Amdocs Limited Reports Quarterly Revenue of $762 Million, Up 7.7% YoY

ST. LOUIS, Nov. 3, 2010 /PRNewswire-FirstCall/ --

Key highlights:

• Eli Gelman will be appointed Chief Executive Officer of Amdocs Management Limited on November 15, 2010, accelerated from the previously announced timeframe of the first calendar quarter of 2011
• Fourth quarter revenue of $762 million, compared to the $755-$770 million guidance range.  Foreign currency movements positively impacted revenue by approximately $3 million sequentially relative to the third quarter
• Fourth quarter non-GAAP operating income of $137 million; non-GAAP operating margin of 18.0%; GAAP operating income of $103 million
• Fourth quarter diluted non-GAAP EPS of $0.62, compared to the $0.57-$0.60 guidance range, excluding amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expense, net of related tax effects
• Diluted GAAP EPS of $0.48 for the fourth quarter, compared to the $0.44-$0.49 guidance range
• Free cash flow of $120 million for the fourth quarter
• Twelve-month backlog of $2.525 billion at the end of the fourth quarter, up $55 million from the end of the third quarter
• First quarter fiscal 2011 guidance: Expected revenue of approximately $760-$780 million and diluted non-GAAP EPS of $0.49-$0.58, excluding acquisition-related costs and approximately $0.06-$0.08 per share of equity-based compensation expense, net of related tax effects.  Diluted GAAP EPS is expected to be approximately $0.34-$0.45
• Repurchased $181 million of ordinary shares during fourth quarter
• Analyst Day rescheduled for February 23, 2011 from December 8, 2010

Amdocs Limited (NYSE: DOX) today reported that for its fiscal fourth quarter ended September 30, 2010, revenue was $762.2 million, up 1.2% sequentially from the third fiscal quarter of 2010 and up 7.7% as compared to last year’s fourth fiscal quarter. Net income on a non-GAAP basis was $122.4 million, or $0.62 per diluted share, compared to non-GAAP net income of $109.2 million, or $0.53 per diluted share, in the fourth quarter of fiscal 2009. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $27.6 million, net of related tax effects, in the fourth quarter of fiscal 2010 and excludes such amortization and equity-based compensation expenses of $23.4 million, net of related tax effects, in the fourth quarter of fiscal 2009. The Company's GAAP net income for the fourth quarter of fiscal 2010 was $94.7 million, or $0.48 per diluted share, compared to GAAP net income of $85.8 million, or $0.42 per diluted share, in the prior year’s fourth quarter.  

“Our fourth quarter results mark a solid conclusion to fiscal 2010, a year in which Amdocs reached a positive inflection point after a period of significant macroeconomic volatility, improved its competitive position and successfully won new business globally.  While there are some near-term challenges ahead, I strongly believe in the opportunities for Amdocs and have great confidence that Eli Gelman will lead the company to success in years to come. Eli has the experience, energy and deep understanding of Amdocs and our industry to reignite our long-term growth engines and invest in the future,” said Dov Baharav, retiring chief executive officer of Amdocs Management Limited.

“I would like to thank Dov for his 8 years as CEO during which he has successfully positioned the company for the future.  I am assuming the leadership of Amdocs with great humbleness and respect,” said Eli Gelman, incoming chief executive officer. “The future of Amdocs remains bright, and I strongly believe Amdocs has the best people, products and business model to address the needs of our industry. In 2011, we plan to execute against the opportunities ahead of us with a keen focus on reaccelerating the long-term growth of the business.”  

Gelman continued, “In the near-term, however, we expect some pressure on profitability due to three components.  We strongly believe that these actions are in the best interest of our shareholders and our customers.  First, we are investing in several programs in early fiscal 2011 that span training, knowledge transfer and productivity efforts as we continue to rebuild momentum in the wake of the recession.  Second, we are making investments in several customer-centric initiatives.  These investments include incremental effort and costs associated with certain on-going implementations, including for customers in the cable industry.  We have also identified a highly strategic emerging markets sales opportunity in the first fiscal quarter which may warrant up-front expense.  Third, a portion of the implementation program at Clearwire has been suspended due to a change in the customer’s business priorities.  This is resulting in further pressure on our profitability, though we will continue to support all of Clearwire’s subscribers on our systems in a managed services relationship.”

Gelman concluded, “We believe fiscal 2011 will mark an important transition year for Amdocs as we overcome our near-term challenges and hone our focus on long-term growth initiatives.  As I transition into the CEO office, we plan to provide greater detail on our long-term strategy at our Analyst Day in February.  I strongly believe that the opportunities at Amdocs are vast, and I look forward to growing the business, further expanding our market leading position, and driving long-term shareholder value.”

Financial Discussion of Fourth Fiscal Quarter Results

Free cash flow was $120 million for the quarter, comprised of cash flow from operations of $148 million less approximately $28 million in net capital expenditures and other.  

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 $2.525 billion at the end of the fourth quarter of fiscal 2010.  

Financial Outlook

Amdocs expects that revenue for the first quarter of fiscal 2011 will be approximately $760-$780 million. Diluted earnings per share on a non-GAAP basis for the first quarter are expected to be $0.49-$0.58, excluding acquisition-related costs and approximately $0.06-$0.08 per share of equity-based compensation expense, net of related tax effects.  Amdocs estimates GAAP diluted earnings per share for the first quarter will be $0.34-$0.45.

Fiscal Year 2010 Results

For the fiscal year ended September 30, 2010, revenue increased by 4.2% to $3.0 billion.  Fiscal 2010 net income on a non-GAAP basis was $471.7 million, or $2.31 per diluted share (excluding amortization of purchased intangible assets and other acquisition related costs, equity-based compensation expense and loss from divestiture of a subsidiary, net of related tax effects, of $127.8 million), compared to non-GAAP net income of $438.9 million, or $2.11 per diluted share, in fiscal 2009 (excluding amortization of purchased intangible assets, in-process research and development write-off, restructuring charges and equity-based compensation expense, net of related tax effects, of $112.7 million).  The Company's GAAP net income in fiscal 2010 was $343.9 million, or $1.69 per diluted share, compared to GAAP net income of $326.2 million, or $1.57 per diluted share, in fiscal 2009.

Conference Call Details

Amdocs will host a conference call on November 3, 2010 at 5 p.m. Eastern Time to discuss the Company's fourth quarter results.  The call will be carried live on the Internet via 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 interest and other income (expense), net, non-GAAP income taxes and non-GAAP net income. These non-GAAP measures exclude the following items:

• amortization of purchased intangible assets and other acquisition related costs;
• in-process research and development write-off;
• restructuring charges;
• equity-based compensation expense;
• impairment on investment in a subsidiary; 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 interest and other income (expense), net, 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, impairment on investment in a subsidiary 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, interest and other income (expense), net, 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. The company combines business and operational support systems, service delivery platforms, proven services, and deep industry expertise to enable service providers and their customers to do more in the connected world. Amdocs' offerings help service providers explore new business models, differentiate through personalized customer experiences, and streamline operations. A global company with revenue of $3.0 billion in fiscal 2010, Amdocs has over 19,000 employees and serves customers in more than 60 countries worldwide. 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, 2009 filed on December 7, 2009 and in our quarterly 6-Ks filed February 8, 2010, May 13, 2010 and August 9, 2010.  

SOURCE Amdocs

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