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Third Quarter Results for Fiscal 2009
Jul 22, 2009
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Key highlights:
- Third quarter revenue of $690 million , within the $670-$690 million guidance range
- Third quarter non-GAAP operating income of $124 million ; non-GAAP operating margin of 18.0%; GAAP operating income of $93 million
- Third quarter diluted non-GAAP EPS of $0.53 , excluding acquisition-related costs and equity-based compensation expense, net of related tax effects
- Diluted GAAP EPS of $0.42 for the third quarter
- Free cash flow of $96 million for the third quarter
- 12-month backlog of $2.37 billion at the end of the third quarter
- Fourth quarter fiscal 2009 guidance: Expected revenue of approximately $670-$690 million and diluted non-GAAP EPS of $0.47-$0.51 , 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 $0.34-$0.39
"We are pleased with our results for the third fiscal quarter,
particularly in light of the on-going strain in the global economy. Favorable
foreign currency movements increased third quarter revenue and EPS relative to
our expectations for the quarter. Even without currency benefits, our results
were at or above the mid-point of our guidance ranges. Additionally, backlog
remained stable and we continued to meet our profit and cash flow objectives,
all of which are encouraging," said Dov Baharav, chief executive officer of
Baharav continued, "Demand conditions, however, remain weak, particularly for large transformational projects, as our customers manage their budgets tightly. As a result, we anticipate that our revenue may continue to trend down sequentially, albeit at a moderating pace, until we see demand improve. This view is reflected in our fourth fiscal quarter guidance, and we believe this trend could persist into early fiscal 2010."
Baharav concluded, "While the pace of new deal activity is still slow, we signed important deals in the third quarter. We saw relative strength in our cable, managed services and Interactive domains, highlighted by several key wins."
For J:COM, Japan's largest multiple system and channel operator,
Amdocs is fully modernizing the customer's billing system and replacing a competitor's CRM system, all based on the CES 7.5 product platform.
Amdocs signed a six-year managed services contract with Elisa, a Finnish service provider, to consolidate eight billing systems across Elisa's wireless, wireline, Internet and cable TV lines of business onto the Amdocs Billing platform, as well as, deploy Amdocs Enterprise Product Catalog 7.5 to centralize information from five different existing catalogs. The new contract builds on an existing relationship with the customer, whereAmdocs billing, ordering and CRM systems were previously deployed to support Elisa's wireless operations.Within Interactive,
Amdocs signed several contracts during the third quarter, including two within the emerging markets. In Latin America,Amdocs signed a key contract with a large service provider to support its wireless portal development, digital commerce and personalization across all of its affiliates. Importantly, the deal included products based on both theQPass and ChangingWorlds technologies, demonstrating early synergies within our Interactive portfolio.Amdocs also signed two additional ChangingWorlds contracts, both in theAsia-Pacific region.
Free cash flow was
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
Financial Outlook
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.
For its internal budgeting process and in monitoring the results of the
business,
Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.
About
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 LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
-------------------- -----------------------
2009 2008 2009 2008
--------- --------- ----------- ----------
Revenue:
License $ 26,075 $ 35,244 $ 107,879 $ 93,570
Service 664,190 785,044 2,047,309 2,243,249
--------- --------- ----------- ----------
690,265 820,288 2,155,188 2,336,819
Operating expenses:
Cost of license 537 555 2,097 2,267
Cost of service 441,777 528,437 1,381,825 1,493,134
Research and development 51,134 56,137 160,113 168,240
Selling, general and
administrative 81,732 104,632 256,305 300,963
Amortization of purchased
intangible assets 21,839 22,796 63,594 66,302
Restructuring charges and
in-process research and
development (1) - 1,780 20,780 1,780
--------- --------- ----------- ----------
597,019 714,337 1,884,714 2,032,686
--------- --------- ----------- ----------
Operating income 93,246 105,951 270,474 304,133
Interest income (expense)
and other, net 2,514 6,159 (1,014) 23,797
--------- --------- ----------- ----------
Income before income taxes 95,760 112,110 269,460 327,930
Income taxes 10,212 11,438 29,035 31,735
--------- --------- ----------- ----------
Net income $ 85,548 $ 100,672 $ 240,425 $ 296,195
========= ========= =========== ==========
Basic earnings per share $ 0.42 $ 0.49 $ 1.19 $ 1.43
========= ========= =========== ==========
Diluted earnings per
share (2) $ 0.42 $ 0.46 $ 1.16 $ 1.36
========= ========= =========== ==========
Basic weighted average
number of shares
outstanding 202,750 206,329 202,624 207,069
========= ========= =========== ==========
Diluted weighted average
number of shares
outstanding 203,515 219,120 208,514 220,315
========= ========= =========== ==========
(1) Restructuring charges and in-process research and development for
the nine months ended June 30, 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,
$0 and $1,486 , representing interest expense and amortization of
issuance costs, were added back to net income for the three and nine
months ended June 30, 2009 , respectively, and $985 and $2,955 were
added back to net income for the three and nine months ended June
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 Nine months ended
June 30, June 30,
--------------------- -------------------------
2009 2008 2009 2008
--------- --------- ----------- -----------
Revenue $ 690,265 $ 820,288 $ 2,155,188 $ 2,336,819
Non-GAAP operating
income 124,482 146,608 388,179 415,925
Non-GAAP net income 108,555 132,463 329,680 382,400
Non-GAAP diluted
earnings per
share (1) $ 0.53 $ 0.61 $ 1.59 $ 1.75
Diluted weighted
average number of
shares outstanding 203,515 219,120 208,514 220,315
(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 nine months ended June 30, 2009 , respectively, and
$985 and $2,955 were added back to net income for the three and
nine months ended June 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
June 30, 2009
------------------------------------------------------
Reconciliation items
---------------------------------
Amortization
of
purchased Equity based
intangible compensation Tax
GAAP assets expense effect Non-GAAP
------------------------------------------------------
Operating
expenses:
Cost of license $ 537 $ - $ - $ - $ 537
Cost of service 441,777 - (6,115) - 435,662
Research and
development 51,134 - (1,238) - 49,896
Selling, general
and
administrative 81,732 - (2,044) - 79,688
Amortization of
purchased
intangible
assets 21,839 (21,839) - - -
------------------------------------------------------
Total operating
expenses 597,019 (21,839) (9,397) - 565,783
------------------------------------------------------
------------------------------------------------------
Operating income 93,246 21,839 9,397 - 124,482
------------------------------------------------------
------------------------------------------------------
Income taxes 10,212 - - 8,229 18,441
------------------------------------------------------
------------------------------------------------------
Net income $ 85,548 $ 21,839 $ 9,397 $ (8,229) $ 108,555
------------------------------------------------------
Three months ended
June 30, 2008
------------------------------------------------------------
Reconciliation items
--------------------------------------------
Amortization
of In-process
purchased research Equity based
intangible and compensation Tax Non-
GAAP assets development expense effect GAAP
------------------------------------------------------------
Operating
expenses:
Cost of
license $ 555 $ - $ - $ - $ - $ 555
Cost of
service 528,437 - - (5,998) - 522,439
Research
and
development 56,137 - - (1,104) - 55,033
Selling,
general
and
administ-
rative 104,632 - - (8,979) - 95,653
Amortization
of
purchased
intangible
assets 22,796 (22,796) - - - -
Restruct-
uring
charges and
in-process
research
and
development 1,780 - (1,780) - - -
------------------------------------------------------------
Total
operating
expenses 714,337 (22,796) (1,780) (16,081) - 673,680
------------------------------------------------------------
------------------------------------------------------------
Operating
income 105,951 22,796 1,780 16,081 - 146,608
------------------------------------------------------------
------------------------------------------------------------
Income
taxes 11,438 - - - 8,866 20,304
------------------------------------------------------------
------------------------------------------------------------
Net income $100,672 $ 22,796 $ 1,780 $ 16,081 $(8,866) $132,463
------------------------------------------------------------
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Nine months ended
June 30, 2009
---------------------------------------------------------------
Reconciliation items
-----------------------------------------
Restruct-
uring
charges
Amortiz- and Equity
ation of in-process based
purchased research compen-
intangible and sation Tax Non-
GAAP assets development expense effect GAAP
---------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,097 $ - $ - $ - $ - $ 2,097
Cost of
service 1,381,825 - - (16,776) - 1,365,049
Research
and
develop-
ment 160,113 - - (3,277) - 156,836
Selling,
general
and
administ-
rative 256,305 - - (13,278) - 243,027
Amortiz-
ation
of
purchased
intangible
assets 63,594 (63,594) - - - -
Restruct-
uring
charges
and
in-
process
research
and
develop-
ment 20,780 - (20,780) - - -
---------------------------------------------------------------
Total
operating
expenses 1,884,714 (63,594) (20,780) (33,331) - 1,767,009
---------------------------------------------------------------
---------------------------------------------------------------
Operating
income 270,474 63,594 20,780 33,331 - 388,179
---------------------------------------------------------------
---------------------------------------------------------------
Income
taxes 29,035 - - - 28,450 57,485
---------------------------------------------------------------
---------------------------------------------------------------
Net
income $ 240,425 $ 63,594 $ 20,780 $ 33,331 $(28,450) $ 329,680
---------------------------------------------------------------
Nine months ended
June 30, 2008
---------------------------------------------------------------
Reconciliation items
----------------------------------------
Amortiz- Equity
ation of In-process based
purchased research compen-
intangible and sation Tax Non-
GAAP assets development expense effect GAAP
---------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,267 $ - $ - $ - $ - $ 2,267
Cost of
service 1,493,134 - - (17,711) - 1,475,423
Research
and
develop-
ment 168,240 - - (3,626) - 164,614
Selling,
general
and
administ-
rative 300,963 - - (22,373) - 278,590
Amortiz-
ation
of
purchased
intangible
assets 66,302 (66,302) - - - -
Restruct-
uring
charges
and
in-
process
research
and
develop-
ment 1,780 - (1,780) - - -
---------------------------------------------------------------
Total
operating
expenses 2,032,686 (66,302) (1,780) (43,710) - 1,920,894
---------------------------------------------------------------
---------------------------------------------------------------
Operating
income 304,133 66,302 1,780 43,710 - 415,925
---------------------------------------------------------------
---------------------------------------------------------------
Income
taxes 31,735 - - - 25,587 57,322
---------------------------------------------------------------
---------------------------------------------------------------
Net
income $ 296,195 $ 66,302 $1,780 $43,710 $(25,587) $ 382,400
---------------------------------------------------------------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
---------------------------
June 30, September 30,
2009 2008
----------- -------------
ASSETS
Current assets
Cash, cash equivalents and short-term
interest-bearing investments $ 1,280,289 $ 1,244,378
Accounts receivable, net, including unbilled
of $44,439 and $48,264 respectively 507,507 573,764
Deferred income taxes and taxes receivable 106,906 84,515
Prepaid expenses and other current assets 95,224 102,930
----------- -------------
Total current assets 1,989,926 2,005,587
Equipment and leasehold improvements, net 279,247 317,081
Goodwill and other intangible assets, net 1,790,572 1,796,922
Other noncurrent assets 439,104 459,473
----------- -------------
Total assets $ 4,498,849 $ 4,579,063
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accruals $ 429,533 $ 600,285
Short-term portion of financing arrangements 1,037 1,660
Deferred revenue 185,097 197,851
Deferred income taxes and taxes payable 24,358 30,228
----------- -------------
Total current liabilities 640,025 830,024
0.50% Convertible notes 1,020 450,000
Long-term loan 300,000 -
Noncurrent liabilities and other 483,135 493,848
Shareholders' equity 3,074,669 2,805,191
----------- -------------
Total liabilities and shareholders' equity $ 4,498,849 $ 4,579,063
=========== =============
AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands)
Nine months ended June 30,
--------------------------
2009 2008
----------- ----------
Cash Flow from Operating Activities:
Net income $ 240,425 $ 296,195
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 147,869 143,978
In-process research and development 5,640 1,780
Loss (gain) on sale of equipment 67 (55)
Equity-based compensation expense 33,331 43,710
Deferred income taxes 13,097 6,378
Gain on repurchase of convertible notes (2,185) -
Excess tax benefit from equity-based
compensation (10) (209)
Loss from short-term interest-bearing
investments 5,821 1,771
Net changes in operating assets and
liabilities, net of amounts acquired:
Accounts receivable 63,843 (148,472)
Prepaid expenses and other current assets 6,875 8,166
Other noncurrent assets 2,263 (40,420)
Accounts payable, accrued expenses and
accrued personnel (139,466) (20,728)
Deferred revenue 8,815 12,283
Income taxes payable (12,638) (25,429)
Noncurrent liabilities and other (38,268) 26,590
----------- ----------
Net cash provided by operating activities 335,479 305,538
----------- ----------
Cash Flow from Investing Activities:
Proceeds from sale of equipment and
leasehold improvements 429 1,103
Payments for purchase of equipment and
leasehold improvements (65,474) (101,530)
Proceeds from sale of short-term
interest-bearing investments 601,844 575,602
Purchase of short-term interest-bearing
investments (676,472) (513,462)
Net cash paid for acquisition (61,890) (56,970)
----------- ----------
Net cash used in investing activities (201,563) (95,257)
----------- ----------
Cash Flow from Financing Activities:
Borrowing under long-term financing
arrangements 450,000 -
Payments under long-term financing
arrangements (150,000) -
Redemption of convertible notes (330,780) (174)
Repurchase of convertible notes (116,015) -
Repurchase of shares (20,014) (172,339)
Payments under capital lease and
short-term financing arrangements (3,632) -
Borrowing under short-term financing
arrangements 540 -
Proceeds from employee stock options
exercised 2,026 33,755
Excess tax benefit from equity-based
compensation 10 209
----------- ----------
Net cash used in financing activities (167,865) (138,549)
----------- ----------
Net (decrease) increase in cash and cash
equivalents (33,949) 71,732
Cash and cash equivalents at beginning of
period 718,850 615,501
----------- ----------
Cash and cash equivalents at end of
period $ 684,901 $ 687,233
=========== ==========
AMDOCS LIMITED
Supplementary Information
(in millions)
----------------------------------------------------------
Three months ended
----------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
-------- --------- ------------ ------------- --------
North America $ 527.7 $ 539.8 $ 561.6 $ 558.7 $ 570.5
Europe 84.4 105.0 111.4 150.9 133.0
Rest of World 78.2 66.3 80.8 115.7 116.8
-------- --------- ------------ ------------- --------
Total Revenue $ 690.3 $ 711.1 $ 753.8 $ 825.3 $ 820.3
======== ========= ============ ============= ========
----------------------------------------------------------
Three months ended
----------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
-------- --------- ------------ ------------- --------
Customer
Experience $ 647.9 $ 668.0 $ 701.0 $ 756.5 $ 756.9
Systems
Directory 42.4 43.1 52.8 68.8 63.4
-------- --------- ------------ ------------- --------
Total Revenue $ 690.3 $ 711.1 $ 753.8 $ 825.3 $ 820.3
======== ========= ============ ============= ========
----------------------------------------------------------
As of
----------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
-------- --------- ------------ ------------- --------
12-Month
Backlog $ 2,370 $ 2,370 $ 2,400 $ 2,420 $ 2,420
-------- --------- ------------ ------------- --------
SOURCE
CONTACT:
Treasurer and Vice President of Investor
Relations of
+1-314-212-8328,
dox_info@amdocs.com