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.

Third Quarter 2010 Restructuring Initiatives and Business Transformation

During the second half of 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 commencing in the third quarter of the fiscal year ended January 31, 2011, reducing its annualized operating costs. During the fiscal year ended January 31, 2012, 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-related costs of $0.1 million during the three months ended April 30, 2012. Severance-related costs of $0.8 million were paid during the three months ended April 30, 2012 with the remaining costs of $1.7 million expected to be substantially paid by January 31, 2013.

Netcentrex 2010 Initiative

During the fiscal year ended January 31, 2011, management, as part of initiatives to improve focus on Comverse's core business and to maintain its ability to face intense competitive pressures in its markets, approved the first phase of a restructuring plan to eliminate staff positions primarily located in France. During the fiscal year ended January 31, 2012, Comverse began the second phase of its Netcentrex restructuring plan. In relation to these initiatives, the Company recorded severance and facilities related costs of $0.9 million and paid $0.4 million of such costs during the three months ended on April 30, 2012. The remaining costs of $1.5 million relating to the Netcentrex second phase are expected to be substantially paid by January 31, 2013. As part of its commitment to its customers, Netcentrex is providing, and is expected to continue to provide, maintenance, support and certain other services to address the ongoing needs of its existing customer base.

The following table presents the roll forward of the workforce reduction and restructuring activities noted above:



	Third Quarter 2010 Initiative ⁽¹⁾					Netcentrex 2010 Initiative
	Severance Related			Facilities Related		Severance Related			Facilities Related			Total
	(In thousands)
For the Three Months Ended April 30, 2012
January 31, 2012	$	2,486		$	8	$	1,178		$	—		$	3,672
Charges	116			—		11			854			981
Change in assumptions	(136		)	—		(165		)	—			(301		)
Translation adjustments	(2		)	—		10			6			14
Paid or utilized	(771		)	—		(315		)	(60		)	(1,146		)
April 30, 2012	$	1,693		$	8	$	719		$	800		$	3,220


(1)	Includes charges attributable to the Phase II Business Transformation.



	Comverse Third Quarter 2010 Initiative						Netcentrex 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 Three Months Ended April 30, 2011
January 31, 2011	$	2,462		$	86		$	2,910		$	—	$	6		$	94		$	227		$	29		$	5,814
Charges	4,505			—			6,591			—		—			—			48			57			11,201
Change in assumptions	(114		)	—			—			—		(3		)	—			1			2			(114		)
Translation adjustments	—			—			702			—		—			—			—			—			702
Paid or utilized	(5,018		)	(51		)	(3,546		)	—		—			(72		)	(48		)	(72		)	(8,807		)
April 30, 2011	$	1,835		$	35		$	6,657		$	—	$	3		$	22		$	228		$	16		$	8,796