Amdocs Limited Reports Quarterly Revenue of $711 Million

Key highlights:

- Second quarter revenue of $711 million, in-line with guidance of $700-$720 million

- Second quarter non-GAAP operating income of $128 million; non-GAAP operating margin of 18.0%; GAAP operating income of $96 million

- Second quarter diluted non-GAAP EPS of $0.50, excluding acquisition-related costs and equity-based compensation expense, net of related tax effects, in-line with guidance

- Diluted GAAP EPS of $0.39 for the quarter

- Free cash flow of $62 million for the quarter; included in the calculation of second quarter free cash flow was $52 million in annual employee bonus payments

- 12-month backlog of $2.37 billion at the end of the second quarter

- Third quarter fiscal 2009 guidance: Expected revenue of approximately $670-$690 million and diluted non-GAAP EPS of $0.46-$0.50, excluding acquisition-related costs and approximately $0.04-$0.05 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.33-$0.38

ST. LOUIS, April 22 /PRNewswire-FirstCall/ -- Amdocs Limited (NYSE: DOX) today reported that for its fiscal second quarter ended March 31, 2009, revenue was $711.1 million, a decrease of 8.2% from last year's second quarter. Net income on a non-GAAP basis was $104.9 million, or $0.50 per diluted share, compared to non-GAAP net income of $126.6 million, or $0.58 per diluted share, in the second quarter of fiscal 2008. Non-GAAP net income excludes amortization of purchased intangible assets and equity-based compensation expenses of $24.2 million, net of related tax effects, in the second quarter of fiscal 2009 and excludes such amortization and equity-based compensation expenses of $26.8 million, net of related tax effects, in the second quarter of fiscal 2008. The Company's GAAP net income for the second quarter of fiscal 2009 was $80.6 million, or $0.39 per diluted share, compared to GAAP net income of $99.9 million, or $0.46 per diluted share, in the prior year's second quarter.

"In the second quarter of fiscal 2009 difficult economic conditions continued to impact our customers' buying decisions. Sales cycles remained extended, particularly for larger, transformational projects, and certain customers delayed commitments for new projects. We had anticipated operating in a difficult environment during the quarter and are pleased with our execution in sales, cost control and cash collections. Our second quarter revenue of $711 million and diluted non-GAAP earnings per share of $0.50 were in-line with our guidance, and we delivered on our 18% non-GAAP operating margin target for the quarter," said Dov Baharav, chief executive officer of Amdocs Management Limited.

Baharav continued, "For the third quarter of fiscal 2009, Amdocs expects that revenue will be approximately $670-$690 million as we anticipate on-going weakness in the economic environment. We are managing our expenses under the assumption that revenue for the year could be down 10%-12% relative to fiscal year 2008, with foreign currency effects contributing roughly 3% of the decline. While we cannot yet provide a precise range for our fourth quarter revenue expectations, at this time we believe that fourth quarter revenue is likely to decline sequentially from third quarter levels."

Baharav concluded, "While these are difficult times for our industry and for Amdocs, we signed a number of important deals in the second quarter which position us well with some key customers. We are managing expenses to protect profitability and cash flow and we are investing in our future, including in R&D, so that we can continue to provide the best products and services to our industry. We believe we are well-positioned for growth when economic conditions improve."

In the second quarter Amdocs won new business with existing customers and new logos. These wins include new business in each of Amdocs' four focus areas for growth: cable/satellite, managed services, emerging markets and OSS, including the examples below.

Cable/satellite

  • Amdocs signed a transformational BSS project based on the CES 7.5 portfolio with a major satellite provider in Asia-Pacific spanning billing, ordering, CRM, self-service and partner relationship management.

Managed Services

  • Clearwire selected Amdocs for a multi-year agreement for the license and implementation of Amdocs CES 7.5 products and managed services to support Clearwire's retail and wholesale business.

Emerging markets and OSS

  • Instituto Costarricense de Electricidad (ICE), Costa Rica's national service provider of telecommunications, will implement Amdocs OSS 7.5 to support ICE's OSS needs, including planning, inventory and discovery, provisioning and activation, trouble ticketing, service fulfillment and service impact analysis.
  • A mobile operator in Asia-Pacific selected Amdocs OSS to support its GSM network.
  • Amdocs signed a new wireless customer in Africa for a pre-paid billing solution.

Additionally, in North America, Amdocs won a significant new Amdocs Interactive project to support a wireless customer's on-portal digital content storefront including content management, commerce, discovery, and delivery, as well as a billing consolidation project for an existing wireline customer.

Free cash flow was $62 million for the quarter, comprised of cash flow from operations of $80 million less approximately $18 million in net capital expenditures and other. Included in the calculation of second quarter free cash flow was $52 million in annual employee bonus payments.

Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was $2.37 billion at the end of the second quarter of fiscal 2009.

Financial Outlook

Amdocs expects that revenue for the third quarter of fiscal 2009 will be approximately $670-$690 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the third quarter to be $0.46-$0.50, excluding acquisition-related costs and approximately $0.04-$0.05 per share of equity-based compensation expense, net of related tax effects. Amdocs estimates GAAP diluted earnings per share for the third quarter will be $0.33-$0.38.

Amdocs will host a conference call on April 22, 2009 at 5 p.m. Eastern Time to discuss the Company's second quarter results. The call will be carried live on the Internet via www.InvestorCalendar.com and the Amdocs website, www.amdocs.com.

Non-GAAP Financial Measures

This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes and non-GAAP net income. These non-GAAP measures exclude the following items:

  • amortization of purchased intangible assets;
  • in-process research and development write-off;
  • restructuring charges;
  • equity-based compensation expense; and
  • tax effects related to the above.

These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs' results of operations in conjunction with the corresponding GAAP measures.

Amdocs believes that the presentation of non-GAAP diluted earnings per share and other financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes and non-GAAP net income, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations, as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.

For its internal budgeting process and in monitoring the results of the business, Amdocs' management uses financial statements that do not include amortization of purchased intangible assets, in-process research and development write-off, restructuring charges, equity-based compensation expense, and related tax effects. Amdocs' management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Amdocs. In addition, Amdocs believes that significant groups of investors exclude these non-cash expenses in reviewing its results and those of its competitors, because the amounts of the expenses between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the expenses.

Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of service, research and development, selling, general and administrative, operating income, income taxes and net income), it is useful to investors to understand how these specific line items in the Consolidated Statements of Income are affected by these adjustments.

Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

About Amdocs

Amdocs is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and the intentional customer experience(TM) - at every point of service. Amdocs provides solutions that deliver customer experience excellence, combining the software, service and expertise to help its customers execute their strategies and achieve service, operational and financial excellence. A global company with revenue of $3.16 billion in fiscal 2008, Amdocs has more than 17,000 employees and serves customers in more than 50 countries around the world. For more information, visit Amdocs at www.amdocs.com.

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs ability to grow in the business markets that it serves, Amdocs ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future; however, the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2008 filed on December 8, 2008 and in our quarterly 6-K furnished on February 9, 2009.

                                 AMDOCS LIMITED
                         Consolidated Statements of Income

                        (in thousands, except per share data)

                              Three months ended     Six months ended
                                   March 31,             March 31,
                              ------------------------------------------
                                2009      2008        2009        2008
                              --------  --------  ----------  ----------
    Revenue:
      License                 $ 37,203  $ 32,109  $   81,804  $   58,326
      Service                  673,881   742,172   1,383,119   1,458,205
                              --------  --------  ----------  ----------
                               711,084   774,281   1,464,923   1,516,531
    Operating expenses:
      Cost of license              569       938       1,560       1,712
      Cost of service          455,997   493,956     940,048     964,697
      Research and
       development              52,750    56,088     108,979     112,103
      Selling, general and
       administrative           84,308    98,666     174,573     196,331
      Amortization of
       purchased
       intangible assets        21,501    21,753      41,755      43,506
      Restructuring charges
       and in-process
       research and
       development (1)               -         -      20,780           -
                              --------  --------  ----------  ----------
                               615,125   671,401   1,287,695   1,318,349
                              --------  --------  ----------  ----------
    Operating income            95,959   102,880     177,228     198,182

    Interest (expense)
     income and other, net      (5,763)    8,822      (3,528)     17,638
                              --------  --------  ----------  ----------
    Income before
     income taxes               90,196   111,702     173,700     215,820

    Income taxes                 9,566    11,843      18,823      20,297
                              --------  --------  ----------  ----------
    Net income                $ 80,630  $ 99,859  $  154,877  $  195,523
                              ========  ========  ==========  ==========
    Basic earnings per share  $   0.40  $   0.48  $     0.76  $     0.94
                              ========  ========  ==========  ==========
    Diluted earnings
     per share(2)             $   0.39  $   0.46  $     0.74  $     0.89
                              ========  ========  ==========  ==========
    Basic weighted average
     number of shares
     outstanding               202,671   206,759     202,561     207,437
                              ========  ========  ==========  ==========
    Diluted weighted average
     number of shares
     outstanding               209,755   219,786     211,013     220,912
                              ========  ========  ==========  ==========

    (1)  Restructuring charges and in-process research and development for the
         six months ended March 31, 2009 includes restructuring charges of
         $15,140, and in-process research and development of $5,640.
    (2)  To reflect the impact of assumed conversion of the convertible notes,
         $622 and $1,486 representing interest expense and amortization of
         issuance costs, were added back to net income for the three and six
         months ended March 31, 2009, respectively, and $985 and $1,970 were
         added back to net income for the three and six months ended March 31,
         2008, respectively, for the purpose of computing diluted earnings per
         share.


                                  AMDOCS LIMITED
                            Selected Financial Metrics
                       (in thousands, except per share data)

                                    Three months ended    Six months ended
                                         March 31,             March 31,
                                    ------------------  ----------------------
                                      2009      2008        2009        2008
                                    --------  --------  ----------  ----------
    Revenue                         $711,084  $774,281  $1,464,923  $1,516,531

    Non-GAAP operating income        127,977   138,046     263,697     269,317

    Non-GAAP net income              104,875   126,647     221,125     249,937

    Non-GAAP diluted
     earnings per share (1)         $   0.50  $   0.58  $     1.05   $    1.14

    Diluted weighted average
     number of shares outstanding    209,755   219,786     211,013     220,912

    (1)  To reflect the impact of assumed conversion of the convertible notes,
         $622 and $1,486 representing interest expense and amortization of
         issuance costs, were added back to net income for the three and six
         months ended March 31, 2009, respectively, and $985 and $1,970 were
         added back to net income for the three and six months ended March 31,
         2008, respectively, for the purpose of computing diluted earnings per
         share.



                                    AMDOCS LIMITED
         Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                                   (in thousands)

                                          Three months ended
                                             March 31, 2009
                       -------------------------------------------------------
                                        Reconciliation items
                                 ----------------------------------
                                 Amortization
                                 of purchased   Equity based
                                   intangible   compensation  Tax
                          GAAP       assets       expense    effect  Non-GAAP
                       ------------------------------------------------------
    Operating expenses:
      Cost of license  $    569      $     -      $     -   $     -  $    569
      Cost of service   455,997            -       (4,950)        -   451,047
      Research and
       development       52,750            -         (977)        -    51,773
      Selling, general
       and
       administrative    84,308            -       (4,590)        -    79,718
      Amortization of
       purchased
       intangible
       assets            21,501      (21,501)           -         -         -
                       ------------------------------------------------------
    Total operating
     expenses           615,125      (21,501)     (10,517)        -   583,107
                       ------------------------------------------------------
    Operating income     95,959       21,501       10,517         -   127,977
                       ------------------------------------------------------
    Income taxes          9,566            -            -     7,773    17,339
                       ------------------------------------------------------
    Net income         $ 80,630      $21,501      $10,517   $(7,773) $104,875
                       ------------------------------------------------------



                                        Three months ended
                                          March 31, 2008
                       -------------------------------------------------------
                                        Reconciliation items
                                 -----------------------------------
                                  Amortization
                                  of purchased  Equity based
                                   intangible   compensation   Tax
                          GAAP       assets       expense     effect  Non-GAAP
                       -------------------------------------------------------
    Operating expenses:
      Cost of license  $    938    $     -       $     -  $      -   $    938
      Cost of service   493,956          -        (5,431)        -    488,525
      Research and
       development       56,088          -        (1,146)        -     54,942
      Selling, general
       and
       administrative    98,666          -        (6,836)        -     91,830
      Amortization of
       purchased
       intangible
       assets            21,753    (21,753)             -        -          -
                       -------------------------------------------------------
    Total operating
     expenses           671,401    (21,753)      (13,413)        -    636,235
                       -------------------------------------------------------
    Operating income    102,880     21,753        13,413         -    138,046
                       -------------------------------------------------------
    Income taxes         11,843          -             -     8,378     20,221
                       -------------------------------------------------------
    Net income         $ 99,859    $21,753       $13,413  $ (8,378)  $126,647
                       -------------------------------------------------------



                                  AMDOCS LIMITED
        Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                                  (in thousands)

                                       Six months ended
                                        March 31, 2009
                    ----------------------------------------------------------
                                    Reconciliation items
                          ---------------------------------------
                          Amortization Restructuring
                                of      charges and
                             purchased  in-process  Equity based
                            intangible  research and compensation  Tax    Non-
                      GAAP     assets    development   expense    effect  GAAP
                    ----------------------------------------------------------
    Operating expenses:
      Cost of
       license       $  1,560  $     -    $     -   $     -  $     -  $  1,560
      Cost of
       service        940,048        -          -   (10,661)       -   929,387
      Research
       and
       development    108,979        -          -    (2,039)       -   106,940
      Selling,
       general
       and
       administrative 174,573        -          -   (11,234)       -   163,339
      Amortization
       of
       purchased
       intangible
       assets          41,755  (41,755)         -         -        -         -
      Restructuring
       charges and
       in-process
       research and
       development     20,780        -    (20,780)        -        -         -
                    ----------------------------------------------------------
    Total operating
      expenses      1,287,695  (41,755)   (20,780)  (23,934)       - 1,201,226
                    ----------------------------------------------------------
    Operating
     income           177,228   41,755     20,780    23,934        -   263,697
                    ----------------------------------------------------------
    Income taxes       18,823        -          -         -   20,221    39,044
                    ----------------------------------------------------------
    Net income       $154,877  $41,755    $20,780   $23,934 $(20,221) $221,125
                    ----------------------------------------------------------



                                         Six months ended
                                          March 31, 2008
                       -------------------------------------------------------
                                        Reconciliation items
                                 -----------------------------------
                                 Amortization
                                 of purchased   Equity based
                                   intangible   compensation   Tax
                          GAAP       assets       expense     effect  Non-GAAP
                      --------------------------------------------------------
    Operating
     expenses:
      Cost of
       license        $    1,712     $     -     $     -  $      -  $    1,712
      Cost of
       service           964,697           -     (11,713)        -     952,984
      Research and
       development       112,103           -      (2,522)        -     109,581
      Selling,
       general
       and
       administrative    196,331           -     (13,394)        -     182,937
      Amortization of
       purchased
       intangible
       assets             43,506     (43,506)          -         -           -
                      --------------------------------------------------------
    Total operating
     expenses          1,318,349     (43,506)    (27,629)        -   1,247,214
                      --------------------------------------------------------
    Operating income     198,182      43,506      27,629         -     269,317
                      --------------------------------------------------------
    Income taxes          20,297           -           -    16,721      37,018
                      --------------------------------------------------------
    Net income        $  195,523     $43,506     $27,629  $(16,721) $  249,937
                      --------------------------------------------------------



                                  AMDOCS LIMITED
                       Condensed Consolidated Balance Sheets
                                  (in thousands)

                                                            As of
                                                  -------------------------
                                                   March 31,   September 30,
                                                     2009          2008
                                                  ----------   ------------
    ASSETS

    Current assets
    Cash, cash equivalents and short-term
     interest-bearing investments                 $1,334,856     $1,244,378
    Accounts receivable, net, including unbilled
     of $42,323 and $48,264 respectively             506,685        573,764
    Deferred income taxes and taxes receivable        98,843         84,515
    Prepaid expenses and other current assets         96,371        102,930
                                                  ----------     ----------
        Total current assets                       2,036,755      2,005,587

    Equipment and leasehold improvements, net        292,261        317,081
    Goodwill and other intangible assets, net      1,809,335      1,796,922
    Other noncurrent assets                          426,361        459,473
                                                  ----------     ----------
    Total assets                                  $4,564,712     $4,579,063
                                                  ==========     ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
    Accounts payable and accruals                 $  525,917     $  600,285
    Short-term portion of financing arrangements       3,660          1,660
    Deferred revenue                                 155,553        197,851
    Deferred income taxes and taxes payable           31,265         30,228
                                                  ----------     ----------
        Total current liabilities                    716,395        830,024

    0.50% Convertible notes                            1,020        450,000
    Long-term loan                                   450,000              -
    Noncurrent liabilities and other                 439,651        493,848
    Shareholders' equity                           2,957,646      2,805,191
                                                  ----------     ----------
    Total liabilities and shareholders' equity    $4,564,712     $4,579,063
                                                  ==========     ==========



                                  AMDOCS LIMITED
                       Consolidated Statements of Cash Flows
                                  (in thousands)

                                                Six months ended March 31,
                                                -------------------------
                                                    2009           2008
                                                  --------       --------
    Cash Flow from Operating Activities:
    Net income                                    $154,877       $195,523
    Reconciliation of net income to net cash
     provided by operating activities:
      Depreciation and amortization                 98,491         94,202
      In-process research and development            5,640              -
      Loss on sale of equipment                         -             65
      Equity-based compensation expense             23,934         27,629
      Deferred income taxes                         11,258         (4,255)
      Gain on repurchase of convertible notes       (2,185)             -
      Excess tax benefit from equity-based
       compensation                                     (2)           (87)
      Loss from short-term interest-bearing
        investments                                  4,991          1,755
    Net changes in operating assets and
     liabilities, net of amounts acquired:
      Accounts receivable                           67,244       (125,634)
      Prepaid expenses and other current assets      5,905         (4,624)
      Other noncurrent assets                       21,725        (24,963)
      Accounts payable, accrued expenses and
       accrued personnel                           (61,315)       (11,079)
      Deferred revenue                             (49,005)        30,817
      Income taxes payable                         (15,932)        (4,694)
      Noncurrent liabilities and other             (44,027)        15,790
                                                  --------       --------
    Net cash provided by operating activities      221,599        190,445
                                                  --------       --------
    Cash Flow from Investing Activities:
    Proceeds from sale of equipment and
     leasehold improvements                            340            673
    Payments for purchase of equipment and
     leasehold improvements                        (47,818)       (69,126)
    Proceeds from sale of short-term
     interest-bearing investments                  323,234        360,297
    Purchase of short-term interest-bearing
     investments                                  (376,579)      (301,260)
    Net cash paid for acquisition                  (61,855)        (9,242)
                                                  --------       --------
    Net cash used in investing activities         (162,678)       (18,658)
                                                  --------       --------

    Cash Flow from Financing Activities:
    Borrowing under long-term financing
     arrangements                                  450,000              -
    Redemption of convertible notes               (330,780)             -
    Repurchase of convertible notes               (116,015)             -
    Repurchase of shares                           (20,014)      (122,441)
    Proceeds from employee stock options
     exercised                                       1,797         15,736
    Borrowing under short-term financing
     arrangements                                      540              -
    Payments under capital lease financing
     arrangements                                     (950)             -
    Excess tax benefit from equity-based
     compensation                                        2             87
                                                  --------       --------
    Net cash used in financing activities          (15,420)      (106,618)
                                                  --------       --------
    Net increase in cash and cash equivalents       43,501         65,169
    Cash and cash equivalents at beginning of
     period                                        718,850        615,501
                                                  --------       --------
    Cash and cash equivalents at end of period    $762,351       $680,670
                                                  ========       ========



                                   AMDOCS LIMITED
                             Supplementary Information
                                   (in millions)

                       -------------------------------------------------------
                                          Three months ended
                       -------------------------------------------------------
                       March 31, December 31, September 30, June 30, March 31,
                          2009       2008          2008       2008     2008
                       --------- ------------ ------------- -------- ---------
      North America     $539.8     $561.6        $558.7      $570.5    $541.5
      Europe             105.0      111.4         150.9       133.0     135.8
      Rest of World       66.3       80.8         115.7       116.8      97.0
                       --------- ------------ ------------- -------- ---------
    Total Revenue       $711.1     $753.8        $825.3      $820.3    $774.3
                       ========= ============ ============= ======== =========



                       -------------------------------------------------------
                                          Three months ended
                       -------------------------------------------------------
                       March 31, December 31, September 30, June 30, March 31,
                          2009       2008          2008       2008     2008
                       --------- ------------ ------------- -------- ---------
      Customer
       Experience
       Systems          $668.0     $701.0        $756.5      $756.9    $708.2
      Directory           43.1       52.8          68.8        63.4      66.1
                       --------- ------------ ------------- -------- ---------
    Total Revenue       $711.1     $753.8        $825.3      $820.3    $774.3
                       ========= ============ ============= ======== =========



                       -------------------------------------------------------
                                                 As of
                       -------------------------------------------------------
                       March 31, December 31, September 30, June 30, March 31,
                          2009       2008          2008       2008     2008
                       --------- ------------ ------------- -------- ---------
    12-Month Backlog    $2,370     $2,400        $2,420      $2,420    $2,360
                       --------- ------------ ------------- -------- ---------

SOURCE Amdocs Limited



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