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.