Key highlights: - Fourth quarter revenue of $707 million, above the $670-$690 million guidance range - Fourth quarter non-GAAP operating income of $128 million; non-GAAP operating margin of 18.1%; GAAP operating income of $97 million - Fourth quarter diluted non-GAAP EPS of $0.53, excluding amortization of purchased intangible assets and equity-based compensation expense, net of related tax effects - Diluted GAAP EPS of $0.42 for the fourth quarter - Free cash flow of $166 million for the fourth quarter - 12-month backlog of $2.385 billion at the end of the fourth quarter - First quarter fiscal 2010 guidance: Expected revenue of approximately $705-$725 million and diluted non-GAAP EPS of $0.51-$0.55, 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 $0.38-$0.44
ST. LOUIS, Nov. 4 /PRNewswire-FirstCall/ -- Amdocs Limited (NYSE:DOX) today reported that for its fiscal fourth quarter ended September 30, 2009, revenue was $707.4 million, a decrease of 14.3% from last year's fourth quarter and up 2.5% sequentially. Net income on a non-GAAP basis was $109.2 million, or $0.53 per diluted share, compared to non-GAAP net income of $117.2 million, or $0.54 per diluted share, in the fourth quarter of fiscal 2008. Non-GAAP net income excludes amortization of purchased intangible assets and equity-based compensation expenses of $23.4 million, net of related tax effects, in the fourth quarter of fiscal 2009 and excludes such amortization, equity-based compensation expenses and restructuring charges of $34.5 million, net of related tax effects, in the fourth quarter of fiscal 2008. The Company's GAAP net income for the fourth quarter of fiscal 2009 was $85.8 million, or $0.42 per diluted share, compared to GAAP net income of $82.7 million, or $0.38 per diluted share, in the prior year's fourth quarter.
"After experiencing a challenging fiscal year, we are pleased that our fourth quarter results demonstrated stronger-than-expected performance across our four key financial metrics: revenue, profitability, earnings and free cash flow. We believe this reflects positively on the value of Amdocs' market leading offerings and strategic position against the backdrop of steadying economic conditions. While indicators are still mixed across our market and the global economy, we are cautiously optimistic that our business is stabilizing to slightly improving, as reflected in our fiscal first quarter guidance for 2010," said Dov Baharav, chief executive officer of Amdocs Management Limited.
Baharav continued, "Reflecting on our relative successes in 2009, we experienced rising interest and strong signings in managed services which we believe addresses the communications industry's need to streamline cost structures, while concurrently offering the option to modernize systems. Additionally, we performed very well in cable and satellite in a tough economy, and we validated our market position by establishing and expanding important relationships with leading operators. We expect these two growth drivers - managed services and cable and satellite - to continue to perform well and provide a strong foundation for our results again in 2010. On the other hand, our project-oriented activities contracted in 2009 as they naturally reacted more sharply to deteriorating economic conditions. We believe, in aggregate, our project-oriented revenue is showing early signs of stabilization; however, decision cycles remain extended and results may still vary quarter to quarter in individual product areas and geographies." Baharav concluded, "Lastly, we believe we have made the right investments to drive our future long-term growth. Over the course of the recession, we have deepened our relationships with key customers, led the industry in R&D investment, and continued to streamline our cost structure. As a result, we truly believe we are emerging from the global economic crisis in a stronger competitive position than we entered." Free cash flow was $166 million for the quarter, comprised of cash flow from operations of $184 million less approximately $18 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 $2.385 billion at the end of the fourth quarter of fiscal 2009.
Financial Outlook Amdocs expects that revenue for the first quarter of fiscal 2010 will be approximately $705-$725 million. Diluted earnings per share on a non-GAAP basis for the first quarter are expected to be $0.51-$0.55, 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 first quarter will be $0.38-$0.44.
Fiscal Year 2009 Results For the fiscal year ended September 30, 2009, revenue decreased by 9.5% to $2.863 billion. Fiscal 2009 net income on a non-GAAP basis was $438.9 million, or $2.12 per diluted share (excluding acquisition-related costs, which include amortization of purchased intangible assets and in-process research and development write-off, and excluding restructuring charges and equity-based compensation expense, net of related tax effects, of $112.7 million), compared to non-GAAP net income of $499.6 million, or $2.29 per diluted share, in fiscal 2008 (excluding acquisition-related costs, which include amortization of purchased intangible assets and in-process research and development write-off, and excluding restructuring charges and equity-based compensation expense, net of related tax effects, of $120.7 million). The Company's GAAP net income in fiscal 2009 was $326.2 million, or $1.58 per diluted share, compared to GAAP net income of $378.9 million, or $1.74 per diluted share, in fiscal 2008.
Amdocs will host a conference call on November 4, 2009 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, http://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 $2.86 billion in fiscal 2009, Amdocs has approximately 17,000 employees and serves customers in more than 60 countries around the world. For more information, visit Amdocs at http://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-Ks furnished on February 9, 2009, May 12, 2009 and August 10, 2009.
AMDOCS LIMITED Consolidated Statements of Income (in thousands, except per share data) Three months ended Twelve months ended
September 30, September 30,
----------------------- -----------------------
2009 2008 2009 2008
--------- --------- ---------- ----------
Revenue:
License $ 27,267 $ 41,917 $ 135,146 $ 135,487
Service 680,152 783,360 2,727,461 3,026,609
--------- --------- ---------- ----------
707,419 825,277 2,862,607 3,162,096
Operating expenses:
Cost of license 589 462 2,686 2,729
Cost of service 450,122 530,428 1,831,947 2,023,562
Research and
development 50,274 57,252 210,387 225,492
Selling, general and
administrative 88,030 103,171 344,335 404,134
Amortization of
purchased intangible
assets 21,559 20,385 85,153 86,687
Restructuring charges
and in-process
research and
development (1) - 12,116 20,780 13,896
--------- --------- ---------- ----------
610,574 723,814 2,495,288 2,756,500
--------- --------- ---------- ----------
Operating income 96,845 101,463 367,319 405,596 Interest (expense)
income and other, net (151) (11,842) (1,165) 11,955
--------- --------- ---------- ----------
Income before income
taxes 96,694 89,621 366,154 417,551 Income taxes 10,943 6,910 39,978 38,645
--------- --------- ---------- ----------
Net income $ 85,751 $ 82,711 $ 326,176 $ 378,906
========= ========= ========== ==========
Basic earnings per
share $ 0.42 $ 0.40 $ 1.61 $ 1.83
========= ========= ========== ==========
Diluted earnings per
share (2) $ 0.42 $ 0.38 $ 1.58 $ 1.74
========= ========= ========== ==========
Basic weighted average
number of shares
outstanding 203,587 205,164 202,867 206,590
========= ========= ========== ==========
Diluted weighted
average number of
shares outstanding 204,883 217,479 207,606 219,606
========= ========= ========== ========== (1) Restructuring charges and in-process research and development for the
twelve months ended September 30, 2009 and 2008 include restructuring
charges of $15,140 and $12,116 and in-process research and development
of $5,640 and $1,780, respectively.
(2) To reflect the impact of assumed conversion of the convertible notes,
$0 and $1,486, representing interest expense and amortization of
issuance costs, were added back to net income for the three and twelve
months ended September 30, 2009, respectively, and $985 and $3,940
were added back to net income for the three and twelve months ended
September 30, 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 Twelve months ended
September 30, September 30,
--------------------- -------------------------
2009 2008 2009 2008
--------- --------- ----------- ----------- Revenue $ 707,419 $ 825,277 $ 2,862,607 $ 3,162,096 Non-GAAP operating
income 127,984 147,744 516,163 563,669 Non-GAAP net income 109,198 117,208 438,878 499,608 Non-GAAP diluted
earnings per share (1) $ 0.53 $ 0.54 $ 2.12 $ 2.29 Diluted weighted
average number of
shares outstanding 204,883 217,479 207,606 219,606 (1) To reflect the impact of assumed conversion of the convertible notes,
$0 and $1,486, representing interest expense and amortization of
issuance costs, were added back to net income for the three and twelve
months ended September 30, 2009, respectively, and $985 and $3,940
were added back to net income for the three and twelve months ended
September 30, 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
September 30, 2009
-----------------------------------------------------
Reconciliation items
----------------------------------
Amortization
of
GAAP purchased Equity based
intangible compensation Tax
assets expense effect Non-GAAP
-----------------------------------------------------
Operating expenses:
Cost of license $ 589 $ - $ - $ - $ 589
Cost of service 450,122 - (4,957) - 445,165
Research and
development 50,274 - (972) - 49,302
Selling, general
and administrative 88,030 - (3,651) - 84,379
Amortization of
purchased
intangible
assets 21,559 (21,559) - - -
-----------------------------------------------------
Total operating
expenses 610,574 (21,559) (9,580) - $579,435
-----------------------------------------------------
-----------------------------------------------------
Operating income 96,845 21,559 9,580 - 127,984
-----------------------------------------------------
-----------------------------------------------------
Income taxes 10,943 - - 7,692 18,635
-----------------------------------------------------
-----------------------------------------------------
Net income $ 85,751 $ 21,559 $ 9,580 $ (7,692) $ 109,198
-----------------------------------------------------
Three months ended
September 30, 2008
--------------------------------------------------------------
Reconciliation items
----------------------------------------------
Amortization
GAAP of purchased Equity based
intangible Restructuring compensation Tax Non-
assets charges expense effect GAAP
-------------------------------------------------------------- Operating
expenses:
Cost of
license $ 462 $ - $ - $ - $ - $ 462
Cost of
service 530,428 - - (5,836) - 524,592
Research
and
develop-
ment 57,252 - - (1,088) - 56,164
Selling,
general
and
admini-
strative 103,171 - - (6,856) - 96,315
Amortization
of purchased
intangible
assets 20,385 (20,385) - - - -
Restructuring
charges and
in-process
research and
develop-
ment 12,116 - (12,116) - - -
--------------------------------------------------------------
Total
operating
expenses 723,814 (20,385) (12,116) (13,780) - $677,533
--------------------------------------------------------------
--------------------------------------------------------------
Operating
income 101,463 20,385 12,116 13,780 - 147,744
--------------------------------------------------------------
--------------------------------------------------------------
Income
taxes 6,910 - - - 11,784 18,694
--------------------------------------------------------------
--------------------------------------------------------------
Net income $82,711 $20,385 $12,116 $13,780 $ (11,784) $117,208
-------------------------------------------------------------- AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands) Twelve months ended
September 30, 2009
--------------------------------------------------------------
Reconciliation items
-------------------------------------------
Restructuring
Amortization charges and
of in-process Equity
purchased research and based
intangible development compensation Tax Non-
GAAP assets expense effect GAAP
--------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,686 $ - $ - $ - $ - $ 2,686
Cost of
service 1,831,947 - - (21,733) - 1,810,214
Research
and
development 210,387 - - (4,249) - 206,138
Selling,
general and
admini-
strative 344,335 - - (16,929) - 327,406
Amortization
of purchased
intangible
assets 85,153 (85,153) - - - -
Restructuring
charges and
in-process
research and
development 20,780 - (20,780) - - -
--------------------------------------------------------------
Total
operating
expenses 2,495,288 (85,153) (20,780) (42,911) - 2,346,444
--------------------------------------------------------------
--------------------------------------------------------------
Operating
income 367,319 85,153 20,780 42,911 - 516,163
--------------------------------------------------------------
--------------------------------------------------------------
Income taxes 39,978 - - - 36,142 76,120
--------------------------------------------------------------
--------------------------------------------------------------
Net income $ 326,176 $ 85,153 $ 20,780 $ 42,911 $ (36,142) $ 438,878
-------------------------------------------------------------- Twelve months ended
September 30, 2008
--------------------------------------------------------------
Reconciliation items
-------------------------------------------
Restructuring
Amortization charges and
of in-process Equity
purchased research and based
intangible development compensation Tax Non-
GAAP assets expense effect GAAP
--------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,729 $ - $ - $ - $ - $ 2,729
Cost of
service 2,023,562 - - (23,547) - 2,000,015
Research
and
development 225,492 - - (4,714) - 220,778
Selling,
general
and
admini-
strative 404,134 - - (29,229) - 374,905
Amortization
of purchased
intangible
assets 86,687 (86,687) - - - -
Restructuring
charges and
in-process
research
and
development 13,896 - (13,896) - - -
--------------------------------------------------------------
--------------------------------------------------------------
Total
operating
expenses 2,756,500 (86,687) (13,896) (57,490) - 2,598,427
--------------------------------------------------------------
--------------------------------------------------------------
Operating
income 405,596 86,687 13,896 57,490 - 563,669
--------------------------------------------------------------
--------------------------------------------------------------
Income taxes 38,645 - - - 37,371 76,016
--------------------------------------------------------------
--------------------------------------------------------------
Net income $ 378,906 $ 86,687 $ 13,896 $ 57,490 $ (37,371) $ 499,608
-------------------------------------------------------------- AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands) As of
------------------------------
September 30, September 30,
2009 2008
------------- ------------- ASSETS Current assets
Cash, cash equivalents and short-term
interest-bearing investments $ 1,173,041 $ 1,244,378
Accounts receivable, net, including unbilled
of $21,749 and $48,264, respectively 454,965 573,764
Deferred income taxes and taxes receivable 117,848 84,515
Prepaid expenses and other current assets 126,704 102,930
------------- -------------
Total current assets 1,872,558 2,005,587 Equipment, vehicles and leasehold
improvements, net 279,659 317,081
Goodwill and other intangible assets, net 1,766,761 1,796,922
Other noncurrent assets 409,439 459,473
------------- -------------
Total assets $ 4,328,417 $ 4,579,063
============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities
Accounts payable, accruals and other $ 415,371 $ 601,945
Deferred revenue 186,158 197,851
Deferred income taxes and taxes payable 9,338 30,228
------------- -------------
Total current liabilities 610,867 830,024
0.50% Convertible notes 1,020 450,000
Noncurrent liabilities and other 503,477 493,848
Shareholders' equity 3,213,053 2,805,191
------------- -------------
Total liabilities and shareholders' equity $ 4,328,417 $ 4,579,063
============= ============= AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands) Year ended September 30,
--------------------------
2009 2008
------------ ------------
Cash Flow from Operating Activities:
Net income $ 326,176 $ 378,906
Reconciliation of net income to net
cash provided by operating activities:
Depreciation and amortization 198,119 192,937
In-process research and development
expenses 5,640 1,780
Equity-based compensation expense 42,911 57,490
Loss (gain) on sale of equipment 197 (970)
Deferred income taxes 16,249 1,111
Gain on repurchase of convertible
notes (2,185) -
Excess tax benefit from equity-based
compensation (18) (211)
Loss from short-term interest-bearing
investments 4,449 4,945
Net changes in operating assets and
liabilities, net of amounts acquired:
Accounts receivable, net 131,527 (118,291)
Prepaid expenses and other current assets (13,614) 4,173
Other noncurrent assets (2,690) (31,739)
Accounts payable, accrued expenses
and accrued personnel (160,321) (27,501)
Deferred revenue 20,956 28,408
Income taxes payable, net (19,980) (26,824)
Noncurrent liabilities and other (28,260) 18,799
------------ ------------
Net cash provided by operating activities 519,156 483,013
------------ ------------
Cash Flow from Investing Activities:
Proceeds from sale of equipment,
vehicles and leasehold improvements 994 2,655
Payments for purchase of equipment
and leasehold improvements (83,325) (135,823)
Proceeds from sale of short-term
interest-bearing investments 1,045,278 708,708
Purchase of short-term
interest-bearing investments (963,433) (685,873)
Net cash paid for acquisitions (65,890) (58,772)
------------ ------------
Net cash used in investing activities (66,376) (169,105)
------------ ------------ Cash Flow from Financing Activities:
Borrowings under long-term financing
arrangements 450,000 -
Payments under long-term financing
arrangements (450,000) -
Redemption of convertible notes (330,780) (175)
Repurchase of convertible notes (116,015) -
Repurchase of shares (20,014) (247,630)
Proceeds from employee stock options
exercised 27,893 37,577
Payments under capital lease and
short-term financing arrangements (3,970) (542)
Excess tax benefit from equity-based
compensation 18 211
------------ ------------
Net cash used in financing activities (442,868) (210,559)
------------ ------------
Net increase in cash and cash
equivalents 9,912 103,349
Cash and cash equivalents at
beginning of year 718,850 615,501
------------ ------------
Cash and cash equivalents at end of
year $ 728,762 $ 718,850
============ ============
AMDOCS LIMITED
Supplementary Information
(in millions) -----------------------------------------------------------
Three months ended
-----------------------------------------------------------
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
------------- -------- --------- ------------ -------------
North America $ 528.0 $ 527.7 $ 539.8 $ 561.6 $ 558.7
Europe 93.0 84.4 105.0 111.4 150.9
Rest of World 86.4 78.2 66.3 80.8 115.7
------------- -------- --------- ------------ -------------
Total Revenue $ 707.4 $ 690.3 $ 711.1 $ 753.8 $ 825.3
============= ======== ========= ============ ============= -----------------------------------------------------------
Three months ended
-----------------------------------------------------------
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
------------- -------- --------- ------------ -------------
Customer
Experience $ 668.6 $ 647.9 $ 668.0 $ 701.0 $ 756.5
Systems
Directory 38.8 42.4 43.1 52.8 68.8
------------- -------- --------- ------------ -------------
Total Revenue $ 707.4 $ 690.3 $ 711.1 $ 753.8 $ 825.3
============= ======== ========= ============ ============= -----------------------------------------------------------
As of
-----------------------------------------------------------
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
------------- -------- --------- ------------ -------------
12-Month
Backlog $ 2,385 $ 2,370 $ 2,370 $ 2,400 $ 2,420
------------- -------- --------- ------------ -------------
DATASOURCE: Amdocs CONTACT: Elizabeth Grausam, Director of Investor Relations, Amdocs Limited, +1-314-212-8328, Web Site: http://www.amdocs.com/
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