisition-related intangibles		13,953			—			—			13,953
Compliance-related professional fees		—			—			63,536			63,536
Compliance-related compensation and other expenses		1,617			326			810			2,753
Impairment charges		—			—			—			—
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			28,776			28,776
Gain on sale of land		—			—			(2,371	)		(2,371	)
Other		—			—			(1,421	)		(1,421	)
Expense adjustments		15,570			326			90,970			106,866
Expenses after adjustments											596,729
Comverse performance										$	30,290
Interest expense	$	—		$	—		$	(406	)	$	(406	)
Depreciation and amortization	$	(17,877	)	$	(4,348	)	$	(7,225	)	$	(29,450	)
Other non-cash items (1)	$	—		$	—		$	(595	)	$	(595	)

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

44

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

19. RELATED PARTY TRANSACTIONS

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 (the “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 October 31, 2011 and January 31, 2011, cumulative, undeclared dividends on the preferred stock were $55.6 million and $45.7 million, respectively. As of October 31, 2011 and January 31, 2011, the liquidation preference of the preferred stock was $348.6 million and $338.7 million, respectively.

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. As of October 31, 2011 and January 31, 2011, the preferred stock could be converted into approximately 10.7 million and 10.4 million shares of Verint Systems’ common stock, respectively.

20. COMMITMENTS AND CONTINGENCIES

Guarantees

The Company provides certain customers in the ordinary course of business with financial performance guarantees which in certain cases are backed by standby letters of credit or surety bonds, the majority of which are cash collateralized and accounted for as restricted cash and bank time deposits. The Company is only liable for the amounts of those guarantees in the event of its nonperformance, which would permit the customer to exercise the guarantee. As of October 31, 2011 and January 31, 2011, the Company believes that it was in compliance with its performance obligations under all contracts for which there is a financial performance guarantee, and that any liabilities arising in connection with these guarantees will not have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows. The Company also obtained bank guarantees primarily to provide customer assurance relating to the performance of certain obligations required by customer agreements for the guarantee of certain payment obligations. These guarantees, which aggregated $52.6 million as of October 31, 2011, are generally scheduled to be released upon the Company’s performance of specified contract milestones, a majority of which are scheduled to be completed at various dates through January 31, 2016.

Warranty Liabilities

Warranty liabilities were not significant to the Company as of October 31, 2011 and January 31, 2011.

Litigation Overview

Except as disclosed below, the Company does not believe that it is currently party to any other claims, assessments or pending legal action that could reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.

Proceedings Related to CTI’s Special Committee Investigations

Overview

On March 14, 2006, CTI announced the creation of a Special Committee of its Board of Directors (the “Special Committee”) composed of outside directors to review CTI’s historic stock option grant practices and related accounting matters, including, but not limited to, the accuracy of the stated dates of option grants and whether all proper corporate procedures were followed. In November 2006, the Special Committee’s investigation was expanded to other financial and accounting matters, including the recognition of revenue related to certain contracts, errors in the recording of certain deferred tax accounts, the misclassification of certain expenses, the misuse of accounting reserves and the misstatement of backlog. The Special Committee issued its report on January 28, 2008. Following the commencement of the Special Committee’s investigation, CTI, certain of its subsidiaries and some of CTI’s former directors and officers and a current director were named as defendants in several class and derivative actions, and CTI commenced direct actions against certain of its former officers and directors.

45

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Petition for Remission of Civil Forfeiture

In July 2006, the U.S. Attorney filed a forfeiture action against certain accounts of Jacob “Kobi” Alexander, CTI’s former Chairman and Chief Executive Officer, that resulted in the United States District Court for the Eastern District entering an order freezing approximately $50.0 million of Mr. Alexander’s assets. In order to ensure that CTI receives the assets in Mr. Alexander’s frozen accounts, in July 2007, CTI filed with the U.S. Attorney a Petition for Remission of Civil Forfeiture requesting remission of any funds forfeited by Mr. Alexander. The United States District Court entered an order on November 30, 2010 directing that the assets in such accounts be liquidated and remitted to CTI. The process of liquidating such assets has been completed and the proceeds from the assets in such accounts have been transferred to a class action settlement fund in conjunction with the settlements of the Direct Actions (as defined below), the consolidated shareholder class action and shareholder derivative actions. The agreement to settle the shareholder class action was approved by the court in which such action was pending on June 23, 2010. The agreement to settle the federal and state derivative actions was approved by the courts in which such actions were pending on July 1, 2010 and September 23, 2010, respectively.

Direct Actions

Based on the Special Committee’s findings, CTI commenced litigations against three former executive officers as a result of their misconduct relating to historical stock option grants. On January 16, 2008, CTI commenced an action against Mr. Alexander, its former Chairman and Chief Executive Officer, and William F. Sorin, its former Senior General Counsel and director, in the Supreme Court of the State of New York, captioned Comverse Technology, Inc. v. Alexander et al., No. 08/600142. On January 17, 2008, CTI commenced an action against David Kreinberg, its former Executive Vice President and Chief Financial Officer, in the Superior Court of New Jersey, captioned Comverse Technology, Inc. v. Kreinberg (N.J. Super. Ct.). That action was discontinued and on January 8, 2009, a separate action was commenced against Mr. Kreinberg in the Supreme Court of the State of New York, captioned Comverse Technology, Inc. v. Kreinberg, No. 09/600052. The actions captioned Comverse Technology, Inc. v. Alexander et al. and Comverse Technology, Inc. v. Kreinberg are referred to collectively as the “Direct Actions.” The Direct Actions asserted claims for fraud, breach of fiduciary duty, and unjust enrichment in connection with the defendants’ conduct related to historical stock option grants. As part of the agreement to settle the federal and state derivative actions, which was approved by the courts in which such actions were pending on July 1, 2010 and September 23, 2010, respectively, CTI dismissed the Direct Actions on September 29, 2010.

Shareholder Derivative Actions

Beginning on or about April 11, 2006, several purported shareholder derivative lawsuits were filed in the New York Supreme Court for New York County and in the United States District Court for the Eastern District of New York. The defendants in these actions included certain of CTI’s former directors and officers and a current director and, in the state court action, CTI’s independent registered public accounting firm. CTI was named as a nominal defendant only. The consolidated complaints in both the state and federal actions alleged that the defendants breached certain duties to CTI and that certain former officers and directors were unjustly enriched (and, in the federal action, violated the federal securities laws, specifically Sections 10(b) and 14(a) of the Exchange Act, and Rules 10(b)-5 and 14(a)-9 promulgated thereunder) by, among other things: (i) allowing and participating in an alleged scheme to backdate the grant dates of employee stock options to provide improper benefits to the recipients; (ii) allowing insiders, including certain of the defendants, to profit by trading in CTI’s stock while allegedly in possession of material inside information; (iii) failing to oversee properly or implement procedures to detect and prevent the alleged improper practices; (iv) causing CTI to issue allegedly materially false and misleading proxy statements and to file other allegedly false and misleading documents with the SEC; and (v) exposing CTI to civil liability. The complaints sought unspecified damages and various forms of equitable relief.

The state court derivative actions were consolidated into one action captioned, In re Comverse Technology, Inc. Derivative Litigation, No. 601272/2006. On August 7, 2007, the New York Supreme Court dismissed the consolidated state court derivative action, granting CTI’s motion to dismiss. That decision was successfully appealed by the plaintiffs to the Appellate Division of the New York State Supreme Court which, in its decision issued on October 7, 2008, reinstated the action.

The federal court derivative actions were consolidated into one action captioned, In re Comverse Technology, Inc. Derivative Litigation, No. 06-CV-1849. CTI filed a motion to stay that action in deference to the state court proceeding. That motion was denied by the court. On October 16, 2007, CTI filed a motion to dismiss the federal court action based on the plaintiffs’ failure to make a demand on the Board and the state court’s ruling that such a demand was required. On the same date, various individual defendants also filed motions to dismiss the complaint. On April 22, 2008, the court ordered that all dismissal motions would be held in abeyance pending resolution of the appeal of the New York State Supreme Court’s decision in the state court derivative action.

46

COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

On December 17, 2009, the parties to the shareholder derivative actions entered into an agreement to settle these actions, which settlement was approved by the courts in which the federal and state derivative actions were pending on July 1, 2010 and September 23, 2010, respectively (see Settlement Agreements below). The Company recorded a charge associated with the settlement during the fiscal year ended January 31, 2007.

Shareholder Class Action

Beginning on or about April 19, 2006, class action lawsuits were filed by persons identifying themselves as CTI shareholders, purportedly on behalf of a class of CTI’s shareholders who purchased its publicly traded securities. Two actions were filed in the United States District Court for the Eastern District of New York, and three actions were filed in the United States District Court for the Southern District of New York. On August 28, 2006, the actions pending in the United States District Court for the Southern District of New York were transferred to the United States District Court for the Eastern District of New York. A consolidated amended complaint under the caption In re Comverse Technology, Inc. Sec. Litig., No. 06-CV- 1825, was filed by the court-appointed Lead Plaintiff, Menorah Group, on March 23, 2007. The consolidated amended complaint was brought on behalf of a purported class of CTI shareholders who purchased CTI’s publicly traded securities between April 30, 2001 and November 14, 2006. The complaint named CTI and certain of its former officers and directors as defendants and alleged, among other things, violations of Sections 10(b) and 14(a) of the Exchange Act, Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act in connection with prior statements made by CTI with respect to, among other things, its accounting treatment of stock options. The action sought compensatory damages in an unspecified amount.

The parties to this action entered into a settlement agreement on December 16, 2009, which was amended on June 19, 2010 and approved by the court in which such action was pending on June 23, 2010 (see Settlement Agreements below). The Company recorded a charge associated with the settlement during the fiscal year ended January 31, 2007.

Settlement Agreements

On December 16, 2009 and December 17, 2009, CTI entered into agreements to settle the consolidated shareholder class action and consolidated shareholder derivative actions described above, respectively. The agreement to settle the consolidated shareholder class action was amended on June 19, 2010. Pursuant to the amendment, CTI agreed to waive certain rights to terminate the settlement in exchange for a deferral of the timing of scheduled payments of the settlement consideration and the right to a credit (the “Opt-out Credit”) in respect of a portion of the settlement funds that would have been payable to a class member that elected not to participate in and be bound by the settlement. In connection with such settlements, CTI dismissed its Direct Actions against Messrs. Alexander, Kreinberg and Sorin, who, in turn, dismissed any counterclaims they filed against CTI.

As part of the settlement of the consolidated shareholder class action, as amended, CTI agreed to make payments to a class action settlement fund in the aggregate amount of up to $165.0 million that were paid as follows:

• $1.0 million that was paid following the signing of the settlement agreement in December 2009;

• $17.9 million that was paid in July 2010 (representing an agreed $21.5 million payment less a holdback of $3.6 million in respect of the then anticipated Opt-out Credit);

• $30.0 million that was paid in May 2011;

• $20.0 million that was paid in October 2011; and

• $91.3 million (representing the remaining $92.5 million less the amount by which the Opt-out Credit exceeded the holdback described above) that was paid subsequent to October 31, 2011, of which $82.5 million was paid through the issuance of 12,462,236 shares of CTI’s common stock and the remainder paid in cash.

Under the terms of the settlement agreement, if CTI received net cash proceeds from the sale of certain ARS held by it in an aggregate amount in excess of $50.0 million, CTI was required to use $50.0 million of such proceeds to prepay the settlement amounts referred to above and, if CTI received net cash proceeds from the sale of such ARS in an aggregate amount in excess of $100.0 million, CTI was required to use an additional $50.0 million of such proceeds to prepay the settlement amounts referred to above. In addition, CTI granted a security interest for the benefit of the plaintiff class in the account in which CTI held its ARS (other than the ARS that were held in an account with UBS) and the proceeds from any sales thereof, restricting CTI’s ability to use the proceeds

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

from sales of such ARS until the amounts payable under the settlement agreement are paid in full. As of October 31, 2011 and January 31, 2011, the Company had $14.1 million and $33.4 million, respectively, of cash received from sales and redemptions of ARS (including interest thereon) to which these provisions of the settlement agreement applied which were classified in “Restricted cash and bank time deposits” within the condensed consolidated balance sheets. Following the payment by CTI of the remaining amounts payable under the settlement agreement, the security interest for the benefit of the plaintiff class in the Company’s account terminated.

In addition, as part of the settlements of the Direct Actions, the consolidated shareholder class action and shareholder derivative actions, Mr. Alexander agreed to pay $60.0 million to CTI to be deposited into the derivative settlement fund and then transferred into the class action settlement fund. All amounts payable by Mr. Alexander have been paid. Also, as part of the settlement of the shareholder derivative actions, Mr. Alexander transferred to CTI shares of Starhome B.V. representing 2.5% of its outstanding share capital.

Pursuant to the amendment, Mr. Alexander agreed to waive certain rights to terminate the settlement and received the right to a credit in respect of a portion of the settlement funds that would have been payable to a class member that elected not to participate in and be bound by the settlement. CTI’s settlement of claims against it in the class action was not contingent upon Mr. Alexander satisfying his payment obligations. Certain other defendants in the Direct Actions and the shareholder derivative actions have paid to CTI an aggregate of $1.4 million and certain former directors relinquished certain outstanding unexercised stock options. As part of the settlement of the shareholder derivative actions, CTI paid, in October 2010, $9.4 million to cover the legal fees and expenses of the plaintiffs. In September 2010, CTI received insurance proceeds of $16.5 million under its directors’ and officers’ insurance policies in connection with the settlements of the shareholder derivative actions and the consolidated shareholder class action.

Under the terms of the settlements, Mr. Alexander and his wife relinquished their claims to the assets in Mr. Alexander’s frozen accounts that were subject to the forfeiture action, and the United States District Court entered an order on November 30, 2010 directing that the assets in such accounts be liquidated and remitted to CTI. The process of liquidating such assets has been completed and the proceeds from the assets in such accounts have been transferred to the class action settlement fund.

The agreement to settle the consolidated shareholder class action, as amended, was approved by the court in which such action was pending on June 23, 2010. The agreement to settle the federal and state derivative actions was approved by the courts in which such actions were pending on July 1, 2010 and September 23, 2010, respectively.

As of October 31, 2011 and January 31, 2011, the Company had accrued liabilities for this matter of $96.2 million and $146.1 million, respectively.

Opt-Out Plaintiffs’ Action

On September 28, 2010, an action was filed in the United States District Court for the Eastern District of New York under the caption Maverick Fund, L.D.C., et al. v. Comverse Technology, Inc., et al., No. 10-cv-4436. Plaintiffs alleged that they were CTI shareholders who purchased CTI’s publicly traded securities in 2005, 2006 and 2007. The plaintiffs, Maverick Fund, L.D.C. and certain affiliated investment funds, opted not to participate in the settlement of the consolidated shareholder class action described above. The complaint named CTI, its former Chief Executive Officer and certain of its former officers and directors as defendants and alleged, among other things, violations of Sections 10(b), 18 and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and negligent misrepresentation in connection with prior statements made by CTI with respect to, among other things, its accounting treatment of stock options, other accounting practices at CTI and the timeline for CTI to become current in its periodic reporting obligations. The action sought compensatory damages in an unspecified amount. The Company filed a motion to dismiss the complaint in December 2010, and a hearing on the motion was conducted on March 4, 2011. On July 12, 2011, the Court dismissed the plaintiffs’ claims related to their purchase of CTI’s securities in 2007 and the claims against Andre Dahan, CTI’s former President and Chief Executive Officer, and Avi Aronovitz, CTI’s former Interim Chief Financial Officer, and otherwise denied CTI’s motion to dismiss. In December 2011, the parties agreed to a settlement in principle, pursuant to which CTI would be required to pay the plaintiffs approximately $9.5 million. The Company recorded an additional liability of $4.9 million in connection with this matter as of October 31, 2011, representing the amount by which the anticipated settlement amount exceeds the Opt-out Credit and certain other credits under the settlement agreement of the consolidated shareholder class action.

Israeli Optionholder Class Actions

CTI and certain of its subsidiaries were named as defendants in four potential class action litigations in the State of Israel involving claims to recover damages incurred as a result of purported negligence or breach of contract that allegedly prevented certain current or former employees from exercising certain stock options. The Company intends to vigorously defend these actions.

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Two cases were filed in the Tel Aviv District Court against CTI on March 26, 2009, by plaintiffs Katriel (a former Comverse Ltd. employee) and Deutsch (a former Verint Systems Ltd. employee). The Katriel case (Case Number 1334/09) and the Deutsch case (Case Number 1335/09) both seek to approve class actions to recover damages that are claimed to have been incurred as a result of CTI’s negligence in reporting and filing its financial statements, which allegedly prevented the exercise of certain stock options by certain employees and former employees. By stipulation of the parties, on September 30, 2009, the court ordered that these cases, including all claims against CTI in Israel and the motion to approve the class action, be stayed until resolution of the actions pending in the United States regarding stock option accounting, without prejudice to the parties’ ability to investigate and assert the unique facts, claims and defenses in these cases. To date, the stay has not yet been lifted.

Two cases were also filed in the Tel Aviv Labor Court by plaintiffs Katriel and Deutsch, and both seek to approve class actions to recover damages that are claimed to have been incurred as a result of breached employment contracts, which allegedly prevented the exercise by certain employees and former employees of certain CTI and Verint Systems stock options, respectively. The Katriel litigation (Case Number 3444/09) was filed on March 16, 2009, against Comverse Ltd., and the Deutsch litigation (Case Number 4186/09) was filed on March 26, 2009, against Verint Systems Ltd. The Tel Aviv Labor Court has ruled that it lacks jurisdiction, and both cases have been transferred to the Tel Aviv District Court. The Katriel case has been consolidated with the Katriel case filed in the Tel Aviv District Court (Case Number 1334/09) and is subject to the stay discussed above. At the preliminary hearing in the Tel Aviv District Court in October 2011, the Deutsch case was also made subject to the stay discussed above.

The Company did not accrue for these matters as the potential loss is currently not probable or estimable.

SEC Civil Actions

Promptly following the discovery of the errors and improprieties related to CTI’s historic stock option grant practices and the creation of the Special Committee, CTI, through the Special Committee and its representatives, met with and informed the staff of the SEC of the underlying facts and the initiation of the Special Committee investigation. In March 2008, CTI received a “Wells Notice” from the staff of the SEC arising out of the SEC’s investigation of CTI’s historical stock option grant practices and certain unrelated accounting matters. The “Wells Notice” provided notification that the staff of the SEC intended to recommend that the SEC bring civil actions against CTI alleging violations of certain provisions of the federal securities laws.

On June 18, 2009, a settlement between CTI and the SEC with respect to such matters was announced. On that date, the SEC filed a civil action against CTI in the United States District Court for the Eastern District of New York alleging violations of certain provisions of the federal securities laws regarding CTI’s improper backdating of stock options and other accounting practices, including the improper establishment, maintenance, and release of reserves, the reclassification of certain expenses, and the improper calculation of backlog of sales orders. Simultaneous with the filing of the complaint, without admitting or denying the allegations therein, CTI consented to the issuance of a final judgment (the “Final Judgment”) that was approved by the United States District Court for the Eastern District of New York on June 25, 2009. Pursuant to the Final Judgment, CTI is permanently restrained and enjoined from any future violations of the federal securities laws addressed in the complaint and was ordered to become current in its periodic reporting obligations under Section 13(a) of the Exchange Act by no later than February 8, 2010. No monetary penalties were assessed against CTI in conjunction with this settlement. These matters were the result of actions principally taken by senior executives of CTI who were terminated in 2006. CTI, however, was unable to file the requisite periodic reports by February 8, 2010.

As a result of CTI’s inability to become current in its periodic reporting obligations under the federal securities laws in accordance with the final judgment and court order by February 8, 2010, CTI received an additional “Wells Notice” from the staff of the SEC on February 4, 2010. The “Wells Notice” provided notification that the staff of the SEC intended to recommend that the SEC institute an administrative proceeding to determine whether, pursuant to Section 12(j) of the Exchange Act, the SEC should suspend or revoke the registration of each class of CTI’s securities registered under Section 12 of the Exchange Act. Under the process established by the SEC, recipients of a “Wells Notice” have the opportunity to make a Wells Submission before the staff of the SEC makes a formal recommendation to the SEC regarding what action, if any, should be brought by the SEC. On February 25, 2010, CTI submitted a Wells Submission to the SEC in response to this Wells Notice. On March 23, 2010, the SEC issued an Order Instituting Administrative Proceedings (“OIP”) pursuant to Section 12(j) of the Exchange Act to suspend or revoke the registration of CTI’s common stock because, prior to the filing of the Annual Report on Form 10-K for the fiscal years ended January 31, 2009, 2008, 2007 and 2006 with the SEC on October 4, 2010, CTI had not filed an Annual Report on Form 10-K since April 20, 2005 or a Quarterly Report on Form 10-Q since December 12, 2005. On July 22, 2010, the Administrative Law Judge issued an initial decision to revoke the registration of CTI’s common stock. The initial decision did not become effective until the SEC issued a final order, which would indicate the date on which sanctions, if any, would take effect. On August 17, 2010, the SEC issued an order granting a petition by

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

CTI for review of the Administrative Law Judge’s initial decision to revoke the registration of CTI’s common stock and setting forth a briefing schedule under which the final brief was filed on November 1, 2010. On February 17, 2011, the SEC issued an order directing the parties to file additional briefs in the matter and such briefs were filed on March 7, 2011. In May 2011, the SEC granted CTI’s motion for oral argument and such argument was scheduled for July 14, 2011.

On July 13, 2011, CTI entered into an agreement in principle with the SEC’s Division of Enforcement regarding the terms of a settlement of the Section 12(j) administrative proceeding, which terms were subsequently reflected in an Offer of Settlement made on July 26, 2011 and which the SEC accepted on September 8, 2011. Under the terms of the settlement, the SEC’s Division of Enforcement agreed to recommend that the SEC resolve the Section 12(j) administrative proceeding against CTI if CTI filed its Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2010, July 31, 2010 and October 31, 2010 by 5:30 p.m. EDT on September 9, 2011 (which reports were filed on July 28, 2011) and its Quarterly Report for the fiscal quarter ended July 31, 2011 on a timely basis (which report was filed timely on September 8, 2011).

On September 16, 2011, the SEC ordered termination of the Section 12(j) administrative proceeding and entry of final judgment without the imposition of a remedy under such section. With the entry of final judgment, the Section 12(j) administrative proceeding has been resolved.

Investigation of Alleged Unlawful Payments

On March 16, 2009, CTI disclosed that the Audit Committee of its Board of Directors was conducting an internal investigation of alleged improper payments made by certain Comverse employees and external sales agents in foreign jurisdictions in connection with the sale of certain products. The Audit Committee found that the conduct at issue did not involve CTI’s current executive officers. The Audit Committee also reviewed Comverse’s other existing and prior arrangements with agents. When the Audit Committee commenced the investigation, CTI voluntarily disclosed to the SEC and the Department of Justice (the “DOJ”) these facts and advised that the Audit Committee had initiated an internal investigation and that the Audit Committee would provide the results of its investigation to the agencies. On April 27, 2009, the SEC advised CTI that it was investigating the matter and issued a subpoena to CTI in connection with its investigation. The Audit Committee provided information to, and cooperated fully with, the DOJ and the SEC with respect to its findings of the internal investigation and resulting remedial action.

On April 7, 2011, CTI entered into a non-prosecution agreement with the DOJ and the SEC submitted a settlement agreement with CTI to the United States District Court for the Eastern District of New York for its approval, which was obtained on April 12, 2011. These agreements resolved allegations that CTI and certain of its foreign subsidiaries violated the books and records and internal controls provisions of the U.S. Foreign Corrupt Practices Act (the “FCPA”) by inaccurately recording certain improper payments made from 2003 through 2006 by certain former employees and an external sales agent of Comverse Ltd. or its subsidiaries, in connection with the sale of certain products in foreign jurisdictions.

Under the non-prosecution agreement with the DOJ, CTI paid a fine of $1.2 million to the DOJ and agreed to continue to implement improvements in its internal controls and anti-corruption practices and policies. Under its settlement agreement with the SEC, CTI paid approximately $1.6 million in disgorgement and pre-judgment interest and is required under a conduct-based injunction to comply with the books and records and internal controls provisions of the FCPA.

The Company recorded charges associated with this matter during the fiscal year ended January 31, 2009.

Other Legal Proceedings

In addition to the litigation discussed above, the Company is, and in the future, may be involved in various other lawsuits, claims and proceedings incident to the ordinary course of business. The results of litigation are inherently unpredictable. Any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, the Company believes that the ultimate resolution of these current matters will not have a material adverse effect on its condensed consolidated financial statements taken as a whole.

Indemnifications

In the normal course of business, the Company provides indemnifications of varying scopes to customers against claims of intellectual property infringement made by third parties arising from the use of the Company’s products. The Company evaluates its indemnifications for potential losses and in its evaluation considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Generally, the Company has not encountered significant charges as a result of such indemnification provisions.

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COMVERSE TECHNOLOGY, INC. SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

To the extent permitted under state laws or other applicable laws, the Company has agreements where it will indemnify its directors and officers for certain events or occurrences while the director or officer is, or was, serving at the Company’s request in such capacity. The indemnification period covers all pertinent events and occurrences during the Company’s director’s or officer’s lifetime. The maximum potential amount of future payments that the Company could be required to make under these indemnification agreements is unlimited; however, the Company has certain director and officer insurance coverage that limits the Company’s exposure and enables the Company to recover a portion of any future amounts paid. The Company is not able to estimate the fair value of these indemnification agreements in excess of applicable insurance coverage, if any.

21. SUBSEQUENT EVENTS

Final Payment under Consolidated Shareholder Class Action Settlement Agreement and Release of ARS

Subsequent to October 31, 2011, CTI paid the remaining amount payable under the settlement agreement of the consolidated shareholder class action of $91.3 million, of which $82.5 million was paid through the issuance of 12,462,236 shares of CTI’s common stock and the remainder paid in cash. Following the payment by CTI of such amounts, the security interest for the benefit of the plaintiff class in the account in which CTI held its ARS and cash proceeds from sales and redemptions of ARS (including interest thereon) terminated.

Approval of the 2011 Stock Incentive Compensation Plan

In September 2011, CTI’s Board approved the Comverse Technology, Inc. 2011 Stock Incentive Compensation Plan (the “2011 Incentive Plan”) and such plan was approved by CTI’s shareholders at the annual shareholder meeting held on November 16, 2011. A total of 22,000,000 shares of CTI common stock are reserved for issuance under the 2011 Incentive Plan. Equity awards may be granted under the 2011 Incentive Plan to employees, non-employee directors and consultants as well as employees and consultants of our subsidiaries and affiliates.

Sale of ARS

In November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash.

Acquisitions

In November 2011, Verint acquired technology and other assets in two separate transactions that both qualify as business combinations. Combined consideration for these acquisitions, including potential future contingent consideration, will be less than $10.0 million. The impacts of these acquisitions will not be material to the Company’s condensed consolidated financial statements.

Settlement of Opt-Out Plaintiffs’ Action

On September 28, 2010, an action was filed in the United States District Court for the Eastern District of New York under the caption Maverick Fund, L.D.C., et al. v. Comverse Technology, Inc., et al., No. 10-cv-4436. Plaintiffs alleged that they were CTI shareholders who purchased CTI’s publicly traded securities in 2005, 2006 and 2007. The plaintiffs, Maverick Fund, L.D.C. and certain affiliated investment funds, opted not to participate in the settlement of the consolidated shareholder class action. In December 2011, the parties agreed to a settlement in principle, pursuant to which CTI would be required to pay the plaintiffs approximately $9.5 million. The Company recorded an additional liability of $4.9 million in connection with this matter as of October 31, 2011, representing the amount by which the anticipated settlement amount exceeds the Opt-out Credit and certain other credits under the settlement agreement of the consolidated shareholder class action. See Note 20, Commitments and Contingencies.

Verint’s New Lease Agreement

In November 2011, Verint executed a lease agreement for a new facility in the Americas region. This new facility will be occupied in connection with the expiration of Verint’s existing facility lease in the area at the end of November 2012. The lease term extends through September 2026. The aggregate minimum lease commitment over the term of this new lease, excluding operating expenses, is approximately $36.1 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and related notes included in Item 15 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2011 (or the 2010 Form 10-K) and the condensed consolidated financial statements and related notes included in this Quarterly Report. This discussion and analysis contains forward-looking statements based on current expectations relating to future events and our future financial performance that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Forward-Looking Statements” on page i of this Quarterly Report. Percentages and amounts within this section may not calculate precisely due to rounding differences.

OVERVIEW

Corporate Structure

CTI is a holding company that conducts business through its subsidiaries, principally, Comverse, Inc., Verint Systems and Starhome, B.V.

Comverse

Comverse is a leading provider of software-based products, systems and related services that:

• provide converged, prepaid and postpaid billing and active customer management for wireless, wireline and cable network operators (referred to as Business Support Systems or BSS) delivering a value proposition designed to ensure timely and efficient service monetization and enable real-time offers to be made to end users based on all relevant customer profile information;

• enable wireless and wireline (including cable) network-based Value-Added Services (or VAS), comprised of two categories—Voice and Messaging—that include voicemail, visual voicemail, call completion, short messaging service (or SMS) text messaging (or texting), multimedia picture and video messaging, and Internet Protocol (or IP) communications; and

• provide wireless users with optimized access to mobile Internet websites, content and applications, and generate data usage and revenue for wireless operators.

Comverse’s products and services are designed to generate carrier voice and data network traffic, revenue and customer loyalty, monetize network operators’ services and improve operational efficiency for more than 450 wireless and wireline network communication service provider customers in more than 125 countries, including the majority of the world’s 100 largest wireless network operators.

As previously disclosed, during the fiscal year ended January 31, 2011, we commenced certain initiatives to improve our cash position, including a plan to restructure the operations of Comverse with a view towards aligning operating costs and expenses with anticipated revenue. Comverse successfully implemented the first phase of such plan, significantly reducing its annualized operating costs. During the nine months ended October 31, 2011, Comverse implemented a second phase of measures (referred to as the Phase II Business Transformation) that focuses on process reengineering to maximize business performance, productivity and operational efficiency. 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 leading market position in VAS and implementing further cost savings through operational efficiencies and strategic focus.

As part of the Phase II Business Transformation, Comverse restructured its operations into new business units that are designed to improve operational efficiency and business performance. Comverse’s business units consist of the following:

• BSS, which conducts Comverse’s converged, prepaid and postpaid billing and active management systems business and includes groups engaged in product management, professional services, research and development and product sales;

• VAS, which conducts Comverse’s value-added services business and includes groups engaged in VAS delivery, voice product research and development, messaging product research and development and product sales; and

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• Mobile Internet (or Comverse MI), which is responsible for Comverse’s mobile Internet products and includes groups engaged in product management, solution engineering, delivery, research and development and product sales.

In addition, Comverse created Global Services (or Comverse GLS), which provides customer post-delivery services and includes groups engaged in support services for BSS, VAS and mobile Internet products, services sales and product management.

Certain Comverse business operations are conducted through the following global corporate functions:

• Customer Facing Group, which is primarily engaged in providing overall customer account management and sales for all product lines;

• Operations Group, which provides centralized information technology, procurement, supply chain management and global business operations services to all business units; and

• Strategy and innovation, finance, legal and human resources groups, which continue to support all business operations.

Comverse is a wholly-owned subsidiary of CTI.

Verint

Verint is a global leader in Actionable Intelligence^® solutions and value-added services. Verint’s solutions enable organizations of all sizes to make timely and effective decisions to improve enterprise performance and enhance safety. More than 10,000 organizations in over 150 countries—including more than 85% of the Fortune 100—use Verint’s Actionable Intelligence solutions to capture, distill, and analyze complex and underused information sources, such as voice, video, and unstructured text.

In the enterprise market, Verint’s Enterprise Intelligence solutions help organizations enhance customer service operations in contact centers, branches and back-office environments to increase customer satisfaction, reduce operating costs, identify revenue opportunities, and improve profitability. In the security intelligence market, Verint’s Video Intelligence, public safety, and Communications Intelligence solutions are vital to government and commercial organizations in their efforts to protect people and property and neutralize terrorism and crime.

As of November 15, 2011, CTI held 41.9% of the outstanding shares of Verint Systems’ common stock and 100% of the outstanding shares of Series A Convertible Perpetual Preferred Stock, par value $0.001 per share, of Verint Systems (or the preferred stock), giving CTI aggregate beneficial ownership of 54.4% of Verint Systems’ common stock. The common stock of Verint Systems is publicly traded and Verint Systems files separate periodic and current reports with the SEC, which are available on its website, www.verint.com, and on the SEC’s website at www.sec.gov.

Starhome

Starhome is a provider of wireless service mobility solutions that enhance international roaming. Wireless operators use Starhome’s software-based solutions to generate additional revenue and to improve profitability by directing international roaming traffic to preferred networks and by providing a wide range of services to subscribers traveling outside their home network.

As of November 15, 2011, CTI held 66.5% of Starhome B.V., a privately-held company.

Significant Events

During the three months ended October 31, 2011 and subsequent thereto, the following significant events occurred:

Timely Filing of Periodic Reports. During the three months ended October 31, 2011, CTI resumed the timely filing of its periodic reports with the filing of its Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011. Expenses for

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accounting, tax and legal fees incurred in connection with the filing of this report and to remediate material weaknesses in internal control over financial reporting, declined compared to three months ended July 31, 2011 but continued to be significant. During the three months ended October 31, 2011, these expenses aggregated $5.1 million and were primarily incurred by CTI.

Resolution of SEC Section 12(j) Administrative Proceeding. As previously disclosed, on March 23, 2010, the SEC instituted an administrative proceeding pursuant to Section 12(j) of the Exchange Act to revoke the registration of CTI’s common stock because of CTI’s previous failure to file certain periodic reports with the SEC. On July 13, 2011, CTI entered into an agreement in principle with the SEC’s Division of Enforcement regarding the terms of a settlement of the Section 12(j) administrative proceeding, which terms were subsequently reflected in an Offer of Settlement made on July 26, 2011 and which the SEC accepted on September 8, 2011. Under the terms of the settlement, the SEC’s Division of Enforcement agreed to recommend that the SEC resolve the Section 12(j) administrative proceeding against CTI if CTI filed its Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2010, July 31, 2010 and October 31, 2010 by 5:30 p.m. EDT on September 9, 2011 (which reports were filed on July 28, 2011) and its Quarterly Report for the fiscal quarter ended July 31, 2011 on a timely basis (which report was filed timely on September 8, 2011). On September 16, 2011, the SEC ordered termination of the Section 12(j) administrative proceeding and entry of final judgment without the imposition of a remedy under such section. With the entry of final judgment, the Section 12(j) administrative proceeding has been resolved.

Relisting on NASDAQ. In September 2011, NASDAQ approved CTI’s application for the relisting of its common stock on The NASDAQ Global Select Market and trading resumed on September 23, 2011.

Final Payments under Consolidated Shareholder Class Action Settlement Agreement and Release of ARS. In December 2009, CTI entered into an agreement, which was amended in June 2010, to settle the consolidated shareholder class action. In October 2011, CTI paid $20.0 million in cash due under the settlement agreement. Subsequent to October 31, 2011, CTI paid the remaining amount payable under the settlement agreement of the consolidated shareholder class action of $91.3 million, of which $82.5 million was paid through the issuance of 12,462,236 shares of CTI’s common stock and the remainder paid in cash. Following the payment by CTI of such amounts, the security interest for the benefit of the plaintiff class in the account in which CTI held its auction rate securities (or ARS) and cash proceeds from sales and redemptions of ARS (including interest thereon) terminated.

Verint’s Business Acquisitions. During the three months ended October 31, 2011, Verint completed three business combinations that consisted of the acquisitions of Global Management Technologies Corporation (or GMT), a privately-held provider of workforce management solutions, Vovici Corporation (or Vovici), a U.S.-based privately-held provider of online survey management and enterprise feedback solutions and a privately-held provider of communications intelligence solutions, data retention services, and network performance management, based in the Americas region. For more information relating to these acquisitions, see note 5 to the condensed consolidated financial statements included in this Quarterly Report.

Changes in Board Composition. In September 2011, Mr. Richard Nottenburg and Mr. A. Alexander Porter, Jr., each advised CTI that, for personal reasons, he will not seek re-election as a director at CTI’s annual shareholder meeting held on November 16, 2011. Each of Messrs. Nottenburg and Porter indicated that his decision was not a result of any disagreement with CTI. In addition, at the annual shareholder meeting, each of Mr. Raz Alon and Mr. Joseph O’Donnell did not receive a majority of the votes cast as required by CTI’s By-Laws. Consequently, and, in accordance with CTI’s Corporate Governance Guidelines and Principles, each of Messrs. Alon and O’Donnell tendered his resignation from the Board, which resignations were accepted by the Board. Also, on November 16, 2011, following the annual shareholder meeting, the Board reduced the size of the Board to six directors.

Approval of the 2011 Stock Incentive Compensation Plan. In September 2011, CTI’s Board approved the Comverse Technology, Inc. 2011 Stock Incentive Compensation Plan (referred to as the 2011 Incentive Plan) and such plan was approved by CTI’s shareholders at the annual shareholder meeting held on November 16, 2011. A total of 22,000,000 shares of CTI common stock are reserved for issuance under the 2011 Incentive Plan. Equity awards may be granted under the 2011 Incentive Plan to employees, non-employee directors and consultants as well as employees and consultants of our subsidiaries and affiliates.

Sale of ARS. In November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash.

Settlement of Opt-Out Plaintiffs’ Action. In December 2011, CTI agreed to a settlement in principle of an action initiated by Maverick Fund, L.D.C. and certain affiliated investment funds, who opted not to participate in the settlement of the consolidated shareholder class action. Pursuant to the settlement in principle, CTI would be required to pay the plaintiffs approximately $9.5 million. For a more detailed discussion, see note 20 to the condensed consolidated financial statements included in this Quarterly Report.

Verint’s New Lease Agreement. In November 2011, Verint executed a lease agreement for a new facility in the Americas region. This new facility will be occupied in connection with the expiration of Verint’s existing facility lease in the area at the end of November 2012. The lease term extends through September 2026. The aggregate minimum lease commitment over the term of this new lease, excluding operating expenses, is approximately $36.1 million

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Liquidity Forecast at CTI and Comverse

We currently forecast that available cash and cash equivalents will be sufficient to meet the liquidity needs, including capital expenditures, of CTI and Comverse for at least the next 12 months. For a more comprehensive discussion of our liquidity forecast, see “—Liquidity and Capital Resources—Financial Condition of CTI and Comverse—Liquidity Forecast.”

Changes in Reportable Segments

We changed our reportable segments during the three months ended October 31, 2011. The change in reportable segments is attributable to the implementation of the Phase II Business Transformation at Comverse that focuses on process reengineering to maximize business performance, productivity and operational efficiency. For a more comprehensive discussion relating to the Phase II Business Transformation, see “—Corporate Structure—Comverse” and note 8 to the condensed consolidated financial statements included in this Quarterly Report. As a result of the Phase II Business Transformation, Comverse BSS, Comverse VAS and Comverse MI became operating segments. The revenue of each of Comverse BSS, Comverse VAS and Comverse MI includes the revenue generated by Comverse GLS that is attributable to the operations of each such operating segment. The costs and expenses of each of Comverse BSS, Comverse VAS and Comverse MI are comprised of direct costs such as product materials and personnel-related costs, and costs and expenses incurred by Comverse GLS in connection with the operations of each such operating segment. The chief operating decision maker (or CODM), CTI’s Chief Executive Officer, uses the segment performance of Comverse BSS, Comverse VAS and Comverse MI, after including the amounts attributable to Comverse GLS, for assessing the financial results of the segments and for the allocation of resources. The discrete financial information of Comverse GLS is not used by the CODM for the assessment of financial results or the allocation of resources.

Our reportable segments now consist of Comverse BSS, Comverse VAS, and Verint. The results of operations of all of our other operations are included in the column captioned “All Other” as part of our business segment presentation. The operating segments included in “All Other” do not meet the quantitative thresholds required for a separate presentation. See note 18 to the condensed consolidated financial statements included in this Quarterly Report. We have recast the presentation of our segment information for the six months ended July 31, 2011 (which is included in the segment information for the nine months ended October 31, 2011) and for the three and nine months ended October 31, 2010 to reflect these reportable segments. We do not maintain balance sheets for the Comverse operating segments. For a more comprehensive discussion relating to the changes in our reportable segments, see note 1 to the condensed consolidated financial statements included in this Quarterly Report. Ulticom was a reportable segment prior to its sale to a third party on December 3, 2010. As a result of the Ulticom Sale, the results of operations of Ulticom are reflected in discontinued operations for the three and nine months ended October 31, 2010. See note 15 to the condensed consolidated financial statements included in this Quarterly Report.

Segment Performance

We evaluate our business by assessing the performance of each of our operating segments. CTI’s Chief Executive Officer is its CODM. The CODM uses segment performance, as defined below, as the primary basis for assessing the financial results of the operating segments and for the allocation of resources. Segment performance, as we define it in accordance with the Financial Accounting Standard Board’s (or the FASB) 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 or remain current in periodic reporting obligations under the federal securities laws which are expected to be eliminated over time, certain non-cash charges, and certain other gains and charges.

Segment performance is computed by management as income (loss) 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 gains and charges. Compliance-related professional fees and compliance-related compensation and other expenses recorded for fiscal periods ended on or before July 31, 2011 relate to fees and expenses incurred in connection with (a) our efforts to complete current and previously issued financial statements and audits of such financial statements, and (b) our efforts to become current in our periodic reporting obligations under the federal securities laws. Compliance-related professional fees and compliance-related compensation and other expenses recorded for the three months ended October 31, 2011 relate to fees and expenses incurred in connection with the timely filing of our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 and our efforts to remediate material weaknesses in internal control over financial reporting that are expected to be eliminated over time. For additional information on how we apply segment performance to evaluate the operating results of our segments for each of the three and nine months ended October 31, 2011 and 2010, see note 18 to the condensed consolidated financial statements included in this Quarterly Report.

In evaluating each segment’s performance, management uses segment revenue, which consists of revenue generated by the segment, including intercompany revenue. Certain segment performance adjustments relate to expenses included in the calculation of income (loss) from operations, while, from time-to-time, certain segment performance adjustments may be presented as adjustments to revenue. In calculating Verint’s segment performance for the three and nine months ended October 31, 2011, the presentation of segment revenue gives effect to segment revenue adjustments that represent the impact of fair value adjustments required under the FASB’s guidance relating to acquired customer support contracts that would have otherwise been recognized as revenue on a standalone basis with respect to acquisitions consummated by Verint during the periods presented. Verint did not have a segment revenue adjustment for the three or nine months ended October 31, 2010.

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	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(Dollars in thousands)
SEGMENT RESULTS
Comverse BSS
Segment revenue	$	117,731		$	90,906		$	278,403		$	242,151
Segment performance	$	34,657		$	30,706		$	71,568		$	52,449
Segment performance margin		29.4	%		33.8	%		25.7	%		21.7	%
Comverse VAS
Segment revenue	$	112,655		$	121,141		$	276,234		$	341,001
Segment performance	$	48,667		$	55,893		$	100,553		$	119,301
Segment performance margin		43.2	%		46.1	%		36.4	%		35.0	%
Verint
Segment revenue	$	204,575		$	186,641		$	576,828		$	539,930
Segment performance	$	44,026		$	53,102		$	123,927		$	141,705
Segment performance margin		21.5	%		28.5	%		21.5	%		26.2	%
All Other
Segment revenue	$	24,394		$	27,567		$	67,633		$	71,779
Segment performance	$	(45,549	)	$	(50,307	)	$	(133,137	)	$	(154,227	)
Segment performance margin		(186.7	%)		(182.5	%)		(196.9	%)		(214.9	%)

For a discussion of the results of our segments, see “—Results of Operations.”

Comverse Subsidiary Financial Highlights

As discussed above, we revised our segment reporting as a result of the implementation of the Phase II Business Transformation at Comverse and the manner in which our CODM reviews the operating performance of Comverse and allocates resources to its operating segments. We are providing the following additional information, presenting highlights of the results of operations of the previous Comverse reporting segment. We believe that such presentation provides useful information to investors regarding the performance of our Comverse subsidiary, including comparability to previously reported financial information. The additional information provided is not a replacement for or subset of business segment information.

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(Dollars in thousands)
COMVERSE SUBSIDIARY RESULTS
Comverse revenue	$	243,797		$	228,901		$	589,616		$	627,019
Comverse performance(1)	$	43,405		$	40,851		$	54,022		$	30,290
Comverse performance margin		17.8	%		17.8	%		9.2	%		4.8	%

(1) Comverse performance represents the operating results of our Comverse subsidiary without the impact of significant expenditures incurred by Comverse in connection with our efforts to become or remain current in periodic reporting obligations under the federal securities laws which are expected to be eliminated over time, certain non-cash charges, and certain other gains and charges.

For more information, see “-Comverse Business Trends and Uncertainties” and note 18 to the condensed consolidated financial statements included in this Quarterly Report.

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Comverse Business Trends and Uncertainties

Comverse

        As previously disclosed, during the fiscal year ended January 31, 2011, we commenced certain initiatives to improve our cash position, including a plan to restructure the operations of Comverse with a view towards aligning operating costs and expenses with anticipated revenue. Comverse successfully implemented the first phase of such plan, significantly reducing its annualized operating costs. During the nine months ended October 31, 2011, Comverse implemented the Phase II Business Transformation. As part of the Phase II Business Transformation, Comverse is seeking to achieve improved operating performance and sustain double digit Comverse performance margins and positive operating cash flows. We believe that Comverse is beginning to realize some of the benefits of these initiatives. In the three and nine months ended October 31, 2011, Comverse improved its operating performance compared to the prior year period. Consistent with the preceding fiscal quarter, for the three months ended October 31, 2011, Comverse continued to have positive cash flows from operations. We believe that the improvement in performance and cash flows is attributable, to a large extent, to management’s enhanced focus on profitability, improved cash collections and cost reduction measures.

As part of the Phase II Business Transformation, Comverse has achieved cost reduction through process reengineering to maximize business performance, productivity and operational efficiency. In addition, compliance-related professional fees declined significantly during the three and nine months ended October 31, 2011 compared to the three and nine months ended October 31, 2010.

We believe that further cost reductions will result primarily from declines in compliance-related professional fees expected as we resumed the timely filing of our periodic reports and after we complete the remediation of material weaknesses in internal controls over financial reporting. These cost reductions may be partially offset by, among other factors, the increasing complexity of project deployment which may result in higher product delivery costs.

Comverse BSS

As part of its previously disclosed strategy, Comverse is continuing its efforts to expand its presence and market share in the BSS market with BSS solutions that we believe offer several advantages over competitors’ offerings. Comverse is currently beginning to experience an increase in customer demand for its Comverse ONE converged billing solution. Comverse BSS improved, and continues to improve, its delivery and implementation capabilities which resulted in reduced cost, faster delivery time and increased customer satisfaction. In addition, Comverse BSS continues to focus on broadening its customer solution and service offerings, including managed services, to existing and new customers.

We believe that Comverse’s BSS solutions offering has the potential to become a key driver of growth going forward. We expect that Comverse will continue to build on the strength of its Comverse ONE solution, particularly in the converged billing segment of the BSS market, which is expected to grow rapidly over the next few years.

Comverse BSS’s revenue for the three and nine months ended October 31, 2011 include revenue recognized on an accelerated basis due to the adoption of new accounting guidance. On February 1, 2011, we adopted new accounting guidance relating to revenue recognition on a prospective basis. This guidance amends the criteria for allocating consideration in multiple-deliverable revenue arrangements by establishing a selling price hierarchy. As a result of the adoption of this guidance, an additional $35.0 million and $36.3 million of revenue was recognized for the three and nine months ended October 31, 2011, respectively. For more information, see note 2 to the condensed consolidated financial statements included in this Quarterly Report. Such additional revenue included $33.5 million and $34.7 million of additional revenue recognized under the new guidance as compared to the revenue that would have been recognized under prior accounting guidance for the three and nine months ended October 31, 2011, respectively, resulting from material modifications of certain existing contracts in connection with change orders that included the purchase of additional customer solutions and services and the expansion of projects by customers.

Comverse VAS

Revenue from VAS customer solutions for the three and nine months ended October 31, 2011 decreased compared to the three and nine months ended October 31, 2010. The decrease in VAS revenue is attributable in part to Comverse’s strategy to pursue primarily higher margin VAS projects which may result in lower VAS revenue but greater project and product profitability. Although operating margins declined in the three months ended October 31, 2011 compared to the prior year period, they did increase slightly for the nine months ended October 31, 2011 compared to nine months ended October 31, 2010. Comverse VAS continues its efforts to improve its operating margins.

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Comverse VAS continues to maintain its market leadership in voice-based products, such as voicemail and call completion. Other services, however, such as certain voice and SMS text message services and MMS, have become relatively commoditized, resulting in reduced revenue and margins. As part of its efforts to maintain its market position, Comverse is engaged in the promotion of advanced offerings such as visual voicemail, call management, IP Engine (an IP-based messaging platform) and a Service Enablement Middleware cloud-based solution. We believe demand for advanced offerings may grow due to the increasing deployment of smart phones by wireless communication service providers. Accordingly, Comverse continues to expend significant resources on VAS research and development activities in order to enhance existing products and develop new solutions.

Comverse VAS’s revenue for the three and nine months ended October 31, 2011 include revenue recognized on an accelerated basis due to the adoption of new accounting guidance on February 1, 2011, as described above. As a result of this guidance, an additional $3.9 million and $4.5 million of revenue was recognized for the three and nine months ended October 31, 2011, respectively. For more information, see note 2 to the condensed consolidated financial statements included in this Quarterly Report. Additional revenue recognized under the new guidance as compared to the revenue that would have been recognized under prior accounting guidance for the three and nine months ended October 31, 2011, respectively, resulting from material modifications of certain existing contracts was not significant.

Uncertainties Impacting Future Performance

We believe that Comverse may have lost business opportunities due to concerns on the part of customers about our financial condition and CTI’s previous extended delay in becoming current in its periodic reporting obligations under the federal securities laws. We anticipate that these concerns will ease as a result of the successful implementation of initiatives to improve our cash position and CTI becoming current in its reporting obligations. We also believe that the relisting of CTI’s common stock on NASDAQ has enhanced Comverse’s market perception and will increase the willingness of customers and partners to purchase our solutions and services.

Comverse’s business is impacted by general economic conditions. During the fiscal year ended January 31, 2011 and a portion of the fiscal year ending January 31, 2012, the global economy experienced a gradual recovery resulting in a moderate increase in levels of spending by customers. Recently, however, there have been adverse developments in global debt markets (including sovereign debt) and other indications of a slowdown in the global economic recovery. These conditions have adversely impacted financial markets and have created substantial volatility and uncertainty, and will likely continue to do so. If the recovery in the global economy is curtailed and market conditions worsen, our existing and potential customers could reduce their spending, which, in turn, could reduce the demand for Comverse’s products and services.

As discussed above, as part of its strategy, Comverse is continuing its efforts to expand its BSS business and pursue primarily higher margin VAS projects which have resulted in lower VAS revenue. We expect that the BSS revenue portion of Comverse’s total revenue will increase and that the VAS revenue portion of total revenue will decline. Currently, we are unable to predict whether increases in BSS revenue, if any, will exceed or fully offset declines in VAS revenue. If BSS revenue does not increase or if increases in BSS revenue do not exceed or fully offset declines in VAS revenue, Comverse’s revenue, profitability and cash flows may be materially adversely affected.

Due to current market trends and consumer preferences, we expect that Comverse’s advanced offerings will account for a larger portion of its revenue. Although Comverse’s advanced offerings have proven to be initially successful, it is unclear whether they will be widely adopted by Comverse’s existing and potential customers. Currently, we are unable to predict whether increases in revenue from Comverse’s advanced offerings will exceed or fully offset declines that Comverse may experience in the sale of traditional solutions. If increases in revenue from Comverse’s advanced offerings do not exceed or fully offset any declines in revenue from traditional solutions, due to adverse market trends or changes in consumer preferences, Comverse’s revenue, profitability and cash flows may be materially adversely affected.

The operating results of Comverse are difficult to predict. The difficulty is a result of lengthy and variable sales cycles, focus on large installations, short delivery windows required by customers, and the high percentage of orders typically generated late in the fiscal quarter. In addition, the deferral or loss of one or more significant orders or customers, or a delay in an expected implementation of such an order, could materially and adversely affect Comverse’s results of operations in any fiscal quarter, particularly if there are significant sales and marketing expenses associated with the deferred, lost or delayed sales.

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RESULTS OF OPERATIONS

The following discussion provides an analysis of our condensed consolidated results and the results of operations of each of our segments for the fiscal periods presented. The discussion of our condensed consolidated results relates to the consolidated results of CTI and its subsidiaries. The discussion of the results of operations of each of our segments provides a more detailed analysis of the results of each segment presented. Accordingly, the discussion of our condensed consolidated results should be read in conjunction with the discussions of the results of operations of our segments.

Three and Nine Months Ended October 31, 2011 Compared to Three and Nine Months Ended October 31, 2010

Condensed Consolidated Results

	Three Months Ended October 31,						Change						Nine Months Ended October 31,						Change
	2011			2010			Amount			Percent			2011			2010			Amount			Percent
	(Dollars in thousands, except per share data)
Total revenue	$	453,078		$	425,460		$	27,618			6.5	%	$	1,188,942		$	1,192,590		$	(3,648	)		(0.3	%)
Income (loss) from operations		32,130			23,302			8,828			37.9	%		10,768			(73,440	)		84,208			(114.7	%)
Interest income		826			833			(7	)		(0.8	%)		3,493			2,835			658			23.2	%
Interest expense		(8,192	)		(9,020	)		828			(9.2	%)		(25,325	)		(21,241	)		(4,084	)		19.2	%
Loss on extinguishment of debt		—			—			—			N/M			(8,136	)		—			(8,136	)		N/M
Other (expense) income, net		(4,144	)		1,563			(5,707	)		N/M			8,253			7,178			1,075			15.0	%
Income tax benefit (provision)		21,647			(47,237	)		68,884			(145.8	%)		(35,793	)		(49,463	)		13,670			(27.6	%)
Net income (loss) from continuing operations		42,267			(30,559	)		72,826			(238.3	%)		(46,740	)		(134,131	)		87,391			(65.2	%)
Loss from discontinued operations, net of tax		—			(947	)		947			(100.0	%)		—			(4,000	)		4,000			(100.0	%)
Net income (loss)		42,267			(31,506	)		73,773			(234.2	%)		(46,740	)		(138,131	)		91,391			(66.2	%)
Less: Net income attributable to noncontrolling interest		(6,577	)		(10,197	)		3,620			(35.5	%)		(16,462	)		(9,620	)		(6,842	)		71.1	%
Net income (loss) attributable to Comverse Technology, Inc.	$	35,690		$	(41,703	)	$	77,393			(185.6	%)	$	(63,202	)	$	(147,751	)	$	84,549			(57.2	%)
Earnings (loss) per share attributable to Comverse Technology, Inc.’s shareholders:
Basic earnings (loss) per share
Continuing operations	$	0.17		$	(0.20	)	$	0.37					$	(0.31	)	$	(0.71	)	$	0.40
Discontinued operations	$	—		$	(0.00	)	$	0.00					$	—		$	(0.01	)	$	0.01
Diluted earnings (loss) per share
Continuing operations	$	0.17		$	(0.21	)	$	0.38					$	(0.31	)	$	(0.71	)	$	0.40
Discontinued operations	$	—		$	(0.00	)	$	0.00					$	—		$	(0.01	)	$	0.01
Net income (loss) attributable to Comverse Technology, Inc.
Net income (loss) from continuing operations	$	35,690		$	(40,929	)	$	76,619					$	(63,202	)	$	(144,753	)	$	81,551
Loss from discontinued operations, net of tax		—			(774	)		774						—			(2,998	)		2,998
Net income (loss) attributable to Comverse Technology, Inc.	$	35,690		$	(41,703	)	$	77,393					$	(63,202	)	$	(147,751	)	$	84,549

Total Revenue

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Total revenue was $453.1 million for the three months ended October 31, 2011, an increase of $27.6 million, or 6.5%, compared to the three months ended October 31, 2010. The increase was attributable to increases in revenue of $26.8 million and $12.7 million at the Comverse BSS and Verint segments, respectively, partially offset by decreases in revenue of $8.5 million and $3.4 million at the Comverse VAS segment and All Other, respectively, for the three months ended October 31, 2011 compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Total revenue was $1,188.9 million for the nine months ended October 31, 2011, a decrease of $3.6 million, or 0.3%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to declines in revenue of $64.8 million and $5.9 million at the Comverse VAS segment and All Other, respectively, partially offset by increases in revenue of $36.3 million and $30.7 million at the Comverse BSS and Verint segments, respectively, for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010.

Income (Loss) from Operations

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Income from operations was $32.1 million for the three months ended October 31, 2011, an increase of $8.8 million, or 37.9%, compared to the three months ended October 31, 2010. The increase was primarily due to:

• a $27.6 million increase in total revenue, attributable to increases in revenue of the Comverse BSS and Verint segments, partially offset by decreases in revenue of the Comverse VAS segment and All Other;

• a $26.9 million decrease in compliance-related professional fees, primarily within All Other; and

• $20.0 million decrease in restructuring charges primarily within All Other.

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This increase was partially offset by a $44.8 million increase in the cost of revenue primarily attributable to the Comverse BSS, Comverse VAS and Verint segments and a change of $22.1 million from litigation income to litigation expense primarily attributable to litigation income of $17.4 million received by CTI in connection with the settlements of the consolidated shareholder derivative actions and consolidated class action in the three months ended October 31, 2010, compared to $4.9 million of litigation settlement costs for the three months ended October 31, 2011.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Income from operations was $10.8 million for the nine months ended October 31, 2011, a change of $84.2 million compared to loss from operations of $73.4 million for the nine months ended October 31, 2010. The change was primarily attributable to:

• a $100.6 million decrease in compliance-related professional fees, primarily within All Other and the Verint segment;

• a $19.5 million decrease in stock-based compensation in the Verint segment and All Other; and

• a $13.9 million decrease in restructuring charges within All Other.

The change was partially offset by:

• a $29.1 million increase in cost of revenue, attributable to the Comverse BSS and Verint segments, partially offset by a decrease at the Comverse VAS segment and All Other; and

• a $22.2 million increase attributable to litigation settlement income of $17.5 million received by CTI in connection with the settlements of the consolidated shareholder derivative actions and consolidated shareholder class action, in the nine months ended October 31, 2010, compared to $4.9 million of litigation settlement costs for the nine months ended October 31, 2011.

Interest Income

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Interest income was $0.8 million for the three months ended October 31, 2011, which was consistent with the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Interest income was $3.5 million for the nine months ended October 31, 2011, an increase of $0.7 million, or 23.2%, compared to the nine months ended October 31, 2010.

Interest Expense

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Interest expense was $8.2 million for the three months ended October 31, 2011, a decrease of $0.8 million, or 9.2%, compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Interest expense was $25.3 million for the nine months ended October 31, 2011, an increase of $4.1 million, or 19.2%, compared to the nine months ended October 31, 2010. The increase was primarily attributable to a $3.7 million increase in interest expense at the Verint segment, principally due to a higher interest rate on Verint’s borrowings associated with the amendment to its prior facility entered into in July 2010 and its new credit agreement entered into in April 2011.

Loss on Extinguishment of Debt

During the nine months ended October 31, 2011, Verint recorded an $8.1 million loss in connection with the termination of its prior facility in April 2011. For additional discussion, see “—Liquidity and Capital Resources—Indebtedness—Verint Credit Facilities.”

Other (Expense) Income, Net

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Other expense, net was $4.1 million for the three months ended October 31, 2011, a change of $5.7 million compared to other income, net of $1.6 million for the three months ended October 31, 2010. The change was primarily attributable to a $6.2 million change from a foreign currency gain of $2.3 million for the three months ended October 31, 2010 to a foreign currency loss of $3.8 million for the three months ended October 31, 2011.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Other income, net was $8.3 million for the nine months ended October 31, 2011, an increase of $1.1 million, or 15.0%, compared to the nine months ended October 31, 2010. The increase was attributable to:

• a $6.7 million impairment charge recorded for the nine months ended October 31, 2010 in respect of CTI’s right to require UBS to repurchase from CTI eligible ARS at par value (which CTI exercised in June 2010), with no corresponding charge recorded for the nine months ended October 31, 2011;

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• $4.8 million of proceeds recorded in the nine months ended October 31, 2011 in connection with the settlement of certain CTI claims against a third party;

• $3.1 million of net realized and unrealized losses on Verint’s interest rate swap (which was terminated in July 2010) recorded for the nine months ended October 31, 2010, with no corresponding losses recorded for the nine months ended October 31, 2011; and

• a $2.8 million decrease in foreign currency losses.

The increase was partially offset primarily by a $15.7 million decrease in realized gains on investments for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010.

Income Tax Benefit (Provision)

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Income tax benefit was $21.6 million for the three months ended October 31, 2011, representing an effective tax rate of (105.0%), compared to an income tax provision of $47.2 million, representing an effective tax rate of 283.2% for the three months ended October 31, 2010. For the three months ended October 31, 2011 the effective tax rate was negative due to the fact that we reported an income tax benefit on a consolidated pre-tax income, primarily due to the mix of income and losses by jurisdiction. For the three months ended October 31, 2010 the effective tax rate was higher than US federal statutory rate of 35% primarily because we maintained or increased valuation allowances in certain jurisdictions on an interim basis, incurred withholding taxes and recorded certain tax contingencies and deferred taxes on our investment in affiliates.

The change in our effective tax rate for the three months ended October 31, 2011, compared to the three months ended October 31, 2010 is primarily attributable to changes in the relative mix of income and losses across various jurisdictions.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Income tax provision was $35.8 million for the nine months ended October 31, 2011, representing an effective tax rate of (327.0%), compared to income tax provision of $49.5 million, representing an effective tax rate of (58.4%) for the nine months ended October 31, 2010. During the nine months ended October 31, 2011 and 2010, the effective tax rates were negative due to the fact that we reported income tax expense on consolidated pre-tax losses, primarily due to the mix of income and losses by jurisdiction. We did not record an income tax benefit on the loss for the period, primarily because we maintain valuation allowances against certain of our U.S. and foreign net deferred tax assets. The income tax provision for the period is comprised of income tax expense recorded in non-loss jurisdictions, withholding taxes, and certain tax contingencies recorded in the nine months ended October 31, 2011 and 2010.

The change in our effective tax rate for the nine months ended October 31, 2011, compared to the nine months ended October 31, 2010 is primarily attributable to changes in the relative mix of income and losses across various jurisdictions.

Loss from Discontinued Operations, Net of Tax

Three Months Ended October 31, 2011 compared to the Three Months Ended October 31, 2010. Loss from discontinued operations, net of tax, of $0.9 million for the three months ended October 31, 2010 represented the results of operations of Ulticom for the three months ended October 31, 2010 less applicable income taxes. Ulticom was sold on December 3, 2010.

Nine Months Ended October 31, 2011 compared to the Nine Months Ended October 31, 2010. Loss from discontinued operations, net of tax, of $4.0 million for the nine months ended October 31, 2010 represented the results of operations of Ulticom for the nine months ended October 31, 2010 less applicable income taxes. Ulticom was sold on December 3, 2010.

Net Income Attributable to Noncontrolling Interest

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Net income attributable to noncontrolling interest was $6.6 million for the three months ended October 31, 2011, a decrease of $3.6 million, or 35.5% compared to the three months ended October 31, 2010. The decrease was primarily attributable to a decrease in Verint’s net income for the three months ended October 31, 2011 compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Net income attributable to noncontrolling interest was $16.5 million for the nine months ended October 31, 2011, an increase of $6.8 million, or 71.1%, compared to net income attributable to noncontrolling interest for the nine months ended October 31, 2010. The increase was primarily attributable to an increase in Verint’s net income for the nine months ended October 31, 2011 as compared to the nine months ended October 31, 2010 as well as an increase in the percentage ownership of Verint by Verint’s stockholders other than CTI.

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Segment Results

Comverse BSS

	Three Months Ended October 31,					Change						Nine Months Ended October 31,				Change
	2011			2010		Amount			Percent			2011		2010		Amount			Percent
	(Dollars in thousands)
Revenue:
Revenue	$	117,731		$	90,906	$	26,825			29.5	%	$	278,403	$	242,151	$	36,252			15.0	%
Intercompany revenue		—			—		—			N/M			—		—		—			N/M
Total revenue		117,731			90,906		26,825			29.5	%		278,403		242,151		36,252			15.0	%
Costs and expenses:
Cost of revenue		64,823			42,238		22,585			53.5	%		154,320		133,811		20,509			15.3	%
Intercompany purchases		—			—		—			N/M			—		—		—			N/M
Selling, general and administrative		7,022			6,937		85			1.2	%		20,774		22,055		(1,281	)		(5.8	%)
Research and development, net		15,458			15,698		(240	)		(1.5	%)		46,967		49,119		(2,152	)		(4.4	%)
Other operating expenses		15			15		—			0.0	%		81		287		(206	)		(71.8	%)
Total costs and expenses		87,318			64,888		22,430			34.6	%		222,142		205,272		16,870			8.2	%
Income from operations	$	30,413		$	26,018	$	4,395			16.9	%	$	56,261	$	36,879	$	19,382			52.6	%
Computation of segment performance:
Total revenue	$	117,731		$	90,906	$	26,825			29.5	%	$	278,403	$	242,151	$	36,252			15.0	%
Segment revenue adjustment		—			—		—			N/M			—		—		—			N/M
Segment revenue	$	117,731		$	90,906	$	26,825			29.5	%	$	278,403	$	242,151	$	36,252			15.0	%
Total costs and expenses	$	87,318		$	64,888	$	22,430			34.6	%	$	222,142	$	205,272	$	16,870			8.2	%
Segment expense adjustments:
Stock-based compensation expense		—			—		—			N/M			—		—		—			N/M
Amortization of acquisition-related intangibles		4,245			4,641		(396	)		(8.5	%)		13,241		13,953		(712	)		(5.1	%)
Compliance-related professional fees		—			—		—			N/M			—		—		—			N/M
Compliance-related compensation and other expenses		(1	)		47		(48	)		(102.1	%)		2,066		1,617		449			27.8	%
Impairment charges		—			—		—			N/M			—		—		—			N/M
Restructuring and integration charges		—			—		—			N/M			—		—		—			N/M
Gain on sale of land		—			—		—			N/M			—		—		—			N/M
Litigation settlements and related costs		—			—		—			N/M			—		—		—			N/M
Other		—			—		—			N/M			—		—		—			N/M
Segment expense adjustments		4,244			4,688		(444	)		(9.5	%)		15,307		15,570		(263	)		(1.7	%)
Segment expenses		83,074			60,200		22,874			38.0	%		206,835		189,702		17,133			9.0	%
Segment performance	$	34,657		$	30,706	$	3,951			12.9	%	$	71,568	$	52,449	$	19,119			36.5	%

Revenue

Management analyzes Comverse BSS’s revenue by: (i) revenue generated from its customer solutions, and (ii) maintenance revenue. Revenue generated from customer solutions consists primarily of the licensing of Comverse’s BSS customer solutions, hardware and related professional services and training. Professional services primarily include installation, customization and consulting services. Maintenance revenue consists primarily of post-contract customer support (or PCS), including technical software support services, unspecified software updates or upgrades to customers on a when-and-if-available basis. Maintenance revenue is typically less susceptible to changes in market conditions as it generally represents a stable revenue stream from recurring renewals of contracts with Comverse BSS’s existing customer base.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Revenue from Comverse BSS customer solutions was $82.3 million for the three months ended October 31, 2011, an increase of $30.2 million, or 58.0%, compared to the three months ended October 31, 2010. The increase in revenue from Comverse BSS customer solutions was primarily attributable to material modifications of certain existing contracts that allowed the recognition of additional revenue of approximately $33.5 million. The increase was partially offset by a decrease attributable to a combination of the timing of customer acceptances in certain projects and the completion of milestones in certain other projects. Revenue from Comverse BSS customer solutions continued to be adversely affected by the increasing complexity of project deployment resulting in extended periods of time required to complete project milestones and receive customer acceptance.

Comverse BSS maintenance revenue was $35.4 million for the three months ended October 31, 2011, a decrease of $3.4 million, or 8.7%, compared to the three months ended October 31, 2010. This decrease was primarily attributable to the timing of signing of renewal contracts with the existing customer base.

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Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Revenue from Comverse BSS customer solutions was $168.3 million for the nine months ended October 31, 2011, an increase of $33.3 million, or 24.6%, compared to the nine months ended October 31, 2010. The increase in revenue from Comverse BSS customer solutions was primarily attributable to (i) material modifications of certain existing contracts that allowed the recognition of additional revenue of approximately $34.7 million and (ii) certain new projects in the nine months ended October 31, 2011 for which revenue is recognized using the percentage of completion method with no comparable projects in the nine months ended October 31, 2010, partially offset by lower volume of customer acceptances for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010. Revenue from Comverse BSS customer solutions continued to be adversely affected by the increasing complexity of project deployment resulting in extended periods of time required to complete project milestones and receive customer acceptance.

Comverse BSS maintenance revenue was $110.1 million for the nine months ended October 31, 2011, an increase of $3.0 million, or 2.8%, compared to the nine months ended October 31, 2010. The increase was primarily attributable to an increase in the installed base of Comverse BSS customer solutions.

Revenue by Geographic Region

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Revenue in the Americas, Europe, Middle East and Africa (or EMEA) and Asia Pacific (or APAC) represented approximately 12%, 53%, and 35% of Comverse BSS’s revenue, respectively, for the three months ended October 31, 2011 compared to approximately 21%, 55%, and 24% of Comverse BSS’s revenue, respectively, for the three months ended October 31, 2010. The presentation of revenue by geographic region is based on the location of customers.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Revenue in the Americas, EMEA and APAC represented approximately 17%, 53%, and 30% of Comverse BSS’s revenue, respectively, for the nine months ended October 31, 2011 compared to approximately 19%, 58%, and 23% of Comverse BSS’s revenue, respectively, for the nine months ended October 31, 2010.

The increase in revenue as a percentage of the total revenue for Comverse BSS in APAC was primarily attributable to significant revenue recognized due to customer acceptances in certain large-scale projects in the three and nine months ended October 31, 2011, with no comparable customer acceptances in the three and nine months ended October 31, 2010.

Foreign Currency Impact on Revenue

Our functional currency for financial reporting purposes is the U.S. dollar. The majority of Comverse BSS’s revenue for the three and nine months ended October 31, 2011 was derived from transactions denominated in U.S. dollars. All other revenue was derived from transactions denominated in various foreign currencies, primarily the euro. Fluctuations in the U.S. dollar relative to foreign currencies in which Comverse BSS conducted business for the three months ended October 31, 2011 compared to the three months ended October 31, 2010 unfavorably impacted revenue by $0.6 million. Fluctuations in the U.S. dollar relative to foreign currencies in which Comverse BSS conducted business for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010 unfavorably impacted revenue by $5.9 million.

Foreign Currency Impact on Costs

A significant portion of Comverse BSS’s expenses, principally personnel-related costs, is incurred in new Israeli shekel (or NIS), whereas our functional currency for financial reporting purposes is the U.S. dollar. A strengthening of the NIS against the U.S. dollar would increase the U.S. dollar value of Comverse BSS’s expenses in Israel. Comverse enters into foreign currency forward contracts to mitigate risk attributable to foreign currency exchange rate fluctuations.

Cost of Revenue

Cost of revenue consists primarily of hardware and software material costs and compensation and related expenses for personnel involved in the customization of Comverse BSS’s products for customer delivery, contractor costs, maintenance and professional services, such as installation costs and training, royalties and license fees, depreciation of equipment used in operations, amortization of capitalized software costs and certain purchased intangible assets and related overhead costs.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Cost of revenue was $64.8 million for the three months ended October 31, 2011, an increase of $22.6 million, or 53.5%, compared to the three months ended October 31, 2010. The increase was primarily attributable to:

• a $15.9 million increase in material costs and overhead, of which $13.5 million was attributable to increased revenue and $2.4 million was due to lower margin projects; and

• a $7.2 million increase in personnel-related costs.

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Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Cost of revenue was $154.3 million for the nine months ended October 31, 2011, an increase of $20.5 million, or 15.3%, compared to the nine months ended October 31, 2010. The increase was primarily attributable to:

• a $17.0 million increase in material costs and overhead, of which $14.0 million was attributable to increased revenue and $3.0 million was due to lower margin projects; and

• a $3.7 million increase in personnel-related costs and contractor costs primarily due to increase in revenue.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of compensation and related expenses of personnel, professional services, sales and marketing expenses, facility costs and unallocated overhead expenses.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Selling, general and administrative expenses were $7.0 million for the three months ended October 31, 2011, an increase of $0.1 million, or 1.2%, compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Selling, general and administrative expenses were $20.8 million for the nine months ended October 31, 2011, a decrease of $1.3 million, or 5.8%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to a decrease in employee sales commissions due to a workforce reduction and an overall reduction in bookings generated from certain projects.

Research and Development, Net

Research and development expenses, net primarily consist of personnel-related costs involved in product development, net of reimbursement under government programs. Research and development expenses also include third-party development and programming costs and the amortization of purchased software code and services content used in research and development activities.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Research and development expenses, net were $15.5 million for the three months ended October 31, 2011, a decrease of $0.2 million, or 1.5%, compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Research and development expenses, net were $47.0 million for the nine months ended October 31, 2010, a decrease of $2.2 million, or 4.4%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to a $1.9 million decrease in personnel-related costs principally due to workforce reductions and a decline in compensation levels.

Segment Performance

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Segment performance was $34.7 million for the three months ended October 31, 2011 based on segment revenue of $117.7 million, representing a segment performance margin of 29.4% as a percentage of segment revenue. Segment performance was $30.7 million for the three months ended October 31, 2010 based on segment revenue of $90.9 million, representing a segment performance margin of 33.8% as a percentage of segment revenue. The decrease in segment performance margin was primarily attributable to the increase in segment expenses, partially offset by the increase in segment revenue for the three months ended October 31, 2011 compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Segment performance was $71.6 million for the nine months ended October 31, 2011 based on segment revenue of $278.4 million, representing a segment performance margin of 25.7% as a percentage of segment revenue. Segment performance was a $52.4 million for the nine months ended October 31, 2010 based on segment revenue of $242.2 million, representing a segment performance margin of 21.7% as a percentage of segment revenue. The increase in segment performance margin was primarily attributable to the increase in segment revenue partially offset by the increase in segment expenses for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010.

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Comverse VAS

	Three Months Ended October 31,				Change						Nine Months Ended October 31,				Change
	2011		2010		Amount			Percent			2011		2010		Amount			Percent
	(Dollars in thousands)
Revenue:
Revenue	$	112,655	$	121,141	$	(8,486	)		(7.0	%)	$	276,234	$	341,001	$	(64,767	)		(19.0	%)
Intercompany revenue		—		—		—			N/M			—		—		—			N/M
Total revenue		112,655		121,141		(8,486	)		(7.0	%)		276,234		341,001		(64,767	)		(19.0	%)
Costs and expenses:
Cost of revenue		55,632		44,650		10,982			24.6	%		151,325		155,085		(3,760	)		(2.4	%)
Intercompany purchases		—		—		—			N/M			—		—		—			N/M
Selling, general and administrative		1,865		6,184		(4,319	)		(69.8	%)		6,454		21,422		(14,968	)		(69.9	%)
Research and development, net		6,786		14,405		(7,619	)		(52.9	%)		19,434		45,196		(25,762	)		(57.0	%)
Other operating expenses		—		9		(9	)		(100.0	%)		4		323		(319	)		(98.8	%)
Total costs and expenses		64,283		65,248		(965	)		(1.5	%)		177,217		222,026		(44,809	)		(20.2	%)
Income from operations	$	48,372	$	55,893	$	(7,521	)		(13.5	%)	$	99,017	$	118,975	$	(19,958	)		(16.8	%)
Computation of segment performance:
Total revenue	$	112,655	$	121,141	$	(8,486	)		(7.0	%)	$	276,234	$	341,001	$	(64,767	)		(19.0	%)
Segment revenue adjustment		—		—		—			N/M			—		—		—			N/M
Segment revenue	$	112,655	$	121,141	$	(8,486	)		(7.0	%)	$	276,234	$	341,001	$	(64,767	)		(19.0	%)
Total costs and expenses	$	64,283	$	65,248	$	(965	)		(1.5	%)	$	177,217	$	222,026	$	(44,809	)		(20.2	%)
Segment expense adjustments:
Stock-based compensation expense		—		—		—			N/M			—		—		—			N/M
Amortization of acquisition-related intangibles		—		—		—			N/M			—		—		—			N/M
Compliance-related professional fees		—		—		—			N/M			—		—		—			N/M
Compliance-related compensation and other expenses		295		—		295			N/M			1,531		326		1,205			N/M
Impairment charges		—		—		—			N/M			5		—		5			N/M
Restructuring and integration charges		—		—		—			N/M			—		—		—			N/M
Gain on sale of land		—		—		—			N/M			—		—		—			N/M
Litigation settlements and related costs		—		—		—			N/M			—		—		—			N/M
Other		—		—		—			N/M			—		—		—			N/M
Segment expense adjustments		295		—		295			N/M			1,536		326		1,210			N/M
Segment expenses		63,988		65,248		(1,260	)		(1.9	%)		175,681		221,700		(46,019	)		(20.8	%)
Segment performance	$	48,667	$	55,893	$	(7,226	)		(12.9	%)	$	100,553	$	119,301	$	(18,748	)		(15.7	%)

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Revenue

Management analyzes Comverse VAS’s revenue by: (i) revenue generated from its customer solutions, and (ii) maintenance revenue. Revenue generated from customer solutions consists primarily of the licensing of Comverse’s VAS customer solutions, hardware and related professional services and training. Professional services primarily include installation, customization and consulting services. Maintenance revenue consists primarily of post-contract customer support (or PCS), including technical software support services, unspecified software updates or upgrades to customers on a when-and-if-available basis. Maintenance revenue also includes revenue attributable to maintenance services provided to customers during the initial service period and represents a portion of the revenue generated from customer solutions. Maintenance revenue is typically less susceptible to changes in market conditions as it generally represents a stable revenue stream from recurring renewals of contracts with Comverse VAS’s existing customer base.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Revenue from Comverse VAS customer solutions was $69.8 million for the three months ended October 31, 2011, a decrease of $5.9 million, or 7.8%, compared to the three months ended October 31, 2010. The decrease in revenue from Comverse VAS customer solutions was primarily attributable to significant revenue recognized due to customer acceptances in certain large-scale projects in the three months ended October 31, 2010, with no comparable customer acceptances in the three months ended October 31, 2011.

Comverse VAS maintenance revenue was $42.9 million for the three months ended October 31, 2011, a decrease of $2.6 million, or 5.6%, compared to the three months ended October 31, 2010. This decrease was primarily attributable to timing of signing renewal contracts with the existing customer base and a decline in installed base value.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Revenue from Comverse VAS customer solutions was $152.5 million for the nine months ended October 31, 2011, a decrease of $58.3 million, or 27.6%, compared to the nine months ended October 31, 2010. The decrease in revenue from Comverse VAS customer solutions was primarily attributable to (i) significant revenue recognized due to customer acceptances in certain large-scale projects in the nine months ended October 31, 2010, with no comparable customer acceptances in the nine months ended October 31, 2011, and (ii) changes in the timing of customer acceptances in certain projects and the timing of completion of project milestones that led to the remainder of the change.

Comverse VAS maintenance revenue was $123.7 million for the nine months ended October 31, 2011, a decrease of $6.5 million, or 5.0%, compared to the nine months ended October 31, 2010. The decrease was mainly due to a decline in maintenance revenue attributable to maintenance services provided to customers during the initial service period corresponding to the decline in revenue from VAS customer solutions and a decline in installed base value, partially offset by the timing of the signing of contracts with the existing customer base.

Revenue by Geographic Region

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Revenue in the Americas, EMEA and APAC represented approximately 27%, 52%, and 21% of Comverse VAS’s revenue, respectively, for the three months ended October 31, 2011 compared to approximately 46%, 32%, and 22% of Comverse VAS’s revenue, respectively, for the three months ended October 31, 2010. The presentation of revenue by geographic region is based on the location of customers.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Revenue in the Americas, EMEA and APAC represented approximately 27%, 47%, and 26% of Comverse VAS’s revenue, respectively, for the nine months ended October 31, 2011 compared to approximately 39%, 34%, and 27% of Comverse VAS’s revenue, respectively, for the nine months ended October 31, 2010.

The decrease in revenue as a percentage of total revenue for Comverse VAS in the Americas was primarily attributable to (i) significant revenue recognized due to customer acceptances in certain large-scale projects in the three and nine months ended October 31, 2010, with no comparable customer acceptances in the three and nine months ended October 31, 2011, and (ii) the implementation of Comverse’s strategy to pursue higher margin Comverse VAS projects which, as expected, led to lower revenue but resulted in greater project and product profitability. The increase in revenue for Comverse VAS in EMEA was primarily attributable to timing of certain acceptances.

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Foreign Currency Impact on Revenue

Our functional currency for financial reporting purposes is the U.S. dollar. The majority of Comverse VAS’s revenue for the three and nine months ended October 31, 2011 was derived from transactions denominated in U.S. dollars. All other revenue was derived from transactions denominated in various foreign currencies, primarily the euro. Fluctuations in the U.S. dollar relative to foreign currencies in which Comverse VAS conducted business for the three months ended October 31, 2011 compared to the three months ended October 31, 2010 unfavorably impacted revenue by $2.2 million. Fluctuations in the U.S. dollar relative to foreign currencies in which Comverse conducted business for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010 unfavorably impacted revenue by $4.4 million.

Foreign Currency Impact on Costs

A significant portion of Comverse VAS’s expenses, principally personnel-related costs, is incurred in NIS, whereas our functional currency for financial reporting purposes is the U.S. dollar. A strengthening of the NIS against the U.S. dollar would increase the U.S. dollar value of Comverse VAS’s expenses in Israel. Comverse enters into foreign currency forward contracts to mitigate risk attributable to foreign currency exchange rate fluctuations.

Cost of Revenue

Cost of revenue consists primarily of hardware and software material costs and compensation and related expenses for personnel involved in the customization of Comverse VAS’s products for customer delivery, contractor costs, maintenance and professional services, such as installation costs and training, royalties and license fees, depreciation of equipment used in operations, amortization of capitalized software costs and certain purchased intangible assets and related overhead costs.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Cost of revenue was $55.6 million for the three months ended October 31, 2011, an increase of $11.0 million, or 24.6%, compared to the three months ended October 31, 2010. The increase was primarily attributable to:

• a $5.2 million increase in personnel-related costs primarily due to increased revenue from customer solutions;

• a $3.1 million increase in allocated overhead relating to cost of revenue; and

• a $1.7 million increase in material costs and overhead primarily due to increased revenue from customer solutions.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Cost of revenue was $151.3 million for the nine months ended October 31, 2011, a decrease of $3.8 million, or 2.4%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to a $12.5 million decrease in material costs and overhead primarily as a result of decreased revenue and decreases in provisions for contract loss and inventory obsolescence.

This decrease was partially offset by:

• a $6.3 million increase in allocated overhead related to cost of revenue; and

• a $3.7 million increase in personnel-related costs.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of compensation and related expenses of personnel, professional services, sales and marketing expenses, facility costs and unallocated overhead expenses.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Selling, general and administrative expenses were $1.9 million for the three months ended October 31, 2011, a decrease of $4.3 million, or 69.8%, compared to the three months ended October 31, 2010. The decrease was primarily attributable to a $3.4 million decrease in personnel-related costs principally due to workforce reductions and a decline in compensation levels.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Selling, general and administrative expenses were $6.5 million for the nine months ended October 31, 2011, a decrease of $15.0 million, or 69.9%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to:

• a $10.9 million decrease in personnel-related costs primarily due to workforce reductions and a decline in compensation levels; and

• a $2.2 million decrease in overhead allocations related to selling, general and administrative expenses.

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Research and Development, Net

Research and development expenses primarily consist of personnel-related costs involved in product development, net of reimbursement under government programs. Research and development expenses also include third-party development and programming costs and the amortization of purchased software code and services content used in research and development activities.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Research and development expenses, net were $6.8 million for the three months ended October 31, 2011, a decrease of $7.6 million, or 52.9%, compared to the three months ended October 31, 2010. The decrease was primarily attributable to:

• a $4.9 million decrease in personnel-related costs primarily due to workforce reductions and a decline in compensation levels; and

• a $1.9 million decrease in allocated overhead costs relating to research and development due to workforce reductions.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Research and development expenses, net were $19.4 million for the nine months ended October 31, 2010, a decrease of $25.8 million, or 57.0%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to:

• a $15.3 million decrease in personnel-related costs primarily due to workforce reductions, a decline in compensation levels, and a decrease in research and development activity;

• a $6.3 million decrease in allocated overhead costs relating to research and development due to a workforce reduction; and

• a $3.4 million decrease in contractor costs due to a decrease in research and development activity.

Segment Performance

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Segment performance was $48.7 million for the three months ended October 31, 2011 based on segment revenue of $112.7 million, representing a segment performance margin of 43.2% as a percentage of segment revenue. Segment performance was $55.9 million for the three months ended October 31, 2010 based on segment revenue of $121.1 million, representing a segment performance margin of 46.1% as a percentage of segment revenue. The decrease in segment performance margin was primarily attributable to the decrease in segment revenue, partially offset by the decrease in segment expenses for the three months ended October 31, 2011 compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Segment performance was $100.6 million for the nine months ended October 31, 2011 based on segment revenue of $276.2 million, representing a segment performance margin of 36.4% as a percentage of segment revenue. Segment performance was $119.3 million for the nine months ended October 31, 2010 based on segment revenue of $341.0 million, representing a segment performance margin of 35.0% as a percentage of segment revenue. The increase in segment performance margin was primarily attributable to the decrease in segment expenses partially offset by decrease in segment revenue for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010.

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Verint

	Three Months Ended October 31,				Change						Nine Months Ended October 31,				Change
	2011		2010		Amount			Percent			2011		2010		Amount			Percent
	(Dollars in thousands)
Revenue:
Revenue	$	199,364	$	186,641	$	12,723			6.8	%	$	570,655	$	539,930	$	30,725			5.7	%
Intercompany revenue		—		—		—			N/M			—		—		—			N/M
Total revenue		199,364		186,641		12,723			6.8	%		570,655		539,930		30,725			5.7	%
Costs and expenses:
Cost of revenue		70,139		58,941		11,198			19.0	%		194,597		177,094		17,503			9.9	%
Intercompany purchases		—		—		—			N/M			—		—		—			N/M
Selling, general and administrative		82,479		73,244		9,235			12.6	%		235,892		240,082		(4,190	)		(1.7	%)
Research and development, net		28,464		24,063		4,401			18.3	%		81,640		72,544		9,096			12.5	%
Total costs and expenses		181,082		156,248		24,834			15.9	%		512,129		489,720		22,409			4.6	%
Income from operations	$	18,282	$	30,393	$	(12,111	)		(39.8	%)	$	58,526	$	50,210	$	8,316			16.6	%
Computation of segment performance:
Total revenue	$	199,364	$	186,641	$	12,723			6.8	%	$	570,655	$	539,930	$	30,725			5.7	%
Segment revenue adjustment		5,211		—		5,211			N/M			6,173		—		6,173			N/M
Segment revenue	$	204,575	$	186,641	$	17,934			9.6	%	$	576,828	$	539,930	$	36,898			6.8	%
Total costs and expenses	$	181,082	$	156,248	$	24,834			15.9	%	$	512,129	$	489,720	$	22,409			4.6	%
Segment expense adjustments:
Stock-based compensation expense		6,650		13,090		(6,440	)		(49.2	%)		20,841		39,095		(18,254	)		(46.7	%)
Amortization of acquisition-related intangibles		9,368		7,632		1,736			22.7	%		25,664		22,762		2,902			12.7	%
Compliance-related professional fees		3		823		(820	)		(99.6	%)		1,011		27,090		(26,079	)		(96.3	%)
Acquisition-related charges		2,183		518		1,665			N/M			7,377		1,349		6,028			N/M
Other		2,329		646		1,683			260.5	%		4,335		1,199		3,136			261.6	%
Segment expense adjustments		20,533		22,709		(2,176	)		(9.6	%)		59,228		91,495		(32,267	)		(35.3	%)
Segment expenses		160,549		133,539		27,010			20.2	%		452,901		398,225		54,676			13.7	%
Segment performance	$	44,026	$	53,102	$	(9,076	)		(17.1	%)	$	123,927	$	141,705	$	(17,778	)		(12.5	%)

Revenue

Verint’s product revenue consists of the sale of hardware and software products. Verint’s service and support revenue consists primarily of revenue from installation, consulting and training services and post-contract customer support.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Product revenue was $101.2 million for the three months ended October 31, 2011, an increase of $3.4 million, or 3.5%, compared to the three months ended October 31, 2010. The increase was attributable to an increase in product revenue of $2.2 million and $2.9 million related to Verint’s Enterprise Intelligence solutions and Verint’s Video Intelligence solutions, respectively. Verint’s Enterprise Intelligence solutions revenue increased due to continued growth in sales to existing and new customers. Product revenue related to Verint’s Video Intelligence solutions increased primarily due to an increase in product deliveries to customers, partially offset by a reduction in revenue recognized from prior fiscal years’ multiple-element arrangements where the entire arrangement was being recognized ratably over several fiscal quarters or years due to the prior business practice of providing implied PCS to customers for which VSOE did not exist. These increases in product revenue were partially offset by a decrease in revenue of $1.7 million related to Verint’s Communications Intelligence solutions due to an increase in projects requiring customized implementation services, some of which have a lower portion of the fee attributable to product revenue during the three months ended October 31, 2011 compared to the three months ended October 31, 2010.

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Service and support revenue was $98.2 million for the three months ended October 31, 2011, an increase of $9.3 million, or 10.5%, compared to the three months ended October 31, 2010. The increase was primarily attributable to an increase in service and support revenue of $5.6 million and $5.0 million related to Verint’s Enterprise Intelligence solutions and Communications Intelligence solutions, respectively. The increase in Verint’s Enterprise Intelligence service and support revenue is principally due to an increase in customer installed base and the related support revenue generated from this customer base and, to a lesser extent, the inclusion of the results of operations of companies (primarily Vovici) acquired during the three months ended October 31, 2011. The increase in Communications Intelligence service and support revenue is principally due to an increase in customer installed base and the related support revenue generated from this customer base, and the progress realized during the three months ended October 31, 2011 on certain large projects, some of which commenced in the previous fiscal year. These increases in service and support revenue were partially offset by a $1.3 million decrease in revenue related to Verint’s Video Intelligence solutions due to a reduction in service revenue recognized from prior fiscal years’ multiple-element arrangements where the entire arrangement was being recognized ratably over several fiscal quarters or years due to the prior business practice of providing implied PCS to customers for which VSOE did not exist.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Product revenue was $284.8 million for the nine months ended October 31, 2011, an increase of $1.9 million, or 0.7%, compared to the nine months ended October 31, 2010. The increase was primarily attributable to a $6.8 million increase in revenue related to Verint’s Video Intelligence solutions primarily due to an increase in product deliveries to customers and recognition of revenue associated with the completion of an implementation of a project for a large customer during the three months ended October 31, 2011, partially offset by a reduction in revenue recognized from prior fiscal years’ multiple-element arrangements where the entire arrangement was being recognized ratably over several fiscal quarters or years due to the prior business practice of providing implied PCS to customers for which VSOE did not exist. The increase in revenue was partially offset by a $3.4 million decrease in revenue related to Verint’s Communication Intelligence solutions and also a $1.5 million decrease in revenue related to Verint’s Enterprise Intelligence solutions. The decrease in revenue related to Verint’s Communications Intelligence solutions was due to an increase in projects requiring customized implementation services, some of which have a lower portion of the fee attributable to product revenue, during the nine months ended October 31, 2011, compared to the nine months ended October 31, 2010. The decrease in product revenue related to Verint’s Enterprise Intelligence solutions is due, in part, to decreased product deliveries during the nine months ended October 31, 2011, due to stronger than expected product revenue in the three months ended January 31, 2011, which adversely impacted product revenue in the nine months ended October 31, 2011.

Service and support revenue was $285.8 million for the nine months ended October 31, 2011, an increase of $28.8 million, or 11.2%, compared to the nine months ended October 31, 2010. The increase was primarily attributable to an increase in service and support revenue of $20.6 million related to Verint’s Enterprise Intelligence solutions principally due to an increase in its customer installed base and the related support revenue generated from this customer base and, to a lesser extent, the inclusion of companies (primarily Vovici) acquired during the three months ended October 31, 2011. Verint continues to experience expansion of its implementation services revenue due to the growth in its professional services organization to meet the demands of its customer base. In addition, there was an increase in service and support revenue of $12.0 million related to Verint’s Communications Intelligence solutions primarily due to an increase in its customer installed base and the related support revenue generated from this customer base, and the progress realized during the nine months ended October 31, 2011 on certain large projects, some of which commenced in the previous fiscal year, which resulted in an increase in service revenue during the nine months ended October 31, 2011, compared to the nine months ended October 31, 2010. These increases in service and support revenue were partially offset by a $3.8 million decrease in revenue related to Verint’s Video Intelligence solutions due to a reduction in service revenue recognized from prior fiscal years’ multiple-element arrangements where the entire arrangement was being recognized ratably over several fiscal quarters or years due to the prior business practice of providing implied PCS to customers for which VSOE did not exist.

Revenue by Geographic Region

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Revenue in the Americas, EMEA and APAC represented approximately 54%, 28%, and 18% of Verint’s total revenue, respectively, for the three months ended October 31, 2011 compared to approximately 49%, 26%, and 25%, respectively, for the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Revenue in the Americas, EMEA and APAC represented approximately 53%, 27%, and 20% of Verint’s total revenue, respectively, for the nine months ended October 31, 2011 compared to approximately 52%, 26%, and 22%, respectively, for the nine months ended October 31, 2010.

Cost of Revenue

Cost of revenue consists of product costs, service costs and amortization of acquired technology. Verint’s product cost of revenue primarily consists of hardware material costs, royalties due to third parties for software components that are embedded in the software applications, amortization of capitalized software development costs, personnel-related costs associated with Verint’s global operations, contractor and consulting expenses, travel expenses relating to resources dedicated to the delivery of customized projects, facility costs, and other allocated overhead expenses. Verint’s service cost of revenue primarily consists of personnel-related costs, contractor costs, travel expenses relating to installation, training, consulting, and maintenance services, stock-based compensation expenses, facility costs, and other overhead expenses.

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Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Product cost of revenue was $37.0 million for the three months ended October 31, 2011, an increase of $8.2 million, or 28.3%, compared to the three months ended October 31, 2010. Verint’s overall product margins decreased in the three months ended October 31, 2011 compared to the three months ended October 31, 2010, primarily as a result of higher profit margins on projects recognized in the three months ended October 31, 2010, compared to the three months ended October 31, 2011, partially offset by a favorable product mix. Product costs for the three months ended October 31, 2011 and 2010 included amortization of acquired technology of $3.4 million and $2.3 million, respectively.

Service cost of revenue was $33.1 million for the three months ended October 31, 2011, an increase of $3.0 million, or 10.0%, compared to three months ended October 31, 2010. The increase was primarily attributable to a $3.6 million increase in personnel-related costs due to an increase in employee headcount required to deliver the increased volume of implementation services. Verint’s overall service margins remained consistent in the three months ended October 31, 2011 and 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Product cost of revenue was $98.1 million for the nine months ended October 31, 2011, an increase of $8.1 million, or 9.0%, compared to the nine months ended October 31, 2010. Verint’s overall product margins decreased slightly in the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010, as a result of higher profit margins on projects recognized in the nine months ended October 31, 2010 as compared to the nine months ended October 31, 2011 partially offset by a favorable product mix. Product costs for the nine months ended October 31, 2011 and 2010 included amortization of acquired technology of $8.7 million and $6.7 million, respectively.

Service cost of revenue was $96.5 million for the nine months ended October 31, 2011, an increase of $9.4 million, or 10.8%, compared to the nine months ended October 31, 2010. The increase was primarily attributable to a $10.2 million increase in personnel-related costs due to an increase in employee headcount required to deliver the increased volume of implementation services. Verint’s overall service and support margins remained consistent for the nine months ended October 31, 2011 and 2010.

Selling, General and Administrative

Verint’s selling, general and administrative expenses consist primarily of personnel-related costs and related expenses, professional fees, sales and marketing expenses, including travel, sales commissions and sales referral fees, facility costs, communication expenses, other administrative expenses and amortization of other acquired intangible assets which consists of amortization of certain intangible assets acquired in connection with business combinations, including customer relationships, distribution networks, trade names and non-compete agreements.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Selling, general, and administrative expenses were $82.5 million for the three months ended October 31, 2011, an increase of $9.2 million, or 12.6%, compared to the three months ended October 31, 2010. The increase was primarily attributable to:

• an $8.2 million increase in personnel-related costs and a $1.4 million increase in employee travel expenses, both of which were due to an increase in employee headcount; and

• a $2.5 million increase in costs associated with business combinations, consisting primarily of legal and other professional fees.

This increase was partially offset by a $4.5 million decrease in stock-based compensation primarily due to a decrease in the number of outstanding stock-based compensation arrangements accounted for as liability awards and lower average amounts of outstanding restricted stock units compared to the three months ended October 31, 2010.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Selling, general, and administrative expenses were $235.9 million for the nine months ended October 31, 2011, a decrease of $4.2 million, or 1.7%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to:

• a $26.1 million decrease in compliance-related professional fees due to Verint becoming current in its periodic reporting obligations under the federal securities laws in June 2010; and

• an $11.5 million decrease in stock-based compensation primarily due to a decrease in the number of outstanding stock-based compensation arrangements accounted for as liability awards and lower average amounts of outstanding restricted stock units during the nine months ended October 31, 2011.

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This decrease was partially offset by an $18.0 million increase in personnel-related costs, a $3.3 million increase in employee travel expenses, both of which, were due to an increase in employee headcount and a $6.9 million increase in costs associated with business combinations, primarily due to a $1.1 million net increase in the change in fair value of contingent consideration arrangements and a $4.8 million increase in legal and other professional fees, resulting principally from business combinations which closed during the three months ended October 31, 2011. These decreases were also partially offset by a $1.6 million increase in facilities expenses partially due to business combinations which closed during the three months ended October 31, 2011 and a $1.8 million increase in sales and marketing costs.

Research and Development, Net

Verint’s research and development expenses primarily consist of personnel and subcontracting expenses, facility costs, and other allocated overhead, net of certain software development costs that are capitalized as well as reimbursements under government programs. Software development costs are capitalized upon the establishment of technological feasibility and until related products are available for general release to customers.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Research and development expenses, net were $28.5 million for the three months ended October 31, 2011, an increase of $4.4 million, or 18.3%, compared to the three months ended October 31, 2010. The increase was primarily attributable to a $4.2 million increase in personnel-related costs due to an increase in employee headcount as well as the impact of the weakening U.S. dollar against the NIS and Canadian dollar on research and development wages in Verint’s Israeli and Canadian research and development facilities, and a $0.5 million increase in contractor costs. These increases were partially offset by a $1.1 million decrease in stock-based compensation due to a decrease in the number of outstanding stock-based compensation arrangements accounted for as liability awards compared to the three months ended October 31, 2010 and lower average amounts of outstanding restricted stock units, in each case, associated with Verint’s research and development employees.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Research and development expenses, net were $81.6 million for the nine months ended October 31, 2011, an increase of $9.1 million, or 12.5%, compared to the nine months ended October 31, 2010. The increase was primarily attributable to a $9.9 million increase in personnel-related costs due to an increase in employee headcount as well as the impact of the weakening U.S. dollar against the NIS and Canadian dollar on research and development wages in Verint’s Israeli and Canadian research and development facilities, and a $1.1 million increase in contractor costs. These increases were partially offset by a $3.8 million decrease in stock-based compensation due to the decrease in the number of outstanding stock-based compensation arrangements accounted for as liability awards during the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010 and lower average amounts of outstanding restricted stock units, in each case, associated with research and development employees.

Foreign Currency Effect on Operating Results

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. In the three months ended October 31, 2011 compared to the three months ended October 31, 2010, fluctuations in the value of the U.S. dollar relative to the other major currencies used in Verint’s business resulted in increases in Verint’s revenue, cost of revenue and operating expenses on a dollar-denominated basis. Had foreign exchange rates remained constant in these periods, Verint’s revenue would have been approximately $1.4 million lower and its cost of revenue and operating expenses would have been approximately $1.9 million lower, which would have resulted in an increase of approximately $0.5 million in income from operations for the three months ended October 31, 2011.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. In the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010, fluctuations in the value of the U.S. dollar relative to the other major currencies used in Verint’s business resulted in increases in revenue, cost of revenue and operating expenses on a dollar-denominated basis. Had foreign exchange rates remained constant in these periods, Verint’s revenues would have been approximately $12.1 million lower and its cost of revenue and operating expenses would have been approximately $11.7 million lower, which would have resulted in a decrease of approximately $0.4 million in income from operations for the nine months ended October 31, 2011.

Segment Performance

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Segment performance was $44.0 million for the three months ended October 31, 2011 based on segment revenue of $204.6 million, representing a segment performance margin of 21.5% as a percentage of segment revenue. Segment performance was $53.1 million for the three months ended October 31, 2010 based on segment revenue of $186.6 million, representing a segment performance margin of 28.5% as a percentage of segment revenue. The decrease in segment performance margin was primarily attributable to the increase in segment expenses partially offset by an increase in segment revenue for the three months ended October 31, 2011 compared to the three months ended October 31, 2010.

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Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Segment performance was $123.9 million for the nine months ended October 31, 2011 based on segment revenue of $576.8 million, representing a segment performance margin of 21.5% as a percentage of segment revenue. Segment performance was $141.7 million for the nine months ended October 31, 2010 based on segment revenue of $539.9 million, representing a segment performance margin of 26.2% as a percentage of segment revenue. The decrease in segment performance margin was primarily attributable to the increase in segment expenses partially offset by an increase in segment revenue for the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010.

All Other

	Three Months Ended October 31,						Change						Nine Months Ended October 31,						Change
	2011			2010			Amount			Percent			2011			2010			Amount			Percent
	(Dollars in thousands)
Revenue:
Revenue	$	23,328		$	26,772		$	(3,444	)		(12.9	%)	$	63,650		$	69,508		$	(5,858	)		(8.4	%)
Intercompany revenue		1,066			795			271			34.1	%		3,983			2,271			1,712			75.4	%
Total revenue		24,394			27,567			(3,173	)		(11.5	%)		67,633			71,779			(4,146	)		(5.8	%)
Costs and expenses:
Cost of revenue		25,392			25,386			6			0.0	%		65,024			70,130			(5,106	)		(7.3	%)
Intercompany purchases		1,066			1,232			(166	)		(13.5	%)		3,983			2,874			1,109			38.6	%
Selling, general and administrative		51,088			77,054			(25,966	)		(33.7	%)		168,347			242,245			(73,898	)		(30.5	%)
Research and development, net		5,060			8,894			(3,834	)		(43.1	%)		13,665			26,405			(12,740	)		(48.2	%)
Other operating expenses		6,703			4,426			2,277			51.4	%		19,683			10,666			9,017			84.5	%
Total costs and expenses		89,309			116,992			(27,683	)		(23.7	%)		270,702			352,320			(81,618	)		(23.2	%)
Loss from operations	$	(64,915	)	$	(89,425	)	$	24,510			(27.4	%)	$	(203,069	)	$	(280,541	)	$	77,472			(27.6	%)
Computation of segment performance:
Total revenue	$	24,394		$	27,567		$	(3,173	)		(11.5	%)	$	67,633		$	71,779		$	(4,146	)		(5.8	%)
Segment revenue adjustment		—			—			—			N/M			—			—			—			N/M
Segment revenue	$	24,394		$	27,567		$	(3,173	)		(11.5	%)	$	67,633		$	71,779		$	(4,146	)		(5.8	%)
Total costs and expenses	$	89,309		$	116,992		$	(27,683	)		(23.7	%)	$	270,702		$	352,320		$	(81,618	)		(23.2	%)
Segment expense adjustments:
Stock-based compensation expense		2,010			2,744			(734	)		(26.7	%)		7,240			8,492			(1,252	)		(14.7	%)
Compliance-related professional fees		5,082			31,144			(26,062	)		(83.7	%)		32,955			107,492			(74,537	)		(69.3	%)
Compliance-related compensation and other expenses		1,281			1,829			(548	)		(30.0	%)		1,885			804			1,081			134.5	%
Impairment charges		1,118			—			1,118			N/M			1,270			—			1,270			N/M
Litigation settlements and related costs		4,882			(17,258	)		22,140			(128.3	%)		5,444			(17,148	)		22,592			(131.7	%)
Restructuring and integration charges		1,838			21,800			(19,962	)		(91.6	%)		14,888			28,776			(13,888	)		(48.3	%)
Gain on sale of land		—			(2,371	)		2,371			N/M			—			(2,371	)		2,371			N/M
Other		3,155			1,230			1,925			156.5	%		6,250			269			5,981			N/M
Segment expense adjustments		19,366			39,118			(19,752	)		(50.5	%)		69,932			126,314			(56,382	)		(44.6	%)
Segment expenses		69,943			77,874			(7,931	)		(10.2	%)		200,770			226,006			(25,236	)		(11.2	%)
Segment performance	$	(45,549	)	$	(50,307	)	$	4,758			(9.5	%)	$	(133,137	)	$	(154,227	)	$	21,090			(13.7	%)

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Revenue

All Other revenue for the three and nine months ended October 31, 2011 and 2010 includes revenue generated primarily by Starhome, Comverse’s Mobile Internet operating segment (or Comverse MI) and Comverse’s Netcentrex operations (or Netcentrex).

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. All Other revenue was $23.3 million for the three months ended October 31, 2011, a decrease of $3.4 million, or 12.9%, compared to the three months ended October 31, 2010. The decrease was primarily attributable to a $5.7 million revenue decline at Comverse MI partially offset by a $1.5 million increase at Netcentrex and a $0.1 million increase in revenue at Starhome. All Other revenue for the three months ended October 31, 2011 consisted primarily of $10.6 million, $5.6 million and $6.5 million generated by Starhome, Comverse MI and Netcentrex, respectively. All Other revenue for the three months ended October 31, 2010 consisted primarily of $10.5 million, $11.2 million, and $5.0 million generated by Starhome, Comverse MI and Netcentrex, respectively.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. All Other revenue was $63.7 million for the nine months ended October 31, 2011, a decrease of $5.9 million, or 8.4%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to a $10.4 million revenue decline at Comverse MI partially offset by a $3.7 million increase in revenue at Starhome. All Other revenue for the nine months ended October 31, 2011 consisted primarily of $31.0 million, $15.4 million and $17.3 million generated by Starhome, Comverse MI and Netcentrex, respectively. All Other revenue for the nine months ended October 31, 2010 consisted primarily of $27.3 million, $25.8 million, and $15.0 million generated by Starhome, Comverse MI and Netcentrex, respectively.

Cost of Revenue

All Other cost of revenue for the three and nine months ended October 31, 2011 and October 31, 2010 was primarily attributable to Starhome and Comverse, including Comverse MI and Netcentrex. Cost of revenue attributable to Comverse includes shared services costs associated with percentage of completion projects attributable to Comverse’s operations, including Comverse BSS and Comverse VAS.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Cost of revenue was $25.4 million for the three months ended October 31, 2011, which was consistent with the three months ended October 31, 2010. Personnel-related costs increased by $5.5 million, and were partially offset by a $2.2 million decrease in material costs and a $2.0 million decrease in allocated overhead costs related to cost of revenue. Cost of revenue include expenses related to Comverse of $23.1 million and $23.4 million for the three months ended October 31, 2011 and 2010, respectively.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Cost of revenue was $65.0 million for the nine months ended October 31, 2011, a decrease of $5.1 million, or 7.3%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to:

• an $8.0 million decrease in material costs due to a decrease in provision for contract loss compared to the nine months ended October 31, 2010;

• a $2.0 million decrease in allocated overhead costs related to cost of revenue; and

• a $0.9 million decrease in contractor costs.

The decrease was partially offset by a $6.8 increase in personnel-related costs due to the assignment of certain research and development personnel to specific projects due to reduced research and development activity at Comverse with the personnel-related costs attributable to such personnel being recorded as cost of revenue in lieu of research and development expenses, net. Cost of revenue include expenses related to Comverse of $58.2 million and $64.2 million for the nine months ended October 31, 2011 and 2010, respectively.

Selling, General and Administrative

Selling, general and administrative expenses include primarily expenses incurred by Comverse, Starhome, CTI’s holding company operations and other insignificant operations. Selling, general and administrative attributable to Comverse include expenses incurred by Comverse’s global corporate functions in connection with shared services provided to Comverse’s operations, including Comverse BSS and Comverse VAS.

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Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Selling, general and administrative expenses were $51.1 million for the three months ended October 31, 2011, a decrease of $26.0 million, or 33.7%, compared to the three months ended October 31, 2010. The decrease was primarily attributable to a $26.1 million decrease in compliance-related professional fees primarily at CTI and Comverse. During the three months ended October 31, 2011, the Company incurred compliance-related professional fees primarily in connection with the preparation of the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 (which was filed with the SEC on September 8, 2011). Such fees were lower than the compliance-related professional fees incurred during the three months ended October 31, 2010 in connection with our efforts to complete adjustments to our historical financial statements and evaluations of the application of U.S. GAAP, which were ultimately concluded with the filing of the comprehensive Annual Report on Form 10-K for the fiscal years ended January 31, 2009, 2008, 2007 and 2006 (or the Comprehensive Form 10-K) with the SEC on October 4, 2010. Selling, general and administrative expenses include expenses related to Comverse of $34.3 million and $55.5 million for the three months ended October 31, 2011 and 2010, respectively.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Selling, general and administrative expenses were $168.3 million for the nine months ended October 31, 2011, a decrease of $73.9 million, or 30.5%, compared to the nine months ended October 31, 2010. The decrease was primarily attributable to a $74.5 million decrease in compliance-related professional fees related primarily to CTI and Comverse. During the nine months ended October 31, 2011, the Company incurred compliance-related professional fees primarily in connection with the preparation of the 2010 Form 10-K (which was filed with the SEC on May 31, 2011), the Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2011 (which was filed with the SEC on June 22, 2011), the Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2010, July 31, 2010 and October 31, 2010 (which were filed with the SEC on July 28, 2011) and the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 (which was filed with the SEC on September 8, 2011). Such fees were lower than the compliance-related professional fees incurred during the nine months ended October 31, 2010 in connection with our efforts to complete adjustments to our historical financial statements and evaluations of the application of U.S. GAAP, which were ultimately concluded with the filing of the Comprehensive Form 10-K with the SEC on October 4, 2010. Selling, general and administrative expenses include expenses related to Comverse of $106.6 million and $162.3 million for the nine months ended October 31, 2011 and 2010, respectively.

Research and Development, Net

Research and development expenses, net primarily include expenses incurred by Comverse and Starhome. Research and development expenses, net attributable to Comverse include expenses incurred by Comverse’s global corporate functions in connection with shared services provided to Comverse’s operations, including Comverse BSS and Comverse VAS.

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Research and development expenses, net were $5.1 million for the three months ended October 31, 2011, a decrease of $3.8 million, or 43.1%. The decrease was primarily attributable to a $2.0 million decrease in personnel-related costs due to workforce reduction at Comverse’s global corporate functions, Comverse MI and Netcentrex and a $1.1 million decrease in allocated overhead costs related to research and development at Comverse’s global corporate functions and Netcentrex. Research and development expenses, net include expenses related to Comverse of $3.0 million and $6.9 million for the three months ended October 31, 2011 and 2010,

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Research and development expenses, net were $13.7 million for the nine months ended October 31, 2011, a decrease of $12.7 million, or 48.2%. The decrease was primarily attributable to:

• a $7.3 million decrease in personnel-related costs due to a decrease in research and development activity, resulting in certain personnel being assigned to specific projects and the related personnel costs being recorded in cost of revenue in lieu of research and development expenses, net; and

• a $4.1 million decrease in personnel-related costs primarily due to a workforce reduction at Comverse.

Research and development expenses, net include expenses related to Comverse of $7.6 million and $20.7 million for the nine months ended October 31, 2011 and 2010, respectively.

Other Operating Expense

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Other operating expenses were $6.7 million for the three months ended October 31, 2011, an increase of $2.3 million, or 51.4%. The increase was primarily attributable to litigation settlement income of $17.4 million received by CTI in connection with settlements of the consolidated shareholder derivative actions and consolidated shareholder class action, in the three months ended October 31, 2010, compared to $4.9 million of litigation settlement costs for the three months ended October 31, 2011. This increase was partially offset by a $20.0 million decrease in restructuring and integration charges due to higher personnel-related expenses incurred during the three months ended October 31, 2010 in connection with the implementation of restructuring initiatives at Comverse.

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Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Other operating expenses were $19.7 million for the nine months ended October 31, 2011, an increase of $9.0 million, or 84.5%. The increase was primarily attributable to litigation settlement income of $17.5 million received by CTI in connection with settlements of the consolidated shareholder derivative actions and consolidated shareholder class action, in the nine months ended October 31, 2010, compared to $4.9 million of litigation settlement costs for the nine months ended October 31, 2011. This increase was partially offset by a $13.9 million decrease in restructuring and integration charges due to higher personnel-related expenses incurred during the nine months ended October 31, 2010.

Loss from Operations

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Loss from operations was $64.9 million for the three months ended October 31, 2011, a decrease in loss of $24.5 million, or 27.4%, compared to the three months ended October 31, 2010. For the three months ended October 31, 2011 and 2010, Starhome had income from operations of $2.0 million and $1.9 million, respectively.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Loss from operations was $203.1 million for the nine months ended October 31, 2011, a decrease in loss of $77.5 million, or 27.6%, compared to the nine months ended October 31, 2010. For the nine months ended October 31, 2011 and 2010, Starhome had income from operations of $5.8 million and $2.9 million, respectively.

Segment Performance

Three Months Ended October 31, 2011 compared to Three Months Ended October 31, 2010. Segment performance was a $45.5 million loss for the three months ended October 31, 2011, a decrease in loss of $4.8 million, or 9.5%, compared to the loss for the three months ended October 31, 2010. The decrease in loss was attributable to a decrease in segment expenses partially offset by a decrease in segment revenue.

Nine Months Ended October 31, 2011 compared to Nine Months Ended October 31, 2010. Segment performance was a $133.1 million loss for the nine months ended October 31, 2011, a decrease in loss of $21.1 million, or 13.7%, compared to the loss for the nine months ended October 31, 2010. The decrease in loss was attributable to a decrease in segment expenses partially offset by a decrease in segment revenue.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal sources of liquidity historically have consisted of cash and cash equivalents, cash flows from operations, including changes in working capital, borrowings under term loans and revolving credit facilities, proceeds from the issuance of convertible debt obligations, the sale of investments and assets and receipt of dividends from subsidiaries. We believe that our future sources of liquidity will include cash and cash equivalents, proceeds from sales of investments, new borrowings, cash generated from asset divestitures, or proceeds from the issuance of equity or debt securities.

During the nine months ended October 31, 2011, our principal uses of liquidity were to fund operating expenses, make capital expenditures, repay indebtedness, service our debt obligations, complete business combinations, make cash payments under the consolidated shareholder class action settlement agreement, and pay significant professional fees and other expenses in connection with our efforts to become current in and continue to meet our periodic reporting obligations under the federal securities laws. In addition, we expended resources and made investments to improve our internal control over financial reporting, through the hiring of additional experienced finance and accounting personnel, redesigning of processes, implementing accounting and finance systems and performing additional business analytics. These expenses declined significantly in the nine months ended October 31, 2011 compared to the nine months ended October 31, 2010 and we expect these expenses to continue to decline significantly in subsequent fiscal periods as we continue to file timely periodic reports, improve internal controls and expand our financial reporting and analysis capabilities.

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Financial Condition of CTI and Comverse

Cash and Cash Equivalents

As of October 31, 2011, CTI and Comverse had cash, cash equivalents, bank time deposits and restricted cash of approximately $342.6 million, compared to approximately $374.2 million as of July 31, 2011.

During the three months ended October 31, 2011, CTI and Comverse made the following significant disbursements:

• $20.0 million paid by CTI in accordance with the terms of the settlement agreement of the consolidated shareholder class action;

• approximately $10.4 million paid for professional fees primarily in connection with CTI’s timely filing of its Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 and to remediate material weaknesses in internal control over financial reporting;

• approximately $4.0 million in restructuring payments, including workforce reduction initiatives at Comverse; and

• approximately $2.1 million paid by CTI in connection with a separation agreement with CTI’s former President and Chief Executive Officer.

In addition, during the three months ended October 31, 2011, CTI’s holding company operations experienced negative cash flows from operations.

For the three months ended October 31, 2011, such reductions in cash and cash equivalents were partially offset primarily by positive cash flows from operations at Comverse.

Restricted Cash

Restricted cash aggregated $61.8 million and $78.5 million as of October 31, 2011 and July 31, 2011, respectively. Restricted cash includes compensating cash balances related to existing lines of credit and deposits that are pledged as collateral or restricted for use to settle specified credit-related bank instruments, pending tax judgments and proceeds received from sales and redemptions of ARS (including interest thereon) that were restricted under the terms of the consolidated shareholder class action settlement agreement. As of October 31, 2011 and July 31, 2011, CTI had $14.1 million and $33.6 million, respectively, of restricted cash received from sales and redemptions of ARS (including interest thereon) that were restricted under the terms of the settlement agreement. Subsequent to October 31, 2011, CTI used approximately $8.8 million of such restricted cash and shares of its common stock to pay all remaining amounts under the settlement agreement and, accordingly, all remaining cash proceeds received from sales and redemptions of ARS became unrestricted.

ARS

Cash, cash equivalents, bank time deposits and restricted cash excludes ARS. As of October 31, 2011 and July 31, 2011, CTI had $68.7 million and $68.9 million aggregate principal amount of ARS, respectively, with a carrying amount on each such date of approximately $50.3 million and $51.9 million, respectively. As noted above, proceeds from sales and redemptions of ARS (including interest thereon) were restricted under the terms of the consolidated shareholder class action settlement agreement. In November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash. Subsequent to October 31, 2011, CTI paid all remaining amounts under the settlement agreement and, as noted above, all remaining ARS became unrestricted.

Liquidity Forecast

We currently forecast that available cash and cash equivalents will be sufficient to meet the liquidity needs, including capital expenditures, of CTI and Comverse for at least the next 12 months.

Management’s current forecast is based upon a number of assumptions including, among others: Comverse’s improved operating performance due to, among other things, the implementation of the Phase II Business Transformation; continued reduced operating costs attributable to the first phase of Comverse’s restructuring plan; restricted cash and bank time deposits in amounts consistent with historical levels; slight reductions in the unrestricted cash levels required to support the working capital needs of the business; reductions in compliance-related costs; and intra-quarter working capital fluctuations consistent with historical trends. Management believes that the above-noted assumptions are reasonable. However, should one or more of the assumptions prove incorrect, or should one or more of the risks or uncertainties described in Item 1A, “Risk Factors” of the 2010 Form 10-K in Part II, Item 1A, “Risk Factors,” of the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 and in Part II, Item 1A, “Risk Factors,” of this Quarterly Report materialize, CTI and Comverse may experience a shortfall in the cash required to support working capital needs.

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Financial Condition of CTI’s Majority-Owned Subsidiaries

Based on past performance and current expectations, we believe that cash and cash equivalents, and cash generated from operations by our majority-owned subsidiaries will be sufficient to meet their respective anticipated operating costs, working capital needs, capital expenditures, research and development spending, and other commitments and, in respect of Verint, required payments of principal and interest, for at least the next 12 months.

The liquidity of CTI’s majority-owned subsidiaries could be negatively impacted by a decrease in demand for their products and service and support, including the impact of changes in customer buying behavior due to the economic environment. If any of CTI’s majority-owned subsidiaries determines to make acquisitions or otherwise requires additional funds, it may need to raise additional capital, which could involve the issuance of equity or debt securities. There can be no assurance that such subsidiary would be able to raise additional equity or debt in the private or public markets on terms favorable to it, or at all.

Verint incurred significant professional fees and related expenses during the past several fiscal years, including the fiscal year ended January 31, 2011, in connection with its efforts to become current in its periodic reporting obligations under the federal securities laws. By July 2010, Verint filed with the SEC annual reports for all required fiscal years and quarterly reports for certain fiscal quarters for which it had not previously filed reports, resumed making timely periodic filings with the SEC, relisted its common stock on NASDAQ and resolved certain matters with the SEC. As a result, professional fees incurred by Verint during the nine months ended October 31, 2011 declined significantly from those incurred during the nine months ended October 31, 2010. Verint expects future professional fees and related expenses to continue to be significantly lower than the amounts incurred during Verint’s filing delay period.

Sources of Liquidity

The following is a discussion that highlights our primary sources of liquidity, cash and cash equivalents, and changes in those amounts due to operations, financing, and investing activities and the liquidity of our investments.

Cash Flows

Nine Months Ended October 31, 2011 Compared to Nine Months Ended October 31, 2010

	Nine Months Ended October 31,
	2011			2010
	(Dollars in thousands)
Net cash used in operating activities	$	(81,473	)	$	(215,440	)
Net cash (used in) provided by investing activities		(75,900	)		23,463
Net cash used in financing activities		(6,554	)		(1,053	)
Net cash provided by discontinued operations		—			52,554
Effects of exchange rates on cash and cash equivalents		3,883			1,288
Net decrease in cash and cash equivalents		(160,044	)		(139,188	)
Cash and cash equivalents, beginning of period including the cash of discontinued operations		581,390			574,872
Cash and cash equivalents, end of period including the cash of discontinued operations		421,346			435,684
Less cash and cash equivalents of discontinued operations at end of period		—			(66,880	)
Cash and cash equivalents, end of period	$	421,346		$	368,804

Operating Cash Flows

Our operating cash flows vary significantly from period to period based on timing of collections of accounts receivable, receipts of deposits on work-in-process and achievement of milestones. During the nine months ended October 31, 2011, we used net cash of $81.5 million for operating activities. Net cash used in operating activities was primarily attributable to:

• the recognition of deferred revenue for which the related deposits were previously received;

• a net loss for the nine months ended October 31, 2011;

• a payment made under the settlement agreement of the consolidated shareholder class action; and

• cash used to settle previously recognized accounts payable and accrued expenses.

Such cash used in operating activities was partially offset by a decrease in deferred cost of revenue.

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Investing Cash Flows

During the nine months ended October 31, 2011, net cash used in investing activities was $75.9 million. Net cash used in investing activities was primarily attributable to (i) $98.7 million of cash used for Verint’s acquisition of a business and payments of contingent consideration associated with business combinations completed in prior periods and (ii) $15.7 million of cash used for capital expenditures, including capitalization of software development costs. These cash outflows were partially offset by proceeds of $26.3 million from sales and redemptions of investments and an $11.8 million decrease in restricted cash and bank time deposits.

Financing Cash Flows

During the nine months ended October 31, 2011, net cash used in financing activities was $6.6 million. Net cash used in financing activities is primarily attributable to (i) $591.5 million of cash used to repay bank loans, long-term debt and other financing obligations, including the repayment of $583.2 million of outstanding borrowings under Verint’s prior facility, (ii) $15.3 million of debt issuance costs incurred by Verint in connection with the new credit agreement, and (iii) $4.3 million of cash used to repurchase stock of CTI from certain directors, executive officers and employees to cover tax liabilities in connection with the delivery of shares in settlement of stock awards. These were partially offset by (i) $597.0 million of Verint’s borrowings under the new credit agreement representing $600.0 million of gross borrowings, net of a $3.0 million original issuance discount, and (ii) $8.6 million of net proceeds received from the issuance of common stock by a subsidiary.

Effects of Exchange Rates on Cash and Cash Equivalents

The majority of our cash and cash equivalents are denominated in the U.S. dollars. However, due to the nature of our global business, we also hold cash denominated in other currencies, primarily the euro, the NIS and the British pound Sterling. For the nine months ended October 31, 2011, the fluctuation in foreign currency exchange rates had a favorable impact of $3.9 million on cash and cash equivalents primarily due to the weakening of the U.S. dollar relative to the major foreign currencies we held during such period.

Liquidity of Investments

As of October 31, 2011 and January 31, 2011, the carrying amount of our ARS was $50.3 million and $72.4 million, respectively, and their principal amount was $68.7 million and $94.4 million, respectively. Since October 2009, the prices of many of the ARS we held have essentially stabilized and we recorded no other-than-temporary impairment charges for the nine months ended October 31, 2011. We recorded other-than-temporary impairment charges of $0.4 million for the nine months ended October 31, 2010. As of October 31, 2011 and January 31, 2011, all investments in ARS (all of which were held by CTI as of such date) were restricted as CTI was prohibited from using proceeds from sales of such ARS pursuant to the terms of the consolidated shareholder class action settlement agreement CTI entered into on December 16, 2009, as amended on June 19, 2010. Subsequent to October 31, 2011, CTI paid all remaining amounts under the settlement agreement and accordingly, all ARS became unrestricted. For more information, see “—Restrictions on Use of ARS Sales Proceeds” and note 20 to the condensed consolidated financial statements included in this Quarterly Report.

In November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash.

On August 5, 2011, Standard & Poor’s Ratings Services lowered its long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’, and the outlook on its long-term rating is negative. In addition, the developments in Europe have created uncertainty with respect to the ability of certain European Union countries to continue to service their sovereign debt obligations. We continue to monitor the impact of these and other events on the financial institutions in which we hold our cash and investments.

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Restrictions on Use of ARS Sales Proceeds

As part of the settlement agreement of the consolidated shareholder class action, as amended, CTI granted a security interest for the benefit of the plaintiff class in the account in which CTI holds its ARS (other than the ARS that were held in an account with UBS) and the proceeds from any sales thereof, restricting CTI’s ability to use proceeds from sales of such ARS until the amounts payable under the settlement agreement are paid in full. In addition, under the terms of the settlement agreement of the consolidated shareholder class action, if CTI received net cash proceeds from the sale of certain ARS held by it in an aggregate amount in excess of $50.0 million, CTI was required to use $50.0 million of such proceeds to prepay the settlement amounts under the settlement agreement and, if CTI received net cash proceeds from the sale of such ARS in an aggregate amount in excess of $100.0 million, CTI was required to use an additional $50.0 million of such proceeds to prepay the settlement amounts under the settlement agreement. As of October 31, 2011 and January 31, 2011, CTI had $14.1 million and $33.4 million of restricted cash received from sales and redemptions of ARS (including interest thereon) to which these provisions of the settlement agreement applied, respectively. In May 2011, CTI used $30.0 million of restricted cash to make the payment that was due under the terms of the settlement agreement. As a result of certain redemptions of ARS, through July 20, 2011, CTI had received cash proceeds from the sale of certain ARS then held by it in an aggregate amount in excess of $50.0 million and, as a result, prepaid in October 2011 $20.0 million of the remaining $112.5 million due under the settlement agreement on November 15, 2011 (as $30.0 million of such net proceeds were used to fund the May 2011 payment). As of October 31, 2011 and January 31, 2011, CTI held $68.7 million and $94.4 million aggregate principal amount of ARS with a carrying amount on each of such date of approximately $50.3 million and $72.4 million, respectively, to which such restrictions applied. In November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash. Subsequent to October 31, 2011, CTI paid all remaining amounts under the settlement agreement and accordingly, all remaining ARS and cash proceeds from the sale of ARS became unrestricted.

Indebtedness

Verint Credit Facilities

On May 25, 2007, Verint entered into a $675.0 million secured credit agreement (referred to as the prior facility) with a group of banks to fund a portion of the acquisition of Witness. The prior facility was comprised of a $650.0 million seven-year term loan facility and a $25.0 million six-year revolving line of credit. The borrowing capacity under the revolving line of credit was increased to $75.0 million in July 2010.

On April 29, 2011, Verint entered into a credit agreement (referred to as the new credit agreement) with a group of lenders and Credit Suisse AG, as administrative agent and collateral agent for the lenders (referred to in such capacities as the agent), and terminated the prior facility.

The new credit agreement provides for $770.0 million of secured senior credit facilities, comprised of a $600.0 million term loan maturing in October 2017 (referred to as the new term loan facility) and a $170.0 million revolving credit facility maturing in April 2016 (referred to as the new revolving credit facility), subject to increase (up to a maximum increase of $300.0 million) and reduction from time to time according to the terms of the new credit agreement. As of October 31, 2011, Verint had no outstanding borrowings under the new revolving credit facility.

The majority of the new term loan facility proceeds were used to repay all $583.2 million of outstanding term loan borrowings under the prior facility at the closing date of the new credit agreement. There were no outstanding borrowings under the prior revolving credit facility at the closing date.

The new credit agreement included an original issuance term loan facility discount of 0.50%, or $3.0 million, resulting in net term loan facility proceeds of $597.0 million. This discount is being amortized as interest expense over the term of the term loan facility using the effective interest method.

Loans under the new credit agreement bear interest, payable quarterly or, in the case of Eurodollar loans with an interest period of three months or shorter, at the end of any interest period, at a per annum rate of, at Verint’s election:

• in the case of Eurodollar loans, the Adjusted London Interbank Offered (or LIBO) Rate plus 3.25% (or if Verint’s corporate ratings are at least BB- and Ba3 or better, 3.00%). The “Adjusted LIBO Rate” is the greater of (i) 1.25% per annum and (ii) the product of the LIBO Rate and Statutory Reserves (both as defined in the new credit agreement), and

• in the case of base rate loans, the Base Rate plus 2.25% (or if Verint’s corporate ratings are at least BB- and Ba3 or better, 2.00%). The “Base Rate” is the greatest of (i) the agent’s prime rate, (ii) the Federal Funds Effective Rate (as defined in the new credit agreement) plus 0.50% and (iii) the Adjusted LIBO Rate for a one month interest period plus 1.00%.

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Verint incurred debt issuance costs of $14.8 million associated with the new credit agreement, which have been deferred and classified within “Other assets.” The deferred costs are being amortized as interest expense over the term of the new credit agreement. Deferred costs associated with the term loan facility were $10.2 million, and are being amortized using the effective interest rate method. Deferred costs associated with the new revolving credit facility were $4.6 million and are being amortized on a straight-line basis.

At the closing date of the new credit agreement, there were $9.0 million of unamortized deferred costs associated with the prior facility. Upon termination of the prior facility and repayment of the prior term loan, $8.1 million of these fees were expensed as a loss on extinguishment of debt. The remaining $0.9 million of these fees were associated with lenders that provided commitments under both the new and the prior revolving credit facilities, which remained deferred and are being amortized over the term of the new credit agreement.

During the three months ended October 31, 2011, Verint incurred $0.5 million of fees to secure waivers of certain provisions of the new credit agreement which allowed it to structure the financing for one of its business combinations in a favorable manner, $0.2 million of which were deferred and will be amortized over the remaining term of the new credit agreement and $0.3 million of which were expensed as incurred.

As of October 31, 2011, the interest rate on the new term loan facility was 4.50%. Including the impact of the 0.50% original issuance term loan facility discount and the deferred debt issuance costs, the effective interest rate on Verint’s new term loan facility was approximately 4.91% as of October 31, 2011.

Verint incurred interest expense on borrowings under its credit facilities of $6.9 million and $21.3 million during the three and nine months ended October 31, 2011, respectively, and $8.0 million and $18.3 million during the three and nine months ended October 31, 2010, respectively. Verint also recorded $0.7 million and $2.1 million during the three and nine months ended October 31, 2011, respectively, for amortization of deferred debt issuance costs, which is reported within interest expense. Amortization of Verint’s deferred debt issuance costs during the three and nine months ended October 31, 2010 were $0.8 million and $2.0 million, respectively.

Verint is required to pay a commitment fee with respect to undrawn availability under the new revolving credit facility, payable quarterly, at a rate of 0.50% per annum, and customary administrative agent and letter of credit fees.

The new credit agreement requires Verint to make term loan principal payments of $1.5 million per quarter through August 2017, beginning in August 2011, with the remaining balance due in October 2017. Optional prepayments of the loans are permitted without premium or penalty, other than customary breakage costs associated with the prepayment of loans bearing interest based on LIBO Rates and a 1.0% premium applicable in the event of a Repricing Transaction (as defined in the new credit agreement) prior to April 30, 2012. The loans are also subject to mandatory prepayment requirements with respect to certain asset sales, excess cash flow (as defined in the new credit agreement), and certain other events. Prepayments are applied first to the eight immediately following scheduled term loan principal payments, and then pro rata to other remaining scheduled term loan principal payments, if any, and thereafter as otherwise provided in the new credit agreement.

Verint Systems’ obligations under the new credit agreement are guaranteed by substantially all of Verint’s domestic subsidiaries and certain foreign subsidiaries that have elected to be disregarded for U.S. tax purposes and are secured by security interests in substantially all assets of Verint and its guarantor subsidiaries, subject to certain exceptions. Verint’s obligations under the new credit agreement are not guaranteed by CTI and are not secured by any of CTI’s assets.

The new credit agreement contains customary negative covenants for credit facilities of this type, including limitations on Verint and its subsidiaries with respect to indebtedness, liens, nature of business, investments and loans, distributions, acquisitions, dispositions of assets, sale-leaseback transactions and transactions with affiliates. Accordingly, the new credit agreement precludes Verint Systems from paying cash dividends and limits its ability to make asset distributions to its stockholders, including CTI. The new credit agreement also contains a financial covenant that requires Verint to maintain a Consolidated Total Debt to Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (or EBITDA) (each as defined in the new credit agreement) leverage ratio until July 31, 2013 of no greater than 5.00 to 1.00 and, thereafter, of no greater than 4.50 to 1.00. The limitations imposed by the covenants are subject to certain exceptions. As of October 31, 2011, Verint was in compliance with such requirements. As of October 31, 2011, Verint’s consolidated leverage ratio was approximately 2.9 to 1.0 compared to a permitted consolidated leverage ratio of 5.00 to 1.00, and Verint’s EBITDA for the twelve-month period then ended exceeded the requirement of the covenant by more than $70.0 million.

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The new credit agreement also contains a number of affirmative covenants, including a requirement that Verint submit consolidated financial statements to the lenders within certain periods after the end of each fiscal year and quarter.

The new credit agreement provides for customary events of default with corresponding grace periods, including failure to pay principal or interest under the new credit agreement when due, failure to comply with covenants, any representation or warranty made by Verint proving to be inaccurate in any material respect, defaults under certain other indebtedness of Verint or its subsidiaries, a change of control (as defined in the new credit agreement) of Verint, and certain insolvency or receivership events affecting Verint or its significant subsidiaries. Upon an event of default, all of Verint’s obligations under the new credit agreement may be declared immediately due and payable, and the lenders’ commitments to provide loans under the new credit agreement may be terminated.

Other Verint Indebtedness

In connection with Verint’s August 2, 2011 business combination, Verint assumed approximately $3.3 million of development bank and government debt in the Americas region. This debt is payable in periods through February 2017 and bears interest at varying rates. As of October 31, 2011, the majority of this debt bears interest at an annual rate of 7.00%. The carrying value of this debt was approximately $3.2 million at October 31, 2011.

Convertible Debt Obligations

As of October 31, 2011 and January 31, 2011, CTI had $2.2 million aggregate principal amount of outstanding convertible debt obligations (referred to as the Convertible Debt Obligations). The Convertible Debt Obligations are not secured by any of our assets and are not guaranteed by any of CTI’s subsidiaries.

Comverse Ltd. Lines of Credit

As of January 31, 2011, Comverse Ltd., a wholly-owned Israeli subsidiary of Comverse, Inc., had a $10.0 million line of credit with a bank to be used for various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. This line of credit is not available for borrowings. The line of credit bears no interest and is subject to renewal on an annual basis. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts utilized under the line of credit. In June 2011, the line of credit increased to $20.0 million with a corresponding increase in the cash balances that Comverse Ltd. is required to maintain with the bank to $20.0 million. As of October 31, 2011 and January 31, 2011, Comverse Ltd. had utilized $18.8 million and $4.0 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

As of October 31, 2011 and January 31, 2011, Comverse Ltd. had an additional line of credit with a bank for $15.0 million, to be used for borrowings, various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. The line of credit bears no interest other than on borrowings thereunder and is subject to renewal on an annual basis. Borrowings under the line of credit bear interest at an annual rate of LIBOR plus a variable margin determined based on the bank’s underlying cost of capital. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts borrowed or utilized under the line of credit. As of January 31, 2011, Comverse Ltd. had outstanding borrowings of $6.0 million under the line of credit which was repaid in full during the three months ended April 30, 2011. Accordingly, as of October 31, 2011, Comverse Ltd. had no outstanding borrowings under the line of credit. As of October 31, 2011 and January 31, 2011, Comverse Ltd. had utilized $3.2 million and $7.3 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

Other than Comverse Ltd.’s requirement to maintain cash balances with the banks as discussed above, the lines of credit have no financial covenants. These cash balances required to be maintained with the banks were classified as “Restricted cash and bank time deposits” within the condensed consolidated balance sheets as of October 31, 2011 and January 31, 2011.

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Settlement of Shareholder Class Action

On December 16, 2009, CTI entered into a consolidated shareholder class action settlement agreement, which was amended on June 19, 2010. Pursuant to the amendment, CTI agreed to waive certain rights to terminate the settlement in exchange for a deferral of the timing of scheduled payments of the settlement consideration and the right to a credit (referred to as the Opt-out Credit) in respect of a portion of the settlement funds that would have been payable to a class member that elected not to participate in and be bound by the settlement. For a discussion of these actions and additional terms of the settlement, see note 20 to the condensed consolidated financial statements included in this Quarterly Report. As part of the settlement of the consolidated shareholder class action, as amended, CTI agreed to make payments to a class action settlement fund in the aggregate amount of up to $165.0 million that were paid as follows:

• $1.0 million that was paid following the signing of the settlement agreement in December 2009;

• $17.9 million that was paid in July 2010 (representing an agreed $21.5 million payment less a holdback of $3.6 million in respect of the then anticipated Opt-out Credit);

• $30.0 million that was paid in May 2011;

• $20.0 million that was paid in October 2011; and

• $91.3 million (representing the remaining $92.5 million less the amount by which the Opt-out Credit exceeded the holdback described above) that was paid subsequent to October 31, 2011, of which $82.5 million was paid through the issuance of 12,462,236 shares of CTI’s common stock and the remainder paid in cash.

The consolidated shareholder class action settlement agreement included restrictions on CTI’s ability to use proceeds from sales of ARS until the amounts payable under the settlement agreement are paid in full. Following the payment by CTI of the remaining amounts payable under the settlement agreement, these restrictions terminated. For more information, see “—Restrictions on Use of ARS Sales Proceeds.”

Restructuring Initiatives

We review our business, manage costs and align resources with market demand and in conjunction with various acquisitions. As a result, we have taken several actions to improve our cash position, reduce fixed costs, eliminate redundancies, strengthen operational focus and better position us to respond to market pressures or unfavorable economic conditions. While such restructuring initiatives are expected to have positive impact on our operating cash flows in the long term, they also have led and will lead to some charges.

Business Transformation

During the fiscal year ended January 31, 2011, we commenced certain initiatives to improve our cash position, including a plan to restructure the operations of Comverse with a view towards aligning operating costs and expenses with anticipated revenue. Comverse successfully implemented the first phase of such plan during the fiscal year ended January 31, 2011, significantly reducing its annualized operating costs. During the nine months ended October 31, 2011, Comverse implemented 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 restructured its operations into new business units 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 leading market position in VAS and implementing further cost savings through operational efficiencies and strategic focus. In relation to these restructuring plans, we recorded severance and facilities-related costs of $7.5 million during the nine months ended October 31, 2011. Severance and facilities-related costs of $8.8 million were paid during the nine months ended October 31, 2011 with the remaining cost of $1.1 million expected to be substantially paid by January 31, 2012. We are 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. During the nine months ended on October 31, 2011, Comverse began the second phase of its Netcentrex restructuring plan. In relation to these initiatives, we recorded severance-related costs of $7.1 million and paid $6.2 million of such costs during the nine months ended October 31, 2011. The remaining costs of $4.0 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 options for the Netcentrex business. For future financial obligations relating to our restructuring initiatives, see note 8 to the condensed consolidated financial statements.

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Guarantees and Restrictions on Access to Subsidiary Cash

Guarantees

We provide certain customers in the ordinary course of business with financial performance guarantees which in certain cases are backed by standby letters of credit or surety bonds, the majority of which are cash collateralized and accounted for as restricted cash and bank time deposits. We are only liable for the amounts of those guarantees in the event of our nonperformance, which would permit the customer to exercise the guarantee. As of October 31, 2011 and January 31, 2011, we believe that we were in compliance with our performance obligations under all contracts for which there is a financial performance guarantee, and that any liabilities arising in connection with these guarantees will not have a material adverse effect on our consolidated results of operations, financial position or cash flows. We also obtained bank guarantees primarily to provide customer assurance relating to the performance of certain obligations required by customer agreements for the guarantee of certain payment obligations. These guarantees, which aggregated $52.6 million as of October 31, 2011, are generally scheduled to be released upon our performance of specified contract milestones, a majority of which are scheduled to be completed at various dates through January 31, 2016.

Dividends from Subsidiaries

The ability of our Israeli subsidiaries to pay dividends is governed by Israeli law, which provides that dividends may be paid by an Israeli corporation only out of earnings as defined in accordance with the Israeli Companies Law of 1999, provided that there is no reasonable concern that such payment will cause such subsidiary to fail to meet its current and expected liabilities as they come due.

We operate our business internationally. A significant portion of our cash and cash equivalents are held outside of the United States by various foreign subsidiaries. If cash and cash equivalents held outside the United States are distributed to the United States resident corporate parents in the form of dividends or otherwise, we may be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. We may incur substantial withholding taxes if we repatriate our cash from certain foreign subsidiaries.

In addition, Verint is party to a credit agreement that contains certain restrictive covenants which, among other things, preclude Verint Systems from paying cash dividends and limits its ability to make asset distributions to its stockholders, including CTI. Also, pursuant to its investment agreements, Starhome B.V. is precluded from paying cash dividends to its shareholders without the approval of certain minority shareholders.

Investment in Verint Systems’ Preferred Stock

On May 25, 2007, in connection with Verint’s acquisition of Witness, CTI entered into a Securities Purchase Agreement with Verint (referred to as the Securities Purchase Agreement), whereby CTI purchased, for cash, an aggregate of 293,000 shares of Verint’s Series A Convertible Perpetual Preferred Stock (referred to as the 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 October 31, 2011 and January 31, 2011, cumulative, undeclared dividends on the preferred stock were $55.6 million and $45.7 million, respectively. As of October 31, 2011 and January 31, 2011, the liquidation preference of the preferred stock was $348.6 million and $338.7 million, respectively.

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. As of October 31, 2011 and January 31, 2011, the preferred stock could be converted into approximately 10.7 million and 10.4 million shares of Verint Systems’ common stock, respectively.

Liquidation Preference in Starhome B.V.

In the event of a liquidation, merger or sale of Starhome B.V., the first $20.0 million of proceeds would be distributed to certain minority shareholders. Thereafter, each shareholder would be entitled to receive its pro rata share of any remaining proceeds on an as-converted basis, provided, that, under certain circumstances, CTI would be entitled to receive up to $41.0 million of any such remaining proceeds.

Contingent Payments Associated with Business Combinations

In connection with certain of Verint’s business combinations, Verint has agreed to make contingent cash payments to the former shareholders of the acquired companies based upon achievement of performance targets following the acquisition dates.

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During the three months ended October 31, 2011, Verint completed three business combinations that included contingent cash consideration arrangements. For more information, see note 5 to the condensed consolidated financial statements included in the Quarterly Report.

As of October 31, 2011, potential future cash payments under these arrangements aggregated $65.5 million, the estimated fair value of which was $34.6 million, of which $13.6 million is included within “Accounts payable and accrued expenses,” and $21.0 million is included within “Other long-term liabilities.” The performance periods associated with these potential payments extend through January 2014.

OFF-BALANCE SHEET ARRANGEMENTS

As of October 31, 2011, we had no material off-balance sheet arrangements, other than performance guarantees disclosed in “—Liquidity and Capital Resources—Guarantees and Restrictions on Access to Subsidiary Cash—Guarantees.” There were no material changes in our off-balance sheet arrangements since January 31, 2011. For a more comprehensive discussion of our off-balance sheet arrangements as of January 31, 2011, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2010 Form 10-K.

CONTRACTUAL OBLIGATIONS

Verint’s New Lease Agreement

In November 2011, Verint executed a lease agreement for a new facility in the Americas region. This new facility will be occupied in connection with the expiration of Verint’s existing facility lease in the area at the end of November 2012. The lease term extends through September 2026. The aggregate minimum lease commitment over the term of this new lease, excluding operating expenses, is approximately $36.1 million.

Except for Verint’s entry into the new credit agreement, the termination of its prior facility, the contingent payments associated with Verint’s business acquisitions and Verint’s entry into a new lease agreement, there were no material changes in our contractual obligations or commercial commitments since January 31, 2011. For a more comprehensive discussion of our contractual obligations as of January 31, 2011, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2010 Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We described the significant accounting policies and methods used in the preparation of our consolidated financial statements in note 1 to the consolidated financial statement included in Item 15 of our 2010 Form 10-K. The accounting policies that reflect our more significant estimates, judgments and assumptions in the preparation of our consolidated financial statements are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2010 Form 10-K, and include the following:

• revenue recognition;

• stock-based compensation;

• business combinations;

• recoverability of goodwill;

• impairment of long-lived assets;

• allowance for doubtful accounts;

• valuation and other-than-temporary impairments;

• income taxes; and

• litigation and contingencies.

Except for the changes to our critical accounting policies and estimates discussed below, we do not believe that there were any significant changes in our critical accounting policies and estimates during the nine months ended October 31, 2011.

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Revenue Recognition

On February 1, 2011, we adopted new accounting guidance for multiple element revenue arrangements that are outside the scope of industry-specific software revenue recognition guidance, on a prospective basis. Arrangements that were entered into or materially modified on or after February 1, 2011 are accounted for under this new guidance. This guidance amends the criteria for allocating consideration in multiple-deliverable revenue arrangements by establishing a selling price hierarchy. The selling price used for each deliverable will be based on vendor specific objective evidence (or VSOE), if available, third-party evidence of fair value (or TPE) if VSOE is not available, or our best estimate of selling price (or BESP) if neither VSOE nor TPE is available.

When we are unable to establish selling price of our non-software deliverables using VSOE or TPE, we use BESP in our allocation of arrangement consideration. BESP is a more subjective measure than either VSOE or TPE, and determining BESP requires significant judgment. We determine BESP for a product or service by considering multiple factors, including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies and customer classes. For more information about our revenue recognition policies, see note 2 to the condensed financial statements included in this Quarterly Report.

RECENT ACCOUNTING PRONOUNCEMENTS TO BE IMPLEMENTED

For information related to recent accounting pronouncements to be implemented, see note 2 to the condensed consolidated financial statements included in this Quarterly Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our 2010 Form 10-K, filed with the SEC on May 31, 2011, provides a detailed discussion of the market risks affecting our operations. As discussed below, Verint completed transactions which impacted our exposures to interest rate risk during the three months ended October 31, 2011. Other than the impact of these transactions, which are described below, we believe our exposure to these market risks did not materially change during the three months ended October 31, 2011.

Interest Rate Risk on our Debt

In April 2011, Verint entered into a new credit agreement and concurrently terminated its prior facility. For additional discussion, see Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Verint Credit Facilities” and note 9 to the condensed consolidated financial statements included in this Quarterly Report.

Because the interest rates applicable to borrowings under the new credit agreement are variable, Verint is exposed to market risk from changes in the underlying index rates, which affect its cost of borrowing. The periodic interest rate on the new term loan facility is currently a function of several factors, most importantly the LIBO Rate and the applicable interest rate margin. However, borrowings are subject to a 1.25% LIBO Rate floor in the interest rate calculation, which currently reduces the likelihood of increases in the periodic interest rate, because current short-term LIBO Rates are well below 1.25%. Although the periodic interest rate may still fluctuate based upon Verint’s corporate ratings, which determine the interest rate margin, changes in short-term LIBO Rates will not impact the calculation unless those rates increase above 1.25%. Based upon Verint’s October 31, 2011 borrowings, for each 1% increase in the applicable LIBO Rate above 1.25%, annual interest payments would increase by approximately $6.0 million.

Verint had utilized a pay-fixed/receive-variable interest rate swap agreement to partially mitigate the variable interest rate risk associated with its prior facility. Verint terminated that agreement in July 2010. Verint may consider utilizing interest rate swap agreements, or other agreements intended to mitigate variable interest rate risk, in the future.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, for the three months ended October 31, 2011. Based on this evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of October 31, 2011, as we cannot conclude that the material weaknesses described in our 2010 Form 10-K have been remediated as of the date of this Quarterly Report.

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Changes in Internal Control Over Financial Reporting

In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no change identified in our internal control over financial reporting that occurred during the three months ended October 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We are continuing to make improvements to our internal control over financial reporting through the implementation of numerous remedial actions as outlined in Item 9A of our 2010 Form 10-K. We anticipate that most, but not all, of the material weaknesses disclosed in our 2010 Form 10-K will be remediated by January 31, 2012. Material weaknesses related to income taxes and other material weaknesses not fully remediated by January 31, 2012, if any, are expected to be remediated by January 31, 2013.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of our legal proceedings, see note 20 to the condensed consolidated financial statements included in this Quarterly Report. Except as set forth below, there have been no material developments in the legal proceedings previously reported in our 2010 Form 10-K and our Quarterly Report on Form 10-Q for the period ended April 30, 2011 and July 31, 2011.

Resolution of SEC Administrative Proceedings

On July 13, 2011, CTI entered into an agreement in principle with the SEC’s Division of Enforcement regarding the terms of a settlement of the Section 12(j) administrative proceeding, which was initiated by the SEC in March 2010, pursuant to Section 12(j) of the Exchange Act, to revoke the registration of CTI’s common stock due to CTI’s previous failure to file certain periodic reports with the SEC. The terms of the agreement in principle were reflected in an Offer of Settlement made on July 26, 2011 and which the SEC accepted on September 8, 2011. Under the terms of the settlement, the SEC’s Division of Enforcement agreed to recommend that the SEC resolve the Section 12(j) administrative proceeding against CTI if CTI filed its Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2010, July 31, 2010 and October 31, 2010 by 5:30 p.m. EDT on September 9, 2011 (which reports were filed on July 28, 2011) and its Quarterly Report for the fiscal quarter ended July 31, 2011 on a timely basis (which report was filed timely on September 8, 2011).

On September 16, 2011, the SEC ordered termination of the Section 12(j) administrative proceeding and entry of final judgment without the imposition of a remedy under such section. With the entry of final judgment, the Section 12(j) administrative proceeding has been resolved. For additional information, see note 20 to the condensed consolidated financial statements included in this Quarterly Report under the caption “SEC Civil Actions.”

Final Payments Under Class Action Settlement Agreement

On December 16, 2009, CTI entered into an agreement to settle a consolidated shareholder class action. The settlement agreement was amended on June 19, 2010. Pursuant to the amendment, CTI agreed to waive certain rights to terminate the settlement in exchange for a deferral of the timing of scheduled payments of the settlement consideration and the right to a credit (referred to as the Opt-out Credit) in respect of a portion of the settlement funds that would have been payable to a class member that elected not to participate in and be bound by the settlement.

As part of the settlement of the consolidated shareholder class action, as amended, CTI agreed to make payments to a class action settlement fund in the aggregate amount of up to $165.0 million that were paid as follows:

• $1.0 million that was paid following the signing of the settlement agreement in December 2009;

• $17.9 million that was paid in July 2010 (representing an agreed $21.5 million payment less a holdback of $3.6 million in respect of the then anticipated Opt-out Credit);

• $30.0 million that was paid in May 2011;

• $20.0 million that was paid in October 2011; and

• $91.3 million (representing the remaining $92.5 million less the amount by which the Opt-out Credit exceeded the holdback described above) that was paid subsequent to October 31, 2011, of which $82.5 million was paid through the issuance of 12,462,236 shares of CTI’s common stock and the remainder paid in cash.

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Under the terms of the settlement agreement, CTI granted a security interest for the benefit of the plaintiff class in the account in which CTI held its ARS (other than the ARS that were held in an account with UBS) and the proceeds from any sales thereof, restricting CTI’s ability to use the proceeds from sales of such ARS until the amounts payable under the settlement agreement are paid in full. Following the payment by CTI of the remaining amounts payable under the settlement agreement, the security interest for the benefit of the plaintiff class in CTI’s account terminated. For additional information, see note 20 to the condensed consolidated financial statements included in this Quarterly Report under the caption “Settlement Agreements.”

Settlement of Opt-Out Plaintiff’s Action

On September 28, 2010, an action was filed in the United States District Court for the Eastern District of New York under the caption Maverick Fund, L.D.C., et al. v. Comverse Technology, Inc., et al., No. 10-cv-4436. Plaintiffs alleged that they were CTI shareholders who purchased CTI’s publicly traded securities in 2005, 2006 and 2007. The plaintiffs, Maverick Fund, L.D.C. and certain affiliated investment funds, opted not to participate in the settlement of the consolidated shareholder class action. In December 2011, the parties agreed to a settlement in principle, pursuant to which CTI would be required to pay the plaintiffs approximately $9.5 million. For additional information, see note 20 to the condensed consolidated financial statements included in this Quarterly Report under the caption “Opt-out Plaintiffs’ Action.”

ITEM 1A. RISK FACTORS

Except as set forth below, there has been no material change to the risk factors previously reported in our 2010 Form 10-K and in our Quarterly Report on Form 10-Q for the period ended July 31, 2011.

The risk factors set forth in Item 1A, “Risk Factors” of our 2010 Form 10-K under the following captions are hereby eliminated:

• “CTI is and continues to be in violation of a final judgment and court order that mandated that it become current in its periodic reporting obligations under the federal securities laws by February 8, 2010. After CTI becomes current in such periodic reporting obligations, it will also be in violation of such judgment and court order if, in the future, it does not file its periodic reports in a timely manner. Violations of the final judgment and court order may result in significant sanctions.”

• “As a result of CTI’s inability to become current in its periodic reporting obligations in accordance with the final judgment and court order by February 8, 2010, the SEC instituted an administrative proceeding pursuant to Section 12(j) of the Exchange Act to suspend or revoke the registration of CTI’s common stock and the Administrative Law Judge in such proceeding issued an initial decision to revoke the registration of CTI’s common stock. Although the SEC has granted review of the Administrative Law Judge’s initial decision to revoke the registration of CTI’s common stock, the outcome of such review may be adverse to CTI, and may result in the revocation of the registration of CTI’s common stock.”

• “The failure of CTI to be current in its periodic reporting obligations under the federal securities laws may materially and adversely affect its ability to obtain new debt or equity financing or engage in business combinations.”

• “Comverse is required to comply with stringent standards imposed through Indian telecommunications service providers on equipment and software vendors that are not Indian owned or controlled by the Department of Telecommunications of the Government of India (or the DoT). If Comverse is unable to comply with these standards its ability to conduct business in India will be substantially limited and our revenue, profitability and cash flows would be materially adversely affected. In addition, as part of its compliance with the DoT prescribed standards, Comverse is, and will continue to be, subject to significant indemnification obligations and various other obligations.”

• “CTI’s common stock is traded over-the-counter on the “Pink Sheets,” which limits the liquidity of its common stock.”

• “CTI is not yet in a position to seek relisting of its common stock on a national securities exchange.”

The risk factor set forth in Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the period ended July 31, 2011 under the caption “If the SEC’s Division of Enforcement determines that this Quarterly Report is deficient and CTI fails to resubmit such report in accordance with the terms of the Offer of Settlement, the SEC will issue a non-appealable order to revoke the registration of CTI’s common stock. If a final order is issued, public trading in CTI’s common stock would cease” is hereby eliminated.

The following risk factors set forth in Item 1A, “Risk Factors” of our 2010 Form 10-K are hereby amended and restated in their entirety.

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We derive a significant portion of our total revenue from customers outside the United States and have significant international sales, which subject us to risks inherent in foreign operations.

For the fiscal year ended January 31, 2011, we derived approximately 70% of our total revenue from customers outside of the United States. In addition, we maintain significant operations in Israel, France, the United Kingdom, India, China and Canada and elsewhere throughout the world. Approximately 68% of our employees and approximately 59% of our facilities were located outside the United States as of January 31, 2011. Conducting business internationally exposes our subsidiaries to particular risks inherent in doing business in international markets, including, but not limited to:

• lack of acceptance of non-localized products;

• legal and cultural differences in the conduct of business;

• difficulties in hiring qualified foreign employees and staffing and managing foreign operations;

• longer payment cycles;

• difficulties in collecting accounts receivable and withholding taxes that limit the repatriation of cash;

• tariffs and trade conditions;

• currency exchange rate fluctuations;

• rapid and unforeseen changes in economic conditions in individual countries;

• increased costs resulting from lack of proximity to customers;

• difficulties in complying with varied legal and regulatory requirements across jurisdictions, including tax laws, labor laws, employee benefits, customs requirements and currency restrictions;

• different tax regimes and potentially adverse tax consequences of operating in foreign countries;

• immigration regulations that limit our ability to deploy our employees;

• difficulties in complying with applicable export laws and regulations requiring licensure or authorization to sell products;

• difficulties in repatriating cash held by our foreign subsidiaries on a tax efficient basis; and

• turbulence in foreign currency and credit markets.

One or more of these factors could have a material adverse effect on our international operations.

Conditions in Israel and the surrounding Middle East may materially adversely affect our subsidiaries’ operations and personnel and may limit their ability to produce and sell their products.

Our subsidiaries have significant operations in Israel, including research and development, manufacturing, sales, and support. Approximately 41% of our employees, and approximately 38% of our facilities were located in Israel as of January 31, 2011. Since the establishment of the State of Israel in 1948, a number of armed conflicts and terrorist acts have taken place, which in the past, and may in the future, lead to security and economic problems for Israel. In addition, certain countries in the Middle East adjacent to Israel, including Egypt and Syria, recently experienced and some continue to experience political unrest and instability marked by civil demonstrations and violence, which in some cases resulted in the replacement of governments and regimes. Current and future conflicts and political, economic and/or military conditions in Israel and the Middle East region have affected and may in the future affect our operations in Israel. The exacerbation of violence within Israel or the outbreak of violent conflicts involving Israel may impede our subsidiaries’ ability to manufacture, sell, and support our products, engage in research and development, or otherwise adversely affect their business or operations. In addition, many of our subsidiaries’ employees in Israel are required to perform annual mandatory military service and are subject to being called to active duty at any time under emergency circumstances. The absence of these employees may have an adverse effect on our subsidiaries’ operations. Hostilities involving Israel may also result in the interruption or curtailment of trade between Israel and its trading partners could materially adversely affect our results of operations.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

During the three months ended October 31, 2011, CTI granted unregistered deferred stock unit (or DSU) awards to an employee, as described below, in a private placement in reliance on an exemption from the registration requirement of the Securities Act afforded by Section 4(2) thereof.

Grants of Deferred Stock Awards

Unless otherwise noted:

• each DSU award represents the right to receive shares of CTI’s common stock at the end of the applicable deferral period;

• Each DSU award was granted under the Comverse Technology, Inc. 2005 Stock Incentive Compensation Plan;

• delivery of shares in settlement of DSU awards will be made on the applicable vesting date, subject to accelerated vesting under certain circumstances.

New Hire Grants

On June 21, 2011, CTI’s Board of Directors approved the grant of two DSU awards covering an aggregate of 35,000 shares of CTI’s common stock to an employee of Comverse upon the commencement of his employment on September 18, 2011. A DSU award covering 20,000 shares is scheduled to vest as to forty percent (40%) of the shares covered by such DSU award on the first anniversary of September 18, 2011 and as to thirty percent (30%) on each of the second and third anniversaries of such date. A DSU award covering 15,000 shares is scheduled to vest as to one-third (1/3) on each of the first, second and third anniversaries of September 18, 2011.

Issuer Purchases of Equity Securities

In the three months ended October 31, 2011, CTI purchased an aggregate of 435,426 shares of its common stock from certain of its directors, executive officers and employees to cover tax liabilities in connection with the delivery of shares in settlement of stock awards. The shares purchased by CTI are deposited in CTI’s treasury. CTI does not have a specific repurchase plan or program. The following table provides information regarding CTI’s purchases of its common stock in respect of each month during the three months ended October 31, 2011 during which purchases occurred:

Period	Total Number of Shares (or Units) Purchased		Average Price Paid Per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part  of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs
August 1, 2011 – August 31, 2011		—	$	—		—		—
September 1, 2011 – September 30, 2011		312,658		6.65		—		—
October 1, 2011 – October 31, 2011		122,768		6.49		—		—
Total		435,426	$	6.51		—		—

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

NONE

90

ITEM 6. EXHIBITS

Exhibit No.	Exhibit Description
3.1*	By-Laws, as amended and restated on August 8, 2011 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K under the Securities Exchange Act of 1934 filed on August 8, 2011).
3.2*	By-Laws, as amended and restated on September 7, 2011 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K under the Securities Exchange Act of 1934 filed on September 8, 2011).
3.3**	Certificate of Amendment of Certificate of Incorporation, dated September 19, 2000.
10.1*†	Comverse Technology, Inc. 2011 Stock Incentive Compensation Plan (incorporated by reference to Appendix A to the Definitive Proxy Materials for the Registrant’s Annual Meeting of Shareholders held November 16, 2011 filed on October 7, 2011).
10.2*†	Comverse Technology, Inc. 2011 Annual Performance Bonus Plan (incorporated by reference to Appendix B to the Definitive Proxy Materials for the Registrant’s Annual Meeting of Shareholders held November 16, 2011 filed on October 7, 2011).
10.3*†	Amendment, dated November 17, 2011, to the Employment Letter, dated March 9, 2011, between Mr. Charles J. Burdick and Comverse Technology, Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K under the Securities Exchange Act of 1934 filed on November 17, 2011).
31.1**	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2**	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1***	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2***	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101****	The following materials from the Registrant’s Quarterly Report on Form 10-Q for the three months ended October 31, 2011, formatted in XBRL (eXtensible Business Reporting Language), include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements.

* Incorporated by reference.

** Filed herewith.

*** This exhibit is being “furnished” pursuant to Item 601(b)(32) of SEC Regulation S-K and is not deemed “filed” with the Securities and Exchange Commission and is not incorporated by reference in any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

**** In accordance with Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

† Constitutes a management contract or compensatory plan or arrangement.

91

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COMVERSE TECHNOLOGY, INC.
Dated: December 12, 2011	/s/ Charles J. Burdick
	Charles J. Burdick Chief Executive Officer (Principal Executive Officer)
Dated: December 12, 2011	/s/ Joel E. Legon
	Joel E. Legon Senior Vice President, Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

92

EX-3.3

Exhibit 3.3

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

COMVERSE TECHNOLOGY, INC.

Under Section 805 of the

Business Corporation Law

THE UNDERSIGNED, Chairman of the Board and Secretary of COMVERSE TECHNOLOGY, INC., a corporation organized and existing under the laws of the State of New York, hereby certify as follows:

FIRST: The name of the corporation is COMVERSE TECHNOLOGY, INC.

SECOND: The Certificate of Incorporation of the corporation was filed by the Department of State on October 4, 1984.

THIRD: The Certificate of Incorporation, as heretofore amended and currently in effect, is hereby further amended in

order to increase from 300,000,000 to 600,000,000 the aggregate number of authorized common shares of the corporation, having a par value of ten cents ($.10) per share, Article FOURTH of the Certificate of Incorporation to read in its entirety as follows:

“FOURTH: The total number of shares of stock which the Corporation is authorized to issue is six hundred and two million, five hundred thousand (602,500,000) shares, of which six hundred million (600,000,000) shares shall be denominated Common Stock, having a par value of ten cents ($0.10) per share, and two million, five hundred thousand (2,500,000) shares shall be denominated Preferred Stock, having a par value of one cent ($0.01) per share. Preferred Stock may be issued in one or more series with such designations, relative rights, preferences and limitations as may be fixed from time to time by the Board of Directors of the Corporation. Except as may be specifically provided in the resolution or resolutions authorizing issuance of Preferred Stock, no holders of capital shares of the Corporation, by reason of the ownership thereof, shall have any preemptive rights to subscribe for, purchase or otherwise acquire any securities of the Corporation.”

FOURTH: The amendment of the Certificate of Incorporation set forth herein was duly adopted by the Board of Directors of the Corporation at a meeting held on June 26, 2000 and by the Shareholders of the Corporation at the Annual Meeting of Shareholders held on September 15, 2000.

IN WITNESS WHEREOF, this Certificate has been signed and is affirmed as true under penalties of perjury by the undersigned on this 19th day of September, 2000.

/s/ Kobi Alexander

Kobi Alexander,

Chairman of the Board

/s/ William F. Sorin

William F. Sorin,

Secretary

2

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULES 13a-14(a)

AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Charles J. Burdick, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Comverse Technology, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 12, 2011

/s/ Charles J. Burdick

Charles J. Burdick

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULES 13a-14(a)

AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Joel E. Legon, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Comverse Technology, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 12, 2011

/s/ Joel E. Legon

Joel E. Legon

Senior Vice President and Interim Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Comverse Technology, Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles J. Burdick, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 12, 2011

/s/ Charles J. Burdick

Charles J. Burdick

Chief Executive Officer

(Principal Executive Officer)

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Comverse Technology, Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joel E. Legon, Senior Vice President and Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 12, 2011

/s/ Joel E. Legon

Joel E. Legon

Senior Vice President and Interim Chief Financial Officer

(Principal Financial Officer)

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

XML

Discontinued Operations (Tables)

9 Months Ended

Oct. 31, 2011

Discontinued Operations [Abstract]

Schedule Of Operations Included In Discontinued Operations

	Three Months Ended October 31, 2010			Nine Months Ended October 31, 2010
	(In thousands)
Total revenue	$	9,122		$	25,817
Loss before income tax (provision) benefit		(1,162	)		(4,691	)
Income tax (provision) benefit		215			691
Loss from discontinued operations, net of tax		(947	)		(4,000	)
Tax on discontinued operations		—			—
Total loss from discontinued operations, net of tax	$	(947	)	$	(4,000	)
Loss from discontinued operations, net of tax
Attributable to Comverse Technology, Inc.		(774	)		(2,998	)
Attributable to noncontrolling interest		(173	)		(1,002	)
Total	$	(947	)	$	(4,000	)

XML

Restructuring (Narrative) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Oct. 31, 2011
Restructuring Cost and Reserve [Line Items]
Severance and facilities-related cost in Phase II	$ 7.5
Severance and facilities-related cost paid during period for Phase II	8.8
Severance cost expected to be paid in the current year for Phase II	1.1
Netcentrex 2010 Initiative [Member]
Restructuring Cost and Reserve [Line Items]
Severance and facilities-related cost in Phase II	7.1
Severance and facilities-related cost paid during period for Phase II	6.2
Remaining costs of Netcentrex restructuring plan	$ 4.0

XML

Inventories, Net (Schedule Of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2011	Jan. 31, 2011
Inventories, Net [Abstract]
Raw materials	$ 47,360	$ 51,783
Work in process	23,472	30,986
Finished goods	8,116	10,252
Total inventories	78,948	93,021
Less: reserves for excess and obsolete inventories	(25,065)	(26,409)
Inventories, net	$ 53,883	$ 66,612

XML

Discontinued Operations (Narrative) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	0 Months Ended	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 12, 2010	Nov. 24, 2010	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010	Jan. 31, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Dividend received by shareholders without interest per share of common stock		$ 2.33
Aggregate consideration received	$ 17.2
Maximum aggregate consideration per share	$ 2.33
Aggregate consideration approximate amount of cash received	13.2
Aggregate principal amount of promissory notes	4.0
Carrying value of promissory note							0
Purchases made prior to sale of business			0.4	0.4	1.1	1.0
First Promissory Note [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Aggregate principal amount of promissory notes	1.4
Reduced value of promissory note in connection with purchase of certain products	0.8
Promissory note maturity, months	14
Second Promissory Note [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Aggregate principal amount of promissory notes	2.6
Promissory note maturity, months						24
Ulticom, Inc. [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash dividend paid		64.1
Cash dividend per share paid		$ 5.74
Proceeds from dividend received by CTI		42.4
24-Month Period [Member] | Second Promissory Note [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percentage of reduction						40.00%
Maximum revenue considered for reduction in the value of promissory note						$ 75

XML

Restructuring (Roll Forward Of Workforce Reduction And Restructuring Activities Under Various Plans) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010
Restructuring Cost and Reserve [Line Items]
Beginning Balance	$ 5,814	$ 5,302
Charges	15,040	28,886
Change in assumptions	(152)	(110)
Translation adjustments	265
Paid or utilized	(15,828)	(13,506)
Ending Balance	5,139	20,572
Netcentrex 2010 Initiative [Member] | Severance Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	2,910
Charges	7,117	10,098
Change in assumptions	(12)
Translation adjustments	265
Paid or utilized	(6,245)	29
Ending Balance	4,035	10,127
Netcentrex 2010 Initiative [Member] | Facilities Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance
Charges
Change in assumptions
Paid or utilized
Ending Balance
Comverse Third Quarter 2010 Initiative [Member] | Severance Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	2,462
Charges	7,359	11,323
Change in assumptions	(140)
Paid or utilized	(8,602)	(2,532)
Ending Balance	1,079	8,791
Comverse Third Quarter 2010 Initiative [Member] | Facilities Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	86
Charges	179	191
Paid or utilized	(240)
Ending Balance	25	191
Comverse First Quarter 2010 Initiative [Member] | Severance Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	6
Charges	16	6,004
Change in assumptions	(3)
Paid or utilized	(19)	(5,897)
Ending Balance		107
Comverse First Quarter 2010 Initiative [Member] | Facilities Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	94
Charges	13	1,007
Paid or utilized	(107)	(804)
Ending Balance		203
Pre 2010 Initiatives [Member] | Severance Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	227	699
Charges	274	17
Change in assumptions	1	(110)
Paid or utilized	(502)	(366)
Ending Balance		240
Pre 2010 Initiatives [Member] | Facilities Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	29	4,487
Charges	82	246
Change in assumptions	2
Paid or utilized	(113)	(3,820)
Ending Balance		913
Verint Initiatives [Member] | Severance Related [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance		116
Paid or utilized		$ (116)

XML

Investments (Gross Realized Gains And Losses On Investments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Investments [Abstract]
Gross Realized Gains	$ 120	$ 1,625	$ 8,011	$ 23,715

XML

Restructuring (Tables)

9 Months Ended

Oct. 31, 2011

Oct. 31, 2010

Restructuring [Abstract]

Roll Forward Of Workforce Reduction And Restructuring Activities Under Various Plans

	Netcentrex 2010 Initiative					Comverse Third Quarter 2010 Initiative						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 Nine Months Ended October 31, 2011
January 31, 2011	$	2,910		$	—	$	2,462		$	86		$	6		$	94		$	227		$	29		$	5,814
Charges		7,117			—		7,359			179			16			13			274			82			15,040
Change in assumptions		(12	)		—		(140	)		—			(3	)		—			1			2			(152	)
Translation adjustments		265			—		—			—			—			—			—			—			265
Paid or utilized		(6,245	)		—		(8,602	)		(240	)		(19	)		(107	)		(502	)		(113	)		(15,828	)
October 31, 2011	$	4,035		$	—	$	1,079		$	25		$	—		$	—		$	—		$	—		$	5,139

	Netcentrex 2010 Initiative				Comverse Third Quarter  2010 Initiative					Comverse First Quarter  2010 Initiative						Pre  2010 initiatives						Verint Initiatives
	Severance Related		Facilities Related		Severance Related			Facilities Related		Severance Related			Facilities Related			Severance Related			Facilities Related			Severance Related			Facilities Related		Total
	(In thousands)
For the Nine Months Ended October 31, 2010
January 31, 2010	$	—	$	—	$	—		$	—	$	—		$	—		$	699		$	4,487		$	116		$	—	$	5,302
Charges		10,098		—		11,323			191		6,004			1,007			17			246			—			—		28,886
Change in assumptions		—		—		—			—		—			—			(110	)		—			—			—		(110	)
Paid or utilized		29		—		(2,532	)		—		(5,897	)		(804	)		(366	)		(3,820	)		(116	)		—		(13,506	)
October 31, 2010	$	10,127	$	—	$	8,791		$	191	$	107		$	203		$	240		$	913		$	—		$	—	$	20,572

XML

Income Taxes (Details) (USD $)	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010	Jan. 31, 2011
Income Taxes [Abstract]
Income tax provision	$ (21,647,000)	$ 47,237,000	$ 35,793,000	$ 49,463,000
Effective tax rate			(327.00%)	(58.40%)
Unrecognized tax benefits, if recognized would impact effective tax rate	137,800,000		137,800,000
Amount unrecognized tax benefits could decrease in the next twelve months as a result of settlement of certain tax audits or lapses of statutes of limitation	10,400,000		10,400,000
Interest and penalties related to uncertain tax positions	1,200,000	2,100,000
Accrued interest and penalties	$ 58,200,000		$ 58,200,000		$ 54,900,000

XML

Debt (Schedule Of Debt) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2011	Jan. 31, 2011
Debt [Abstract]
Convertible debt obligations	$ 2,195	$ 2,195
Term loan	598,500	583,234
Unamortized debt discount on term loan	(2,790)
Line of credit		6,000
Other debt	3,193
Total debt	601,098	591,429
Less: current portion	8,403	8,195
Total long-term debt	$ 592,695	$ 583,234

XML

Commitments And Contingencies (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended		9 Months Ended									9 Months Ended		1 Months Ended
	Oct. 31, 2010	Sep. 30, 2010	Oct. 31, 2011	Oct. 31, 2010	May 31, 2011	Jan. 31, 2011	Jul. 31, 2010	Dec. 31, 2009	Jul. 31, 2006	Oct. 31, 2011 Settlement Agreements [Member]	Jan. 31, 2011 Settlement Agreements [Member]	Oct. 31, 2011 First Condition [Member]	Oct. 31, 2011 Second Condition [Member]	Dec. 31, 2011 Settlement of Litigation [Member]
Commitments And Contingencies [Line Items]
Guarantee			$ 52.6
Forfeiture action against certain accounts									50.0
Aggregate amount to be paid under settlement agreement			165.0
Amount paid under settlement agreement			91.3				17.9	1.0
Total agreed payment in respect of anticipated opt out credit			92.5				21.5
Amount holdback in respect of anticipated opt out credit							3.6
Class action settlement fund payable in cash or stock			20.0		30.0
Issuance of shares under settlement agreement			12,462,236
Issuance of shares under settlement agreement value			82.5
Aggregate expected amount to be received from sale of securities												50.0	100.0
Additional proceeds to prepay the settlement													50.0
Cash received from sales and redemptions of auction rate securities			14.1			33.4
Amount deposited into the derivative settlement fund			60.0
Percentage of outstanding share capital			2.50%
Amount certain other defendants in the direct actions and the shareholder derivative actions have paid or agreed to pay			1.4
Legal fees and expenses of the plaintiffs	9.4
Insurance proceeds in connection with the settlements of the shareholder derivative actions and the consolidated shareholder class action		16.5
Litigation settlement										96.2	146.1
Fine paid under non-prosecution agreement			1.2
Amount paid for disgorgement and pre-judgment interest			1.6
Agreement to pay plaintiffs														9.5
Additional liability recorded				$ 4.9

XML

Subsequent Events (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended				1 Months Ended	179 Months Ended	1 Months Ended		1 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010	Jul. 31, 2010	Dec. 31, 2009	Nov. 30, 2011 Verint's New Lease Agreement [Member]	Sep. 30, 2026 Verint's New Lease Agreement [Member]	Dec. 31, 2011 Settlement of Litigation [Member]	Nov. 30, 2011 Business Combination [Member]	Nov. 30, 2011 Sale Of ARS [Member]	Oct. 31, 2011 Sale Of ARS [Member]	Nov. 16, 2011 Approval Of The Stock Incentive Plan [Member]
Subsequent Event [Line Items]
Amount paid under settlement agreement	$ 91.3		$ 91.3		$ 17.9	$ 1.0
Issuance of shares under settlement agreement			12,462,236
Issuance of shares under settlement agreement value			82.5
Shares reserved for issuance	1,158,119		1,158,119										22,000,000
Principal amount of ARS											61.2
Carrying amount of ARS											50.0	50.0
Cash proceeds from sales and redemptions of investments	0.5	2.5	26.3	57.1							49.2
Potential additional contingent payments, maximum										10.0
Agreement to pay plaintiffs									9.5
Additional liability recorded				4.9
Lease term extension							September 2026
Aggregate minimum lease commitment over the term of new issue								$ 36.1

XML

Discontinued Operations (Schedule Of Operations Included In Discontinued Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Oct. 31, 2010	Oct. 31, 2010
Discontinued Operations [Abstract]
Total revenue	$ 9,122	$ 25,817
Loss before income tax (provision) benefit	(1,162)	(4,691)
Income tax (provision) benefit	215	691
Tax on discontinued operations
Loss from discontinued operations, net of tax Attributable to Comverse Technology, Inc.	(774)	(2,998)
Loss from discontinued operations, net of tax Attributable to noncontrolling interest	(173)	(1,002)
Total loss from discontinued operations, net of tax	$ (947)	$ (4,000)

XML

Commitments And Contingencies

9 Months Ended

Oct. 31, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

20. COMMITMENTS AND CONTINGENCIES

Guarantees

The Company provides certain customers in the ordinary course of business with financial performance guarantees which in certain cases are backed by standby letters of credit or surety bonds, the majority of which are cash collateralized and accounted for as restricted cash and bank time deposits. The Company is only liable for the amounts of those guarantees in the event of its nonperformance, which would permit the customer to exercise the guarantee. As of October 31, 2011 and January 31, 2011, the Company believes that it was in compliance with its performance obligations under all contracts for which there is a financial performance guarantee, and that any liabilities arising in connection with these guarantees will not have a material adverse effect on the Company's consolidated results of operations, financial position or cash flows. The Company also obtained bank guarantees primarily to provide customer assurance relating to the performance of certain obligations required by customer agreements for the guarantee of certain payment obligations. These guarantees, which aggregated $52.6 million as of October 31, 2011, are generally scheduled to be released upon the Company's performance of specified contract milestones, a majority of which are scheduled to be completed at various dates through January 31, 2016.

Warranty Liabilities

Warranty liabilities were not significant to the Company as of October 31, 2011 and January 31, 2011.

Litigation Overview

Except as disclosed below, the Company does not believe that it is currently party to any other claims, assessments or pending legal action that could reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.

Proceedings Related to CTI's Special Committee Investigations

Overview

On March 14, 2006, CTI announced the creation of a Special Committee of its Board of Directors (the "Special Committee") composed of outside directors to review CTI's historic stock option grant practices and related accounting matters, including, but not limited to, the accuracy of the stated dates of option grants and whether all proper corporate procedures were followed. In November 2006, the Special Committee's investigation was expanded to other financial and accounting matters, including the recognition of revenue related to certain contracts, errors in the recording of certain deferred tax accounts, the misclassification of certain expenses, the misuse of accounting reserves and the misstatement of backlog. The Special Committee issued its report on January 28, 2008. Following the commencement of the Special Committee's investigation, CTI, certain of its subsidiaries and some of CTI's former directors and officers and a current director were named as defendants in several class and derivative actions, and CTI commenced direct actions against certain of its former officers and directors.

Petition for Remission of Civil Forfeiture

In July 2006, the U.S. Attorney filed a forfeiture action against certain accounts of Jacob "Kobi" Alexander, CTI's former Chairman and Chief Executive Officer, that resulted in the United States District Court for the Eastern District entering an order freezing approximately $50.0 million of Mr. Alexander's assets. In order to ensure that CTI receives the assets in Mr. Alexander's frozen accounts, in July 2007, CTI filed with the U.S. Attorney a Petition for Remission of Civil Forfeiture requesting remission of any funds forfeited by Mr. Alexander. The United States District Court entered an order on November 30, 2010 directing that the assets in such accounts be liquidated and remitted to CTI. The process of liquidating such assets has been completed and the proceeds from the assets in such accounts have been transferred to a class action settlement fund in conjunction with the settlements of the Direct Actions (as defined below), the consolidated shareholder class action and shareholder derivative actions. The agreement to settle the shareholder class action was approved by the court in which such action was pending on June 23, 2010. The agreement to settle the federal and state derivative actions was approved by the courts in which such actions were pending on July 1, 2010 and September 23, 2010, respectively.

Direct Actions

Based on the Special Committee's findings, CTI commenced litigations against three former executive officers as a result of their misconduct relating to historical stock option grants. On January 16, 2008, CTI commenced an action against Mr. Alexander, its former Chairman and Chief Executive Officer, and William F. Sorin, its former Senior General Counsel and director, in the Supreme Court of the State of New York, captioned Comverse Technology, Inc. v. Alexander et al., No. 08/600142. On January 17, 2008, CTI commenced an action against David Kreinberg, its former Executive Vice President and Chief Financial Officer, in the Superior Court of New Jersey, captioned Comverse Technology, Inc. v. Kreinberg (N.J. Super. Ct.). That action was discontinued and on January 8, 2009, a separate action was commenced against Mr. Kreinberg in the Supreme Court of the State of New York, captioned Comverse Technology, Inc. v. Kreinberg, No. 09/600052. The actions captioned Comverse Technology, Inc. v. Alexander et al. and Comverse Technology, Inc. v. Kreinberg are referred to collectively as the "Direct Actions." The Direct Actions asserted claims for fraud, breach of fiduciary duty, and unjust enrichment in connection with the defendants' conduct related to historical stock option grants. As part of the agreement to settle the federal and state derivative actions, which was approved by the courts in which such actions were pending on July 1, 2010 and September 23, 2010, respectively, CTI dismissed the Direct Actions on September 29, 2010.

Shareholder Derivative Actions

Beginning on or about April 11, 2006, several purported shareholder derivative lawsuits were filed in the New York Supreme Court for New York County and in the United States District Court for the Eastern District of New York. The defendants in these actions included certain of CTI's former directors and officers and a current director and, in the state court action, CTI's independent registered public accounting firm. CTI was named as a nominal defendant only. The consolidated complaints in both the state and federal actions alleged that the defendants breached certain duties to CTI and that certain former officers and directors were unjustly enriched (and, in the federal action, violated the federal securities laws, specifically Sections 10(b) and 14(a) of the Exchange Act, and Rules 10(b)-5 and 14(a)-9 promulgated thereunder) by, among other things: (i) allowing and participating in an alleged scheme to backdate the grant dates of employee stock options to provide improper benefits to the recipients; (ii) allowing insiders, including certain of the defendants, to profit by trading in CTI's stock while allegedly in possession of material inside information; (iii) failing to oversee properly or implement procedures to detect and prevent the alleged improper practices; (iv) causing CTI to issue allegedly materially false and misleading proxy statements and to file other allegedly false and misleading documents with the SEC; and (v) exposing CTI to civil liability. The complaints sought unspecified damages and various forms of equitable relief.

The state court derivative actions were consolidated into one action captioned, In re Comverse Technology, Inc. Derivative Litigation, No. 601272/2006. On August 7, 2007, the New York Supreme Court dismissed the consolidated state court derivative action, granting CTI's motion to dismiss. That decision was successfully appealed by the plaintiffs to the Appellate Division of the New York State Supreme Court which, in its decision issued on October 7, 2008, reinstated the action.

The federal court derivative actions were consolidated into one action captioned, In re Comverse Technology, Inc. Derivative Litigation, No. 06-CV-1849. CTI filed a motion to stay that action in deference to the state court proceeding. That motion was denied by the court. On October 16, 2007, CTI filed a motion to dismiss the federal court action based on the plaintiffs' failure to make a demand on the Board and the state court's ruling that such a demand was required. On the same date, various individual defendants also filed motions to dismiss the complaint. On April 22, 2008, the court ordered that all dismissal motions would be held in abeyance pending resolution of the appeal of the New York State Supreme Court's decision in the state court derivative action.

On December 17, 2009, the parties to the shareholder derivative actions entered into an agreement to settle these actions, which settlement was approved by the courts in which the federal and state derivative actions were pending on July 1, 2010 and September 23, 2010, respectively (see Settlement Agreements below). The Company recorded a charge associated with the settlement during the fiscal year ended January 31, 2007.

Shareholder Class Action

Beginning on or about April 19, 2006, class action lawsuits were filed by persons identifying themselves as CTI shareholders, purportedly on behalf of a class of CTI's shareholders who purchased its publicly traded securities. Two actions were filed in the United States District Court for the Eastern District of New York, and three actions were filed in the United States District Court for the Southern District of New York. On August 28, 2006, the actions pending in the United States District Court for the Southern District of New York were transferred to the United States District Court for the Eastern District of New York. A consolidated amended complaint under the caption In re Comverse Technology, Inc. Sec. Litig., No. 06-CV- 1825, was filed by the court-appointed Lead Plaintiff, Menorah Group, on March 23, 2007. The consolidated amended complaint was brought on behalf of a purported class of CTI shareholders who purchased CTI's publicly traded securities between April 30, 2001 and November 14, 2006. The complaint named CTI and certain of its former officers and directors as defendants and alleged, among other things, violations of Sections 10(b) and 14(a) of the Exchange Act, Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act in connection with prior statements made by CTI with respect to, among other things, its accounting treatment of stock options. The action sought compensatory damages in an unspecified amount.

The parties to this action entered into a settlement agreement on December 16, 2009, which was amended on June 19, 2010 and approved by the court in which such action was pending on June 23, 2010 (see Settlement Agreements below). The Company recorded a charge associated with the settlement during the fiscal year ended January 31, 2007.

Settlement Agreements

On December 16, 2009 and December 17, 2009, CTI entered into agreements to settle the consolidated shareholder class action and consolidated shareholder derivative actions described above, respectively. The agreement to settle the consolidated shareholder class action was amended on June 19, 2010. Pursuant to the amendment, CTI agreed to waive certain rights to terminate the settlement in exchange for a deferral of the timing of scheduled payments of the settlement consideration and the right to a credit (the "Opt-out Credit") in respect of a portion of the settlement funds that would have been payable to a class member that elected not to participate in and be bound by the settlement. In connection with such settlements, CTI dismissed its Direct Actions against Messrs. Alexander, Kreinberg and Sorin, who, in turn, dismissed any counterclaims they filed against CTI.

As part of the settlement of the consolidated shareholder class action, as amended, CTI agreed to make payments to a class action settlement fund in the aggregate amount of up to $165.0 million that were paid as follows:

• $1.0 million that was paid following the signing of the settlement agreement in December 2009;

• $17.9 million that was paid in July 2010 (representing an agreed $21.5 million payment less a holdback of $3.6 million in respect of the then anticipated Opt-out Credit);

• $30.0 million that was paid in May 2011;

• $20.0 million that was paid in October 2011; and

• $91.3 million (representing the remaining $92.5 million less the amount by which the Opt-out Credit exceeded the holdback described above) that was paid subsequent to October 31, 2011, of which $82.5 million was paid through the issuance of 12,462,236 shares of CTI's common stock and the remainder paid in cash.

Under the terms of the settlement agreement, if CTI received net cash proceeds from the sale of certain ARS held by it in an aggregate amount in excess of $50.0 million, CTI was required to use $50.0 million of such proceeds to prepay the settlement amounts referred to above and, if CTI received net cash proceeds from the sale of such ARS in an aggregate amount in excess of $100.0 million, CTI was required to use an additional $50.0 million of such proceeds to prepay the settlement amounts referred to above. In addition, CTI granted a security interest for the benefit of the plaintiff class in the account in which CTI held its ARS (other than the ARS that were held in an account with UBS) and the proceeds from any sales thereof, restricting CTI's ability to use the proceeds from sales of such ARS until the amounts payable under the settlement agreement are paid in full. As of October 31, 2011 and January 31, 2011, the Company had $14.1 million and $33.4 million, respectively, of cash received from sales and redemptions of ARS (including interest thereon) to which these provisions of the settlement agreement applied which were classified in "Restricted cash and bank time deposits" within the condensed consolidated balance sheets. Following the payment by CTI of the remaining amounts payable under the settlement agreement, the security interest for the benefit of the plaintiff class in the Company's account terminated.

In addition, as part of the settlements of the Direct Actions, the consolidated shareholder class action and shareholder derivative actions, Mr. Alexander agreed to pay $60.0 million to CTI to be deposited into the derivative settlement fund and then transferred into the class action settlement fund. All amounts payable by Mr. Alexander have been paid. Also, as part of the settlement of the shareholder derivative actions, Mr. Alexander transferred to CTI shares of Starhome B.V. representing 2.5% of its outstanding share capital.

Pursuant to the amendment, Mr. Alexander agreed to waive certain rights to terminate the settlement and received the right to a credit in respect of a portion of the settlement funds that would have been payable to a class member that elected not to participate in and be bound by the settlement. CTI's settlement of claims against it in the class action was not contingent upon Mr. Alexander satisfying his payment obligations. Certain other defendants in the Direct Actions and the shareholder derivative actions have paid to CTI an aggregate of $1.4 million and certain former directors relinquished certain outstanding unexercised stock options. As part of the settlement of the shareholder derivative actions, CTI paid, in October 2010, $9.4 million to cover the legal fees and expenses of the plaintiffs. In September 2010, CTI received insurance proceeds of $16.5 million under its directors' and officers' insurance policies in connection with the settlements of the shareholder derivative actions and the consolidated shareholder class action.

Under the terms of the settlements, Mr. Alexander and his wife relinquished their claims to the assets in Mr. Alexander's frozen accounts that were subject to the forfeiture action, and the United States District Court entered an order on November 30, 2010 directing that the assets in such accounts be liquidated and remitted to CTI. The process of liquidating such assets has been completed and the proceeds from the assets in such accounts have been transferred to the class action settlement fund.

The agreement to settle the consolidated shareholder class action, as amended, was approved by the court in which such action was pending on June 23, 2010. The agreement to settle the federal and state derivative actions was approved by the courts in which such actions were pending on July 1, 2010 and September 23, 2010, respectively.

As of October 31, 2011 and January 31, 2011, the Company had accrued liabilities for this matter of $96.2 million and $146.1 million, respectively.

Opt-Out Plaintiffs' Action

On September 28, 2010, an action was filed in the United States District Court for the Eastern District of New York under the caption Maverick Fund, L.D.C., et al. v. Comverse Technology, Inc., et al., No. 10-cv-4436. Plaintiffs alleged that they were CTI shareholders who purchased CTI's publicly traded securities in 2005, 2006 and 2007. The plaintiffs, Maverick Fund, L.D.C. and certain affiliated investment funds, opted not to participate in the settlement of the consolidated shareholder class action described above. The complaint named CTI, its former Chief Executive Officer and certain of its former officers and directors as defendants and alleged, among other things, violations of Sections 10(b), 18 and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and negligent misrepresentation in connection with prior statements made by CTI with respect to, among other things, its accounting treatment of stock options, other accounting practices at CTI and the timeline for CTI to become current in its periodic reporting obligations. The action sought compensatory damages in an unspecified amount. The Company filed a motion to dismiss the complaint in December 2010, and a hearing on the motion was conducted on March 4, 2011. On July 12, 2011, the Court dismissed the plaintiffs' claims related to their purchase of CTI's securities in 2007 and the claims against Andre Dahan, CTI's former President and Chief Executive Officer, and Avi Aronovitz, CTI's former Interim Chief Financial Officer, and otherwise denied CTI's motion to dismiss. In December 2011, the parties agreed to a settlement in principle, pursuant to which CTI would be required to pay the plaintiffs approximately $9.5 million. The Company recorded an additional liability of $4.9 million in connection with this matter as of October 31, 2011, representing the amount by which the anticipated settlement amount exceeds the Opt-out Credit and certain other credits under the settlement agreement of the consolidated shareholder class action.

Israeli Optionholder Class Actions

CTI and certain of its subsidiaries were named as defendants in four potential class action litigations in the State of Israel involving claims to recover damages incurred as a result of purported negligence or breach of contract that allegedly prevented certain current or former employees from exercising certain stock options. The Company intends to vigorously defend these actions.

Two cases were filed in the Tel Aviv District Court against CTI on March 26, 2009, by plaintiffs Katriel (a former Comverse Ltd. employee) and Deutsch (a former Verint Systems Ltd. employee). The Katriel case (Case Number 1334/09) and the Deutsch case (Case Number 1335/09) both seek to approve class actions to recover damages that are claimed to have been incurred as a result of CTI's negligence in reporting and filing its financial statements, which allegedly prevented the exercise of certain stock options by certain employees and former employees. By stipulation of the parties, on September 30, 2009, the court ordered that these cases, including all claims against CTI in Israel and the motion to approve the class action, be stayed until resolution of the actions pending in the United States regarding stock option accounting, without prejudice to the parties' ability to investigate and assert the unique facts, claims and defenses in these cases. To date, the stay has not yet been lifted.

Two cases were also filed in the Tel Aviv Labor Court by plaintiffs Katriel and Deutsch, and both seek to approve class actions to recover damages that are claimed to have been incurred as a result of breached employment contracts, which allegedly prevented the exercise by certain employees and former employees of certain CTI and Verint Systems stock options, respectively. The Katriel litigation (Case Number 3444/09) was filed on March 16, 2009, against Comverse Ltd., and the Deutsch litigation (Case Number 4186/09) was filed on March 26, 2009, against Verint Systems Ltd. The Tel Aviv Labor Court has ruled that it lacks jurisdiction, and both cases have been transferred to the Tel Aviv District Court. The Katriel case has been consolidated with the Katriel case filed in the Tel Aviv District Court (Case Number 1334/09) and is subject to the stay discussed above. At the preliminary hearing in the Tel Aviv District Court in October 2011, the Deutsch case was also made subject to the stay discussed above.

The Company did not accrue for these matters as the potential loss is currently not probable or estimable.

SEC Civil Actions

Promptly following the discovery of the errors and improprieties related to CTI's historic stock option grant practices and the creation of the Special Committee, CTI, through the Special Committee and its representatives, met with and informed the staff of the SEC of the underlying facts and the initiation of the Special Committee investigation. In March 2008, CTI received a "Wells Notice" from the staff of the SEC arising out of the SEC's investigation of CTI's historical stock option grant practices and certain unrelated accounting matters. The "Wells Notice" provided notification that the staff of the SEC intended to recommend that the SEC bring civil actions against CTI alleging violations of certain provisions of the federal securities laws.

On June 18, 2009, a settlement between CTI and the SEC with respect to such matters was announced. On that date, the SEC filed a civil action against CTI in the United States District Court for the Eastern District of New York alleging violations of certain provisions of the federal securities laws regarding CTI's improper backdating of stock options and other accounting practices, including the improper establishment, maintenance, and release of reserves, the reclassification of certain expenses, and the improper calculation of backlog of sales orders. Simultaneous with the filing of the complaint, without admitting or denying the allegations therein, CTI consented to the issuance of a final judgment (the "Final Judgment") that was approved by the United States District Court for the Eastern District of New York on June 25, 2009. Pursuant to the Final Judgment, CTI is permanently restrained and enjoined from any future violations of the federal securities laws addressed in the complaint and was ordered to become current in its periodic reporting obligations under Section 13(a) of the Exchange Act by no later than February 8, 2010. No monetary penalties were assessed against CTI in conjunction with this settlement. These matters were the result of actions principally taken by senior executives of CTI who were terminated in 2006. CTI, however, was unable to file the requisite periodic reports by February 8, 2010.

As a result of CTI's inability to become current in its periodic reporting obligations under the federal securities laws in accordance with the final judgment and court order by February 8, 2010, CTI received an additional "Wells Notice" from the staff of the SEC on February 4, 2010. The "Wells Notice" provided notification that the staff of the SEC intended to recommend that the SEC institute an administrative proceeding to determine whether, pursuant to Section 12(j) of the Exchange Act, the SEC should suspend or revoke the registration of each class of CTI's securities registered under Section 12 of the Exchange Act. Under the process established by the SEC, recipients of a "Wells Notice" have the opportunity to make a Wells Submission before the staff of the SEC makes a formal recommendation to the SEC regarding what action, if any, should be brought by the SEC. On February 25, 2010, CTI submitted a Wells Submission to the SEC in response to this Wells Notice. On March 23, 2010, the SEC issued an Order Instituting Administrative Proceedings ("OIP") pursuant to Section 12(j) of the Exchange Act to suspend or revoke the registration of CTI's common stock because, prior to the filing of the Annual Report on Form 10-K for the fiscal years ended January 31, 2009, 2008, 2007 and 2006 with the SEC on October 4, 2010, CTI had not filed an Annual Report on Form 10-K since April 20, 2005 or a Quarterly Report on Form 10-Q since December 12, 2005. On July 22, 2010, the Administrative Law Judge issued an initial decision to revoke the registration of CTI's common stock. The initial decision did not become effective until the SEC issued a final order, which would indicate the date on which sanctions, if any, would take effect. On August 17, 2010, the SEC issued an order granting a petition by CTI for review of the Administrative Law Judge's initial decision to revoke the registration of CTI's common stock and setting forth a briefing schedule under which the final brief was filed on November 1, 2010. On February 17, 2011, the SEC issued an order directing the parties to file additional briefs in the matter and such briefs were filed on March 7, 2011. In May 2011, the SEC granted CTI's motion for oral argument and such argument was scheduled for July 14, 2011.

On July 13, 2011, CTI entered into an agreement in principle with the SEC's Division of Enforcement regarding the terms of a settlement of the Section 12(j) administrative proceeding, which terms were subsequently reflected in an Offer of Settlement made on July 26, 2011 and which the SEC accepted on September 8, 2011. Under the terms of the settlement, the SEC's Division of Enforcement agreed to recommend that the SEC resolve the Section 12(j) administrative proceeding against CTI if CTI filed its Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2010, July 31, 2010 and October 31, 2010 by 5:30 p.m. EDT on September 9, 2011 (which reports were filed on July 28, 2011) and its Quarterly Report for the fiscal quarter ended July 31, 2011 on a timely basis (which report was filed timely on September 8, 2011).

On September 16, 2011, the SEC ordered termination of the Section 12(j) administrative proceeding and entry of final judgment without the imposition of a remedy under such section. With the entry of final judgment, the Section 12(j) administrative proceeding has been resolved.

Investigation of Alleged Unlawful Payments

On March 16, 2009, CTI disclosed that the Audit Committee of its Board of Directors was conducting an internal investigation of alleged improper payments made by certain Comverse employees and external sales agents in foreign jurisdictions in connection with the sale of certain products. The Audit Committee found that the conduct at issue did not involve CTI's current executive officers. The Audit Committee also reviewed Comverse's other existing and prior arrangements with agents. When the Audit Committee commenced the investigation, CTI voluntarily disclosed to the SEC and the Department of Justice (the "DOJ") these facts and advised that the Audit Committee had initiated an internal investigation and that the Audit Committee would provide the results of its investigation to the agencies. On April 27, 2009, the SEC advised CTI that it was investigating the matter and issued a subpoena to CTI in connection with its investigation. The Audit Committee provided information to, and cooperated fully with, the DOJ and the SEC with respect to its findings of the internal investigation and resulting remedial action.

On April 7, 2011, CTI entered into a non-prosecution agreement with the DOJ and the SEC submitted a settlement agreement with CTI to the United States District Court for the Eastern District of New York for its approval, which was obtained on April 12, 2011. These agreements resolved allegations that CTI and certain of its foreign subsidiaries violated the books and records and internal controls provisions of the U.S. Foreign Corrupt Practices Act (the "FCPA") by inaccurately recording certain improper payments made from 2003 through 2006 by certain former employees and an external sales agent of Comverse Ltd. or its subsidiaries, in connection with the sale of certain products in foreign jurisdictions.

Under the non-prosecution agreement with the DOJ, CTI paid a fine of $1.2 million to the DOJ and agreed to continue to implement improvements in its internal controls and anti-corruption practices and policies. Under its settlement agreement with the SEC, CTI paid approximately $1.6 million in disgorgement and pre-judgment interest and is required under a conduct-based injunction to comply with the books and records and internal controls provisions of the FCPA.

The Company recorded charges associated with this matter during the fiscal year ended January 31, 2009.

Other Legal Proceedings

In addition to the litigation discussed above, the Company is, and in the future, may be involved in various other lawsuits, claims and proceedings incident to the ordinary course of business. The results of litigation are inherently unpredictable. Any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, the Company believes that the ultimate resolution of these current matters will not have a material adverse effect on its condensed consolidated financial statements taken as a whole.

Indemnifications

In the normal course of business, the Company provides indemnifications of varying scopes to customers against claims of intellectual property infringement made by third parties arising from the use of the Company's products. The Company evaluates its indemnifications for potential losses and in its evaluation considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Generally, the Company has not encountered significant charges as a result of such indemnification provisions.

To the extent permitted under state laws or other applicable laws, the Company has agreements where it will indemnify its directors and officers for certain events or occurrences while the director or officer is, or was, serving at the Company's request in such capacity. The indemnification period covers all pertinent events and occurrences during the Company's director's or officer's lifetime. The maximum potential amount of future payments that the Company could be required to make under these indemnification agreements is unlimited; however, the Company has certain director and officer insurance coverage that limits the Company's exposure and enables the Company to recover a portion of any future amounts paid. The Company is not able to estimate the fair value of these indemnification agreements in excess of applicable insurance coverage, if any.

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Business Combinations (Schedule Of Components And The Allocations Of The Purchase Prices) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2011		Jan. 31, 2011
Business Acquisition [Line Items]
Fair value of contingent consideration	$ 34,623		$ 3,686
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	7.5
Vovici [Member]
Business Acquisition [Line Items]
Cash and cash equivalents	55,708
Fair value of contingent consideration	9,900
Fair value of stock options	60
Bank debt, prepaid at closing	435
Total purchase price	66,103
Accounts receivable	1,106
Other current assets	4,396
Other assets	912
Current and other liabilities	(1,794)
Deferred revenue	(2,264)
Deferred income taxes - long-term	(2,300)
Net tangible assets (liabilities)	56
Total identifiable intangible assets	28,400	[1]
Goodwill	37,647
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	8.1
Vovici [Member] | Trademarks And Trade Names [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	1,700
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	5.0
Vovici [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	11,300
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	6.0
Vovici [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	15,400
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	10.0
GMT [Member]
Business Acquisition [Line Items]
Cash and cash equivalents	24,596
Fair value of contingent consideration	12,000
Total purchase price	36,596
Accounts receivable	512
Other current assets	1,717
Other assets	482
Current and other liabilities	(1,634)
Deferred revenue	(1,234)
Net tangible assets (liabilities)	(157)
Total identifiable intangible assets	15,100	[1]
Goodwill	21,653
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	7.3
GMT [Member] | Trademarks And Trade Names [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	400
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	3
GMT [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	7,500
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	5
GMT [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	7,200
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	10
Other Acquisitions [Member]
Business Acquisition [Line Items]
Cash and cash equivalents	21,965
Fair value of contingent consideration	11,804
Other purchase price adjustments	317
Total purchase price	34,086
Accounts receivable	493
Other current assets	12,445
Other assets	5,508
Current and other liabilities	(15,653)
Deferred revenue	(845)
Bank debt	(3,330)
Net tangible assets (liabilities)	(1,382)
Total identifiable intangible assets	15,914	[1]
Goodwill	19,554
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	6.7
Other Acquisitions [Member] | Trademarks And Trade Names [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	1,000
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	5
Other Acquisitions [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	6,943
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)	6
Other Acquisitions [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	6,550
Other Acquisitions [Member] | Other Identifiable Intangible Assets [Member]
Business Acquisition [Line Items]
Total identifiable intangible assets	$ 1,421

[1] The weighted-average estimated useful life of all finite-lived identifiable intangible assets is 7.5 years.

XML

Basis Of Presentation (Details)	Oct. 31, 2011
Comverse, Inc [Member]
Minimum number of countries in which entity operates	125
Minimum number of wireless and wireline network communication service provider customers	450
Total numbers of largest wireless network operators	100
Verint Systems Inc [Member]
Equity method investment, ownership percentage	41.90%
Voting power	52.80%
Subsidiaries percentage of equity interest in consolidated variable interest entity	50.00%
Starhome B.V. [Member]
Equity method investment, ownership percentage	66.50%

XML

Related Party Transactions (Details) (Series A Convertible Perpetual Preferred Stock [Member], USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended	9 Months Ended	12 Months Ended
	May 25, 2007	Oct. 31, 2011	Jan. 31, 2011	May 31, 2007
Series A Convertible Perpetual Preferred Stock [Member]
Related Party Transaction [Line Items]
Aggregate number of shares purchased for cash	293,000
Aggregate purchase price of preferred stock	$ 293.0
Cumulative, undeclared dividends on the preferred stock		55.6	45.7
Liquidation preference of the preferred stock		$ 348.6	$ 338.7
Initial conversion rate for each share of preferred stock to common stock				30.6185
Preferred stock potentially convertible to common stock		10,700,000	10,400,000

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Stock-Based Compensation (Tables)

9 Months Ended

Oct. 31, 2011

Stock-Based Compensation [Abstract]

Schedule Of Stock-Based Compensation Expense

	Three Months Ended October 31,				Nine Months Ended October 31,
	2011		2010		2011		2010
	(In thousands)
Stock options:
Product costs	$	6	$	271	$	133	$	698
Service costs		41		742		268		2,265
Selling, general and administrative		376		4,743		2,443		12,960
Research and development		51		1,241		434		3,904
		474		6,997		3,278		19,827
Restricted/Deferred stock awards:
Product costs		242		234		564		694
Service costs		582		550		1,817		1,864
Selling, general and administrative		6,689		7,389		20,286		22,647
Research and development		673		664		2,136		2,555
		8,186		8,837		24,803		27,760
Total	$	8,660	$	15,834	$	28,081	$	47,587

Schedule Of Fair Values Of The Options With The Weighted-Average Assumptions Using A Black-Scholes Option Pricing Model

	As of August 4, 2011
Expected life (in years)		5.43
Risk-free interest rate		1.26	%
Expected volatility		50.40	%
Dividend yield		0	%

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Goodwill (Changes In Carrying Amount Of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2011
Goodwill [Line Items]
Goodwill, gross at January 31, 2011	$ 1,123,679
Accumulated impairment losses at January 31, 2011	(156,455)
Goodwill, net, at January 31, 2011	967,224
Effect of changes in foreign currencies and other	471
Goodwill, gross at October 31, 2011	1,203,004
Accumulated impairment losses at October 31, 2011	(156,455)
Goodwill, net, at October 31, 2011	1,046,549
Comverse BSS [Member]
Goodwill [Line Items]
Goodwill, gross at January 31, 2011	84,050
Goodwill, net, at January 31, 2011	84,050
Effect of changes in foreign currencies and other	28
Goodwill, gross at October 31, 2011	84,078
Goodwill, net, at October 31, 2011	84,078
Comverse VAS [Member]
Goodwill [Line Items]
Goodwill, gross at January 31, 2011	66,040
Goodwill, net, at January 31, 2011	66,040
Effect of changes in foreign currencies and other	22
Goodwill, gross at October 31, 2011	66,062
Goodwill, net, at October 31, 2011	66,062
Verint [Member]
Goodwill [Line Items]
Goodwill, gross at January 31, 2011	803,971
Goodwill, net, at January 31, 2011	803,971
Effect of changes in foreign currencies and other	420
Goodwill, gross at October 31, 2011	883,245
Goodwill, net, at October 31, 2011	883,245
All Other [Member]
Goodwill [Line Items]
Goodwill, gross at January 31, 2011	169,618	[1]
Accumulated impairment losses at January 31, 2011	(156,455)	[1]
Goodwill, net, at January 31, 2011	13,163	[1]
Effect of changes in foreign currencies and other	1	[1]
Goodwill, gross at October 31, 2011	169,619	[1]
Accumulated impairment losses at October 31, 2011	(156,455)	[1]
Goodwill, net, at October 31, 2011	13,164	[1]
Vovici [Member]
Goodwill [Line Items]
Business acquisition	37,647
Vovici [Member] | Verint [Member]
Goodwill [Line Items]
Business acquisition	37,647
GMT [Member]
Goodwill [Line Items]
Business acquisition	21,653
GMT [Member] | Verint [Member]
Goodwill [Line Items]
Business acquisition	21,653
Other [Member]
Goodwill [Line Items]
Business acquisition	19,554
Other [Member] | Verint [Member]
Goodwill [Line Items]
Business acquisition	$ 19,554

[1] The amount of goodwill in "All Other" is attributable to Starhome, Comverse MI and Netcentrex. The goodwill associated with Netcentrex was impaired during the fiscal year ended January 31, 2009 and prior fiscal years.

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Stock-Based Compensation (Schedule Of Stock-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 8,660	$ 15,834	$ 28,081	$ 47,587
Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	474	6,997	3,278	19,827
Restricted/Deferred Stock Awards [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	8,186	8,837	24,803	27,760
Product Costs [Member] | Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	6	271	133	698
Product Costs [Member] | Restricted/Deferred Stock Awards [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	242	234	564	694
Service Costs [Member] | Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	41	742	268	2,265
Service Costs [Member] | Restricted/Deferred Stock Awards [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	582	550	1,817	1,864
Selling, General And Administrative [Member] | Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	376	4,743	2,443	12,960
Selling, General And Administrative [Member] | Restricted/Deferred Stock Awards [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	6,689	7,389	20,286	22,647
Research And Development [Member] | Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	51	1,241	434	3,904
Research And Development [Member] | Restricted/Deferred Stock Awards [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 673	$ 664	$ 2,136	$ 2,555

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Derivatives And Financial Instruments (Schedule Of Other Comprehensive Income ("OCI") Related To Cash Flow Hedges) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Derivatives And Financial Instruments [Abstract]
Accumulated OCI related to cash flow hedges, beginning of the period	$ 573	$ 747	$ 748	$ 785
Unrealized (losses) gains on cash flow hedges	(1,591)	3,575	4,091	3,191
Reclassification adjustment for losses (gains) included in net income/(loss)	1,044	(1,003)	(4,509)	(619)
Changes in accumulated OCI on cash flow hedges, before tax	(547)	2,572	(418)	2,572
Other comprehensive income (loss) attributable to noncontrolling interest	465	(400)	157	(419)
Deferred income tax benefit (provision)	41	(23)	45	(42)
Changes in accumulated OCI on cash flow hedges, net of tax	(41)	2,149	(216)	2,111
Accumulated OCI related to cash flow hedges, end of the period	$ 532	$ 2,896	$ 532	$ 2,896

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Investments (Components Of Other Comprehensive Income Related To Available-For-Sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Investments [Abstract]
Accumulated OCI related to available-for-sale securities, beginning of the period	$ 14,891	$ 13,747	$ 17,871	$ 25,663
Unrealized gains on available-for-sale securities	(1,376)	1,202	(287)	3,915
Reclassification adjustment for gains included in net income/(loss)	(87)	(57)	(4,156)	(15,419)
Changes in accumulated OCI on available-for-sale securities, before tax	(1,463)	1,145	(4,443)	(11,504)
Other comprehensive income attributable to noncontrolling interest				24
Deferred income tax benefit		3		712
Changes in accumulated OCI on available-for-sale securities, net of tax	(1,463)	1,148	(4,443)	(10,768)
Accumulated OCI related to available-for-sale securities, end of the period	$ 13,428	$ 14,895	$ 13,428	$ 14,895

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Inventories, Net

9 Months Ended

Oct. 31, 2011

Inventories, Net [Abstract]

Inventories, Net

4. INVENTORIES, NET

Inventories as of October 31, 2011 and January 31, 2011, respectively, consist of:

	October 31, 2011			January 31, 2011
	(In thousands)
Raw materials	$	47,360		$	51,783
Work in process		23,472			30,986
Finished goods		8,116			10,252
Total inventories		78,948			93,021
Less: reserves for excess and obsolete inventories		(25,065	)		(26,409	)
Inventories, net	$	53,883		$	66,612

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Fair Value Measurements (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Oct. 31, 2011	Aug. 02, 2011	Jan. 31, 2011
Fair Value Measurements [Abstract]
Term loan estimated fair value	$ 585.0		$ 586.2
Term loan facility carrying value	595.7		583.2
Development bank and government debt in the Americas region		3.3
Carrying value of the debt	$ 3.2

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Recent Accounting Pronouncements (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Oct. 31, 2011	Oct. 31, 2011	Jan. 31, 2011
Recent Accounting Pronouncements [Abstract]
Additional revenue recognized as a result of adoption of new guidance	$ 41.0	$ 49.3
Additional revenue recognized resulting from the material modifications of certain existing contracts	33.9	35.7
Deferred revenue associated with contracts	$ 2.1	$ 2.1	$ 41.2

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Inventories, Net (Tables)

9 Months Ended

Oct. 31, 2011

Inventories, Net [Abstract]

Schedule Of Inventories

	October 31, 2011			January 31, 2011
	(In thousands)
Raw materials	$	47,360		$	51,783
Work in process		23,472			30,986
Finished goods		8,116			10,252
Total inventories		78,948			93,021
Less: reserves for excess and obsolete inventories		(25,065	)		(26,409	)
Inventories, net	$	53,883		$	66,612

XML

Investments (Tables)

9 Months Ended

12 Months Ended

Oct. 31, 2011

Jan. 31, 2011

Investments [Abstract]

Summary Of Available-For-Sale Securities

	October 31, 2011
			Included in Accumulated Other Comprehensive Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities - Student loans	$	46,150	$	12,605	$	—	$	(16,170	)	$	42,585
Auction rate securities - Corporate issuers		22,500		4,616		—		(19,442	)		7,674
Total short-term investments	$	68,650	$	17,221	$	—	$	(35,612	)	$	50,259

	January 31, 2011
			Included in Accumulated Other Comprehensive Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities - Student loans	$	71,900	$	16,044	$	—	$	(24,181	)	$	63,763
Auction rate securities - Corporate issuers		22,500		5,619		—		(19,441	)		8,678
Total short-term investments	$	94,400	$	21,663	$	—	$	(43,622	)	$	72,441

Gross Realized Gains And Losses On Investments

	Three Months Ended October 31,				Nine Months Ended October 31,
	Gross Realized Gains		Gross Realized Losses		Gross Realized Gains		Gross Realized Losses
	(In thousands)
2011	$	120	$	—	$	8,011	$	—
2010	$	1,625	$	—	$	23,715	$	—

Components Of Other Comprehensive Income Related To Available-For-Sale Securities

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands)
Accumulated OCI related to available-for-sale securities, beginning of the period	$	14,891		$	13,747		$	17,871		$	25,663
Unrealized gains on available-for-sale securities		(1,376	)		1,202			(287	)		3,915
Reclassification adjustment for gains included in net income/(loss)		(87	)		(57	)		(4,156	)		(15,419	)
Changes in accumulated OCI on available-for-sale securities, before tax		(1,463	)		1,145			(4,443	)		(11,504	)
Other comprehensive income attributable to noncontrolling interest		—			—			—			24
Deferred income tax benefit		—			3			—			712
Changes in accumulated OCI on available-for-sale securities, net of tax		(1,463	)		1,148			(4,443	)		(10,768	)
Accumulated OCI related to available-for-sale securities, end of the period	$	13,428		$	14,895		$	13,428		$	14,895

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Debt (Narrative) (Details) (USD $)

0 Months Ended

3 Months Ended

9 Months Ended

12 Months Ended

9 Months Ended

9 Months Ended

9 Months Ended

1 Months Ended

9 Months Ended

12 Months Ended

9 Months Ended

Aug. 02, 2011

Oct. 31, 2011

Oct. 31, 2010

Oct. 31, 2011

Oct. 31, 2010

Jan. 31, 2011

May 25, 2007

Oct. 31, 2011

Comverse [Member]

Oct. 31, 2011

Convertible Debt Obligations [Member]

Oct. 31, 2011

Term Loan Facility [Member]

May 25, 2007

Term Loan Facility [Member]

Oct. 31, 2011

Revolving Credit Facility [Member]

Jul. 31, 2010

Revolving Credit Facility [Member]

May 25, 2007

Revolving Credit Facility [Member]

Oct. 31, 2011

Revolving Credit Facility [Member]

Verint Systems Inc [Member]

Oct. 31, 2011

New Credit Agreement, Prior Facility [Member]

Oct. 31, 2011

New Credit Agreement Facility [Member]

Jun. 30, 2011

Comverse Ltd. Lines Of Credit [Member]

Oct. 31, 2011

Comverse Ltd. Lines Of Credit [Member]

Jan. 31, 2011

Comverse Ltd. Lines Of Credit [Member]

Oct. 31, 2011

Leverage Ratio Until July 31, 2013 [Member]

Oct. 31, 2011

Leverage Ratio Thereafter [Member]

Oct. 31, 2011

Maximum [Member]

Debt [Line Items]

Principal amount of the convertible debt obligations

$ 1,000

Conversion price of convertible debt obligations

$ 17.9744

$ 17.9744

Conversion price of convertible debt obligations

55.6347

Credit facility, outstanding

0

0

6,000,000

Secured senior credit facilities

770,000,000

770,000,000

Credit facility increased maximum

300,000,000

Outstanding term loan borrowings repayment

583,200,000

583,200,000

Prior facility

675,000,000

650,000,000

75,000,000

25,000,000

Line of credit facility, term

seven-year

six-year

Credit facility maturing date

October 2017

April 2016

Loan facility discount rate

0.50%

0.50%

Loan facility discount amount

3,000,000

Unamortized deferred costs

9,000,000

Proceeds received on issuance of term loan facility net of discount

597,000,000

Loan facility interest rate

(a) in the case of Eurodollar loans, the Adjusted London Interbank Offered ("LIBO") Rate plus 3.25% (or if Verint's corporate ratings are at least BB- and Ba3 or better, 3.00%). The "Adjusted LIBO Rate" is the greater of (i) 1.25% per annum and (ii) the product of the LIBO Rate and Statutory Reserves (both as defined in the New Credit Agreement), and

(b) in the case of Base Rate loans, the Base Rate plus 2.25% (or if Verint's corporate ratings are at least BB- and Ba3 or better, 2.00%). The "Base Rate" is the greatest of (i) the Agent's prime rate, (ii) the Federal Funds Effective Rate (as defined in the New Credit Agreement) plus 0.50% and (iii) the Adjusted LIBO Rate for a one month interest period plus 1.00%.

Debt issuance costs

15,280,000

4,039,000

14,800,000

Deferred costs associated with the credit facility

10,200,000

4,600,000

Loss on extinguishment of debt

8,136,000

Fees associated with lenders that provided commitments under both the new and the prior revolving credit facilities

900,000

Fees incurred to secure waivers

500,000

Fees that were deferred and will be amortized over remaining term of New Credit Agreement

200,000

Fees expensed to secure waivers

300,000

Credit facility interest rate

4.50%

Credit facility effective interest rate

4.91%

Interest expense on borrowings

6,900,000

8,000,000

21,300,000

18,300,000

Amortization of deferred debt issuance costs

700,000

800,000

2,100,000

2,000,000

Percentage of commitment fee under revolving credit facility

0.50%

Credit facilities principal payments

1,500,000

Premium applicable in the event of repricing transaction

1.00%

Credit facilities leverage ratio

5.00 to 1.00

4.50 to 1.00

Amount available under revolving credit facility

170,000,000

Additional line of credit

15,000,000

15,000,000

Development bank and government debt in the Americas region

3,300,000

Maturity period of bank and development agency debt

February 2017

Annual interest rate

7.00%

7.00%

Carrying value of the debt

3,200,000

3,200,000

Amount available under line of credit

10,000,000

Amount available under the Term Loan Facility

600,000,000

Increase in line of credit

20,000,000

Credit facility, minimum value maintain with bank

20,000,000

Credit facility, used for guarantees and foreign currency transactions

$ 3,200,000

$ 7,300,000

$ 18,800,000

$ 4,000,000

XML

Investments (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended					1 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010	Jan. 31, 2011	Oct. 31, 2011 Commercial Paper And Money Market Funds [Member]	Jan. 31, 2011 Commercial Paper And Money Market Funds [Member]	Nov. 30, 2011 Sale Of ARS [Member]	Oct. 31, 2011 Sale Of ARS [Member]
Investment [Line Items]
Minimum maturity of auction rate securities, in years			in excess of 5 years
Investments with original maturities of three months or less						$ 160.0	$ 195.8
Investments in unrealized loss positions	0		0		0
Principal amount of ARS								61.2
Carrying amount of ARS								50.0	50.0
Cash proceeds from sales and redemptions of investments	$ 0.5	$ 2.5	$ 26.3	$ 57.1				$ 49.2

XML

Business Combinations (Tables)

9 Months Ended

Oct. 31, 2011

Business Combinations [Abstract]

Schedule Of Components And The Allocations Of The Purchase Prices

	Vovici			GMT			Other
	(In thousands)
Components of Purchase Price:
Cash and cash equivalents	$	55,708		$	24,596		$	21,965
Fair value of contingent consideration		9,900			12,000			11,804
Fair value of stock options		60			—			—
Bank debt, prepaid at closing		435			—			—
Other purchase price adjustments		—			—			317
Total purchase price	$	66,103		$	36,596		$	34,086
Allocation of Purchase Price:
Net tangible assets (liabilities):
Accounts receivable	$	1,106		$	512		$	493
Other current assets		4,396			1,717			12,445
Other assets		912			482			5,508
Current and other liabilities		(1,794	)		(1,634	)		(15,653	)
Deferred revenue		(2,264	)		(1,234	)		(845	)
Bank debt		—			—			(3,330	)
Deferred income taxes - long-term		(2,300	)		—			—
Net tangible assets (liabilities)		56			(157	)		(1,382	)
Identifiable intangible assets:
Developed technology		11,300			7,500			6,943
Customer relationships		15,400			7,200			6,550
Trademarks and trade names		1,700			400			1,000
Other identifiable intangible assets		—			—			1,421
Total identifiable intangible assets (1)		28,400			15,100			15,914
Goodwill		37,647			21,653			19,554
Total purchase price	$	66,103		$	36,596		$	34,086

(1) The weighted-average estimated useful life of all finite-lived identifiable intangible assets is 7.5 years.

Schedule Of Unaudited Pro Forma Total Revenue And Net Income (Loss)

	Three Months Ended October 31,					Nine Months Ended October 31,
	2011		2010			2011			2010
	(In thousands)
Total revenue	$	457,076	$	431,737		$	1,206,577		$	1,206,022
Net income (loss) attributable to Comverse Technology Inc.	$	36,746	$	(42,268	)	$	(62,891	)	$	(151,665	)

XML

Goodwill (Tables)

9 Months Ended

Oct. 31, 2011

Goodwill [Abstract]

Changes In Carrying Amount Of Goodwill

	Comverse BSS		Comverse VAS		Verint		All Other (1)			Total
	(In thousands)
For the Nine Months Ended October 31, 2011
Goodwill, gross at January 31, 2011	$	84,050	$	66,040	$	803,971	$	169,618		$	1,123,679
Accumulated impairment losses at January 31, 2011		—		—		—		(156,455	)		(156,455	)
Goodwill, net, at January 31, 2011		84,050		66,040		803,971		13,163			967,224
Goodwill acquired:
Vovici		—		—		37,647		—			37,647
GMT		—		—		21,653		—			21,653
Other		—		—		19,554		—			19,554
Effect of changes in foreign currencies and other		28		22		420		1			471
Goodwill, net, at October 31, 2011	$	84,078	$	66,062	$	883,245	$	13,164		$	1,046,549
Balance at October 31, 2011
Goodwill, gross at October 31, 2011	$	84,078	$	66,062	$	883,245	$	169,619		$	1,203,004
Accumulated impairment losses at October 31, 2011		—		—		—		(156,455	)		(156,455	)
Goodwill, net, at October 31, 2011	$	84,078	$	66,062	$	883,245	$	13,164		$	1,046,549

(1) The amount of goodwill in "All Other" is attributable to Starhome, Comverse MI and Netcentrex. The goodwill associated with Netcentrex was impaired during the fiscal year ended January 31, 2009 and prior fiscal years.

XML

Investments

9 Months Ended

Oct. 31, 2011

Investments [Abstract]

Investments

3. INVESTMENTS

The following is a summary of available-for-sale securities as of October 31, 2011 and January 31, 2011:

	October 31, 2011
			Included in Accumulated Other Comprehensive Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities - Student loans	$	46,150	$	12,605	$	—	$	(16,170	)	$	42,585
Auction rate securities - Corporate issuers		22,500		4,616		—		(19,442	)		7,674
Total short-term investments	$	68,650	$	17,221	$	—	$	(35,612	)	$	50,259

	January 31, 2011
			Included in Accumulated Other Comprehensive Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities - Student loans	$	71,900	$	16,044	$	—	$	(24,181	)	$	63,763
Auction rate securities - Corporate issuers		22,500		5,619		—		(19,441	)		8,678
Total short-term investments	$	94,400	$	21,663	$	—	$	(43,622	)	$	72,441

The auction rate securities ("ARS") have stated maturities in excess of 5 years.

Investments with original maturities of three months or less, when purchased, are included in "Cash and cash equivalents," or in "Restricted cash and bank time deposits" in the condensed consolidated balance sheets. Such investments are not reflected in the tables above as of October 31, 2011 or January 31, 2011 and include commercial paper and money market funds totaling $160.0 million and $195.8 million as of October 31, 2011 and January 31, 2011, respectively.

As of October 31, 2011 and January 31, 2011, all the ARS (all of which were held by CTI as of such dates) were restricted pursuant to the settlement agreement of the consolidated shareholder class action CTI entered into on December 16, 2009, as amended on June 19, 2010. All cash proceeds from sales and redemptions of ARS (other than ARS that were held in an account with UBS) (including interest thereon) were restricted. Subsequent to October 31, 2011, the Company paid all remaining amounts under the settlement agreement and accordingly, all ARS and cash proceeds received from sales and redemptions of ARS became unrestricted (see Note 20, Commitments and Contingencies and Note 21, Subsequent Events).

There were no investments in unrealized loss positions as of October 31, 2011 and January 31, 2011.

The Company received cash proceeds from sales and redemptions of investments of $0.5 million and $26.3 million for the three and nine months ended October 31, 2011, respectively, and $2.5 million and $57.1 million for the three and nine months ended October 31, 2010, respectively. In addition, in November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash.

The gross realized gains and losses on the Company's investments for the three and nine months ended October 31, 2011 and 2010 are as follows:

	Three Months Ended October 31,				Nine Months Ended October 31,
	Gross Realized Gains		Gross Realized Losses		Gross Realized Gains		Gross Realized Losses
	(In thousands)
2011	$	120	$	—	$	8,011	$	—
2010	$	1,625	$	—	$	23,715	$	—

The components of other comprehensive income ("OCI") related to available-for-sale securities are as follows:

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands)
Accumulated OCI related to available-for-sale securities, beginning of the period	$	14,891		$	13,747		$	17,871		$	25,663
Unrealized gains on available-for-sale securities		(1,376	)		1,202			(287	)		3,915
Reclassification adjustment for gains included in net income/(loss)		(87	)		(57	)		(4,156	)		(15,419	)
Changes in accumulated OCI on available-for-sale securities, before tax		(1,463	)		1,145			(4,443	)		(11,504	)
Other comprehensive income attributable to noncontrolling interest		—			—			—			24
Deferred income tax benefit		—			3			—			712
Changes in accumulated OCI on available-for-sale securities, net of tax		(1,463	)		1,148			(4,443	)		(10,768	)
Accumulated OCI related to available-for-sale securities, end of the period	$	13,428		$	14,895		$	13,428		$	14,895

XML

Intangible Assets, Net (Tables)

9 Months Ended

Oct. 31, 2011

Intangible Assets, Net [Abstract]

Acquired Intangible Assets

	Useful Life	October 31, 2011		January 31, 2011
		(In thousands)
Gross carrying amount:
Acquired technology	2 to 7 years	$	190,272	$	164,796
Customer relationships	4 to 10 years		263,001		233,995
Trade names	1to 10 years		15,983		12,952
Non-competition agreements	4to 10 years		5,797		5,215
Sales backlog	3years		843		—
Distribution network	10years		2,440		2,440
			478,336		419,398
Accumulated amortization:
Acquired technology			130,130		110,740
Customer relationships			114,029		95,753
Trade names			13,102		12,577
Non-competition agreements			3,462		2,760
Sales backlog			5		—
Distribution network			1,291		1,108
			262,019		222,938
Total		$	216,317	$	196,460

XML

Earnings (Loss) Per Share Attributable To Comverse Technology, Inc.'s Shareholders (Tables)

9 Months Ended

Oct. 31, 2011

Earnings (Loss) Per Share Attributable To Comverse Technology, Inc.'s Shareholders [Abstract]

Schedule Of Calculation Of Earnings (Loss) Per Share

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands, except per share data)
Numerator:
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - basic	$	35,690		$	(40,929	)	$	(63,202	)	$	(144,753	)
Adjustment for subsidiary stock options		(38	)		(2,027	)		(88	)		—
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - diluted	$	35,652		$	(42,956	)	$	(63,290	)	$	(144,753	)
Net loss from discontinued operations, attributable to Comverse Technology, Inc. - basic and diluted	$	—		$	(774	)	$	—		$	(2,998	)
Denominator:
Basic weighted average common shares outstanding		205,886			205,265			205,891			205,135
Convertible debt obligations		117			—			—			—
Stock options		404			—			—			—
Restricted awards		322			—			—			—
Diluted weighted average common shares outstanding		206,729			205,265			205,891			205,135
Earnings (loss) per share
Basic
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc.	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.71	)
Loss per share from discontinued operations attributable to Comverse Technology, Inc.		—			(0.00	)		—			(0.01	)
Basic earnnings (loss) per share	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.72	)
Diluted
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc.	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.71	)
Loss per share from discontinued operations attributable to Comverse Technology, Inc.		—			(0.00	)		—			(0.01	)
Diluted earnings (loss) per share	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.72	)

XML

Intangible Assets, Net (Details) (USD $)	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010	Jan. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	$ 478,336,000		$ 478,336,000		$ 419,398,000
Intangible assets, Accumulated amortization	262,019,000		262,019,000		222,938,000
Intangible assets, net	216,317,000		216,317,000		196,460,000
Amortization of intangible assets	13,600,000	12,300,000	38,900,000	36,700,000
Impairment of finite-lived intangible assets	0	0	0	0
Acquired Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	190,272,000		190,272,000		164,796,000
Intangible assets, Accumulated amortization	130,130,000		130,130,000		110,740,000
Intangible assets, Useful Life, Minimum, Years			2
Intangible assets, Useful Life, Maximum, Years			7
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	263,001,000		263,001,000		233,995,000
Intangible assets, Accumulated amortization	114,029,000		114,029,000		95,753,000
Intangible assets, Useful Life, Minimum, Years			4
Intangible assets, Useful Life, Maximum, Years			10
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	15,983,000		15,983,000		12,952,000
Intangible assets, Accumulated amortization	13,102,000		13,102,000		12,577,000
Intangible assets, Useful Life, Minimum, Years			1
Intangible assets, Useful Life, Maximum, Years			10
Non-Competition Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	5,797,000		5,797,000		5,215,000
Intangible assets, Accumulated amortization	3,462,000		3,462,000		2,760,000
Intangible assets, Useful Life, Minimum, Years			4
Intangible assets, Useful Life, Maximum, Years			10
Sales Backlog [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	843,000		843,000
Intangible assets, Accumulated amortization	5,000		5,000
Intangible assets, Useful Life, Years			3
Distribution Network [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	2,440,000		2,440,000		2,440,000
Intangible assets, Accumulated amortization	$ 1,291,000		$ 1,291,000		$ 1,108,000
Intangible assets, Useful Life, Years			10

XML

Earnings (Loss) Per Share Attributable To Comverse Technology, Inc.'s Shareholders (Schedule Of Calculation Of Earnings (Loss) Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Earnings (Loss) Per Share [Line Items]
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - basic	$ 35,690	$ (40,929)	$ (63,202)	$ (144,753)
Adjustment for subsidiary stock options	(38)	(2,027)	(88)
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - diluted	35,652	(42,956)	(63,290)	(144,753)
Net loss from discontinued operations, attributable to Comverse Technology, Inc. - basic and diluted		$ (774)		$ (2,998)
Basic weighted average common shares outstanding	205,886,126	205,264,632	205,890,586	205,134,765
Convertible debt obligations	117,000
Diluted weighted average common shares outstanding	206,729,005	205,264,632	205,890,586	205,134,765
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc., Basic	$ 0.17	$ (0.20)	$ (0.31)	$ (0.71)
Loss per share from discontinued operations attributable to Comverse Technology, Inc., Basic		$ 0.00		$ (0.01)
Basic earnings (loss) per share	$ 0.17	$ (0.20)	$ (0.31)	$ (0.72)
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc., Diluted	$ 0.17	$ (0.21)	$ (0.31)	$ (0.71)
Loss per share from discontinued operations attributable to Comverse Technology, Inc., Diluted		$ 0.00		$ (0.01)
Diluted earnings (loss) per share	$ 0.17	$ (0.21)	$ (0.31)	$ (0.72)
Contingently issuable shares excluded from computation of diluted earnings per share	900,000	500,000		700,000
Stock Options [Member]
Earnings (Loss) Per Share [Line Items]
Incremental common shares attributable to share-based payment arrangements	404,000
Restricted Awards [Member]
Earnings (Loss) Per Share [Line Items]
Incremental common shares attributable to share-based payment arrangements	322,000

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Oct. 31, 2011	Jan. 31, 2011
ASSETS
Cash and cash equivalents	$ 421,346	$ 581,390
Restricted cash and bank time deposits	60,070	73,117
Auction rate securities	50,259	72,441
Accounts receivable, net of allowance of $8,939 and $13,237, respectively	314,246	319,628
Inventories, net	53,883	66,612
Deferred cost of revenue	36,540	51,470
Deferred income taxes	41,956	39,644
Prepaid expenses and other current assets	96,712	91,760
Total current assets	1,075,012	1,296,062
Property and equipment, net	77,054	66,843
Goodwill	1,046,549	967,224
Intangible assets, net	216,317	196,460
Deferred cost of revenue	141,273	158,703
Deferred income taxes	18,010	20,766
Other assets	107,001	107,864
Total assets	2,681,216	2,813,922
LIABILITIES AND EQUITY
Accounts payable and accrued expenses	381,003	401,940
Convertible debt obligations	2,195	2,195
Deferred revenue	496,675	559,873
Deferred income taxes	13,596	13,661
Bank loans	6,208	6,000
Litigation settlements	101,030	146,150
Income taxes payable	11,858	11,486
Other current liabilities	44,377	50,280
Total current liabilities	1,056,942	1,191,585
Bank loans	592,695	583,234
Deferred revenue	260,425	270,934
Deferred income taxes	59,795	52,953
Other long-term liabilities	246,993	229,329
Total liabilities	2,216,850	2,328,035
Commitments and contingencies
Equity:
Common stock, $0.10 par value - authorized, 600,000,000 shares; issued 207,096,791 and 204,937,882 shares, respectively; outstanding, 206,055,795 and 204,533,916 shares, respectively	20,710	20,494
Treasury stock, at cost, 1,040,996 and 403,966 shares, respectively	(7,803)	(3,484)
Additional paid-in capital	2,112,780	2,088,717
Accumulated deficit	(1,770,840)	(1,707,638)
Accumulated other comprehensive income	10,094	14,919
Total Comverse Technology, Inc. shareholders' equity	364,941	413,008
Noncontrolling interest	99,425	72,879
Total equity	464,366	485,887
Total liabilities and equity	$ 2,681,216	$ 2,813,922

XML

Investments (Summary Of Available-For-Sale Securities) (Details) (Short-Term Investments [Member], USD $) In Thousands, unless otherwise specified	Oct. 31, 2011	Jan. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Cost	$ 68,650	$ 94,400
Available-for-sale securities, Gross Unrealized Gains	17,221	21,663
Available-for-sale securities, Gross Unrealized Losses
Available-for-sale securities, Cumulative Impairment Charges	(35,612)	(43,622)
Available-for-sale securities, Estimated Fair Value	50,259	72,441
Auction Rate Securities - Student Loans [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Cost	46,150	71,900
Available-for-sale securities, Gross Unrealized Gains	12,605	16,044
Available-for-sale securities, Gross Unrealized Losses
Available-for-sale securities, Cumulative Impairment Charges	(16,170)	(24,181)
Available-for-sale securities, Estimated Fair Value	42,585	63,763
Auction Rate Securities - Corporate Issuers [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Cost	22,500	22,500
Available-for-sale securities, Gross Unrealized Gains	4,616	5,619
Available-for-sale securities, Gross Unrealized Losses
Available-for-sale securities, Cumulative Impairment Charges	(19,442)	(19,441)
Available-for-sale securities, Estimated Fair Value	$ 7,674	$ 8,678

XML

Basis Of Presentation

9 Months Ended

Oct. 31, 2011

Basis Of Presentation [Abstract]

Basis Of Presentation

1. BASIS OF PRESENTATION

Company Background

Comverse Technology, Inc. ("CTI" and, together with its subsidiaries, the "Company") is a holding company organized as a New York corporation in October 1984 that conducts business through its wholly-owned subsidiary, Comverse, Inc. (together with its subsidiaries, "Comverse"), and its majority-owned subsidiaries, Verint Systems Inc. ("Verint Systems" and together with its subsidiaries, "Verint"), Starhome B.V. (together with its subsidiaries, "Starhome") and, prior to its sale to a third party on December 3, 2010, Ulticom, Inc. (together with its subsidiaries, "Ulticom").

In September 2011, The NASDAQ Stock Market ("NASDAQ") approved CTI's application for the relisting of its common stock on The NASDAQ Global Select Market and trading resumed on September 23, 2011.

Comverse

Comverse is a leading provider of software-based products, systems and related services that (i) provides converged, prepaid and postpaid billing and active customer management for wireless, wireline and cable network operators ("Business Support Systems" or "BSS") delivering a value proposition designed to ensure timely and efficient service monetization and enable real-time offers to be made to end users based on all relevant customer profile information; (ii) enables wireless and wireline (including cable) network-based Value-Added Services ("VAS"), comprised of two categories – Voice and Messaging – that include voicemail, visual voicemail, call completion, short messaging service ("SMS") text messaging ("texting"), multimedia picture and video messaging and Internet Protocol ("IP") communications; and (iii) provides wireless users with optimized access to mobile Internet websites, content and applications, and generate data usage and revenue for wireless operators. Comverse's products and services are designed to generate carrier voice and data network traffic, revenue and customer loyalty, monetize network operators' services and improve operational efficiency for more than 450 wireless and wireline network communication service provider customers in more than 125 countries, including the majority of the world's 100 largest wireless network operators.

Verint

Verint is a global leader in Actionable Intelligence solutions and value-added services. Verint's solutions enable organizations of all sizes to make timely and effective decisions to improve enterprise performance and enhance safety. Verint's customers use Verint's Actionable Intelligence solutions to capture, distill, and analyze complex and underused information sources, such as voice, video, and unstructured text.

In the enterprise market, Verint's Enterprise Intelligence solutions help organizations enhance customer service operations in contact centers, branches and back-office environments to increase customer satisfaction, reduce operating costs, identify revenue opportunities, and improve profitability. In the security intelligence market, Verint's Video Intelligence, public safety, and Communications Intelligence solutions are used by government and commercial organizations in their efforts to protect people and property and neutralize terrorism and crime.

Starhome

Starhome is a provider of wireless service mobility solutions that enhance international roaming. Wireless operators use Starhome's software-based solutions to generate additional revenue and to improve profitability by directing international roaming traffic to preferred networks and by providing a wide range of services to subscribers traveling outside their home network.

Ulticom

Ulticom, Inc. was a majority-owned publicly-traded subsidiary of CTI until it was sold to an affiliate of Platinum Equity Advisors, LLC ("Platinum Equity") on December 3, 2010 (the "Ulticom Sale"). Ulticom was a reportable segment of the Company prior to its sale. As a result of the Ulticom 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 (see Note 15, Discontinued Operations).

Condensed Consolidated Financial Statements Preparation

The condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and on the same basis as the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2011 (the "2010 Form 10-K"). The condensed consolidated statements of operations and cash flows for the periods ended October 31, 2011 and 2010, and the condensed consolidated balance sheet as of October 31, 2011 are not audited but reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair presentation of the results of the periods presented. The condensed consolidated balance sheet as of January 31, 2011 is derived from the audited consolidated financial statements presented in the 2010 Form 10-K. Certain information and disclosures normally included in annual consolidated financial statements have been omitted in this interim period report pursuant to the rules and regulations of the SEC. Because the condensed consolidated interim financial statements do not include all of the information and disclosures required by U.S. GAAP for annual financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the 2010 Form 10-K. The results for interim periods are not necessarily indicative of a full fiscal year's results.

Principles of Consolidation

The accompanying condensed consolidated financial statements include CTI and its wholly-owned subsidiaries and its controlled and majority-owned subsidiaries, which include Verint Systems (in which CTI owned 41.9% of the common stock and held 52.8% of the voting power as of October 31, 2011) and Starhome B.V. (66.5% owned as of October 31, 2011). Ulticom, Inc. was a majority-owned subsidiary prior to its sale on December 3, 2010 and was included in the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows through such date. For controlled subsidiaries that are not wholly-owned, the noncontrolling interest is included as a separate component of "Net income (loss)" in the condensed consolidated statements of operations and "Total equity" in the condensed consolidated balance sheets. Verint Systems holds a 50% equity interest in a consolidated variable interest entity in which it is the primary beneficiary. The results of operations of this variable interest entity for the three and nine months ended October 31, 2011 and 2010 were not significant to the condensed consolidated statements of operations.

All intercompany balances and transactions have been eliminated.

The Company includes the results of operations of acquired businesses from the dates of acquisition.

Changes in Reportable Segments

The Company changed its reportable segments during the three months ended October 31, 2011. The Company's reportable segments now consist of Comverse BSS, Comverse VAS, and Verint. The results of operations of all the other operations of the Company are included in the column captioned "All Other" as part of the Company's business segment presentation. The operating segments included in "All Other" do not meet the quantitative thresholds required for a separate presentation. See Note 18, Business Segment Information. The change in reportable segments is attributable to the implementation of a second phase of restructuring measures (the "Phase II Business Transformation") at Comverse that focuses on process reengineering to maximize business performance, productivity and operational efficiency (see Note 8, Restructuring).

As part of the Phase II Business Transformation, Comverse restructured its operations into new business units that are designed to improve operational efficiency and business performance. Comverse's business units consist of the following:

• BSS, which conducts Comverse's converged, prepaid and postpaid billing and active management systems business and includes groups engaged in product management, professional services, research and development and product sales;

• VAS, which conducts Comverse's value-added services business and includes groups engaged in VAS delivery, voice product research and development, messaging product research and development and product sales; and

• Mobile Internet ("Comverse MI"), which is responsible for Comverse's mobile Internet products and includes groups engaged in product management, solution engineering, delivery, research and development and product sales.

In addition, Comverse created Global Services ("Comverse GLS"), which provides customer post-delivery services and includes groups engaged in support services for BSS, VAS and mobile Internet products, services sales and product management.

Certain Comverse business operations are conducted through the following global corporate functions:

• Customer Facing Group, which is primarily engaged in providing overall customer account management and sales for all product lines;

• Operations Group, which provides centralized information technology, procurement, supply chain management and global business operations services to all business units; and

• Strategy and innovation, finance, legal and human resources groups, which continue to support all business operations.

As a result of the Phase II Business Transformation, Comverse BSS, Comverse VAS and Comverse MI became operating segments of the Company. The revenue of each of Comverse BSS, Comverse VAS and Comverse MI includes the revenue generated by Comverse GLS that is attributable to the operations of each such operating segment. The costs and expenses of each of Comverse BSS, Comverse VAS and Comverse MI are comprised of direct costs such as product materials and personnel-related costs, and costs and expenses incurred by Comverse GLS in connection with the operations of each such operating segment. The chief operating decision maker, CTI's Chief Executive Officer, uses the segment performance of Comverse BSS, Comverse VAS and Comverse MI, after including the amounts attributable to Comverse GLS, for assessing the financial results of the segments and for the allocation of resources. The discrete financial information of Comverse GLS is not used by the CODM for the assessment of financial results or the allocation of resources.

The Company does not maintain balance sheets for the Comverse operating segments.

The Company's new reportable segments are presented as follows:

• Comverse BSS - comprised of Comverse's BSS operating segment;

• Comverse VAS - comprised of Comverse's VAS operating segment; and

• Verint - comprised of Verint Systems and its subsidiaries.

All Other is comprised of all the Company's other operations, including the Comverse MI operating segment, Comverse's Netcentrex operations, Comverse's global corporate functions that support its business units, Starhome B.V. and its subsidiaries, miscellaneous operations and CTI's holding company operations.

The Company has recast the presentation of its segment information for the six months ended July 31, 2011 (which is included in the segment information for the nine months ended October 31, 2011) and for the three and nine months ended October 31, 2010 to reflect these reportable segments.

Use of Estimates

The preparation of the condensed consolidated financial statements and the accompanying notes in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses.

The most significant estimates include:

• Estimates relating to the recognition of revenue, including the determination of vendor specific objective evidence ("VSOE") of fair value or the determination of best estimate of selling price for multiple element arrangements;

• Inventory reserves;

• Allowance for doubtful accounts;

• Fair value of stock-based compensation;

• Valuation of assets acquired and liabilities assumed in business combinations;

• Fair value of reporting units for the purpose of goodwill impairment test;

• Valuation of other intangible assets;

• Valuation of investments and financial instruments;

• Realization of deferred tax assets; and

• The identification and measurement of uncertain tax positions.

The Company's actual results may differ from its estimates.

Working Capital Position and Management's Plans

The Company incurred substantial losses and experienced declines in cash flows and working capital during the three fiscal years ended January 31, 2011 and the nine months ended October 31, 2011, and had a significant accumulated deficit as of October 31, 2011.

The Company forecasts that available cash and cash equivalents will be sufficient to meet the liquidity needs, including capital expenditures, of CTI and Comverse for at least the next 12 months. The Company's forecast is based upon a number of assumptions, which the Company believes are reasonable. However, should one or more of the assumptions prove incorrect, or should one or more of the risks or uncertainties attendant to the Company and its business materialize, the Company's business and operations could be materially adversely affected and, in such event, the Company may need to seek new borrowings, asset sales or the issuance of equity or debt securities. Management believes that sources of liquidity could be identified.

XML

Derivatives And Financial Instruments (Schedule Of Derivative Positions And Respective Fair Values) (Details) (USD $)	1 Months Ended
	Jul. 30, 2010	Oct. 31, 2011	Jan. 31, 2011
Derivatives, Fair Value [Line Items]
Payment made for termination of interest rate swap agreement	$ 21,700,000
Derivative assets, Fair Value		827,000	957,000
Derivative liabilities, Fair Value		1,426,000	1,926,000
Derivatives Designated As Hedging Instruments [Member] | Short-Term Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative assets, Notional Amount		24,036,000	22,390,000
Derivative liabilities, Notional Amount		49,762,000	21,250,000
Derivatives Not Designated As Hedging Instruments [Member] | Short-Term Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative assets, Notional Amount		9,523,000
Derivative liabilities, Notional Amount		22,165,000	33,341,000
Prepaid Expenses And Other Current Assets [Member] | Derivatives Designated As Hedging Instruments [Member] | Short-Term Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative assets, Fair Value		814,000	957,000
Prepaid Expenses And Other Current Assets [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Short-Term Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative assets, Fair Value		13,000
Other Current Liabilities [Member] | Derivatives Designated As Hedging Instruments [Member] | Short-Term Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities, Fair Value		670,000	396,000
Other Current Liabilities [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Short-Term Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities, Fair Value		$ 756,000	$ 1,530,000

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Derivatives And Financial Instruments (Tables)

9 Months Ended

Oct. 31, 2011

Derivatives And Financial Instruments [Abstract]

Schedule Of Derivative Positions And Respective Fair Values

	October 31, 2011
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Assets
Derivatives not designated as hedging instruments
Short-term foreign currency forward	$	9,523	Prepaid expenses and other current assets	$	13
Derivatives designated as hedging instruments
Short-term foreign currency forward		24,036	Prepaid expenses and other current assets		814
Total assets				$	827
Liabilities
Derivatives not designated as hedging instruments
Short-term foreign currency forward		22,165	Other current liabilities	$	756
Derivatives designated as hedging instruments
Short-term foreign currency forward		49,762	Other current liabilities		670
Total liabilities				$	1,426
	January 31, 2011
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Assets
Derivatives designated as hedging instruments
Short-term foreign currency forward	$	22,390	Prepaid expenses and other current assets	$	957
Total assets				$	957
Liabilities
Derivatives not designated as hedging instruments
Short-term foreign currency forward		33,341	Other current liabilities	$	1,530
Derivatives designated as hedging instruments
Short-term foreign currency forward		21,250	Other current liabilities		396
Total liabilities				$	1,926

Schedule Of Classification Of Gains And Losses On Derivative Instruments

	Three Months Ended October 31, 2011
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)			Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)			Recognized in Other Income (Expense), Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—		$	—		$	562
Derivatives designated as hedging instruments
Foreign currency forward		(1,126	)		(1,044	)		—
Total	$	(1,126	)	$	(1,044	)	$	562
	Three Months Ended October 31, 2010
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)			Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)			Recognized in Other Income (Expense), Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—		$	—		$	(924	)
Derivatives designated as hedging instruments
Foreign currency forward		3,175			1,003			—
Total	$	3,175		$	1,003		$	(924	)

(1) Amounts reclassified from accumulated other comprehensive income into the statement of operations are classified as operating expenses.

	Nine Months Ended October 31, 2011
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)		Recognized in Other (Expense) Income, Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—	$	—	$	(1,123	)
Derivatives designated as hedging instruments
Foreign currency forward		4,248		4,509		—
Total	$	4,248	$	4,509	$	(1,123	)
	Nine Months Ended October 31, 2010
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)		Recognized in Other (Expense) Income, Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—	$	—	$	(628	)
Interest rate swap		—		—		(3,102	)
Derivatives designated as hedging instruments
Foreign currency forward		2,772		619		—
Total	$	2,772	$	619	$	(3,730	)

(1) Amounts reclassified from accumulated other comprehensive income into the statement of operations are classified as operating expenses.

Schedule Of Other Comprehensive Income ("OCI") Related To Cash Flow Hedges

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands)
Accumulated OCI related to cash flow hedges, beginning of the period	$	573		$	747		$	748		$	785
Unrealized (losses) gains on cash flow hedges		(1,591	)		3,575			4,091			3,191
Reclassification adjustment for losses (gains) included in net income/(loss)		1,044			(1,003	)		(4,509	)		(619	)
Changes in accumulated OCI on cash flow hedges, before tax		(547	)		2,572			(418	)		2,572
Other comprehensive income (loss) attributable to noncontrolling interest		465			(400	)		157			(419	)
Deferred income tax benefit (provision)		41			(23	)		45			(42	)
Changes in accumulated OCI on cash flow hedges, net of tax		(41	)		2,149			(216	)		2,111
Accumulated OCI related to cash flow hedges, end of the period	$	532		$	2,896		$	532		$	2,896

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Severance (Details) (USD $) In Millions, unless otherwise specified	Oct. 31, 2011	Jan. 31, 2011
Severance [Abstract]
Gross accrued severance liability	$ 55.0	$ 61.9
Amount deposited into insurance policies for funding severance liability	$ 38.1	$ 44.7

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Income Taxes

9 Months Ended

Oct. 31, 2011

Income Taxes [Abstract]

Income Taxes

17. INCOME TAXES

The Company's quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items that occur within the periods presented. The significant differences that impact the effective tax rate relate to the difference between the U.S. federal statutory rate and the rates in foreign jurisdictions, incremental valuation allowances, investments in affiliates and tax contingencies.

For the nine months ended October 31, 2011, the Company recorded an income tax provision of $35.8 million, which represents an effective tax rate of (327.0%). The effective tax rate is negative due to the fact that the Company reported income tax expense on a consolidated pre-tax loss. The Company did not record an income tax benefit on the loss for the period, primarily because it maintains valuation allowances against certain of its U.S. and foreign net deferred tax assets. Further, the benefit of losses in other jurisdictions was offset by foreign withholding taxes, certain tax contingencies and taxes recorded with respect to investments in affiliates.

For the nine months ended October 31, 2010, the Company recorded an income tax provision of $49.5 million, which represents an effective tax rate of (58.4%). The effective tax rate is negative due to the fact that the Company reported income tax expense on a consolidated pre-tax loss, primarily due to the mix of income and losses by jurisdiction. The Company did not record an income tax benefit on the loss for the period, primarily because it maintains a valuation allowance against certain of its U.S. and foreign net deferred tax assets. The income tax provision for the period is comprised of income tax expense recorded in non-loss jurisdictions, withholding taxes, and certain tax contingencies recorded in the nine months ended October 31, 2010.

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more-likely-than-not realizable, the Company establishes a valuation allowance. The Company determined that there is sufficient negative evidence to maintain valuation allowances against certain of the Company's federal, state and foreign deferred tax assets as a result of historical losses in the most recent three-year period in the U.S. and certain state and foreign jurisdictions. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support its reversal.

The Company regularly assesses the adequacy of the Company's provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes. As a result, the Company may adjust the reserves for unrecognized tax benefits for the impact of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities, and lapses of statutes of limitation. As of October 31, 2011, the total amount of unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate were approximately $137.8 million. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits as of October 31, 2011 could decrease by approximately $10.4 million in the next twelve months as a result of settlements of certain tax audits or lapses of statutes of limitation. Such decreases may involve the payment of additional taxes, the adjustment of deferred taxes, including the need for additional valuation allowances and the recognition of tax benefits. The Company's income tax returns are subject to ongoing tax examinations in several jurisdictions in which the Company operates. The Company believes that it is reasonably possible that new issues may be raised by tax authorities or developments in tax audits may occur which would require increases or decreases to the balance of reserves for unrecognized tax benefits. However, an estimate of such changes cannot reasonably be made.

The Company's policy is to include interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes in the condensed consolidated statements of operations. The Company recorded $1.2 million and $2.1 million of interest and penalties related to uncertain tax positions in its provision for income taxes for the three months ended October 31, 2011 and 2010, respectively. Accrued interest and penalties were $58.2 million and $54.9 million as of October 31, 2011 and January 31, 2011, respectively.

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 31, 2011

Fair Value Measurements [Abstract]

Schedule Of Financial Instruments

	October 31, 2011
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Commercial paper (1)	$	—	$	9,382	$	—	$	9,382
Money market funds (1)		150,553		—		—		150,553
Auction rate securities		—		—		50,259		50,259
Derivative assets		—		827		—		827
Contingent consideration asset recorded for sale of business		—		—		780		780
	$	150,553	$	10,209	$	51,039	$	211,801
Financial Liabilities:
Derivative liabilities	$	—	$	1,426	$	—	$	1,426
Contingent consideration liability for business combination		—		—		34,623		34,623
	$	—	$	1,426	$	34,623	$	36,049

	January 31, 2011
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Commercial paper (1)	$	—	$	9,375	$	—	$	9,375
Money market funds (1)		186,414		—		—		186,414
Auction rate securities		—		—		72,441		72,441
Derivative assets		—		957		—		957
Contingent consideration asset recorded for sale of business		—		—		722		722
	$	186,414	$	10,332	$	73,163	$	269,909
Financial Liabilities:
Derivative liabilities	$	—	$	1,926	$	—	$	1,926
Contingent consideration liability for business combination		—		—		3,686		3,686
	$	—	$	1,926	$	3,686	$	5,612

(1) As of October 31, 2011, $145.9 million of commercial paper and money market funds were classified in "Cash and cash equivalents" and $14.1 million of money market funds were classified in "Restricted cash and bank deposits" within the condensed consolidated balance sheets. As of January 31, 2011, $162.4 million of commercial paper and money market funds were classified in "Cash and cash equivalents" and $33.4 million of money market funds were classified in "Restricted cash and bank time deposits" within the condensed consolidated balance sheets.

Schedule Of Changes In The Fair Value Of The Level 3 Financial Assets And Liabilities

	Level Three Financial Assets and Liabilities
	Three Months Ended October 31,											Nine Months Ended October 31,
	2011						2010					2011						2010
	Asset			Liability			Asset			Liability		Asset			Liability			Asset			Liability
	(In thousands)											(In thousands)
Beginning balance	$	52,612		$	2,364		$	69,349		$	3,306	$	73,163		$	3,686		$	114,650		$	—
Sales and redemptions		(250	)		—			(2,522	)		—		(25,750	)		—			(57,018	)		—
Change in realized and unrealized gains included in other income, net		120			—			1,625			—		8,011			—			23,715			—
Change in unrealized losses included in other comprehensive income		(1,463	)		—			1,143			—		(4,443	)		—			(11,374	)		—
Impairment charges		—			—			(29	)		—		—			—			(407	)		—
Contingent consideration liability recorded for business combination		—			32,800			—			—		—			33,704			—			3,224
Payments of contingent consideration		—			—			—			—		—			(4,107	)		—			—
Change in fair value recorded in operating expenses		20			(541	)		—			141		58			1,340			—			223
Ending balance	$	51,039		$	34,623		$	69,566		$	3,447	$	51,039		$	34,623		$	69,566		$	3,447

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Related Party Transactions

9 Months Ended

Oct. 31, 2011

Related Party Transactions [Abstract]

Related Party Transactions

19. RELATED PARTY TRANSACTIONS

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 (the "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 October 31, 2011 and January 31, 2011, cumulative, undeclared dividends on the preferred stock were $55.6 million and $45.7 million, respectively. As of October 31, 2011 and January 31, 2011, the liquidation preference of the preferred stock was $348.6 million and $338.7 million, respectively.

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. As of October 31, 2011 and January 31, 2011, the preferred stock could be converted into approximately 10.7 million and 10.4 million shares of Verint Systems' common stock, respectively.

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Stock-Based Compensation (Schedule Of Fair Values Of The Options With The Weighted-Average Assumptions Using A Black-Scholes Option Pricing Model) (Details)	0 Months Ended
	Aug. 04, 2011 years
Stock-Based Compensation [Abstract]
Expected life (in years)	5.43
Risk-free interest rate	1.26%
Expected volatility	50.40%
Dividend yield	0.00%

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Recent Accounting Pronouncements

9 Months Ended

Oct. 31, 2011

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Implemented

Revenue Recognition

The Company reports its revenue in two categories: (i) product revenue, including hardware and software products; and (ii) service revenue, including revenue from professional services, training services and post-contract customer support ("PCS"). Professional services primarily include installation, customization and consulting services.

Revenue arrangements may include one of these single elements, or may incorporate one or more elements in a single transaction or combination of related transactions. In September 2009, the FASB issued revenue recognition guidance applicable to multiple element arrangements, which:

• applies to multiple element revenue arrangements that contain both software and hardware elements, focusing on determining which revenue arrangements are within the scope of the software revenue guidance; and

• addresses how to separate consideration related to each element in a multiple element arrangement, excluding software arrangements, and establishes a hierarchy for determining the selling price of a deliverable. It also eliminates the residual method of allocation by requiring that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method.

The Company adopted this guidance on a prospective basis for revenue arrangements entered into, or materially modified, on or after February 1, 2011.

Certain of the Company's multiple element arrangements include hardware that functions together with software to provide the essential functionality of the product. Therefore, such arrangements entered into or materially modified on or after February 1, 2011 are no longer accounted for in accordance with the FASB's software accounting guidance. Accordingly, the selling price used for each deliverable is based on VSOE of fair value, if available, third-party evidence ("TPE") of fair value if VSOE is not available, or the Company's best estimate of selling price ("BESP") if neither VSOE nor TPE is available. In determining the units of accounting for these arrangements, the Company evaluates whether each deliverable has stand-alone value as defined in the FASB's guidance. For the Company's Comverse BSS and Comverse VAS segments, the professional services performed prior to the product's acceptance do not have stand-alone value and are therefore combined with the related hardware and software as one non-software deliverable. After determining the fair value for each deliverable, the arrangement consideration is allocated using the relative selling price method. Revenue is recognized accordingly for each deliverable once the respective revenue recognition criteria are met for that deliverable.

The Company's Comverse BSS and Comverse VAS segments have not yet established VSOE of fair value for any element other than PCS for a portion of its arrangements. The Company's Verint segment has established VSOE of fair value for one or more elements (installation services, training, consulting and PCS) for a majority of its arrangements. Generally, the Company is not able to determine TPE because its offerings contain a significant level of differentiation such that the comparable pricing of substantially similar products or services cannot be obtained. When the Company is unable to establish fair value of its non-software deliverables using VSOE or TPE, it uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which it would transact a sale if the product or service were sold on a stand-alone basis, which requires significant judgment. The Company determines BESP for a product or service by considering multiple factors including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies and customer classes. The Company exercises judgment and uses estimates in determining the revenue to be recognized in each accounting period.

With the exception of arrangements that require significant customization of the product to meet the particular requirements of the customer, which are accounted for using the percentage-of-completion method, the initial revenue recognition for each non-software product deliverable is generally upon completion of the related professional services. The impact of implementing the guidance was significant for the nine months ended October 31, 2011. For the three and nine months ended October 31, 2011, an additional $41.0 million and $49.3 million of revenue, respectively, was recognized as a result of the adoption of the new guidance. Such additional revenue included $33.9 million and $35.7 million of additional revenue recognized under the new guidance as compared to the revenue that would have been recognized under prior accounting guidance for the three and nine months ended October 31, 2011, respectively, resulting from material modifications of certain existing contracts. For those contracts that were modified during the nine months ended October 31, 2011, deferred revenue associated with these contracts were $2.1 million and $41.2 million as of October 31, 2011 and January 31, 2011, respectively.

For all transactions entered into prior to February 1, 2011 that have not been subsequently materially modified, as well as multiple element arrangements without hardware, the Company allocates revenue to the delivered elements of the arrangement using the residual method, whereby revenue is allocated to the undelivered elements based on VSOE of fair value of the undelivered elements with the remaining arrangement fee allocated to the delivered elements and recognized as revenue assuming all other revenue recognition criteria are met. If the Company is unable to establish VSOE of fair value for the undelivered elements of the arrangement, revenue recognition is deferred for the entire arrangement until all elements of the arrangement are delivered. However, if the only undelivered element is PCS, the Company recognizes the arrangement fee ratably over the PCS period.

Other Standards Implemented

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in an active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a gross presentation of activity within the Level 3 (significant unobservable inputs) roll forward, presenting information on purchases, sales, issuance, and settlements separately. The guidance was effective for the Company for interim and annual periods that commenced February 1, 2010, except for the gross presentation of the Level 3 roll forward, which became effective for the Company for interim and annual periods that commenced February 1, 2011. Adoption of this guidance resulted in additional disclosures for the gross presentation of the Level 3 roll forward (see Note 11, Fair Value Measurements).

In December 2010, the FASB issued updated accounting guidance to clarify that pro forma disclosures should be presented as if a business combination occurred at the beginning of the prior annual period for purposes of preparing both the current reporting period and the prior reporting period pro forma financial information. These disclosures should be accompanied by a narrative description about the nature and amount of material, nonrecurring pro forma adjustments. This new accounting guidance is effective for business combinations consummated in periods beginning after December 15, 2010 and should be applied prospectively as of the date of adoption, although early adoption is permitted. The Company adopted this new guidance effective February 1, 2011. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

In December 2010, the FASB issued guidance on when to perform step two of the goodwill impairment test for reporting units with zero or negative carrying amounts. Upon adoption, if the carrying amount of the reporting unit is zero or negative, the reporting entity must perform step two of the goodwill impairment test if it is more likely than not that goodwill is impaired as of the date of adoption. In determining if it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating an impairment may exist. Goodwill impairment recognized upon adoption of the guidance should be presented as a cumulative-effect adjustment to opening retained earnings as of the adoption date reflecting a change in accounting principle. This guidance was effective for the Company for interim and annual periods that commenced on February 1, 2011. Because the carrying value of the Company's previously defined Comverse reporting unit being negative as of February 1, 2011 and existence of adverse qualitative factors indicating potential impairment, step two of the goodwill impairment test was performed as of such date which did not result in an impairment. The Company believes that the adoption of this guidance will not have a material impact on the consolidated financial statements for the fiscal year ending January 31, 2012.

Standards to be Implemented

In May 2011, the FASB issued updated accounting guidance to amend existing requirements for fair value measurements and disclosures. The guidance expands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value but whose fair value must be disclosed. It also clarifies and expands upon existing requirements for fair value measurements of financial assets and liabilities as well as instruments classified in shareholders' equity. The guidance is effective beginning with the interim period ending April 30, 2012. The Company is assessing the impact that the application of this guidance may have on its condensed consolidated financial statements.

In June 2011, the FASB issued accounting guidance, which revises the manner in which entities present other comprehensive income in their financial statements. The new guidance eliminates the option to present components of other comprehensive income as part of the statement of equity. Under the new guidance, entities are required to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. The guidance is effective for the Company for interim and annual periods commencing February 1, 2012. The Company believes that the adoption of this guidance will not have a material impact on its consolidated financial statements.

In September 2011, the FASB issued new accounting guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit's fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit's fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for the Company for interim and annual periods commencing February 1, 2012. Although early adoption is permitted, the Company has not adopted the new accounting guidance. The Company believes that the adoption of this guidance will not have a material impact on its consolidated financial statements.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Oct. 31, 2011	Jan. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance	$ 8,939	$ 13,237
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	600,000,000	600,000,000
Common stock, shares issued	207,096,791	204,937,882
Common stock, shares outstanding	206,055,795	204,533,916
Treasury stock, shares	1,040,996	403,966

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Severance

9 Months Ended

Oct. 31, 2011

Severance [Abstract]

Severance

12. SEVERANCE

Under Israeli law, the Company is obligated to make severance payments under certain circumstances to employees of its Israeli subsidiaries on the basis of each individual's current salary and length of employment. The Company's liability for severance pay is calculated pursuant to Israel's Severance Pay Law based on the most recent monthly salary of the employee multiplied by the number of years of employment, as of the balance sheet date. Employees are entitled to one month's salary for each year of employment or a portion thereof. The gross accrued severance liability as of October 31, 2011 and January 31, 2011 is $55.0 million and $61.9 million, respectively, and is included in "Other long-term liabilities" in the condensed consolidated balance sheets. A portion of such liability is funded by monthly deposits into insurance policies, which are restricted to only be used to satisfy such severance payments. The amount of deposits is classified in "Other assets" within the condensed consolidated balance sheets as severance pay fund in the amounts of $38.1 million and $44.7 million as of October 31, 2011 and January 31, 2011, respectively.

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Document And Entity Information	9 Months Ended
	Oct. 31, 2011	Nov. 15, 2011
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Entity Registrant Name	COMVERSE TECHNOLOGY INC/NY/
Entity Central Index Key	0000803014
Current Fiscal Year End Date	--01-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		209,216,315

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Stock-Based Compensation

9 Months Ended

Oct. 31, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

13. STOCK-BASED COMPENSATION

Stock-based compensation expense associated with awards made by CTI and its subsidiaries are included in the Company's condensed consolidated statements of operations as follows:

	Three Months Ended October 31,				Nine Months Ended October 31,
	2011		2010		2011		2010
	(In thousands)
Stock options:
Product costs	$	6	$	271	$	133	$	698
Service costs		41		742		268		2,265
Selling, general and administrative		376		4,743		2,443		12,960
Research and development		51		1,241		434		3,904
		474		6,997		3,278		19,827
Restricted/Deferred stock awards:
Product costs		242		234		564		694
Service costs		582		550		1,817		1,864
Selling, general and administrative		6,689		7,389		20,286		22,647
Research and development		673		664		2,136		2,555
		8,186		8,837		24,803		27,760
Total	$	8,660	$	15,834	$	28,081	$	47,587

CTI

CTI's Restricted Period

As a result of the delinquency in the filing of periodic reports under the Exchange Act since April 2006, CTI had been ineligible to use its registration statements on Form S-8 for the offer and sale of equity securities, including equity securities issuable upon exercise of stock options by employees. Consequently, to ensure that it did not violate the federal securities laws, CTI prohibited the exercise of vested stock options from April 2006 until such time, as it was determined that CTI has filed all periodic reports required in a 12-month period and had an effective registration statement on Form S-8 on file with the SEC. This period is referred to as the "restricted period." In October 2011, CTI resumed option exercises.

Restricted Awards and Stock Options

CTI granted restricted stock, deferred stock units ("DSU") awards (collectively "Restricted Awards") and stock options under its various stock incentive plans.

During the three and nine months ended October 31, 2011, CTI granted DSU awards covering an aggregate of 35,000 shares and 1,360,116 shares, respectively, of CTI's common stock to certain executive officers and key employees.

During the three and nine months ended October 31, 2010, CTI granted DSU awards covering an aggregate of 223,607 shares and 1,602,607 shares, respectively, of CTI's common stock to certain executive officers and key employees. The aggregate number of shares underlying DSU awards granted during the nine months ended October 31, 2010 includes a DSU award covering 300,000 shares of CTI's common stock granted to CTI's then-President and Chief Executive Officer and a DSU award covering 150,000 shares of CTI's common stock granted to CTI's then-Executive Vice President and Chief Financial Officer.

During the three and nine months ended October 31, 2011, 332,339 shares of CTI common stock were issued upon exercise of stock options under CTI's stock incentive plans for total proceeds of $1.0 million.

As of October 31, 2011, stock options to purchase 8,655,491 shares of CTI's common stock and Restricted Awards with respect to 1,947,376 shares of CTI's common stock were outstanding and 1,158,119 shares of CTI's common stock were available for future grant under CTI's Stock Incentive Compensation Plans.

The total fair value of Restricted Awards vested during the three and nine months ended October 31, 2011 was $0.4 million and $9.2 million, respectively. As of October 31, 2011, the unrecognized compensation expense related to unvested Restricted Awards was $10.7 million, which is expected to be recognized over a weighted-average period of 2.0 years.

Outstanding stock options as of October 31, 2011 include unvested stock options to purchase 137,534 shares of CTI's common stock with a weighted-average grant date fair value of $2.34, an expected term of 4.0 years and a total fair value of $0.3 million. The unrecognized compensation cost related to the remaining unvested stock options to purchase CTI's common stock was $0.2 million, which is expected to be recognized over a weighted-average period of 0.6 years.

The fair value of stock options to purchase CTI's common stock vested during the three and nine months ended October 31, 2010 was $10 thousand and $0.6 million, respectively.

Verint

Stock Options

Verint Systems has generally not granted stock options subsequent to January 31, 2006. However, in connection with Verint's acquisition of Vovici on August 4, 2011, stock options to purchase Vovici common stock were converted into stock options to purchase approximately 42,000 shares of Verint Systems' common stock. In addition, in connection with Verint's acquisition of Witness on May 25, 2007, stock options to purchase Witness common stock were converted into stock options to purchase approximately 3.1 million shares of Verint Systems' common stock.

The fair values of the options granted in connection with the acquisition of Vovici were estimated using a Black-Scholes option pricing model with the weighted-average assumptions presented in the following table:

	As of August 4, 2011
Expected life (in years)		5.43
Risk-free interest rate		1.26	%
Expected volatility		50.40	%
Dividend yield		0	%

Based on the above assumptions, the weighted-average fair value of the stock options granted in connection with the acquisition of Vovici was $22.97 per option on the date of acquisition.

Stock option exercises had been suspended during Verint's extended filing delay period. Following the filing of certain delayed periodic reports in June 2010 with the SEC, Verint's stock option holders were permitted to resume exercising vested stock options. During the three and nine months ended October 31, 2011, approximately 55,000 and 487,000 shares of Verint Systems' common stock were issued pursuant to stock option exercises, respectively, for total proceeds of $1.0 million and $9.7 million, respectively. During the three and nine months ended October 31, 2010, approximately 969,000 and 1,695,000 shares of Verint Systems' common stock were issued pursuant to stock option exercises, respectively, for total proceeds of $19.0 and $30.9 million, respectively. As of October 31, 2011, Verint Systems had approximately 1.3 million stock options outstanding, of which all but 34,000 were exercisable as of such date.

Restricted Stock Awards and Restricted Stock Units

Verint Systems periodically awards shares of restricted stock, as well as restricted stock units, to its directors, officers and other employees. These awards contain various vesting conditions, and are subject to certain restrictions and forfeiture provisions prior to vesting.

During the nine months ended October 31, 2011, Verint Systems granted 0.9 million restricted stock units, substantially all of which were granted during the three months ended April 30, 2011. During the nine months ended October 31, 2010, Verint Systems granted 1.0 million combined restricted stock awards and restricted stock units, all of which were granted during the three months ended April 30, 2010. Forfeitures of restricted stock awards and restricted stock units were not significant during the period. As of October 31, 2011 and 2010, Verint Systems had 1.5 million restricted stock units and 1.9 million of combined restricted stock awards and stock units outstanding, respectively, with weighted-average grant date fair values of $30.22 and $17.23 per unit or per share, respectively.

As of October 31, 2011, there was approximately $24.7 million of total unrecognized compensation cost, net of estimated forfeitures related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 1.6 years.

Phantom Stock Units

Verint's liability-classified awards include phantom stock awards. The values of phantom stock track the market price of Verint Systems' common stock and are therefore subject to volatility, and are settled with cash payments equivalent to the market value of Verint Systems' common stock upon vesting. Awards under Verint Systems' stock bonus program, which are settled with a variable number of shares of common stock determined using a discounted average price of Verint Systems' common stock, as defined in the program, are also liability-classified awards. Upon settlement of liability-classified awards with equity, compensation expense associated with those awards is reported within equity-classified awards.

Verint has issued phantom stock units to certain Verint non-officer employees that settle, or are expected to settle, with cash payments upon vesting. Like equity-settled awards, phantom stock units are awarded with vesting conditions and are subject to certain forfeiture provisions prior to vesting.

During the three and nine months ended October 31, 2011, phantom stock units granted by Verint Systems were not significant. During the nine months ended October 31, 2010, Verint Systems granted 0.2 million phantom stock units, all of which were granted during the three months ended April 30, 2010. Forfeitures of awards in each period were not significant. Total cash payments made upon vesting of phantom stock units were $10.3 million for the nine months ended October 31, 2011, of which an insignificant amount was paid during the three months ended October 31, 2011. Total cash payments made by Verint Systems upon vesting of phantom stock units were $6.6 million and $22.4 million for the three and nine months ended October 31, 2010, respectively. The total accrued liabilities for phantom stock units were $1.8 million and $9.8 million as of October 31, 2011 and January 31, 2011, respectively.

Stock Bonus Program

In September 2011, Verint Systems' board of directors approved, and in December 2011 revised, a Stock Bonus Program under which eligible Verint employees may receive a portion of their bonus for the year or for the fourth quarter (depending on the employee's bonus plan) in the form of fully vested shares of Verint Systems' common stock. As of the date hereof, executive officers of Verint are not eligible to participate in this program. This program is subject to annual funding approval by Verint Systems' board of directors and an annual cap on the number of shares that can be issued. Subject to these limitations, the number of shares to be issued under the program for a given year is determined using a five-day trailing average price of Verint Systems' common stock when the awards are calculated, reduced by a discount to be determined by Verint Systems' board of directors each year. For the fiscal year ending January 31, 2012, Verint Systems' board of directors has approved up to 150,000 shares of Verint System's common stock for awards under this program and a discount of 20%. To the extent that this program is not funded in a given year or the number of shares of common stock needed to fully satisfy employee enrollment exceeds the annual cap, the applicable portion of the employee bonuses will revert to being paid in cash. Shares of Verint Systems' common stock earned under this program for the fiscal year ending January 31, 2012 are expected to be issued during the first half of the fiscal year ending January 31, 2013. All shares of Verint Systems' common stock awarded pursuant to this program will be issued under one of Verint's stockholder-approved equity incentive plans.

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Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Revenue:
Product revenue	$ 203,587	$ 176,933	$ 511,524	$ 525,464
Service revenue	249,491	248,527	677,418	667,126
Total revenue	453,078	425,460	1,188,942	1,192,590
Costs and expenses:
Product costs	85,326	60,397	207,024	201,034
Service costs	130,670	110,807	358,241	334,632
Selling, general and administrative	142,466	163,444	431,435	525,824
Research and development, net	55,768	63,060	161,706	193,264
Other operating expenses (income):
Litigation settlements	4,880	(17,350)	4,880	(17,500)
Restructuring charges	1,838	21,800	14,888	28,776
Total costs and expenses	420,948	402,158	1,178,174	1,266,030
Income (loss) from operations	32,130	23,302	10,768	(73,440)
Interest income	826	833	3,493	2,835
Interest expense	(8,192)	(9,020)	(25,325)	(21,241)
Loss on extinguishment of debt			(8,136)
Other (expense) income, net	(4,144)	1,563	8,253	7,178
Income (loss) before income tax benefit (provision)	20,620	16,678	(10,947)	(84,668)
Income tax benefit (provision)	21,647	(47,237)	(35,793)	(49,463)
Net income (loss) from continuing operations	42,267	(30,559)	(46,740)	(134,131)
Loss from discontinued operations, net of tax		(947)		(4,000)
Net income (loss)	42,267	(31,506)	(46,740)	(138,131)
Less: Net income attributable to noncontrolling interest	(6,577)	(10,197)	(16,462)	(9,620)
Net income (loss) attributable to Comverse Technology, Inc.	35,690	(41,703)	(63,202)	(147,751)
Weighted average common shares outstanding:
Basic	205,886,126	205,264,632	205,890,586	205,134,765
Diluted	206,729,005	205,264,632	205,890,586	205,134,765
Basic earnings (loss) per share
Continuing operations	$ 0.17	$ (0.20)	$ (0.31)	$ (0.71)
Discontinued operations		$ 0.00		$ (0.01)
Basic earnings (loss) per share	$ 0.17	$ (0.20)	$ (0.31)	$ (0.72)
Diluted earnings (loss) per share
Continuing operations	$ 0.17	$ (0.21)	$ (0.31)	$ (0.71)
Discontinued operations		$ 0.00		$ (0.01)
Diluted earnings (loss) per share	$ 0.17	$ (0.21)	$ (0.31)	$ (0.72)
Net income (loss) attributable to Comverse Technology, Inc.
Net income (loss) from continuing operations	35,690	(40,929)	(63,202)	(144,753)
Loss from discontinued operations, net of tax		(774)		(2,998)
Net income (loss) attributable to Comverse Technology, Inc.	$ 35,690	$ (41,703)	$ (63,202)	$ (147,751)

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Intangible Assets, Net

9 Months Ended

Oct. 31, 2011

Intangible Assets, Net [Abstract]

Intangible Assets, Net

7. INTANGIBLE ASSETS, NET

Acquired intangible assets as of October 31, 2011 and January 31, 2011 are as follows:

	Useful Life	October 31, 2011		January 31, 2011
		(In thousands)
Gross carrying amount:
Acquired technology	2 to 7 years	$	190,272	$	164,796
Customer relationships	4 to 10 years		263,001		233,995
Trade names	1to 10 years		15,983		12,952
Non-competition agreements	4to 10 years		5,797		5,215
Sales backlog	3years		843		—
Distribution network	10years		2,440		2,440
			478,336		419,398
Accumulated amortization:
Acquired technology			130,130		110,740
Customer relationships			114,029		95,753
Trade names			13,102		12,577
Non-competition agreements			3,462		2,760
Sales backlog			5		—
Distribution network			1,291		1,108
			262,019		222,938
Total		$	216,317	$	196,460

Amortization of intangible assets was $13.6 million and $38.9 million for the three and nine months ended October 31, 2011, respectively, and $12.3 million and $36.7 million for the three and nine months ended October 31, 2010, respectively. There was no impairment of intangible assets for the three and nine months ended October 31, 2011 and 2010.

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Goodwill

9 Months Ended

Oct. 31, 2011

Goodwill [Abstract]

Goodwill

6. GOODWILL

The changes in the carrying amount of goodwill in the Company's reportable segments for the nine months ended October 31, 2011 are as follows:

	Comverse BSS		Comverse VAS		Verint		All Other (1)			Total
	(In thousands)
For the Nine Months Ended October 31, 2011
Goodwill, gross at January 31, 2011	$	84,050	$	66,040	$	803,971	$	169,618		$	1,123,679
Accumulated impairment losses at January 31, 2011		—		—		—		(156,455	)		(156,455	)
Goodwill, net, at January 31, 2011		84,050		66,040		803,971		13,163			967,224
Goodwill acquired:
Vovici		—		—		37,647		—			37,647
GMT		—		—		21,653		—			21,653
Other		—		—		19,554		—			19,554
Effect of changes in foreign currencies and other		28		22		420		1			471
Goodwill, net, at October 31, 2011	$	84,078	$	66,062	$	883,245	$	13,164		$	1,046,549
Balance at October 31, 2011
Goodwill, gross at October 31, 2011	$	84,078	$	66,062	$	883,245	$	169,619		$	1,203,004
Accumulated impairment losses at October 31, 2011		—		—		—		(156,455	)		(156,455	)
Goodwill, net, at October 31, 2011	$	84,078	$	66,062	$	883,245	$	13,164		$	1,046,549

(1) The amount of goodwill in "All Other" is attributable to Starhome, Comverse MI and Netcentrex. The goodwill associated with Netcentrex was impaired during the fiscal year ended January 31, 2009 and prior fiscal years.

The Company tests goodwill for impairment annually as of November 1 or more frequently if events or circumstances indicate the potential for impairment exists. As described in Note 1, the Company changed its reportable segments during the three months ended October 31, 2011 and accordingly, allocated its goodwill to the new reportable segments on a relative fair value basis. Due to the change in reportable segments, the Company performed an interim goodwill impairment test as of October 31, 2011. Such goodwill impairment test did not result in an impairment charge during the three months ended October 31, 2011.

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Business Segment Information

9 Months Ended

Oct. 31, 2011

Business Segment Information [Abstract]

Business Segment Information

18. BUSINESS SEGMENT INFORMATION

The Company changed its reportable segments during the three months ended October 31, 2011. The change in reportable segments is attributable to the implementation of the Phase II Business Transformation at Comverse that focuses on process reengineering to maximize business performance, productivity and operational efficiency. For a more comprehensive discussion relating to the Phase II Business Transformation, see Note 8, Restructuring. As part of the Phase II Business Transformation, Comverse restructured its operations into new business units that are designed to improve operational efficiency and business performance. Consequently, the Company's reportable segments now consist of Comverse BSS, Comverse VAS, and Verint. The results of operations of all the other operations of the Company are included in the column captioned "All Other" as part of the Company's business segment presentation. The operating segments included in "All Other" do not meet the quantitative thresholds required for a separate presentation. The Company has recast the presentation of its segment information for the six months ended July 31, 2011 (which is included in the segment information for the nine months ended October 31, 2011) and for the three and nine months ended October 31, 2010 to reflect these reportable segments. The Company does not maintain balance sheets for the Comverse operating segments. For a more comprehensive discussion relating to the changes in the Company's reportable segments, see Note 1, Basis of Presentation. Ulticom was a reportable segment of the Company prior to its sale to a third party on December 3, 2010. As a result of the Ulticom 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.

Segment Performance

The Company evaluates its business by assessing the performance of each of its operating segments. CTI's Chief Executive Officer is its chief operating decision maker ("CODM"). The CODM uses segment performance, as defined below, as the primary basis for assessing the financial results of the operating 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 or remain current in periodic reporting obligations under the federal securities laws which are expected to be eliminated over time, certain non-cash charges, and certain other gains and charges.

Segment performance is computed by management as income (loss) 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 gains and charges. Compliance-related professional fees and compliance-related compensation and other expenses recorded for fiscal periods ended on or before July 31, 2011 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. Compliance-related professional fees and compliance-related compensation and other expenses recorded for the three months ended October 31, 2011 relate to fees and expenses incurred in connection with the timely filing of our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2011 and the Company's efforts to remediate material weaknesses in internal control over financial reporting that are expected to be eliminated over time.

In evaluating each segment's performance, management uses segment revenue, which consists of revenue generated by the segment, including intercompany revenue. Certain segment performance adjustments relate to expenses included in the calculation of income (loss) from operations, while, from time to time, certain segment performance adjustments may be presented as adjustments to revenue. In calculating Verint's segment performance for the three and nine months ended October 31, 2011, the presentation of segment revenue gives effect to segment revenue adjustments that represent the impact of fair value adjustments required under the FASB's guidance relating to acquired customer support contracts that would have otherwise been recognized as revenue on a standalone basis with respect to acquisitions consummated by Verint during the periods presented. Verint did not have a segment revenue adjustment for the three or nine months ended October 31, 2010.

The tables below present information about total revenue, total costs and expenses, income (loss) from operations, interest expense, depreciation and amortization, other non-cash items, and segment performance for the three and nine months ended October 31, 2011 and 2010:

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Three Months Ended October 31, 2011:
Revenue	$	117,731		$	112,655		$	199,364		$	23,328		$	—		$	453,078
Intercompany revenue		—			—			—			1,066			(1,066	)		—
Total revenue	$	117,731		$	112,655		$	199,364		$	24,394		$	(1,066	)	$	453,078
Total costs and expenses	$	87,318		$	64,283		$	181,082		$	89,309		$	(1,044	)	$	420,948
Income (loss) from operations	$	30,413		$	48,372		$	18,282		$	(64,915	)	$	(22	)	$	32,130
Computation of segment performance:
Total revenue	$	117,731		$	112,655		$	199,364		$	24,394
Segment revenue adjustment		—			—			5,211			—
Segment revenue	$	117,731		$	112,655		$	204,575		$	24,394
Total costs and expenses	$	87,318		$	64,283		$	181,082		$	89,309
Segment expense adjustments:
Stock-based compensation expense		—			—			6,650			2,010
Amortization of acquisition-related intangibles		4,245			—			9,368			—
Compliance-related professional fees		—			—			3			5,082
Compliance-related compensation and other expenses		(1	)		295			—			1,281
Impairment charges		—			—			—			1,118
Litigation settlements and related costs		—			—			—			4,882
Acquisition-related charges		—			—			2,183			—
Restructuring and integration charges		—			—			—			1,838
Gain on sale of land		—			—			—			—
Other		—			—			2,329			3,155
Segment expense adjustments		4,244			295			20,533			19,366
Segment expenses		83,074			63,988			160,549			69,943
Segment performance	$	34,657		$	48,667		$	44,026		$	(45,549	)
Interest expense	$	—		$	—		$	(7,905	)	$	(287	)	$	—		$	(8,192	)
Depreciation and amortization	$	(5,116	)	$	(1,248	)	$	(13,613	)	$	(2,422	)	$	—		$	(22,399	)
Other non-cash items (1)	$	—		$	—		$	(44	)	$	(1,118	)	$	—		$	(1,162	)

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

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Three Months Ended October 31, 2010:
Revenue	$	90,906		$	121,141		$	186,641		$	26,772		$	—		$	425,460
Intercompany revenue		—			—			—			795			(795	)		—
Total revenue	$	90,906		$	121,141		$	186,641		$	27,567		$	(795	)	$	425,460
Total costs and expenses	$	64,888		$	65,248		$	156,248		$	116,992		$	(1,218	)	$	402,158
Income (loss) from operations	$	26,018		$	55,893		$	30,393		$	(89,425	)	$	423		$	23,302
Computation of segment performance:
Total revenue	$	90,906		$	121,141		$	186,641		$	27,567
Segment revenue adjustment		—			—			—			—
Segment revenue	$	90,906		$	121,141		$	186,641		$	27,567
Total costs and expenses	$	64,888		$	65,248		$	156,248		$	116,992
Segment expense adjustments:
Stock-based compensation expense		—			—			13,090			2,744
Amortization of acquisition-related intangibles		4,641			—			7,632			—
Compliance-related professional fees		—			—			823			31,144
Compliance-related compensation and other expenses		47			—			—			1,829
Litigation settlements and related costs		—			—			—			(17,258	)
Acquisition-related charges		—			—			518			—
Restructuring and integration charges		—			—			—			21,800
Gain on sale of land		—			—			—			(2,371	)
Other		—			—			646			1,230
Segment expense adjustments		4,688			—			22,709			39,118
Segment expenses		60,200			65,248			133,539			77,874
Segment performance	$	30,706		$	55,893		$	53,102		$	(50,307	)
Interest expense	$	—		$	—		$	(8,941	)	$	(79	)	$	—		$	(9,020	)
Depreciation and amortization	$	(5,646	)	$	(1,104	)	$	(12,148	)	$	(2,757	)	$	—		$	(21,655	)
Other non-cash items (1)	$	—		$	—		$	(15	)	$	(272	)	$	—		$	(287	)

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

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Nine Months Ended October 31, 2011:
Revenue	$	278,403		$	276,234		$	570,655		$	63,650		$	—		$	1,188,942
Intercompany revenue		—			—			—			3,983			(3,983	)		—
Total revenue	$	278,403		$	276,234		$	570,655		$	67,633		$	(3,983	)	$	1,188,942
Total costs and expenses	$	222,142		$	177,217		$	512,129		$	270,702		$	(4,016	)	$	1,178,174
Income (loss) from operations	$	56,261		$	99,017		$	58,526		$	(203,069	)	$	33		$	10,768
Computation of segment performance:
Total revenue	$	278,403		$	276,234		$	570,655		$	67,633
Segment revenue adjustment		—			—			6,173			—
Segment revenue	$	278,403		$	276,234		$	576,828		$	67,633
Total costs and expenses	$	222,142		$	177,217		$	512,129		$	270,702
Segment expense adjustments:
Stock-based compensation expense		—			—			20,841			7,240
Amortization of acquisition-related intangibles		13,241			—			25,664			—
Compliance-related professional fees		—			—			1,011			32,955
Compliance-related compensation and other expenses		2,066			1,531			—			1,885
Impairment charges		—			5			—			1,270
Litigation settlements and related costs		—			—			—			5,444
Acquisition-related charges		—			—			7,377			—
Restructuring and integration charges		—			—			—			14,888
Gain on sale of land		—			—			—			—
Other		—			—			4,335			6,250
Segment expense adjustments		15,307			1,536			59,228			69,932
Segment expenses		206,835			175,681			452,901			200,770
Segment performance	$	71,568		$	100,553		$	123,927		$	(133,137	)
Interest expense	$	—		$	—		$	(24,556	)	$	(769	)	$	—		$	(25,325	)
Depreciation and amortization	$	(15,957	)	$	(3,281	)	$	(39,152	)	$	(7,333	)	$	—		$	(65,723	)
Other non-cash items (1)	$	—		$	—		$	(266	)	$	(1,275	)	$	—		$	(1,541	)

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

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Nine Months Ended October 31, 2010:
Revenue	$	242,151		$	341,001		$	539,930		$	69,508		$	—		$	1,192,590
Intercompany revenue		—			—			—			2,271			(2,271	)		—
Total revenue	$	242,151		$	341,001		$	539,930		$	71,779		$	(2,271	)	$	1,192,590
Total costs and expenses	$	205,272		$	222,026		$	489,720		$	352,320		$	(3,308	)	$	1,266,030
Income (loss) from operations	$	36,879		$	118,975		$	50,210		$	(280,541	)	$	1,037		$	(73,440	)
Computation of segment performance:
Total revenue	$	242,151		$	341,001		$	539,930		$	71,779
Segment revenue adjustment		—			—			—			—
Segment revenue	$	242,151		$	341,001		$	539,930		$	71,779
Total costs and expenses	$	205,272		$	222,026		$	489,720		$	352,320
Segment expense adjustments:
Stock-based compensation expense		—			—			39,095			8,492
Amortization of acquisition-related intangibles		13,953			—			22,762			—
Compliance-related professional fees		—			—			27,090			107,492
Compliance-related compensation and other expenses		1,617			326			—			804
Litigation settlements and related costs		—			—			—			(17,148	)
Acquisition-related charges		—			—			1,349			—
Restructuring and integration charges		—			—			—			28,776
Gain on sale of land		—			—			—			(2,371	)
Other		—			—			1,199			269
Segment expense adjustments		15,570			326			91,495			126,314
Segment expenses		189,702			221,700			398,225			226,006
Segment performance	$	52,449		$	119,301		$	141,705		$	(154,227	)
Interest expense	$	—		$	—		$	(20,825	)	$	(416	)	$	—		$	(21,241	)
Depreciation and amortization	$	(17,877	)	$	(4,348	)	$	(36,100	)	$	(7,941	)	$	—		$	(66,266	)
Other non-cash items (1)	$	—		$	—		$	(238	)	$	(595	)	$	—		$	(833	)

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

Supplemental Financial Information

As discussed above, the Company has revised its segment reporting as a result of the implementation of the Phase II Business Transformation at Comverse and the manner in which its CODM reviews the operating performance of Comverse and allocates resources to its operating segments. The Company is providing the following additional information, presenting the results of operations of the previous Comverse reporting segment. The Company believes that such presentation provides useful information to investors regarding the performance of the Company's Comverse subsidiary, including comparability to previously reported financial information. The additional information provided is not a replacement for the business segment information presented above. The results of operations presented in the column below under "Comverse Other" relate to all the operations of the Company's Comverse subsidiary, other than the Company's Comverse BSS and Comverse VAS segments and includes the Comverse MI operating segment, Comverse's Netcentrex operations and Comverse's global corporate functions that support its business units. The information presented for "Comverse Other" includes unallocated global corporate function costs that are consistent with prior internal allocation practices. The Company determined that the operating segments of the Company's Comverse subsidiary included in "Comverse Other" do not meet the aggregation criteria under the segment reporting guidance; specifically they do not have similar economic characteristics, which would permit the presentation of "Comverse Other" results of operations as a separate reportable segment in the revised segment reporting information. Accordingly, such results of operations of "Comverse Other" are included in the Company's "All Other" column.

Comverse performance represents the operating results of the company's Comverse subsidiary without the impact of significant expenditures incurred by Comverse in connection with the efforts to become or remain current in periodic reporting obligations under the federal securities laws which are expected to be eliminated over time, certain non-cash charges, and certain other gains and charges.

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Three Months Ended October 31, 2011:
Revenue	$	117,731		$	112,655		$	12,757		$	243,143
Intercompany revenue		—			—			654			654
Total revenue	$	117,731		$	112,655		$	13,411		$	243,797
Total costs and expenses	$	87,318		$	64,283		$	62,695		$	214,296
Income (loss) from operations	$	30,413		$	48,372		$	(49,284	)	$	29,501
Computation of Comverse performance:
Total revenue	$	117,731		$	112,655		$	13,411		$	243,797
Total costs and expenses	$	87,318		$	64,283		$	62,695		$	214,296
Expense adjustments:
Stock-based compensation expense		—			—			974			974
Amortization of acquisition-related intangibles		4,245			—			—			4,245
Compliance-related professional fees		—			—			4,162			4,162
Compliance-related compensation and other expenses		(1	)		295			1,281			1,575
Impairment charges		—			—			1,118			1,118
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			1,838			1,838
Gain on sale of land		—			—			—			—
Other		—			—			(8	)		(8	)
Expense adjustments		4,244			295			9,365			13,904
Expenses after adjustments											200,392
Comverse performance										$	43,405
Interest expense	$	—		$	—		$	(283	)	$	(283	)
Depreciation and amortization	$	(5,116	)	$	(1,248	)	$	(2,202	)	$	(8,566	)
Other non-cash items (1)	$	—		$	—		$	(1,118	)	$	(1,118	)

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

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Three Months Ended October 31, 2010:
Revenue	$	90,906		$	121,141		$	16,279		$	228,326
Intercompany revenue		—			—			575			575
Total revenue	$	90,906		$	121,141		$	16,854		$	228,901
Total costs and expenses	$	64,888		$	65,248		$	107,884		$	238,020
Income (loss) from operations	$	26,018		$	55,893		$	(91,030	)	$	(9,119	)
Computation of Comverse performance:
Total revenue	$	90,906		$	121,141		$	16,854		$	228,901
Total costs and expenses	$	64,888		$	65,248		$	107,884		$	238,020
Expense adjustments:
Stock-based compensation expense		—			—			858			858
Amortization of acquisition-related intangibles		4,641			—			—			4,641
Compliance-related professional fees		—			—			23,134			23,134
Compliance-related compensation and other expenses		47			—			1,840			1,887
Impairment charges		—			—			—			—
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			21,800			21,800
Gain on sale of land		—			—			(2,371	)		(2,371	)
Other		—			—			21			21
Expense adjustments		4,688			—			45,282			49,970
Expenses after adjustments											188,050
Comverse performance										$	40,851
Interest expense	$	—		$	—		$	(77	)	$	(77	)
Depreciation and amortization	$	(5,646	)	$	(1,104	)	$	(2,526	)	$	(9,276	)
Other non-cash items (1)	$	—		$	—		$	(272	)	$	(272	)

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

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Nine Months Ended October 31, 2011:
Revenue	$	278,403		$	276,234		$	32,624		$	587,261
Intercompany revenue		—			—			2,355			2,355
Total revenue	$	278,403		$	276,234		$	34,979		$	589,616
Total costs and expenses	$	222,142		$	177,217		$	188,840		$	588,199
Income (loss) from operations	$	56,261		$	99,017		$	(153,861	)	$	1,417
Computation of Comverse performance:
Total revenue	$	278,403		$	276,234		$	34,979		$	589,616
Total costs and expenses	$	222,142		$	177,217		$	188,840		$	588,199
Expense adjustments:
Stock-based compensation expense		—			—			2,671			2,671
Amortization of acquisition-related intangibles		13,241			—			—			13,241
Compliance-related professional fees		—			—			14,629			14,629
Compliance-related compensation and other expenses		2,066			1,531			1,885			5,482
Impairment charges		—			5			1,270			1,275
Litigation settlements and related costs		—			—			474			474
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			14,888			14,888
Gain on sale of land		—			—			—			—
Other		—			—			(55	)		(55	)
Expense adjustments		15,307			1,536			35,762			52,605
Expenses after adjustments											535,594
Comverse performance										$	54,022
Interest expense	$	—		$	—		$	(754	)	$	(754	)
Depreciation and amortization	$	(15,957	)	$	(3,281	)	$	(6,676	)	$	(25,914	)
Other non-cash items (1)	$	—		$	—		$	(1,275	)	$	(1,275	)

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

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Nine Months Ended October 31, 2010:
Revenue	$	242,151		$	341,001		$	42,223		$	625,375
Intercompany revenue		—			—			1,644			1,644
Total revenue	$	242,151		$	341,001		$	43,867		$	627,019
Total costs and expenses	$	205,272		$	222,026		$	276,297		$	703,595
Income (loss) from operations	$	36,879		$	118,975		$	(232,430	)	$	(76,576	)
Computation of Comverse performance:
Total revenue	$	242,151		$	341,001		$	43,867		$	627,019
Total costs and expenses	$	205,272		$	222,026		$	276,297		$	703,595
Expense adjustments:
Stock-based compensation expense		—			—			1,640			1,640
Amortization of acquisition-related intangibles		13,953			—			—			13,953
Compliance-related professional fees		—			—			63,536			63,536
Compliance-related compensation and other expenses		1,617			326			810			2,753
Impairment charges		—			—			—			—
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			28,776			28,776
Gain on sale of land		—			—			(2,371	)		(2,371	)
Other		—			—			(1,421	)		(1,421	)
Expense adjustments		15,570			326			90,970			106,866
Expenses after adjustments											596,729
Comverse performance										$	30,290
Interest expense	$	—		$	—		$	(406	)	$	(406	)
Depreciation and amortization	$	(17,877	)	$	(4,348	)	$	(7,225	)	$	(29,450	)
Other non-cash items (1)	$	—		$	—		$	(595	)	$	(595	)

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

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Equity Attributable To Comverse Technology, Inc. And Noncontrolling Interest

9 Months Ended

Oct. 31, 2011

Equity Attributable To Comverse Technology, Inc. And Noncontrolling Interest [Abstract]

Equity Attributable To Comverse Technology, Inc. And Noncontrolling Interest

14. EQUITY ATTRIBUTABLE TO COMVERSE TECHNOLOGY, INC. AND NONCONTROLLING INTEREST

Noncontrolling interest represents minority shareholders' interest in Verint Systems and Starhome B.V., the Company's majority-owned subsidiaries and in Ulticom, Inc., a former CTI majority-owned subsidiary, prior to its sale to a third party on December 3, 2010. The Company recognizes noncontrolling interest as a separate component of "Total equity" in the condensed consolidated balance sheets and recognizes income attributable to the noncontrolling interest as a separate component of "Net income (loss)" in the condensed consolidated statements of operations.

Components of equity attributable to Comverse Technology, Inc.'s and its noncontrolling interest are as follows:

	Nine Months Ended October 31, 2011									Nine Months Ended October 31, 2010
	Comverse Technology, Inc.'s Shareholders' Equity			Noncontrolling Interest			Total Equity			Comverse Technology, Inc.'s Shareholders' Equity			Noncontrolling Interest			Total Equity
	(In thousands)
Balance, January 31	$	413,008		$	72,879		$	485,887		$	422,486		$	87,236		$	509,722
Comprehensive loss:
Net loss		(63,202	)		16,462			(46,740	)		(147,751	)		9,620			(138,131	)
Unrealized gains and losses on available-for-sale securities, net of reclassification adjustments and tax		(4,443	)		—			(4,443	)		(10,768	)		(24	)		(10,792	)
Unrealized gains and losses for cash flow hedge positions, net of reclassification adjustments and tax		(216	)		(157	)		(373	)		2,111			419			2,530
Foreign currency translation adjustment		(166	)		(1,794	)		(1,960	)		(2,018	)		(1,943	)		(3,961	)
Total comprehensive loss		(68,027	)		14,511			(53,516	)		(158,426	)		8,072			(150,354	)
Stock-based compensation expense		7,150			—			7,150			8,152			—			8,152
Exercises of stock options		1,861			—			1,861			—			—			—
Impact from equity transactions of subsidiaries and other		15,268			12,035			27,303			56,547			(5,548	)		50,999
Repurchase of common stock		(4,319	)		—			(4,319	)		(480	)		—			(480	)
Balance, October 31	$	364,941		$	99,425		$	464,366		$	328,279		$	89,760		$	418,039

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Derivatives And Financial Instruments

9 Months Ended

Oct. 31, 2011

Derivatives And Financial Instruments [Abstract]

Derivatives And Financial Instruments

10. DERIVATIVES AND FINANCIAL INSTRUMENTS

The Company entered into derivative arrangements to manage a variety of risk exposures during the nine months ended October 31, 2011 and 2010, including interest rate risk associated with Verint's Prior Facility and foreign currency risk related to forecasted foreign currency denominated payroll costs at the Company's Comverse, Verint and Starhome subsidiaries. The Company assessed the counterparty credit risk for each party related to its derivative financial instruments for the periods presented.

Forward Contracts

During the nine months ended October 31, 2011 and 2010, Comverse entered into a series of short-term foreign currency forward contracts to limit the variability in exchange rates between the U.S. dollar (the "USD") and the new Israeli shekel ("NIS") to hedge probable cash flow exposure from expected future payroll expense. The transactions qualified for cash flow hedge accounting under the FASB's guidance and there was no hedge ineffectiveness. Accordingly, the Company recorded all changes in fair value of the forward contracts as part of other comprehensive income or loss. Such amounts are reclassified to the condensed consolidated statements of operations when the effects of the item being hedged are recognized in the condensed consolidated statements of operations. The Comverse derivatives outstanding as of October 31, 2011 are short-term in nature and are due to contractually settle within the next twelve months.

Verint periodically enters into short-term foreign currency forward contracts to mitigate risk of fluctuations in foreign currency exchange rates primarily relating to compensation and related expenses denominated in currencies other than the USD, primarily the NIS and Canadian dollar. Verint's joint venture, which has a Singapore dollar functional currency, also utilizes foreign exchange forward contracts to manage its exposure to exchange rate fluctuations related to settlement of liabilities denominated in USD. Verint also periodically utilizes foreign currency forward contracts to manage exposures resulting from forecasted customer collections to be remitted in currencies other than the applicable functional currency. Certain of these foreign currency forward contracts were not designated as hedging instruments under the FASB's guidance and, therefore, gains and losses from changes in their fair values were reported in "Other (expense) income, net" in the condensed consolidated statements of operations. Changes in the fair value of effective forward contracts qualifying for cash flow hedge accounting under the FASB's guidance are recorded as part of other comprehensive income or loss. Such amounts are reclassified to the condensed consolidated statements of operations when the effects of the item being hedged are recognized in the condensed consolidated statements of operations. The Verint derivatives outstanding as of October 31, 2011 are short-term in nature and generally have maturities of no longer than twelve months, although occasionally Verint will execute a contract that extends beyond twelve months, depending upon the nature of the underlying risk.

During the nine months ended October 31, 2011 and 2010, Starhome entered into short-term foreign currency forward contracts to mitigate risk of fluctuations in foreign currency exchange rates mainly relating to payroll costs denominated in the NIS. Certain of these foreign currency forward contracts were not designated as hedging instruments, and therefore, gains and losses from changes in their fair values were reported in "Other (expense) income, net" in the condensed consolidated statements of operations. The Starhome derivatives outstanding as of October 31, 2011 are short-term in nature and are due to contractually settle within the next twelve months.

Interest Rate Swap Agreement

On May 25, 2007, concurrently with entry into its Prior Facility, Verint executed a pay-fixed/receive-variable interest rate swap agreement with a multinational financial institution to mitigate a portion of the risk associated with variable interest rates on the term loan under the Prior Facility. The original term of the interest rate swap agreement extended through May 2011. On July 30, 2010, Verint terminated the interest rate swap agreement in exchange for a payment of $21.7 million to the counterparty. Verint paid this obligation on August 3, 2010. The interest rate swap agreement was not designated as a hedging instrument under derivative accounting guidance, and gains and losses from changes in its fair value were therefore reported in "Other (expense) income, net" in the condensed consolidated statements of operations.

The following tables summarize the Company's derivative positions and their respective fair values as of October 31, 2011 and January 31, 2011:

	October 31, 2011
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Assets
Derivatives not designated as hedging instruments
Short-term foreign currency forward	$	9,523	Prepaid expenses and other current assets	$	13
Derivatives designated as hedging instruments
Short-term foreign currency forward		24,036	Prepaid expenses and other current assets		814
Total assets				$	827
Liabilities
Derivatives not designated as hedging instruments
Short-term foreign currency forward		22,165	Other current liabilities	$	756
Derivatives designated as hedging instruments
Short-term foreign currency forward		49,762	Other current liabilities		670
Total liabilities				$	1,426
	January 31, 2011
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Assets
Derivatives designated as hedging instruments
Short-term foreign currency forward	$	22,390	Prepaid expenses and other current assets	$	957
Total assets				$	957
Liabilities
Derivatives not designated as hedging instruments
Short-term foreign currency forward		33,341	Other current liabilities	$	1,530
Derivatives designated as hedging instruments
Short-term foreign currency forward		21,250	Other current liabilities		396
Total liabilities				$	1,926

The following tables summarize the Company's classification of gains and losses on derivative instruments for the three and nine months ended October 31, 2011 and 2010:

	Three Months Ended October 31, 2011
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)			Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)			Recognized in Other Income (Expense), Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—		$	—		$	562
Derivatives designated as hedging instruments
Foreign currency forward		(1,126	)		(1,044	)		—
Total	$	(1,126	)	$	(1,044	)	$	562
	Three Months Ended October 31, 2010
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)			Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)			Recognized in Other Income (Expense), Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—		$	—		$	(924	)
Derivatives designated as hedging instruments
Foreign currency forward		3,175			1,003			—
Total	$	3,175		$	1,003		$	(924	)

(1) Amounts reclassified from accumulated other comprehensive income into the statement of operations are classified as operating expenses.

	Nine Months Ended October 31, 2011
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)		Recognized in Other (Expense) Income, Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—	$	—	$	(1,123	)
Derivatives designated as hedging instruments
Foreign currency forward		4,248		4,509		—
Total	$	4,248	$	4,509	$	(1,123	)
	Nine Months Ended October 31, 2010
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations (1)		Recognized in Other (Expense) Income, Net
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward	$	—	$	—	$	(628	)
Interest rate swap		—		—		(3,102	)
Derivatives designated as hedging instruments
Foreign currency forward		2,772		619		—
Total	$	2,772	$	619	$	(3,730	)

(1) Amounts reclassified from accumulated other comprehensive income into the statement of operations are classified as operating expenses.

The components of other comprehensive income ("OCI") related to cash flow hedges are as follows:

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands)
Accumulated OCI related to cash flow hedges, beginning of the period	$	573		$	747		$	748		$	785
Unrealized (losses) gains on cash flow hedges		(1,591	)		3,575			4,091			3,191
Reclassification adjustment for losses (gains) included in net income/(loss)		1,044			(1,003	)		(4,509	)		(619	)
Changes in accumulated OCI on cash flow hedges, before tax		(547	)		2,572			(418	)		2,572
Other comprehensive income (loss) attributable to noncontrolling interest		465			(400	)		157			(419	)
Deferred income tax benefit (provision)		41			(23	)		45			(42	)
Changes in accumulated OCI on cash flow hedges, net of tax		(41	)		2,149			(216	)		2,111
Accumulated OCI related to cash flow hedges, end of the period	$	532		$	2,896		$	532		$	2,896

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Derivatives And Financial Instruments (Schedule Of Classification Of Gains And Losses On Derivative Instruments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Oct. 31, 2011		Oct. 31, 2010		Oct. 31, 2011		Oct. 31, 2010
Derivatives, Fair Value [Line Items]
Gain (Loss) Recognized in Other Comprehensive Income (Loss)	$ (1,126)		$ 3,175		$ 4,248		$ 2,772
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Statement of Operations	(1,044)	[1]	1,003	[1]	4,509	[1]	619	[1]
Gain (Loss) Recognized in Other Income (Expense), Net	562		(924)		(1,123)		(3,730)
Derivatives Designated As Hedging Instruments [Member] | Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Gain (Loss) Recognized in Other Comprehensive Income (Loss)	(1,126)		3,175				2,772
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Statement of Operations	(1,044)	[1]	1,003	[1]			619	[1]
Gain (Loss) Recognized in Other Income (Expense), Net					(1,123)
Derivatives Not Designated As Hedging Instruments [Member] | Interest Rate Swap [Member]
Derivatives, Fair Value [Line Items]
Gain (Loss) Recognized in Other Income (Expense), Net							(3,102)
Derivatives Not Designated As Hedging Instruments [Member] | Foreign Currency Forward [Member]
Derivatives, Fair Value [Line Items]
Gain (Loss) Recognized in Other Comprehensive Income (Loss)					4,248
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Statement of Operations					4,509	[1]
Gain (Loss) Recognized in Other Income (Expense), Net	$ 562		$ (924)				$ (628)

[1]

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Restructuring

9 Months Ended

Oct. 31, 2011

Restructuring [Abstract]

Restructuring

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.

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 nine months ended October 31, 2011, Comverse implemented 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 restructured its operations into new business units 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 leading market position in VAS and implementing further cost savings through operational efficiencies and strategic focus. In relation to these restructuring plans, the Company recorded severance and facilities-related costs of $7.5 million during the nine months ended October 31, 2011. Severance and facilities-related costs of $8.8 million were paid during the nine months ended October 31, 2011 with the remaining costs of $1.1 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. During the nine months ended October 31, 2011, Comverse began the second phase of its Netcentrex restructuring plan. In relation to these initiatives, the Company recorded severance-related costs of $7.1 million and paid $6.2 million of such costs during the nine months ended on October 31, 2011. The remaining costs of $4.0 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 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						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 Nine Months Ended October 31, 2011
January 31, 2011	$	2,910		$	—	$	2,462		$	86		$	6		$	94		$	227		$	29		$	5,814
Charges		7,117			—		7,359			179			16			13			274			82			15,040
Change in assumptions		(12	)		—		(140	)		—			(3	)		—			1			2			(152	)
Translation adjustments		265			—		—			—			—			—			—			—			265
Paid or utilized		(6,245	)		—		(8,602	)		(240	)		(19	)		(107	)		(502	)		(113	)		(15,828	)
October 31, 2011	$	4,035		$	—	$	1,079		$	25		$	—		$	—		$	—		$	—		$	5,139

	Netcentrex 2010 Initiative				Comverse Third Quarter  2010 Initiative					Comverse First Quarter  2010 Initiative						Pre  2010 initiatives						Verint Initiatives
	Severance Related		Facilities Related		Severance Related			Facilities Related		Severance Related			Facilities Related			Severance Related			Facilities Related			Severance Related			Facilities Related		Total
	(In thousands)
For the Nine Months Ended October 31, 2010
January 31, 2010	$	—	$	—	$	—		$	—	$	—		$	—		$	699		$	4,487		$	116		$	—	$	5,302
Charges		10,098		—		11,323			191		6,004			1,007			17			246			—			—		28,886
Change in assumptions		—		—		—			—		—			—			(110	)		—			—			—		(110	)
Paid or utilized		29		—		(2,532	)		—		(5,897	)		(804	)		(366	)		(3,820	)		(116	)		—		(13,506	)
October 31, 2010	$	10,127	$	—	$	8,791		$	191	$	107		$	203		$	240		$	913		$	—		$	—	$	20,572

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Debt

9 Months Ended

Oct. 31, 2011

Debt [Abstract]

Debt

9. DEBT

As of October 31, 2011 and January 31, 2011, debt is comprised of the following:

	October 31, 2011			January 31, 2011
	(In thousands)
Convertible debt obligations	$	2,195		$	2,195
Term loan		598,500			583,234
Unamortized debt discount on term loan		(2,790	)		—
Line of credit		—			6,000
Other debt		3,193			—
Total debt		601,098			591,429
Less: current portion		8,403			8,195
Total long-term debt	$	592,695		$	583,234

Convertible Debt Obligations

As of October 31, 2011 and January 31, 2011, CTI had $2.2 million aggregate principal amount of outstanding Convertible Debt Obligations (the "Convertible Debt Obligations"). The Convertible Debt Obligations are not secured by any assets of the Company and are not guaranteed by any of CTI's subsidiaries.

Each $1,000 principal amount of the Convertible Debt Obligations is convertible, at the option of the holder upon certain circumstances, into shares of CTI's common stock at a conversion price of $17.9744 per share (equal to a conversion rate of 55.6347 shares per $1,000 principal amount of Existing Convertible Debt Obligations), subject to adjustment for certain events.

The Convertible Debt Obligations are convertible upon the occurrence of certain events, including during any period, if following the date on which the credit rating assigned to the Convertible Debt Obligations by S&P is lower than "B-" or upon the withdrawal or suspension of the Convertible Debt Obligations rating at CTI's request. On August 19, 2010, S&P discontinued rating the Convertible Debt Obligations at which time they became convertible. Accordingly, the Convertible Debt Obligations are classified as current liabilities as of October 31, 2011 and January 31, 2011. The required redemption obligations in the succeeding five fiscal years are not significant to the Company.

Verint Credit Facilities

On May 25, 2007, Verint entered into a $675.0 million secured credit agreement (the "Prior Facility") with a group of banks to fund a portion of the acquisition of Witness Systems Inc. ("Witness"). The Prior Facility was comprised of a $650.0 million seven-year term loan facility and a $25.0 million six-year revolving line of credit. The borrowing capacity under the revolving line of credit was increased to $75.0 million in July 2010.

On April 29, 2011, Verint (i) entered into a credit agreement (the "New Credit Agreement") with a group of lenders (the "Lenders") and Credit Suisse AG, as administrative agent and collateral agent for the Lenders (in such capacities, the "Agent") and (ii) terminated the Prior Facility.

The New Credit Agreement provides for $770.0 million of secured senior credit facilities, comprised of a $600.0 million term loan maturing in October 2017 (the "Term Loan Facility") and a $170.0 million revolving credit facility maturing in April 2016 (the "Revolving Credit Facility"), subject to increase (up to a maximum increase of $300.0 million) and reduction from time to time according to the terms of the New Credit Agreement. As of October 31, 2011, Verint had no outstanding borrowings under the Revolving Credit Facility.

The majority of the Term Loan Facility proceeds were used to repay all $583.2 million of outstanding term loan borrowings under the Prior Facility at the closing date of the New Credit Agreement. There were no outstanding borrowings under the prior revolving credit facility at the closing date.

The New Credit Agreement included an original issuance Term Loan Facility discount of 0.50%, or $3.0 million, resulting in net Term Loan Facility proceeds of $597.0 million. This discount is being amortized as interest expense over the term of the Term Loan Facility using the effective interest method.

Loans under the New Credit Agreement bear interest, payable quarterly or, in the case of Eurodollar loans with an interest period of three months or shorter, at the end of any interest period, at a per annum rate of, at Verint's election:

(a) in the case of Eurodollar loans, the Adjusted London Interbank Offered ("LIBO") Rate plus 3.25% (or if Verint's corporate ratings are at least BB- and Ba3 or better, 3.00%). The "Adjusted LIBO Rate" is the greater of (i) 1.25% per annum and (ii) the product of the LIBO Rate and Statutory Reserves (both as defined in the New Credit Agreement), and

(b) in the case of Base Rate loans, the Base Rate plus 2.25% (or if Verint's corporate ratings are at least BB- and Ba3 or better, 2.00%). The "Base Rate" is the greatest of (i) the Agent's prime rate, (ii) the Federal Funds Effective Rate (as defined in the New Credit Agreement) plus 0.50% and (iii) the Adjusted LIBO Rate for a one month interest period plus 1.00%.

Verint incurred debt issuance costs of $14.8 million associated with the New Credit Agreement, which have been deferred and classified within "Other assets." The deferred costs are being amortized as interest expense over the term of the New Credit Agreement. Deferred costs associated with the Term Loan Facility were $10.2 million, and are being amortized using the effective interest rate method. Deferred costs associated with the Revolving Credit Facility were $4.6 million and are being amortized on a straight-line basis.

At the closing date of the New Credit Agreement, there were $9.0 million of unamortized deferred costs associated with the Prior Facility. Upon termination of the Prior Facility and repayment of the prior term loan, $8.1 million of these fees were expensed as a loss on extinguishment of debt. The remaining $0.9 million of these fees were associated with lenders that provided commitments under both the new and the prior revolving credit facilities, which remained deferred and are being amortized over the term of the New Credit Agreement.

During the three months ended October 31, 2011, Verint incurred $0.5 million of fees to secure waivers of certain provisions of the New Credit Agreement which allowed it to structure the financing for one of its business combinations in a favorable manner, $0.2 million of which were deferred and will be amortized over the remaining term of the New Credit Agreement and $0.3 million of which were expensed as incurred.

As of October 31, 2011, the interest rate on the Term Loan Facility was 4.50%. Including the impact of the 0.50% original issuance Term Loan Facility discount and the deferred debt issuance costs, the effective interest rate on Verint's Term Loan Facility was approximately 4.91% as of October 31, 2011.

Verint incurred interest expense on borrowings under its credit facilities of $6.9 million and $21.3 million during the three and nine months ended October 31, 2011, respectively, and $8.0 million and $18.3 million during the three and nine months ended October 31, 2010, respectively. Verint also recorded $0.7 million and $2.1 million during the three and nine months ended October 31, 2011, respectively, for amortization of deferred debt issuance costs, which is reported within interest expense. Amortization of Verint's deferred debt issuance costs during the three and nine months ended October 31, 2010 were $0.8 million and $2.0 million, respectively.

Verint is required to pay a commitment fee with respect to undrawn availability under the Revolving Credit Facility, payable quarterly, at a rate of 0.50% per annum, and customary administrative agent and letter of credit fees.

The New Credit Agreement requires Verint to make term loan principal payments of $1.5 million per quarter through August 2017, beginning in August 2011, with the remaining balance due in October 2017. Optional prepayments of the loans are permitted without premium or penalty, other than customary breakage costs associated with the prepayment of loans bearing interest based on LIBO Rates and a 1.0% premium applicable in the event of a Repricing Transaction (as defined in the New Credit Agreement) prior to April 30, 2012. The loans are also subject to mandatory prepayment requirements with respect to certain asset sales, excess cash flow (as defined in the New Credit Agreement), and certain other events. Prepayments are applied first to the eight immediately following scheduled term loan principal payments, and then pro rata to other remaining scheduled term loan principal payments, if any, and thereafter as otherwise provided in the New Credit Agreement.

Verint Systems' obligations under the New Credit Agreement are guaranteed by substantially all of Verint's domestic subsidiaries and certain foreign subsidiaries that have elected to be disregarded for U.S. tax purposes and are secured by security interests in substantially all assets of Verint and its guarantor subsidiaries, subject to certain exceptions. Verint's obligations under the New Credit Agreement are not guaranteed by CTI and are not secured by any of CTI's assets.

The New Credit Agreement contains customary negative covenants for credit facilities of this type, including limitations on Verint and its subsidiaries with respect to indebtedness, liens, nature of business, investments and loans, distributions, acquisitions, dispositions of assets, sale-leaseback transactions and transactions with affiliates. Accordingly, the New Credit Agreement precludes Verint Systems from paying cash dividends and limits its ability to make asset distributions to its stockholders, including CTI. The New Credit Agreement also contains a financial covenant that requires Verint to maintain a Consolidated Total Debt to Consolidated Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") (each as defined in the New Credit Agreement) leverage ratio until July 31, 2013 of no greater than 5.00 to 1.00 and, thereafter, of no greater than 4.50 to 1.00. The limitations imposed by the covenants are subject to certain exceptions. As of October 31, 2011, Verint was in compliance with such requirements.

The New Credit Agreement also contains a number of affirmative covenants, including a requirement that Verint submit consolidated financial statements to the Lenders within certain periods after the end of each fiscal year and quarter.

The New Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay principal or interest under the New Credit Agreement when due, failure to comply with covenants, any representation or warranty made by Verint proving to be inaccurate in any material respect, defaults under certain other indebtedness of Verint or its subsidiaries, a Change of Control (as defined in the New Credit Agreement) of Verint, and certain insolvency or receivership events affecting Verint or its significant subsidiaries. Upon an event of default, all of Verint's obligations under the New Credit Agreement may be declared immediately due and payable, and the Lenders' commitments to provide loans under the New Credit Agreement may be terminated.

Other Verint Indebtedness

In connection with Verint's August 2, 2011 business combination, Verint assumed approximately $3.3 million of development bank and government debt in the Americas region. This debt is payable in periods through February 2017 and bears interest at varying rates. As of October 31, 2011, the majority of this debt bears interest at an annual rate of 7.00%. The carrying value of this debt was approximately $3.2 million at October 31, 2011.

Comverse Ltd. Lines of Credit

As of January 31, 2011, Comverse Ltd., a wholly-owned Israeli subsidiary of Comverse, Inc., had a $10.0 million line of credit with a bank to be used for various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. This line of credit is not available for borrowings. The line of credit bears no interest and is subject to renewal on an annual basis. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts utilized under the line of credit. In June 2011, the line of credit increased to $20.0 million with a corresponding increase in the cash balances that Comverse Ltd. is required to maintain with the bank to $20.0 million. As of October 31, 2011 and January 31, 2011, Comverse Ltd. had utilized $18.8 million and $4.0 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

As of October 31, 2011 and January 31, 2011, Comverse Ltd. had an additional line of credit with a bank for $15.0 million, to be used for borrowings, various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. The line of credit bears no interest other than on borrowings thereunder and is subject to renewal on an annual basis. Borrowings under the line of credit bear interest at an annual rate of LIBOR plus a variable margin determined based on the bank's underlying cost of capital. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts borrowed or utilized under the line of credit. As of January 31, 2011, Comverse Ltd. had outstanding borrowings of $6.0 million under the line of credit which was repaid in full during the three months ended April 30, 2011. Accordingly, as of October 31, 2011, Comverse Ltd. had no outstanding borrowings under the line of credit. As of October 31, 2011 and January 31, 2011, Comverse Ltd. had utilized $3.2 million and $7.3 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

Other than Comverse Ltd.'s requirement to maintain cash balances with the banks as discussed above, the lines of credit have no financial covenants. These cash balances required to be maintained with the banks were classified as "Restricted cash and bank time deposits" within the condensed consolidated balance sheets as of October 31, 2011 and January 31, 2011.

Debt Maturities

The Company's debt maturities are as follows:

Fiscal Years Ending January 31:
(in thousands)
2012 (Remainder of year)	$	3,894
2013		6,069
2014		6,641
2015		6,756
2016		6,727
2017 and thereafter		573,801
	$	603,888

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Fair Value Measurements

9 Months Ended

Oct. 31, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

11. FAIR VALUE MEASUREMENTS

Under the FASB's guidance, fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., "the exit price").

The FASB's guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy consists of three levels based on the reliability of inputs as follows:

• Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access.

• Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in transfers within fair value measurement hierarchy. All transfers into and/or out of Level 3 are assumed to occur at the end of the reporting period. The Company did not have any transfers between levels of the fair value measurement hierarchy during the three and nine months ended October 31, 2011 and 2010.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value of financial instruments is estimated by the Company, using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Money Market Funds. The Company values these assets using quoted market prices for such funds.

Commercial Paper. The Company uses quoted prices for similar assets and liabilities.

ARS. The Company determines the fair value of ARS on a quarterly basis by utilizing a discounted cash flow model, which considers, among other factors, assumptions about the (i) underlying collateral, (ii) credit risk associated with the issuer, and (iii) contractual maturity. The discounted cash flow model considers contractual future cash flows, representing both interest and principal payments. Future interest payments were projected using U.S. Treasury and swap curves over the remaining term of the ARS in accordance with the terms of each specific security and principal payments were assumed to be made at an estimated contractual maturity date taking into account applicable prepayments. Yields used to discount these payments were determined based on the specific characteristics of each security. Key considerations in the determination of the appropriate discount rate include the securities' remaining term to maturity, capital structure subordination, quality and level of collateralization, complexity of payout structure, credit rating of the issuer, and the presence or absence of additional insurance.

Contingent Consideration. The Company values contingent consideration using an estimated probability-adjusted discounted cash flow model. The fair value measurement is based on significant inputs not observable in the market. The key assumptions used in these models are discount rates and the probabilities assigned to the milestones to be achieved. The fair value of contingent consideration is re-measured at each reporting period, and any changes in fair value resulting from either the passage of time or events occurring after the acquisition date, such as changes in the probability of achieving the performance target, are recorded in earnings.

Derivative Assets and Liabilities. The fair value of derivative instruments is based on quotes or data received from counterparties and third party financial institutions. These quotes are reviewed for reasonableness by discounting the future estimated cash flows under the contracts, considering the terms and maturities of the contracts and markets rates for similar contracts using readily observable market prices thereof.

The following tables present financial instruments according to the fair value hierarchy as defined by the FASB's guidance as of October 31, 2011 and January 31, 2011:

	October 31, 2011
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Commercial paper (1)	$	—	$	9,382	$	—	$	9,382
Money market funds (1)		150,553		—		—		150,553
Auction rate securities		—		—		50,259		50,259
Derivative assets		—		827		—		827
Contingent consideration asset recorded for sale of business		—		—		780		780
	$	150,553	$	10,209	$	51,039	$	211,801
Financial Liabilities:
Derivative liabilities	$	—	$	1,426	$	—	$	1,426
Contingent consideration liability for business combination		—		—		34,623		34,623
	$	—	$	1,426	$	34,623	$	36,049

	January 31, 2011
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Commercial paper (1)	$	—	$	9,375	$	—	$	9,375
Money market funds (1)		186,414		—		—		186,414
Auction rate securities		—		—		72,441		72,441
Derivative assets		—		957		—		957
Contingent consideration asset recorded for sale of business		—		—		722		722
	$	186,414	$	10,332	$	73,163	$	269,909
Financial Liabilities:
Derivative liabilities	$	—	$	1,926	$	—	$	1,926
Contingent consideration liability for business combination		—		—		3,686		3,686
	$	—	$	1,926	$	3,686	$	5,612

(1) As of October 31, 2011, $145.9 million of commercial paper and money market funds were classified in "Cash and cash equivalents" and $14.1 million of money market funds were classified in "Restricted cash and bank deposits" within the condensed consolidated balance sheets. As of January 31, 2011, $162.4 million of commercial paper and money market funds were classified in "Cash and cash equivalents" and $33.4 million of money market funds were classified in "Restricted cash and bank time deposits" within the condensed consolidated balance sheets.

The following table is a summary of changes in the fair value of the level 3 financial assets and liabilities, during the three and nine months ended October 31, 2011 and 2010:

	Level Three Financial Assets and Liabilities
	Three Months Ended October 31,											Nine Months Ended October 31,
	2011						2010					2011						2010
	Asset			Liability			Asset			Liability		Asset			Liability			Asset			Liability
	(In thousands)											(In thousands)
Beginning balance	$	52,612		$	2,364		$	69,349		$	3,306	$	73,163		$	3,686		$	114,650		$	—
Sales and redemptions		(250	)		—			(2,522	)		—		(25,750	)		—			(57,018	)		—
Change in realized and unrealized gains included in other income, net		120			—			1,625			—		8,011			—			23,715			—
Change in unrealized losses included in other comprehensive income		(1,463	)		—			1,143			—		(4,443	)		—			(11,374	)		—
Impairment charges		—			—			(29	)		—		—			—			(407	)		—
Contingent consideration liability recorded for business combination		—			32,800			—			—		—			33,704			—			3,224
Payments of contingent consideration		—			—			—			—		—			(4,107	)		—			—
Change in fair value recorded in operating expenses		20			(541	)		—			141		58			1,340			—			223
Ending balance	$	51,039		$	34,623		$	69,566		$	3,447	$	51,039		$	34,623		$	69,566		$	3,447

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also measures certain assets and liabilities at fair value on a nonrecurring basis. The Company measures non-financial assets, including goodwill, intangible assets and property, plant and equipment, at fair value when there is an indication of impairment. The Company also elected not to apply the fair value option for non-financial assets and non-financial liabilities.

Verint's Credit Facilities

As of October 31, 2011, the carrying amount of the Term Loan under Verint's New Credit Agreement was $595.7 million and the estimated fair value was $585.0 million. As of January 31, 2011, the carrying amount of the term loan under the Prior Facility was $583.2 million and the estimated fair value was $586.2 million. The estimated fair values are based upon the estimated bid and ask prices as determined by the agent responsible for the syndication of Verint's term loan.

In connection with Verint's August 2, 2011 business combination, the Company assumed approximately $3.3 million of development bank and government debt in the Americas region. The carrying value of this debt was approximately $3.2 million at October 31, 2011, which approximates its fair value.

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Fair Value Measurements (Schedule Of Changes In The Fair Value Of The Level 3 Financial Assets And Liabilities) (Details) (Significant Unobservable Inputs (Level 3) [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance, Asset	$ 52,612	$ 69,349	$ 73,163	$ 114,650
Sales and redemptions, Asset	(250)	(2,522)	(25,750)	(57,018)
Change in realized and unrealized gains included in other income, net, Asset	120	1,625	8,011	23,715
Change in unrealized losses included in other comprehensive income, Asset	(1,463)	1,143	(4,443)	(11,374)
Impairment charges, Asset		(29)		(407)
Change in fair value recorded in operating expenses, Asset	20		58
Ending balance, Asset	51,039	69,566	51,039	69,566
Beginning balance, Liability	2,364	3,306	3,686
Contingent consideration liability recorded for business combination, Liability	32,800		33,704	3,224
Payments of contingent consideration, Liability			(4,107)
Change in fair value recorded in operating expenses, Liability	(541)	141	1,340	223
Ending balance, Liability	$ 34,623	$ 3,447	$ 34,623	$ 3,447

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Stock-Based Compensation (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			9 Months Ended			3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended			9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011 days	Oct. 31, 2010	Oct. 31, 2011 Verint System [Member]	Oct. 31, 2010 Verint System [Member]	Oct. 31, 2011 Verint System [Member]	Oct. 31, 2010 Verint System [Member]	Aug. 04, 2011 Verint System [Member]	Oct. 31, 2010 President And Chief Executive Officer [Member]	Oct. 31, 2010 Executive Vice President And Chief Financial Officer [Member]	Oct. 31, 2011 Stock Options [Member]	Oct. 31, 2011 Restricted Stock Awards [Member]	Oct. 31, 2011 Restricted Stock Awards [Member]	Oct. 31, 2011 Restricted Stock Units (RSUs) [Member] Verint System [Member]	Oct. 31, 2010 Phantom Stock Units (RSUs) [Member] Verint System [Member]	Oct. 31, 2011 Phantom Stock Units (RSUs) [Member] Verint System [Member]	Oct. 31, 2010 Phantom Stock Units (RSUs) [Member] Verint System [Member]	Jan. 31, 2011 Phantom Stock Units (RSUs) [Member] Verint System [Member]	Oct. 31, 2010 Restricted Stock Awards And Restricted Stock Units [Member] Verint System [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of deferred stock units granted	35,000	223,607	1,360,116	1,602,607						300,000	150,000
Number of stock units granted															900,000			200,000		1,000,000
Stock options to purchase shares of common stock, number of shares									42,000			8,655,491
Common stock available for future grant, number of shares	1,158,119		1,158,119
Fair value of Restricted Awards vested													$ 400,000	$ 9,200,000
Unrecognized compensation cost												200,000	10,700,000	10,700,000	24,700,000
Unrecognized compensation expense period of recognition, in years												0.6		2.0	1.6
Unvested stock options included in outstanding stock options	137,534		137,534
Unvested stock options, weighted-average grant date fair value	$ 2.34		$ 2.34
Unvested stock options, expected term, years			4.0
Unvested stock options, total fair value	300,000		300,000
Fair value of stock options vested		10,000		600,000
Converted into stock options to purchase of common stock							3,100,000
Weighted-average fair value of stock options granted, per option			$ 22.97
Common stock issued		332,339	332,339		55,000	969,000	487,000	1,695,000
Total proceeds received upon exercise of stock options			1,000,000		1,000,000	19,000,000	9,700,000	30,900,000
Stock options exercisable					1,300,000		1,300,000
Options outstanding but not exercisable					34,000		34,000
Restricted stock, outstanding													1,947,376	1,947,376	1,500,000					1,900,000
Weighted-average grant date fair value															$ 30.22					$ 17.23
Cash payments upon vesting of stock units																6,600,000	10,300,000	22,400,000
Total accrued liabilities																	$ 1,800,000		$ 9,800,000
Number of days used to calculate trailing average price			5
Discount when awards are calculated			20.00%
Shares approved by the board of directors	150,000		150,000

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Fair Value Measurements (Schedule Of Financial Instruments) (Details) (USD $)	Oct. 31, 2011		Jan. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 827,000		$ 957,000
Contingent consideration asset recorded for sale of business	780,000		722,000
Financial assets	211,801,000		269,909,000
Derivative liabilities	1,426,000		1,926,000
Contingent consideration liability for business combination	34,623,000		3,686,000
Financial liabilities	36,049,000		5,612,000
Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	9,382,000	[1]	9,375,000	[1]
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	150,553,000	[1]	186,414,000	[1]
Auction Rate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	50,259,000		72,441,000
Commercial Paper And Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	145,900,000		162,400,000
Restricted cash and bank deposits	14,100,000		33,400,000
Quoted Prices To Active Markets For Identical Instruments (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	150,553,000		186,414,000
Quoted Prices To Active Markets For Identical Instruments (Level 1) [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	150,553,000	[1]	186,414,000	[1]
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	827,000		957,000
Financial assets	10,209,000		10,332,000
Derivative liabilities	1,426,000		1,926,000
Financial liabilities	1,426,000		1,926,000
Significant Other Observable Inputs (Level 2) [Member] | Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	9,382,000	[1]	9,375,000	[1]
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration asset recorded for sale of business	780,000		722,000
Financial assets	51,039,000		73,163,000
Contingent consideration liability for business combination	34,623,000		3,686,000
Financial liabilities	34,623,000		3,686,000
Significant Unobservable Inputs (Level 3) [Member] | Auction Rate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	$ 50,259,000		$ 72,441,000

[1] As of October 31, 2011, $145.9 million of commercial paper and money market funds were classified in "Cash and cash equivalents" and $14.1 million of money market funds were classified in "Restricted cash and bank deposits" within the condensed consolidated balance sheets. As of January 31, 2011, $162.4 million of commercial paper and money market funds were classified in "Cash and cash equivalents" and $33.4 million of money market funds were classified in "Restricted cash and bank time deposits" within the condensed consolidated balance sheets.

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Debt (Tables)

9 Months Ended

Oct. 31, 2011

Debt [Abstract]

Schedule Of Debt

	October 31, 2011			January 31, 2011
	(In thousands)
Convertible debt obligations	$	2,195		$	2,195
Term loan		598,500			583,234
Unamortized debt discount on term loan		(2,790	)		—
Line of credit		—			6,000
Other debt		3,193			—
Total debt		601,098			591,429
Less: current portion		8,403			8,195
Total long-term debt	$	592,695		$	583,234

Schedule Of Company's Debt Maturities

Fiscal Years Ending January 31:
(in thousands)
2012 (Remainder of year)	$	3,894
2013		6,069
2014		6,641
2015		6,756
2016		6,727
2017 and thereafter		573,801
	$	603,888

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Business Combinations (Schedule Of Unaudited Pro Forma Total Revenue And Net Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Business Combinations [Abstract]
Total revenue	$ 457,076	$ 431,737	$ 1,206,577	$ 1,206,022
Net income (loss) attributable to Comverse Technology Inc.	$ 36,746	$ (42,268)	$ (62,891)	$ (151,665)

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Earnings (Loss) Per Share Attributable To Comverse Technology, Inc.'s Shareholders

9 Months Ended

Oct. 31, 2011

Earnings (Loss) Per Share Attributable To Comverse Technology, Inc.'s Shareholders [Abstract]

Earning (Loss) Per Share Attributable To Comverse Technology, Inc.'s Shareholders

16. EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMVERSE TECHNOLOGY, INC.'S SHAREHOLDERS

Basic earnings (loss) per share attributable to Comverse Technology, Inc.'s shareholders is computed using the weighted average number of shares of common stock outstanding. For purposes of computing diluted earnings (loss) per share attributable to Comverse Technology, Inc.'s shareholders, shares issuable upon exercise of stock options and deliverable in settlement of unvested DSU awards are included in the weighted average number of shares of common stock outstanding, except when the effect would be antidilutive. The dilutive impact of subsidiary stock-based awards on Comverse Technology, Inc.'s reported net income is recorded as an adjustment to net income for the three months ended October 31, 2011 and as an adjustment to net loss for the nine months ended October 31, 2011 and three and nine months ended October 31, 2010, respectively, for the purposes of calculating earnings (loss) per share.

The calculation of earnings (loss) per share attributable to Comverse Technology Inc.'s shareholders for the three and nine months ended October 31, 2011 and 2010 was as follows:

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
	(In thousands, except per share data)
Numerator:
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - basic	$	35,690		$	(40,929	)	$	(63,202	)	$	(144,753	)
Adjustment for subsidiary stock options		(38	)		(2,027	)		(88	)		—
Net income (loss) from continuing operations attributable to Comverse Technology, Inc. - diluted	$	35,652		$	(42,956	)	$	(63,290	)	$	(144,753	)
Net loss from discontinued operations, attributable to Comverse Technology, Inc. - basic and diluted	$	—		$	(774	)	$	—		$	(2,998	)
Denominator:
Basic weighted average common shares outstanding		205,886			205,265			205,891			205,135
Convertible debt obligations		117			—			—			—
Stock options		404			—			—			—
Restricted awards		322			—			—			—
Diluted weighted average common shares outstanding		206,729			205,265			205,891			205,135
Earnings (loss) per share
Basic
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc.	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.71	)
Loss per share from discontinued operations attributable to Comverse Technology, Inc.		—			(0.00	)		—			(0.01	)
Basic earnnings (loss) per share	$	0.17		$	(0.20	)	$	(0.31	)	$	(0.72	)
Diluted
Earnings (loss) per share from continuing operations attributable to Comverse Technology, Inc.	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.71	)
Loss per share from discontinued operations attributable to Comverse Technology, Inc.		—			(0.00	)		—			(0.01	)
Diluted earnings (loss) per share	$	0.17		$	(0.21	)	$	(0.31	)	$	(0.72	)

As a result of the Company's net loss attributable to Comverse Technology, Inc. during the nine months ended October 31, 2011, the diluted loss per share attributable to Comverse Technology, Inc.'s shareholders computation excludes 0.9 million of contingently issuable shares, respectively, and, for the three and nine months ended October 31, 2010, such computation excludes 0.5 million and 0.7 million of contingently issuable shares, respectively, because the effect would be antidilutive.

The FASB's guidance requires contingently convertible instruments be included in diluted earnings per share, if dilutive, regardless of whether a market price trigger has been met. The Convertible Debt Obligations meet the definition of a contingently convertible instrument. The Convertible Debt Obligations were excluded from the computation of diluted earnings per share attributable to Comverse Technology, Inc.'s shareholders because the effect would be antidilutive for the nine months ended October 31, 2011 and for the three and nine months ended October 31, 2010, respectively.

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Subsequent Events

9 Months Ended

Oct. 31, 2011

Subsequent Events [Abstract]

Subsequent Events

21. SUBSEQUENT EVENTS

Final Payment under Consolidated Shareholder Class Action Settlement Agreement and Release of ARS

Subsequent to October 31, 2011, CTI paid the remaining amount payable under the settlement agreement of the consolidated shareholder class action of $91.3 million, of which $82.5 million was paid through the issuance of 12,462,236 shares of CTI's common stock and the remainder paid in cash. Following the payment by CTI of such amounts, the security interest for the benefit of the plaintiff class in the account in which CTI held its ARS and cash proceeds from sales and redemptions of ARS (including interest thereon) terminated.

Approval of the 2011 Stock Incentive Compensation Plan

In September 2011, CTI's Board approved the Comverse Technology, Inc. 2011 Stock Incentive Compensation Plan (the "2011 Incentive Plan") and such plan was approved by CTI's shareholders at the annual shareholder meeting held on November 16, 2011. A total of 22,000,000 shares of CTI common stock are reserved for issuance under the 2011 Incentive Plan. Equity awards may be granted under the 2011 Incentive Plan to employees, non-employee directors and consultants as well as employees and consultants of our subsidiaries and affiliates.

Sale of ARS

In November 2011, CTI sold approximately $61.2 million aggregate principal amount of ARS with a carrying amount of $50.0 million as of October 31, 2011 for approximately $49.2 million in cash.

Acquisitions

In November 2011, Verint acquired technology and other assets in two separate transactions that both qualify as business combinations. Combined consideration for these acquisitions, including potential future contingent consideration, will be less than $10.0 million. The impacts of these acquisitions will not be material to the Company's condensed consolidated financial statements.

Settlement of Opt-Out Plaintiffs' Action

On September 28, 2010, an action was filed in the United States District Court for the Eastern District of New York under the caption Maverick Fund, L.D.C., et al. v. Comverse Technology, Inc., et al., No. 10-cv-4436. Plaintiffs alleged that they were CTI shareholders who purchased CTI's publicly traded securities in 2005, 2006 and 2007. The plaintiffs, Maverick Fund, L.D.C. and certain affiliated investment funds, opted not to participate in the settlement of the consolidated shareholder class action. In December 2011, the parties agreed to a settlement in principle, pursuant to which CTI would be required to pay the plaintiffs approximately $9.5 million. The Company recorded an additional liability of $4.9 million in connection with this matter as of October 31, 2011, representing the amount by which the anticipated settlement amount exceeds the Opt-out Credit and certain other credits under the settlement agreement of the consolidated shareholder class action. See Note 20, Commitments and Contingencies.

Verint's New Lease Agreement

In November 2011, Verint executed a lease agreement for a new facility in the Americas region. This new facility will be occupied in connection with the expiration of Verint's existing facility lease in the area at the end of November 2012. The lease term extends through September 2026. The aggregate minimum lease commitment over the term of this new lease, excluding operating expenses, is approximately $36.1 million.

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Business Combinations (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended				9 Months Ended	3 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended						9 Months Ended	0 Months Ended	3 Months Ended	9 Months Ended							9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010	Aug. 02, 2011	Jan. 31, 2011	Oct. 31, 2011 GMT [Member]	Oct. 31, 2011 Vovici [Member]	Oct. 31, 2011 Vovici [Member]	Oct. 31, 2011 Vovici [Member]	Oct. 31, 2011 Other Acquisitions [Member]	Oct. 31, 2011 Iontas Acquisition [Member]	Oct. 31, 2011 Other Business Combinations [Member]	Oct. 31, 2011 Other Business Combinations [Member]	Oct. 31, 2011 Iontas Limited [Member]	Oct. 31, 2011 Verint [Member]	Aug. 04, 2011 Verint [Member]	Oct. 31, 2010 Verint [Member]	Oct. 31, 2011 Verint [Member] GMT [Member]	Oct. 31, 2011 Verint [Member] Vovici [Member]	Feb. 04, 2010 Verint [Member] Iontas Acquisition [Member]	Apr. 30, 2011 Verint [Member] Iontas Acquisition [Member]	Oct. 31, 2011 Verint [Member] Iontas Acquisition [Member]	Oct. 31, 2011 Verint [Member] Other Business Combinations [Member]	Oct. 31, 2010 Verint [Member] Iontas Limited [Member]	Oct. 31, 2011 Verint [Member] Compensation for pre-acquisition services [Member]	Oct. 31, 2011 Verint [Member] Stock based compensation expense [Member]	Dec. 31, 2010 Verint [Member] Maximum [Member] Other Business Combinations [Member]	Oct. 31, 2011 All Other [Member] Other Business Combinations [Member]	Oct. 31, 2011 GMT [Member]	Oct. 31, 2011 Developed Technology [Member] GMT [Member]	Oct. 31, 2011 Developed Technology [Member] Vovici [Member]	Oct. 31, 2011 Developed Technology [Member] Other Acquisitions [Member]	Oct. 31, 2011 Developed Technology [Member] Iontas Limited [Member]	Oct. 31, 2011 Non-Competition Agreements [Member] Iontas Limited [Member]	Oct. 31, 2011 Customer Relationships [Member] GMT [Member]	Oct. 31, 2011 Customer Relationships [Member] Vovici [Member]	Oct. 31, 2011 Customer Relationships [Member] Maximum [Member] Other Acquisitions [Member]	Oct. 31, 2011 Customer Relationships [Member] Minimum [Member] Other Acquisitions [Member]	Oct. 31, 2011 Trademarks And Trade Names [Member] GMT [Member]	Oct. 31, 2011 Trademarks And Trade Names [Member] Vovici [Member]	Oct. 31, 2011 Trademarks And Trade Names [Member] Other Acquisitions [Member]	Oct. 31, 2011 Other Identifiable Intangible Assets [Member] Maximum [Member] Other Acquisitions [Member]	Oct. 31, 2011 Other Identifiable Intangible Assets [Member] Minimum [Member] Other Acquisitions [Member]	Oct. 31, 2011 Accounts Payable [Member] Other Business Combinations [Member]	Oct. 31, 2011 Accounts Payable [Member] Verint [Member]	Oct. 31, 2011 Accounts Payable [Member] GMT [Member]	Oct. 31, 2011 Other Longterm Liabilities [Member] Other Business Combinations [Member]	Oct. 31, 2011 Other Longterm Liabilities [Member] Verint [Member]	Oct. 31, 2011 Other Longterm Liabilities [Member] GMT [Member]
Business Acquisition [Line Items]
Total consideration																					$ 21,700,000							$ 15,000,000
Cash consideration							24,596,000	55,708,000	55,708,000	55,708,000	21,965,000								24,600,000	56,100,000	17,700,000			34,100,000
Liability to repay bank debt					3,300,000													10,700,000		400,000
Business acquisition, options issued																42,000
Business acquisition, options issued, value assigned																1,000,000										100,000	900,000
Potential additional contingent payments, maximum																			17,400,000	19,100,000	3,800,000			27,300,000
Expenses recorded reflecting the impact of revised assessments of the probability of payment																				300,000
Estimated profit margin							20.00%			15.00%
Carrying value of acquiree deferred revenue							4,300,000			5,300,000
Fair value of the support obligations assumed										2,300,000																				1,200,000
Service revenue	249,491,000	248,527,000	677,418,000	667,126,000				2,300,000
Transaction costs directly related to acquisition										2,500,000		1,300,000	600,000	3,000,000
Contingent payments tied to certain performance targets period of achievement, in years																					2
Combined cash paid at the closings																								22,000,000
Ending of performance targets periods			January 31, 2013
Selling, general and administrative (expenses) benefit	(142,466,000)	(163,444,000)	(431,435,000)	(525,824,000)			(1,000,000)		(1,300,000)				900,000	1,100,000
Estimated useful lives (in years)																																		6	3
Weighted-average estimated useful life of acquired finite-lived identifiable intangible assets (in years)			7.5				7.3			8.1	6.7				5.9																5	6.0	6			10	10.0	10	4	3	5.0	5	4	3
Estimated fair value of the contingent consideration	34,623,000		34,623,000			3,686,000	12,000,000	9,900,000	9,900,000	9,900,000	11,804,000		10,700,000	10,700,000	3,200,000	10,200,000	9,900,000				3,200,000		1,700,000						11,800,000	12,000,000															3,100,000	5,900,000	2,900,000	7,600,000	4,300,000	9,100,000
Goodwill							21,653,000	37,647,000	37,647,000	37,647,000	19,554,000				12,800,000
Goodwill being assessed for tax deductibility													9,500,000	9,500,000
Goodwill not deductible for tax purpose														10,100,000
Evaluation of pre-acquisition business activities, liabilities recorded					3,300,000													10,700,000		400,000
Current liabilities assumed																5,500,000
Long-term liabilities assumed																5,200,000
Current liabilities																5,000,000
Long-term liabilities																4,800,000
Prepayments for product licenses and support services															1,500,000
Partial offset of trade accounts payable															700,000
Contingent consideration paid to former shareholders																						2,000,000
Developed technology assets acquired												6,900,000
Non-competition arrangements assets acquired												300,000
Tangible net assets acquired															1,700,000
Purchase Price Allocation, Goodwill							21,653,000	37,647,000	37,647,000	37,647,000	19,554,000				12,800,000
Changes in the fair value of contingent consideration recorded within selling, general and administrative expenses																							$ 200,000	$ 1,900,000	$ 200,000

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Business Segment Information (Tables)

3 Months Ended

9 Months Ended

Oct. 31, 2011

Oct. 31, 2010

Oct. 31, 2011

Oct. 31, 2010

Schedule Of Total Revenue, Total Costs And Expenses, Segment Performance

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Three Months Ended October 31, 2011:
Revenue	$	117,731		$	112,655		$	199,364		$	23,328		$	—		$	453,078
Intercompany revenue		—			—			—			1,066			(1,066	)		—
Total revenue	$	117,731		$	112,655		$	199,364		$	24,394		$	(1,066	)	$	453,078
Total costs and expenses	$	87,318		$	64,283		$	181,082		$	89,309		$	(1,044	)	$	420,948
Income (loss) from operations	$	30,413		$	48,372		$	18,282		$	(64,915	)	$	(22	)	$	32,130
Computation of segment performance:
Total revenue	$	117,731		$	112,655		$	199,364		$	24,394
Segment revenue adjustment		—			—			5,211			—
Segment revenue	$	117,731		$	112,655		$	204,575		$	24,394
Total costs and expenses	$	87,318		$	64,283		$	181,082		$	89,309
Segment expense adjustments:
Stock-based compensation expense		—			—			6,650			2,010
Amortization of acquisition-related intangibles		4,245			—			9,368			—
Compliance-related professional fees		—			—			3			5,082
Compliance-related compensation and other expenses		(1	)		295			—			1,281
Impairment charges		—			—			—			1,118
Litigation settlements and related costs		—			—			—			4,882
Acquisition-related charges		—			—			2,183			—
Restructuring and integration charges		—			—			—			1,838
Gain on sale of land		—			—			—			—
Other		—			—			2,329			3,155
Segment expense adjustments		4,244			295			20,533			19,366
Segment expenses		83,074			63,988			160,549			69,943
Segment performance	$	34,657		$	48,667		$	44,026		$	(45,549	)
Interest expense	$	—		$	—		$	(7,905	)	$	(287	)	$	—		$	(8,192	)
Depreciation and amortization	$	(5,116	)	$	(1,248	)	$	(13,613	)	$	(2,422	)	$	—		$	(22,399	)
Other non-cash items (1)	$	—		$	—		$	(44	)	$	(1,118	)	$	—		$	(1,162	)

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

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Three Months Ended October 31, 2010:
Revenue	$	90,906		$	121,141		$	186,641		$	26,772		$	—		$	425,460
Intercompany revenue		—			—			—			795			(795	)		—
Total revenue	$	90,906		$	121,141		$	186,641		$	27,567		$	(795	)	$	425,460
Total costs and expenses	$	64,888		$	65,248		$	156,248		$	116,992		$	(1,218	)	$	402,158
Income (loss) from operations	$	26,018		$	55,893		$	30,393		$	(89,425	)	$	423		$	23,302
Computation of segment performance:
Total revenue	$	90,906		$	121,141		$	186,641		$	27,567
Segment revenue adjustment		—			—			—			—
Segment revenue	$	90,906		$	121,141		$	186,641		$	27,567
Total costs and expenses	$	64,888		$	65,248		$	156,248		$	116,992
Segment expense adjustments:
Stock-based compensation expense		—			—			13,090			2,744
Amortization of acquisition-related intangibles		4,641			—			7,632			—
Compliance-related professional fees		—			—			823			31,144
Compliance-related compensation and other expenses		47			—			—			1,829
Litigation settlements and related costs		—			—			—			(17,258	)
Acquisition-related charges		—			—			518			—
Restructuring and integration charges		—			—			—			21,800
Gain on sale of land		—			—			—			(2,371	)
Other		—			—			646			1,230
Segment expense adjustments		4,688			—			22,709			39,118
Segment expenses		60,200			65,248			133,539			77,874
Segment performance	$	30,706		$	55,893		$	53,102		$	(50,307	)
Interest expense	$	—		$	—		$	(8,941	)	$	(79	)	$	—		$	(9,020	)
Depreciation and amortization	$	(5,646	)	$	(1,104	)	$	(12,148	)	$	(2,757	)	$	—		$	(21,655	)
Other non-cash items (1)	$	—		$	—		$	(15	)	$	(272	)	$	—		$	(287	)

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

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Nine Months Ended October 31, 2011:
Revenue	$	278,403		$	276,234		$	570,655		$	63,650		$	—		$	1,188,942
Intercompany revenue		—			—			—			3,983			(3,983	)		—
Total revenue	$	278,403		$	276,234		$	570,655		$	67,633		$	(3,983	)	$	1,188,942
Total costs and expenses	$	222,142		$	177,217		$	512,129		$	270,702		$	(4,016	)	$	1,178,174
Income (loss) from operations	$	56,261		$	99,017		$	58,526		$	(203,069	)	$	33		$	10,768
Computation of segment performance:
Total revenue	$	278,403		$	276,234		$	570,655		$	67,633
Segment revenue adjustment		—			—			6,173			—
Segment revenue	$	278,403		$	276,234		$	576,828		$	67,633
Total costs and expenses	$	222,142		$	177,217		$	512,129		$	270,702
Segment expense adjustments:
Stock-based compensation expense		—			—			20,841			7,240
Amortization of acquisition-related intangibles		13,241			—			25,664			—
Compliance-related professional fees		—			—			1,011			32,955
Compliance-related compensation and other expenses		2,066			1,531			—			1,885
Impairment charges		—			5			—			1,270
Litigation settlements and related costs		—			—			—			5,444
Acquisition-related charges		—			—			7,377			—
Restructuring and integration charges		—			—			—			14,888
Gain on sale of land		—			—			—			—
Other		—			—			4,335			6,250
Segment expense adjustments		15,307			1,536			59,228			69,932
Segment expenses		206,835			175,681			452,901			200,770
Segment performance	$	71,568		$	100,553		$	123,927		$	(133,137	)
Interest expense	$	—		$	—		$	(24,556	)	$	(769	)	$	—		$	(25,325	)
Depreciation and amortization	$	(15,957	)	$	(3,281	)	$	(39,152	)	$	(7,333	)	$	—		$	(65,723	)
Other non-cash items (1)	$	—		$	—		$	(266	)	$	(1,275	)	$	—		$	(1,541	)

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

	Comverse BSS			Comverse VAS			Verint			All Other			Eliminations			Consolidated
	(In thousands)
Nine Months Ended October 31, 2010:
Revenue	$	242,151		$	341,001		$	539,930		$	69,508		$	—		$	1,192,590
Intercompany revenue		—			—			—			2,271			(2,271	)		—
Total revenue	$	242,151		$	341,001		$	539,930		$	71,779		$	(2,271	)	$	1,192,590
Total costs and expenses	$	205,272		$	222,026		$	489,720		$	352,320		$	(3,308	)	$	1,266,030
Income (loss) from operations	$	36,879		$	118,975		$	50,210		$	(280,541	)	$	1,037		$	(73,440	)
Computation of segment performance:
Total revenue	$	242,151		$	341,001		$	539,930		$	71,779
Segment revenue adjustment		—			—			—			—
Segment revenue	$	242,151		$	341,001		$	539,930		$	71,779
Total costs and expenses	$	205,272		$	222,026		$	489,720		$	352,320
Segment expense adjustments:
Stock-based compensation expense		—			—			39,095			8,492
Amortization of acquisition-related intangibles		13,953			—			22,762			—
Compliance-related professional fees		—			—			27,090			107,492
Compliance-related compensation and other expenses		1,617			326			—			804
Litigation settlements and related costs		—			—			—			(17,148	)
Acquisition-related charges		—			—			1,349			—
Restructuring and integration charges		—			—			—			28,776
Gain on sale of land		—			—			—			(2,371	)
Other		—			—			1,199			269
Segment expense adjustments		15,570			326			91,495			126,314
Segment expenses		189,702			221,700			398,225			226,006
Segment performance	$	52,449		$	119,301		$	141,705		$	(154,227	)
Interest expense	$	—		$	—		$	(20,825	)	$	(416	)	$	—		$	(21,241	)
Depreciation and amortization	$	(17,877	)	$	(4,348	)	$	(36,100	)	$	(7,941	)	$	—		$	(66,266	)
Other non-cash items (1)	$	—		$	—		$	(238	)	$	(595	)	$	—		$	(833	)

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

Comverse [Member]

Schedule Of Total Revenue, Total Costs And Expenses, Segment Performance

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Three Months Ended October 31, 2011:
Revenue	$	117,731		$	112,655		$	12,757		$	243,143
Intercompany revenue		—			—			654			654
Total revenue	$	117,731		$	112,655		$	13,411		$	243,797
Total costs and expenses	$	87,318		$	64,283		$	62,695		$	214,296
Income (loss) from operations	$	30,413		$	48,372		$	(49,284	)	$	29,501
Computation of Comverse performance:
Total revenue	$	117,731		$	112,655		$	13,411		$	243,797
Total costs and expenses	$	87,318		$	64,283		$	62,695		$	214,296
Expense adjustments:
Stock-based compensation expense		—			—			974			974
Amortization of acquisition-related intangibles		4,245			—			—			4,245
Compliance-related professional fees		—			—			4,162			4,162
Compliance-related compensation and other expenses		(1	)		295			1,281			1,575
Impairment charges		—			—			1,118			1,118
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			1,838			1,838
Gain on sale of land		—			—			—			—
Other		—			—			(8	)		(8	)
Expense adjustments		4,244			295			9,365			13,904
Expenses after adjustments											200,392
Comverse performance										$	43,405
Interest expense	$	—		$	—		$	(283	)	$	(283	)
Depreciation and amortization	$	(5,116	)	$	(1,248	)	$	(2,202	)	$	(8,566	)
Other non-cash items (1)	$	—		$	—		$	(1,118	)	$	(1,118	)

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

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Three Months Ended October 31, 2010:
Revenue	$	90,906		$	121,141		$	16,279		$	228,326
Intercompany revenue		—			—			575			575
Total revenue	$	90,906		$	121,141		$	16,854		$	228,901
Total costs and expenses	$	64,888		$	65,248		$	107,884		$	238,020
Income (loss) from operations	$	26,018		$	55,893		$	(91,030	)	$	(9,119	)
Computation of Comverse performance:
Total revenue	$	90,906		$	121,141		$	16,854		$	228,901
Total costs and expenses	$	64,888		$	65,248		$	107,884		$	238,020
Expense adjustments:
Stock-based compensation expense		—			—			858			858
Amortization of acquisition-related intangibles		4,641			—			—			4,641
Compliance-related professional fees		—			—			23,134			23,134
Compliance-related compensation and other expenses		47			—			1,840			1,887
Impairment charges		—			—			—			—
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			21,800			21,800
Gain on sale of land		—			—			(2,371	)		(2,371	)
Other		—			—			21			21
Expense adjustments		4,688			—			45,282			49,970
Expenses after adjustments											188,050
Comverse performance										$	40,851
Interest expense	$	—		$	—		$	(77	)	$	(77	)
Depreciation and amortization	$	(5,646	)	$	(1,104	)	$	(2,526	)	$	(9,276	)
Other non-cash items (1)	$	—		$	—		$	(272	)	$	(272	)

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

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Nine Months Ended October 31, 2011:
Revenue	$	278,403		$	276,234		$	32,624		$	587,261
Intercompany revenue		—			—			2,355			2,355
Total revenue	$	278,403		$	276,234		$	34,979		$	589,616
Total costs and expenses	$	222,142		$	177,217		$	188,840		$	588,199
Income (loss) from operations	$	56,261		$	99,017		$	(153,861	)	$	1,417
Computation of Comverse performance:
Total revenue	$	278,403		$	276,234		$	34,979		$	589,616
Total costs and expenses	$	222,142		$	177,217		$	188,840		$	588,199
Expense adjustments:
Stock-based compensation expense		—			—			2,671			2,671
Amortization of acquisition-related intangibles		13,241			—			—			13,241
Compliance-related professional fees		—			—			14,629			14,629
Compliance-related compensation and other expenses		2,066			1,531			1,885			5,482
Impairment charges		—			5			1,270			1,275
Litigation settlements and related costs		—			—			474			474
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			14,888			14,888
Gain on sale of land		—			—			—			—
Other		—			—			(55	)		(55	)
Expense adjustments		15,307			1,536			35,762			52,605
Expenses after adjustments											535,594
Comverse performance										$	54,022
Interest expense	$	—		$	—		$	(754	)	$	(754	)
Depreciation and amortization	$	(15,957	)	$	(3,281	)	$	(6,676	)	$	(25,914	)
Other non-cash items (1)	$	—		$	—		$	(1,275	)	$	(1,275	)

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

	Comverse BSS			Comverse VAS			Comverse Other			Total Comverse
	(In thousands)
Nine Months Ended October 31, 2010:
Revenue	$	242,151		$	341,001		$	42,223		$	625,375
Intercompany revenue		—			—			1,644			1,644
Total revenue	$	242,151		$	341,001		$	43,867		$	627,019
Total costs and expenses	$	205,272		$	222,026		$	276,297		$	703,595
Income (loss) from operations	$	36,879		$	118,975		$	(232,430	)	$	(76,576	)
Computation of Comverse performance:
Total revenue	$	242,151		$	341,001		$	43,867		$	627,019
Total costs and expenses	$	205,272		$	222,026		$	276,297		$	703,595
Expense adjustments:
Stock-based compensation expense		—			—			1,640			1,640
Amortization of acquisition-related intangibles		13,953			—			—			13,953
Compliance-related professional fees		—			—			63,536			63,536
Compliance-related compensation and other expenses		1,617			326			810			2,753
Impairment charges		—			—			—			—
Litigation settlements and related costs		—			—			—			—
Acquisition-related charges		—			—			—			—
Restructuring and integration charges		—			—			28,776			28,776
Gain on sale of land		—			—			(2,371	)		(2,371	)
Other		—			—			(1,421	)		(1,421	)
Expense adjustments		15,570			326			90,970			106,866
Expenses after adjustments											596,729
Comverse performance										$	30,290
Interest expense	$	—		$	—		$	(406	)	$	(406	)
Depreciation and amortization	$	(17,877	)	$	(4,348	)	$	(7,225	)	$	(29,450	)
Other non-cash items (1)	$	—		$	—		$	(595	)	$	(595	)

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

XML

Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010
Cash flows from operating activities:
Net cash used in operating activities - continuing operations	$ (81,473)	$ (215,440)
Net cash used in operating activities - discontinued operations		(2,377)
Net cash used in operating activities	(81,473)	(217,817)
Cash flows from investing activities:
Proceeds from sales and maturities of investments	26,275	57,056
Acquisition of businesses, net of cash acquired	(98,698)	(15,292)
Purchase of property and equipment	(13,145)	(15,582)
Capitalization of software development costs	(2,542)	(1,604)
Net change in restricted cash and bank time deposits	11,757	3,197
Proceeds from asset sales		27,296
Settlement of derivative financial instruments not designated as hedges	(1,134)	(31,596)
Other, net	1,587	(12)
Net cash (used in) provided by investing activities - continuing operations	(75,900)	23,463
Net cash provided by investing activities - discontinued operations		54,673
Net cash (used in) provided by investing activities	(75,900)	78,136
Cash flows from financing activities:
Debt issuance costs and other debt-related costs	(15,280)	(4,039)
Proceeds from borrowings, net of original issuance discount	597,000
Repayment of bank loans, long-term debt and other financing obligations	(591,542)	(22,960)
Repurchase of common stock	(4,319)	(480)
Net proceeds from issuance of common stock by a subsidiary	8,567	26,426
Proceeds from exercises of stock options	1,024
Other, net	(2,004)
Net cash used in financing activities - continuing operations	(6,554)	(1,053)
Net cash provided by financing activities - discontinued operations		258
Net cash used in financing activities	(6,554)	(795)
Effects of exchange rates on cash and cash equivalents	3,883	1,288
Net decrease in cash and cash equivalents	(160,044)	(139,188)
Cash and cash equivalents, beginning of period including cash of discontinued operations	581,390	574,872
Cash and cash equivalents, end of period including cash of discontinued operations	421,346	435,684
Less: Cash and cash equivalents of discontinued operations at end of period		(66,880)
Cash and cash equivalents, end of period	421,346	368,804
Non-cash investing and financing transactions:
Accrued but unpaid purchases of property and equipment	1,521	3,058
Inventory transfers to property and equipment	17,377	4,096
Liabilities for contingent consideration in business combination	$ 33,704	$ 3,224

XML

Business Combinations

9 Months Ended

Oct. 31, 2011

Business Combinations [Abstract]

Business Combinations

5. BUSINESS COMBINATIONS

Verint Segment

Vovici Acquisition

On August 4, 2011, Verint acquired all of the outstanding shares of Vovici Corporation ("Vovici"), a U.S.-based privately-held provider of online survey management and enterprise feedback solutions. This acquisition enhances Verint's Enterprise Intelligence product suite to include comprehensive Voice of the Customer software and services offerings, designed to help organizations implement a single-vendor solution set for collecting, analyzing and acting on customer insights. The financial results of Vovici have been included in the Company's condensed consolidated financial statements since August 4, 2011.

Verint acquired Vovici for approximately $56.1 million in cash at closing, including $0.4 million to repay Vovici's bank debt. The consideration also included the exchange of certain unvested Vovici stock options for options to acquire approximately 42,000 shares of Verint Systems' common stock with fair values totaling $1.0 million, of which $0.1 million represents compensation for pre-acquisition services and is included in the consideration transferred and $0.9 million is being recognized as stock-based compensation expense over the remaining future vesting periods of the awards. Verint also agreed to make potential additional cash payments of up to approximately $19.1 million, contingent upon the achievement of certain performance targets over the period ending January 31, 2013. The fair value of this contingent obligation was estimated to be $9.9 million at August 4, 2011.

The $9.9 million acquisition date fair value of the contingent consideration obligation was estimated based on the probability adjusted present value of the consideration expected to be transferred using significant inputs that are not observable in the market. Key assumptions used in this estimate include probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. At each reporting date, the contingent consideration obligation is revalued to its fair value and increases and decreases in fair value are recorded within "Selling, general and administrative" expenses in the Company's condensed consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration obligation may result from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets. The Company recorded expense of approximately $0.3 million for the three months ended October 31, 2011, reflecting the impact of revised assessments of the probability of payment, as well as the decrease in the discount period since the acquisition date. As of October 31, 2011, the fair value of this contingent consideration obligation was approximately $10.2 million, of which $5.9 million was recorded within "Accounts payable and accrued expenses" and $4.3 million within "Other long-term liabilities".

The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair values assigned to identifiable intangible assets acquired was determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The acquired identifiable intangible assets are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over their estimated useful lives.

Among the factors contributing to the recognition of goodwill in this transaction were synergies in products and technologies, and the addition of a skilled, assembled workforce. This goodwill is not deductible for income tax purposes.

In connection with the purchase price allocation, the estimated fair value of support obligations assumed from Vovici was determined utilizing a cost build-up approach. The cost build-up approach calculates fair value by estimating the costs relating to fulfilling these obligations plus a normal profit margin, which approximates the amount the Company believes would be required to pay a third party to assume the support obligations. The estimated costs to fulfill the support obligation were based on the historical direct costs related to providing support services. These estimated costs did not include any costs associated with selling efforts or research and development or the related margins on these costs. Profit associated with selling efforts is excluded because the selling effort on the support contracts concluded prior to the August 4, 2011 acquisition date. The estimated profit margin was 15%, which the Company believes best approximates the operating profit margin to fulfill support obligations. As a result, in allocating the purchase price, an adjustment was recorded to reduce the $5.3 million carrying value of Vovici's deferred revenue to $2.3 million, representing the estimated fair value of the support obligations assumed. As former Vovici customers renew their support contracts, revenue will be recognized at the full contract value over the remaining term of the contracts.

Revenue attributable to Vovici from August 4, 2011 through October 31, 2011 was $2.3 million. The impact of Vovici on net income for this fiscal period was not significant.

Transaction and related costs, consisting primarily professional fees and integration expenses, directly related to the acquisition of Vovici, totaled $2.5 million for the nine months ended October 31, 2011, including $1.3 million incurred during the three months ended October 31, 2011, were expensed as incurred and recorded within "Selling, general and administrative" expenses.

Global Management Technologies Acquisition

On October 7, 2011, Verint acquired all of the outstanding shares of Global Management Technologies Corporation ("GMT"), a U.S.-based, privately-held provider of workforce management solutions whose software and services are widely used by organizations, particularly in retail branch banking environments. This acquisition adds key functionality to Verint's Enterprise Intelligence product solutions. The financial results of GMT have been included in the Company's condensed consolidated financial statements since October 7, 2011.

Verint acquired GMT for approximately $24.6 million in cash at closing. Verint also agreed to make potential additional cash payments of up to approximately $17.4 million, contingent upon the achievement of certain performance targets over the period ending January 31, 2014. As of October 7, 2011 the fair value of this contingent obligation was estimated to be $12.0 million, of which $2.9 million was recorded within "Accounts payable and accrued expenses" and $9.1 million within "Other long-term liabilities".

The $12.0 million acquisition date fair value of the contingent consideration obligation was estimated based on the probability adjusted present value of the consideration expected to be transferred using significant inputs that are not observable in the market. Key assumptions used in this estimate include probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. At each reporting date, the contingent consideration obligation is revalued to its fair value and increases and decreases in fair value are recorded within "Selling, general and administrative" expenses in the Company's condensed consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration obligation may result from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets. There was no change in the estimated fair value of the contingent consideration obligation between the acquisition date and October 31, 2011.

The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair values assigned to identifiable intangible assets acquired was determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The acquired identifiable intangible assets are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over their estimated useful lives.

Among the factors contributing to the recognition of goodwill in this transaction were synergies in products and technologies, and the addition of a skilled, assembled workforce. This goodwill is not deductible for income tax purposes.

In connection with the purchase price allocation, the estimated fair value of support obligations assumed from GMT was determined utilizing a cost build-up approach. The cost build-up approach calculates fair value by estimating the costs relating to fulfilling the obligations plus a normal profit margin, which approximates the amount that the Company believes would be required to pay a third party to assume the support obligations. The estimated costs to fulfill the support obligation were based on the historical direct costs related to providing support services. These estimated costs did not include any costs associated with selling efforts or research and development or the related margins on these costs. Profit associated with selling efforts is excluded because the selling effort on the support contracts was concluded prior to the October 7, 2011 acquisition date. The estimated profit margin was 20%, which the Company believes best approximates the operating profit margin to fulfill support obligations. As a result, in allocating the purchase price, an adjustment was recorded to reduce the $4.3 million carrying value of GMT's deferred revenue to $1.2 million, representing the estimated fair value of the support obligations assumed. As former GMT customers renew their support contracts, revenue will be recognized at the full contract value over the remaining term of the contracts.

Revenue and the impact on net income attributable to GMT from October 7, 2011 through October 31, 2011 were not significant.

Transaction and related costs, primarily professional fees and integration expenses, directly related to the acquisition of GMT, totaled $1.0 million for the nine months ended October 31, 2011, almost all of which were incurred during the three months ended October 31, 2011, were expensed as incurred and recorded within "Selling, general and administrative" expenses.

Other Business Combinations

On August 2, 2011, Verint acquired all of the outstanding shares of a privately-held provider of communications intelligence solutions, data retention services, and network performance management, based in the Americas region. This acquisition expands Verint's Communications Intelligence product portfolio and increases its presence in this region.

On March 30, 2011, Verint acquired all of the outstanding shares of a privately-held company, based in Israel. This acquisition broadened product portfolio of Verint's video intelligence product line.

Verint acquired these two companies for combined consideration of approximately $34.1 million, including $22.0 million of combined cash paid at the closings. Verint also agreed to make potential additional cash payments aggregating up to approximately $27.3 million contingent upon the achievement of certain performance targets over periods ending January 31, 2014. The combined fair values of these contingent consideration obligations were estimated to be $11.8 million as of the respective acquisition dates.

Benefits of $0.9 million and $1.1 million were recorded within selling, general and administrative expenses for the three and nine months ended October 31 2011, respectively, for changes in the fair values of the contingent consideration obligations associated with these acquisitions, reflecting the impacts of revised assessments of the probability of payment, as well as decreases in the discount periods since the acquisition dates. As of October 31, 2011, the combined fair values of these contingent consideration obligations were $10.7 million, of which $3.1 million was recorded within "Accounts payable and accrued expenses" and $7.6 million within "Other long-term liabilities".

The fair values assigned to identifiable intangible assets acquired in these business combinations were determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. The acquired identifiable intangible assets are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over their estimated useful lives.

Among the factors contributing to the recognition of goodwill in these transactions were synergies in products and technologies, and the additions of skilled, assembled workforces. Of the $19.6 million of goodwill associated with these business combinations, $10.1 million was not deductible for income tax purposes, and $9.5 million is still being assessed for tax deductibility.

In connection with the foregoing August 2, 2011 Verint acquisition, the Company has evaluated and continues to evaluate the impact of certain liabilities associated with pre-acquisition business activities of the acquired company. Based upon this evaluation, the Company recorded liabilities of approximately $10.7 million, of which $5.5 million is classified as current and $5.2 million is classified as long-term, along with corresponding indemnification assets of the same amounts and classified in the same manner, as components of the purchase price for this acquisition, representing the Company's best estimates of these amounts at the acquisition date. The indemnification assets recognize the selling shareholders' contractual obligation to indemnify Verint for these pre-acquisition liabilities, and were measured on the same basis as the corresponding liabilities. As of October 31, 2011, the current and long-term liabilities were reduced to $5.0 million and $4.8 million, respectively, as a result of currency exchange rate fluctuations, with corresponding changes in the current and long-term indemnification assets. The Company is continuing to gather and assess information in this regard, and changes to the amounts recorded, if any, during the remainder of the measurement period, will be included in the purchase price allocation during the measurement period and, subsequently, in the Company's results of operations.

Revenue and the impact on net income attributable to these acquisitions for the three and nine months ended October 31, 2011 were not significant.

Transaction and related costs, primarily professional fees and integration expenses, directly related to these acquisitions totaled $3.0 million for the nine months ended October 31, 2011, including $0.6 million incurred during the three months ended October 31, 2011, and were expensed as incurred.

Components and Allocations of Purchase Prices

The following table sets forth the components and the allocations of the purchase prices, some of which are preliminary, for business combinations completed during the nine months ended October 31, 2011:

	Vovici			GMT			Other
	(In thousands)
Components of Purchase Price:
Cash and cash equivalents	$	55,708		$	24,596		$	21,965
Fair value of contingent consideration		9,900			12,000			11,804
Fair value of stock options		60			—			—
Bank debt, prepaid at closing		435			—			—
Other purchase price adjustments		—			—			317
Total purchase price	$	66,103		$	36,596		$	34,086
Allocation of Purchase Price:
Net tangible assets (liabilities):
Accounts receivable	$	1,106		$	512		$	493
Other current assets		4,396			1,717			12,445
Other assets		912			482			5,508
Current and other liabilities		(1,794	)		(1,634	)		(15,653	)
Deferred revenue		(2,264	)		(1,234	)		(845	)
Bank debt		—			—			(3,330	)
Deferred income taxes - long-term		(2,300	)		—			—
Net tangible assets (liabilities)		56			(157	)		(1,382	)
Identifiable intangible assets:
Developed technology		11,300			7,500			6,943
Customer relationships		15,400			7,200			6,550
Trademarks and trade names		1,700			400			1,000
Other identifiable intangible assets		—			—			1,421
Total identifiable intangible assets (1)		28,400			15,100			15,914
Goodwill		37,647			21,653			19,554
Total purchase price	$	66,103		$	36,596		$	34,086

(1) The weighted-average estimated useful life of all finite-lived identifiable intangible assets is 7.5 years.

The purchase price allocations for acquisitions completed during the nine months ended October 31, 2011 are preliminary and subject to revision as more detailed analyses are completed and additional information about the acquisition date fair values of assets and liabilities becomes available during the respective measurement periods. The purchase price allocations for these acquisitions as reported as of October 31, 2011 represent the Company's best estimates of their fair values and were based upon information available to the Company.

For the acquisition of Vovici, the acquired developed technology, customer relationships, and trademarks and tradenames were assigned estimated useful lives of six years, ten years, and five years, respectively, the weighted average of which is approximately 8.1 years.

For the acquisition of GMT, the acquired developed technology, customer relationships, and trademarks and tradenames were assigned estimated useful lives of five years, ten years, and three years, respectively, the weighted average of which is approximately 7.3 years.

For other acquisitions, the acquired developed technology, customer relationships, trademarks and tradenames, and other identifiable intangible assets were assigned estimated useful lives of six years, from four years to ten years, five years, and from three years to four years, respectively, the weighted average of which is approximately 6.7 years.

For the Year Ended January 31, 2011

Iontas Limited

On February 4, 2010, Verint acquired all of the outstanding shares of Iontas Limited ("Iontas"), a privately-held provider of desktop analytics solutions which measure application usage and analyze workflows to help improve staff performance in contact center, branch, and back-office operations environments. Verint acquired Iontas, among other objectives, to expand the desktop analytical capabilities of its Enterprise Intelligence solutions. The financial results of Iontas have been included in the condensed consolidated financial statements since the acquisition date.

Verint acquired Iontas for total consideration valued at $21.7 million, including cash consideration of $17.7 million, and additional milestone-based contingent payments of up to $3.8 million tied to certain performance targets being achieved over the two-year period following the acquisition date. The acquisition-date fair value of the contingent consideration was estimated to be $3.2 million. The purchase price also included $1.5 million of prepayments for product licenses and support services procured from Iontas prior to the acquisition date, partially offset by $0.7 million of trade accounts payable to Iontas as of the acquisition date.

The consideration paid to acquire Iontas was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, which included $6.9 million for developed technology, $0.3 million for non-competition agreements, $1.7 million for tangible net assets, and $12.8 million for goodwill. The developed technology and non-competition agreements were assigned estimated useful lives of six years and three years, respectively, the weighted average of which is 5.9 years, and are being amortized on a straight-line basis, which the Company believes approximates the pattern in which the assets are utilized, over these estimated useful lives.

Among the factors that contributed to the recognition of goodwill in this transaction were the expansion of Verint's desktop analytical capabilities, the expansion of its suite of products and services, and the addition of an assembled workforce. This goodwill is not deductible for income tax purposes.

The Company recorded the $3.2 million acquisition-date estimated fair value of the contingent consideration as a component of the purchase price of Iontas. During the three months ended April 30, 2011, $2.0 million of the previously recorded contingent consideration was paid to the former shareholders of Iontas. The estimated fair value of the remaining contingent consideration was $1.7 million as of October 31, 2011 and was recorded within "Accounts payable and other accrued expenses." Changes in the fair value of this contingent consideration of $0.2 million for each of the nine months ended October 31, 2011 and 2010, respectively, were recorded within "Selling, general and administrative" expenses for those fiscal periods.

Transaction costs, primarily professional fees, directly related to the acquisition of Iontas, totaled $1.3 million and were expensed as incurred and recorded within "Selling, general and administrative" expenses.

Revenue from Iontas for the three and nine months ended October 31, 2011 and 2010 was not material.

Other Business Combination

In December 2010, Verint acquired certain technology and other assets in a transaction that qualified as a business combination. Total consideration for this acquisition was less than $15.0 million. The impact of this acquisition was not material to the Company's condensed consolidated financial statements. The fair value of the liability for contingent consideration related to this acquisition increased by $1.9 million during the nine months ended October 31, 2011, resulting in a corresponding charge recorded within "Selling, general and administrative" expenses for that fiscal period. Substantially all of the increase occurred during the three months ended April 30, 2011. The earned contingent consideration related to this acquisition was paid to the sellers during the three months ended July 31, 2011.

Pro Forma Information

The following table provides unaudited pro forma total revenue and net income (loss) attributable to Comverse Technology, Inc. for the three and nine months ended October 31, 2011 and 2010, as if Vovici and GMT had been acquired on February 1, 2010. These unaudited pro forma results reflect certain adjustments related to these acquisitions, such as amortization expense on finite-lived intangible assets acquired from Vovici and GMT. The unaudited pro forma results do not include any operating efficiencies or potential cost savings which may result from these business combinations. Accordingly, such unaudited pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on February 1, 2010, nor are they indicative of future operating results. The pro forma impact of the other business combinations discussed in this note were not material to the Company's historical consolidated operating results and is therefore not presented.

	Three Months Ended October 31,					Nine Months Ended October 31,
	2011		2010			2011			2010
	(In thousands)
Total revenue	$	457,076	$	431,737		$	1,206,577		$	1,206,022
Net income (loss) attributable to Comverse Technology Inc.	$	36,746	$	(42,268	)	$	(62,891	)	$	(151,665	)

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Debt (Schedule Of Company's Debt Maturities) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2011
Debt [Abstract]
2012 (Remainder of year)	$ 3,894
2013	6,069
2014	6,641
2015	6,756
2016	6,727
2017 and thereafter	573,801
Total debt	$ 603,888

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Equity Attributable To Comverse Technology, Inc. And Noncontrolling Interest (Components Of Equity Attributable To Comverse Technology, Inc.'s And Its Noncontrolling Interest) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010
Equity [Line Items]
Balance, January 31			$ 485,887	$ 509,722
Net loss	42,267	(31,506)	(46,740)	(138,131)
Unrealized gains and losses on available-for-sale securities, net of reclassification adjustments and tax			(4,443)	(10,792)
Unrealized gains and losses for cash flow hedge positions, net of reclassification adjustments and tax			(373)	2,530
Foreign currency translation adjustment			(1,960)	(3,961)
Total comprehensive loss			(53,516)	(150,354)
Stock-based compensation expense			7,150	8,152
Exercises of stock options			1,861
Impact from equity transactions of subsidiaries and other			27,303	50,999
Repurchase of common stock			(4,319)	(480)
Balance, October 31	464,366	418,039	464,366	418,039
Comverse Technology, Inc.'s Shareholders' Equity [Member]
Equity [Line Items]
Balance, January 31			413,008	422,486
Net loss			(63,202)	(147,751)
Unrealized gains and losses on available-for-sale securities, net of reclassification adjustments and tax			(4,443)	(10,768)
Unrealized gains and losses for cash flow hedge positions, net of reclassification adjustments and tax			(216)	2,111
Foreign currency translation adjustment			(166)	(2,018)
Total comprehensive loss			(68,027)	(158,426)
Stock-based compensation expense			7,150	8,152
Exercises of stock options			1,861
Impact from equity transactions of subsidiaries and other			15,268	56,547
Repurchase of common stock			(4,319)	(480)
Balance, October 31	364,941	328,279	364,941	328,279
Noncontrolling Interest [Member]
Equity [Line Items]
Balance, January 31			72,879	87,236
Net loss			16,462	9,620
Unrealized gains and losses on available-for-sale securities, net of reclassification adjustments and tax				(24)
Unrealized gains and losses for cash flow hedge positions, net of reclassification adjustments and tax			(157)	419
Foreign currency translation adjustment			(1,794)	(1,943)
Total comprehensive loss			14,511	8,072
Impact from equity transactions of subsidiaries and other			12,035	(5,548)
Balance, October 31	$ 99,425	$ 89,760	$ 99,425	$ 89,760

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Basis Of Presentation (Policy)

9 Months Ended

Oct. 31, 2011

Basis Of Presentation [Abstract]

Principles Of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include CTI and its wholly-owned subsidiaries and its controlled and majority-owned subsidiaries, which include Verint Systems (in which CTI owned 41.9% of the common stock and held 52.8% of the voting power as of October 31, 2011) and Starhome B.V. (66.5% owned as of October 31, 2011). Ulticom, Inc. was a majority-owned subsidiary prior to its sale on December 3, 2010 and was included in the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows through such date. For controlled subsidiaries that are not wholly-owned, the noncontrolling interest is included as a separate component of "Net income (loss)" in the condensed consolidated statements of operations and "Total equity" in the condensed consolidated balance sheets. Verint Systems holds a 50% equity interest in a consolidated variable interest entity in which it is the primary beneficiary. The results of operations of this variable interest entity for the three and nine months ended October 31, 2011 and 2010 were not significant to the condensed consolidated statements of operations.

All intercompany balances and transactions have been eliminated.

The Company includes the results of operations of acquired businesses from the dates of acquisition.

Changes In Reportable Segments

Changes in Reportable Segments

The Company changed its reportable segments during the three months ended October 31, 2011. The Company's reportable segments now consist of Comverse BSS, Comverse VAS, and Verint. The results of operations of all the other operations of the Company are included in the column captioned "All Other" as part of the Company's business segment presentation. The operating segments included in "All Other" do not meet the quantitative thresholds required for a separate presentation. See Note 18, Business Segment Information. The change in reportable segments is attributable to the implementation of a second phase of restructuring measures (the "Phase II Business Transformation") at Comverse that focuses on process reengineering to maximize business performance, productivity and operational efficiency (see Note 8, Restructuring).

As part of the Phase II Business Transformation, Comverse restructured its operations into new business units that are designed to improve operational efficiency and business performance. Comverse's business units consist of the following:

• BSS, which conducts Comverse's converged, prepaid and postpaid billing and active management systems business and includes groups engaged in product management, professional services, research and development and product sales;

• VAS, which conducts Comverse's value-added services business and includes groups engaged in VAS delivery, voice product research and development, messaging product research and development and product sales; and

• Mobile Internet ("Comverse MI"), which is responsible for Comverse's mobile Internet products and includes groups engaged in product management, solution engineering, delivery, research and development and product sales.

In addition, Comverse created Global Services ("Comverse GLS"), which provides customer post-delivery services and includes groups engaged in support services for BSS, VAS and mobile Internet products, services sales and product management.

Certain Comverse business operations are conducted through the following global corporate functions:

• Customer Facing Group, which is primarily engaged in providing overall customer account management and sales for all product lines;

• Operations Group, which provides centralized information technology, procurement, supply chain management and global business operations services to all business units; and

• Strategy and innovation, finance, legal and human resources groups, which continue to support all business operations.

As a result of the Phase II Business Transformation, Comverse BSS, Comverse VAS and Comverse MI became operating segments of the Company. The revenue of each of Comverse BSS, Comverse VAS and Comverse MI includes the revenue generated by Comverse GLS that is attributable to the operations of each such operating segment. The costs and expenses of each of Comverse BSS, Comverse VAS and Comverse MI are comprised of direct costs such as product materials and personnel-related costs, and costs and expenses incurred by Comverse GLS in connection with the operations of each such operating segment. The chief operating decision maker, CTI's Chief Executive Officer, uses the segment performance of Comverse BSS, Comverse VAS and Comverse MI, after including the amounts attributable to Comverse GLS, for assessing the financial results of the segments and for the allocation of resources. The discrete financial information of Comverse GLS is not used by the CODM for the assessment of financial results or the allocation of resources.

The Company does not maintain balance sheets for the Comverse operating segments.

The Company's new reportable segments are presented as follows:

• Comverse BSS - comprised of Comverse's BSS operating segment;

• Comverse VAS - comprised of Comverse's VAS operating segment; and

• Verint - comprised of Verint Systems and its subsidiaries.

All Other is comprised of all the Company's other operations, including the Comverse MI operating segment, Comverse's Netcentrex operations, Comverse's global corporate functions that support its business units, Starhome B.V. and its subsidiaries, miscellaneous operations and CTI's holding company operations.

The Company has recast the presentation of its segment information for the six months ended July 31, 2011 (which is included in the segment information for the nine months ended October 31, 2011) and for the three and nine months ended October 31, 2010 to reflect these reportable segments.

Use Of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements and the accompanying notes in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses.

The most significant estimates include:

• Estimates relating to the recognition of revenue, including the determination of vendor specific objective evidence ("VSOE") of fair value or the determination of best estimate of selling price for multiple element arrangements;

• Inventory reserves;

• Allowance for doubtful accounts;

• Fair value of stock-based compensation;

• Valuation of assets acquired and liabilities assumed in business combinations;

• Fair value of reporting units for the purpose of goodwill impairment test;

• Valuation of other intangible assets;

• Valuation of investments and financial instruments;

• Realization of deferred tax assets; and

• The identification and measurement of uncertain tax positions.

The Company's actual results may differ from its estimates.

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Business Segment Information (Schedule Of Total Revenue, Total Costs And Expenses, Segment Performance) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Oct. 31, 2011		Oct. 31, 2010		Oct. 31, 2011		Oct. 31, 2010
Segment Reporting Information [Line Items]
Revenue	$ 453,078		$ 425,460		$ 1,188,942		$ 1,192,590
Total revenue	453,078		425,460		1,188,942		1,192,590
Total costs and expenses	420,948		402,158		1,178,174		1,266,030
Income (loss) from operations	32,130		23,302		10,768		(73,440)
Segment revenue adjustment
Stock-based compensation expense	8,660		15,834		28,081		47,587
Restructuring and integration charges	1,838		21,800		14,888		28,776
Interest expense	(8,192)		(9,020)		(25,325)		(21,241)
Depreciation and amortization	(22,399)		(21,655)		(65,723)		(66,266)
Other non-cash items	(1,162)	[1]	(287)	[1]	(1,541)	[1]	(833)	[1]
Comverse [Member]
Segment Reporting Information [Line Items]
Revenue	243,143		228,326		587,261		625,375
Intercompany revenue	654		575		2,355		1,644
Total revenue	243,797		228,901		589,616		627,019
Total costs and expenses	214,296		238,020		588,199		703,595
Income (loss) from operations	29,501		(9,119)		1,417		(76,576)
Comverse [Member] | Comverse Performance [Member]
Segment Reporting Information [Line Items]
Total revenue	243,797		228,901		589,616		627,019
Total costs and expenses	214,296		238,020		588,199		703,595
Stock-based compensation expense	974		858		2,671		1,640
Amortization of acquisition-related intangibles	4,245		4,641		13,241		13,953
Compliance-related professional fees	4,162		23,134		14,629		63,536
Compliance-related compensation and other expenses	1,575		1,887		5,482		2,753
Impairment charges	1,118				1,275
Litigation settlements and related costs					474
Restructuring and integration charges	1,838		21,800		14,888		28,776
Gain on sale of land			(2,371)				(2,371)
Other	(8)		21		(55)		(1,421)
Expense adjustments	13,904		49,970		52,605		106,866
Expenses after adjustments	200,392		188,050		535,594		596,729
Comverse performance	43,405		40,851		54,022		30,290
Interest expense	(283)		(77)		(754)		(406)
Depreciation and amortization	(8,566)		(9,276)		(25,914)		(29,450)
Other non-cash items	(1,118)	[1]	(272)	[1]	(1,275)	[1]	(595)	[1]
Comverse BSS [Member]
Segment Reporting Information [Line Items]
Revenue	117,731		90,906		278,403		242,151
Total revenue	117,731		90,906		278,403		242,151
Total costs and expenses	87,318		64,888		222,142		205,272
Income (loss) from operations	30,413		26,018		56,261		36,879
Segment revenue adjustment
Amortization of acquisition-related intangibles	4,245		4,641		13,241		13,953
Compliance-related compensation and other expenses	(1)		47		2,066		1,617
Segment expense adjustments	4,244		4,688		15,307		15,570
Segment expenses	83,074		60,200		206,835		189,702
Segment performance	34,657		30,706		71,568		52,449
Depreciation and amortization	(5,116)		(5,646)		(15,957)		(17,877)
Comverse BSS [Member] | Segment Revenue [Member]
Segment Reporting Information [Line Items]
Revenue	117,731		90,906		278,403		242,151
Comverse BSS [Member] | Comverse Performance [Member]
Segment Reporting Information [Line Items]
Total revenue	117,731		90,906		278,403		242,151
Total costs and expenses	87,318		64,888		222,142		205,272
Amortization of acquisition-related intangibles	4,245		4,641		13,241		13,953
Compliance-related compensation and other expenses	(1)		47		2,066		1,617
Expense adjustments	4,244		4,688		15,307		15,570
Depreciation and amortization	(5,116)		(5,646)		(15,957)		(17,877)
Comverse VAS [Member]
Segment Reporting Information [Line Items]
Revenue	112,655		121,141		276,234		341,001
Total revenue	112,655		121,141		276,234		341,001
Total costs and expenses	64,283		65,248		177,217		222,026
Income (loss) from operations	48,372		55,893		99,017		118,975
Segment revenue adjustment
Compliance-related compensation and other expenses	295				1,531		326
Impairment charges					5
Segment expense adjustments	295				1,536		326
Segment expenses	63,988		65,248		175,681		221,700
Segment performance	48,667		55,893		100,553		119,301
Depreciation and amortization	(1,248)		(1,104)		(3,281)		(4,348)
Comverse VAS [Member] | Segment Revenue [Member]
Segment Reporting Information [Line Items]
Revenue	112,655		121,141		276,234		341,001
Comverse VAS [Member] | Comverse Performance [Member]
Segment Reporting Information [Line Items]
Total revenue	112,655		121,141		276,234		341,001
Total costs and expenses	64,283		65,248		177,217		222,026
Compliance-related compensation and other expenses	295				1,531		326
Impairment charges					5
Expense adjustments	295				1,536		326
Depreciation and amortization	(1,248)		(1,104)		(3,281)		(4,348)
Verint [Member]
Segment Reporting Information [Line Items]
Revenue	199,364		186,641		570,655		539,930
Total revenue	199,364		186,641		570,655		539,930
Total costs and expenses	181,082		156,248		512,129		489,720
Income (loss) from operations	18,282		30,393		58,526		50,210
Segment revenue adjustment	5,211				6,173
Stock-based compensation expense	6,650		13,090		20,841		39,095
Amortization of acquisition-related intangibles	9,368		7,632		25,664		22,762
Compliance-related professional fees	3		823		1,011		27,090
Acquisition-related charges	2,183		518		7,377		1,349
Other	2,329		646		4,335		1,199
Segment expense adjustments	20,533		22,709		59,228		91,495
Segment expenses	160,549		133,539		452,901		398,225
Segment performance	44,026		53,102		123,927		141,705
Interest expense	(7,905)		(8,941)		(24,556)		(20,825)
Depreciation and amortization	(13,613)		(12,148)		(39,152)		(36,100)
Other non-cash items	(44)	[1]	(15)	[1]	(266)	[1]	(238)	[1]
Verint [Member] | Segment Revenue [Member]
Segment Reporting Information [Line Items]
Revenue	204,575		186,641		576,828		539,930
All Other [Member]
Segment Reporting Information [Line Items]
Revenue	23,328		26,772		63,650		69,508
Intercompany revenue	1,066		795		3,983		2,271
Total revenue	24,394		27,567		67,633		71,779
Total costs and expenses	89,309		116,992		270,702		352,320
Income (loss) from operations	(64,915)		(89,425)		(203,069)		(280,541)
Segment revenue adjustment
Stock-based compensation expense	2,010		2,744		7,240		8,492
Compliance-related professional fees	5,082		31,144		32,955		107,492
Compliance-related compensation and other expenses	1,281		1,829		1,885		804
Impairment charges	1,118				1,270
Litigation settlements and related costs	4,882		(17,258)		5,444		(17,148)
Restructuring and integration charges	1,838		21,800		14,888		28,776
Gain on sale of land			(2,371)				(2,371)
Other	3,155		1,230		6,250		269
Segment expense adjustments	19,366		39,118		69,932		126,314
Segment expenses	69,943		77,874		200,770		226,006
Segment performance	(45,549)		(50,307)		(133,137)		(154,227)
Interest expense	(287)		(79)		(769)		(416)
Depreciation and amortization	(2,422)		(2,757)		(7,333)		(7,941)
Other non-cash items	(1,118)	[1]	(272)	[1]	(1,275)	[1]	(595)	[1]
All Other [Member] | Segment Revenue [Member]
Segment Reporting Information [Line Items]
Revenue	24,394		27,567		67,633		71,779
Eliminations [Member]
Segment Reporting Information [Line Items]
Intercompany revenue	(1,066)		(795)		(3,983)		(2,271)
Total revenue	(1,066)		(795)		(3,983)		(2,271)
Total costs and expenses	(1,044)		(1,218)		(4,016)		(3,308)
Income (loss) from operations	(22)		423		33		1,037
Segment revenue adjustment
Comverse Other [Member]
Segment Reporting Information [Line Items]
Revenue	12,757		16,279		32,624		42,223
Intercompany revenue	654		575		2,355		1,644
Total revenue	13,411		16,854		34,979		43,867
Total costs and expenses	62,695		107,884		188,840		276,297
Income (loss) from operations	(49,284)		(91,030)		(153,861)		(232,430)
Comverse Other [Member] | Comverse Performance [Member]
Segment Reporting Information [Line Items]
Total revenue	13,411		16,854		34,979		43,867
Total costs and expenses	62,695		107,884		188,840		276,297
Stock-based compensation expense	974		858		2,671		1,640
Compliance-related professional fees	4,162		23,134		14,629		63,536
Compliance-related compensation and other expenses	1,281		1,840		1,885		810
Impairment charges	1,118				1,270
Litigation settlements and related costs					474
Restructuring and integration charges	1,838		21,800		14,888		28,776
Gain on sale of land			(2,371)				(2,371)
Other	(8)		21		(55)		(1,421)
Expense adjustments	9,365		45,282		35,762		90,970
Interest expense	(283)		(77)		(754)		(406)
Depreciation and amortization	(2,202)		(2,526)		(6,676)		(7,225)
Other non-cash items	$ (1,118)	[1]	$ (272)	[1]	$ (1,275)	[1]	$ (595)	[1]

[1] Other non-cash items consist primarily of write-offs and impairments of property and equipment.

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Equity Attributable To Comverse Technology, Inc. And Noncontrolling Interest (Tables)

9 Months Ended

Oct. 31, 2011

Equity Attributable To Comverse Technology, Inc. And Noncontrolling Interest [Abstract]

Components Of Equity Attributable To Comverse Technology, Inc.'s And Its Noncontrolling Interest

	Nine Months Ended October 31, 2011									Nine Months Ended October 31, 2010
	Comverse Technology, Inc.'s Shareholders' Equity			Noncontrolling Interest			Total Equity			Comverse Technology, Inc.'s Shareholders' Equity			Noncontrolling Interest			Total Equity
	(In thousands)
Balance, January 31	$	413,008		$	72,879		$	485,887		$	422,486		$	87,236		$	509,722
Comprehensive loss:
Net loss		(63,202	)		16,462			(46,740	)		(147,751	)		9,620			(138,131	)
Unrealized gains and losses on available-for-sale securities, net of reclassification adjustments and tax		(4,443	)		—			(4,443	)		(10,768	)		(24	)		(10,792	)
Unrealized gains and losses for cash flow hedge positions, net of reclassification adjustments and tax		(216	)		(157	)		(373	)		2,111			419			2,530
Foreign currency translation adjustment		(166	)		(1,794	)		(1,960	)		(2,018	)		(1,943	)		(3,961	)
Total comprehensive loss		(68,027	)		14,511			(53,516	)		(158,426	)		8,072			(150,354	)
Stock-based compensation expense		7,150			—			7,150			8,152			—			8,152
Exercises of stock options		1,861			—			1,861			—			—			—
Impact from equity transactions of subsidiaries and other		15,268			12,035			27,303			56,547			(5,548	)		50,999
Repurchase of common stock		(4,319	)		—			(4,319	)		(480	)		—			(480	)
Balance, October 31	$	364,941		$	99,425		$	464,366		$	328,279		$	89,760		$	418,039

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Discontinued Operations

9 Months Ended

Oct. 31, 2011

Discontinued Operations [Abstract]

Discontinued Operations

15. DISCONTINUED OPERATIONS

On December 3, 2010 (the "Effective Date"), Ulticom, Inc. completed a merger (the "Merger") with an affiliate of 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 $0.8 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 October 31, 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.

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

	Three Months Ended October 31, 2010			Nine Months Ended October 31, 2010
	(In thousands)
Total revenue	$	9,122		$	25,817
Loss before income tax (provision) benefit		(1,162	)		(4,691	)
Income tax (provision) benefit		215			691
Loss from discontinued operations, net of tax		(947	)		(4,000	)
Tax on discontinued operations		—			—
Total loss from discontinued operations, net of tax	$	(947	)	$	(4,000	)
Loss from discontinued operations, net of tax
Attributable to Comverse Technology, Inc.		(774	)		(2,998	)
Attributable to noncontrolling interest		(173	)		(1,002	)
Total	$	(947	)	$	(4,000	)

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. These amounts were eliminated in the condensed consolidated financial statements. The purchases made by the Company from Ulticom were $0.4 million and $1.1 million, in the three and nine months ended October 31, 2011, respectively.