« Back
Third Quarter Results for Fiscal 2010
Jul 21, 2010
ST. LOUIS, July 21, 2010 /PRNewswire via COMTEX/ --
Key highlights:
- Third fiscal quarter revenue of $753 million, compared to the $750-$765 million guidance range. Foreign currency movements negatively impacted revenue by approximately $5 million subsequent to the issuance of guidance in April 2010
- Third quarter non-GAAP operating income of $138 million; non-GAAP operating margin of 18.3%; GAAP operating income of $105 million
- Third quarter diluted non-GAAP EPS of $0.58, excluding amortization of purchased intangible assets and other acquisition related costs, loss from divestiture of a subsidiary, and equity-based compensation expense, net of related tax effects, compared to the $0.55-$0.58 guidance range
- Diluted GAAP EPS of $0.45 for the third quarter, compared to the $0.41-$0.46 guidance range
- Free cash flow of $160 million for the third quarter
- Twelve-month backlog of $2.47 billion at the end of the third quarter, up $10 million from the end of the second quarter of 2010
- Fourth fiscal quarter of 2010 guidance: Expected revenue of approximately $755-$770 million and diluted non-GAAP EPS of $0.57-$0.60, 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 $0.44-$0.49
- Repurchased $209 million of ordinary shares during third quarter
Amdocs Limited (NYSE: DOX) today reported that for its third fiscal quarter of 2010 ended June 30, 2010, revenue was $753.2 million, up 1.2% sequentially from the second fiscal quarter of 2010 and up 9.1% as compared to last year's third fiscal quarter. Net income on a non-GAAP basis was $119.4 million, or $0.58 per diluted share, compared to non-GAAP net income of $108.6 million, or $0.53 per diluted share, in the third quarter of fiscal 2009. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs, loss from divestiture of a subsidiary and equity-based compensation expense of $27.1 million, net of related tax effects, in the third quarter of fiscal 2010 and excludes such amortization, and equity-based compensation expense of $23.0 million, net of related tax effects, in the third quarter of fiscal 2009. The Company's GAAP net income for the third quarter of fiscal 2010 was $92.3 million, or $0.45 per diluted share, compared to GAAP net income of $85.5 million, or $0.42 per diluted share, in the prior year's third quarter.
"We are pleased with our third quarter results as they reflected solid market demand and a strong competitive win rate. We have gained traction in the marketplace with our CES 8 product portfolio and, in particular, our TurboCharging offering, driving customer preference for Amdocs solutions. We are also increasingly confident in Amdocs' position in the emerging markets where service provider requirements for customer experience systems are becoming more sophisticated. In addition to new project activity, our managed services business continues to produce a very solid foundation of visibility and growth for the company, demonstrated again today by the extension of our relationships with our two largest directory customers, AT&T and Sensis," said Dov Baharav, chief executive officer of Amdocs Management Limited.
Baharav concluded, "While we are encouraged with the level of activity in North America and the emerging markets, we are marginally more cautious on our European business given our third fiscal quarter results in Europe and relatively weaker spending trends in the region. As a result, our fourth quarter revenue outlook is for $755-$770 million which, at the lower end, is slightly below our previous expectation of 1-2% sequential growth. However, reflecting high confidence in our future performance, we repurchased $209 million of our ordinary shares during the third quarter and continue to maintain a very strong financial and strategic position to pursue the market opportunities ahead of us."
Financial Discussion of Third Fiscal Quarter Results
Free cash flow was $160 million for the quarter, comprised of cash flow from operations of $179 million less approximately $19 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 $2.47 billion at the end of the third quarter of fiscal 2010.
Financial Outlook
Amdocs expects that revenue for the fourth quarter of fiscal 2010 will be approximately $755-$770 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the fourth quarter to be $0.57-$0.60, 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 fourth quarter will be $0.44-$0.49.
Conference Call Details
Amdocs will host a conference call on July 21, 2010 at 5 p.m. Eastern Time to discuss the Company's third 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;
- loss from divestiture of 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, loss from divestiture of 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 $2.86 billion in fiscal 2009, Amdocs has over 18,000 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 and May 13, 2010.
AMDOCS LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Revenue:
License $25,592 $26,075 $75,691 $107,879
Service 727,657 664,190 2,146,338 2,047,309
------- ------- --------- ---------
753,249 690,265 2,222,029 2,155,188
Operating expenses:
Cost of license 459 537 1,646 2,097
Cost of service 480,074 441,777 1,417,729 1,381,825
Research and
development 52,253 51,134 153,549 160,113
Selling, general
and administrative 93,446 81,732 277,054 256,305
Amortization of
purchased
intangible assets
and other 21,748 21,839 64,506 63,594
Restructuring
charges and in-
process research
and development - - - 20,780
--- --- --- ------
647,980 597,019 1,914,484 1,884,714
------ ------ --------
Operating income 105,269 93,246 307,545 270,474
Interest and other
income (expense),
net (3,768) 2,514 (27,244) (1,014)
------ ----- ------- ------
Income before
income taxes 101,501 95,760 280,301 269,460
Income taxes 9,236 10,212 31,133 29,035
---- ----- -----
Net income $92,265 $85,548 $249,168 $240,425
======= ======= ======== ========
Basic earnings per
share $0.45 $0.42* $1.21 $1.18*
===== ===== ===== =====
Diluted earnings
per share $0.45 $0.42* $1.21 $1.16*
===== =====
Basic weighted
average number of
shares outstanding 203,786 203,951* 205,078 203,784*
======= ======== ======= ========
Diluted weighted
average number of
shares outstanding 205,471 204,252* 206,606 209,322*
======= ======== ======= ========
* The basic and diluted weighted average number of shares
outstanding for the three and nine months ended June 30, 2009 have
been retroactively adjusted to reflect the adoption of new Earnings
Per Share authoritative guidance requiring the inclusion of unvested
share-based payment awards containing nonforfeiture rights to dividends
or dividend equivalents in the calculation of basic weighted average
number of shares outstanding. This adjustment reduced basic earnings
per share by $0.01 for the nine months ended June 30, 2009.
AMDOCS LIMITED
Selected Financial Metrics
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
2010 2009 2010 2009
-- -- ---- ----
Revenue $753,249 $690,265 $2,222,029 $2,155,188
Non-GAAP operating
income 137,774 124,482 404,379 388,179
Non-GAAP net income 119,360 108,555 349,357 329,680
Non-GAAP diluted
earnings per share $0.58 $0.53* $1.69 $1.58*
Diluted weighted
average number of
shares outstanding 205,471 204,252* 206,606 209,322*
* The basic and diluted weighted average number of shares
outstanding for the three and nine months ended
June 30, 2009 have been retroactively adjusted to reflect the
adoption of new Earnings Per Share authoritative
guidance requiring the inclusion of unvested share-based payment
awards containing nonforfeiture rights to
dividends or dividend equivalents in the calculation of basic
weighted average number of shares outstanding.
This adjustment reduced non-GAAP diluted earnings per share by $0.01
for the nine months ended June 30, 2009.
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Three months ended
June 30, 2010
-------------
Reconciliation items
------------------------------
Amortization Equity
GAAP of based
---- purchased compensation
intangible expense
assets and -------
other
-----
Operating expenses:
Cost of license $459 $- $-
Cost of service 480,074 - (4,871)
Research and
development 52,253 - (1,017)
Selling, general
and administrative 93,446 - (4,869)
Amortization of
purchased
intangible
assets and other 21,748 (21,748) -
------ ------- ---
Total operating
expenses 647,980 (21,748) (10,757)
------- ------- -------
Operating income 105,269 21,748 10,757
------ ------ ------
Interest and
other income
(expense), net (3,768) - -
----- --- ---
Income taxes 9,236 - -
---- --- ---
Net income $92,265 $21,748 $10,757
------- ------- -------
Three months ended
June 30, 2010
-------------
Reconciliation items
---------------------
Tax
Loss from effect Non-GAAP
Divestiture ------ --------
of a
subsidiary
-----------
Operating expenses:
Cost of license $- $- $459
Cost of service - - 475,203
Research and
development - - 51,236
Selling, general
and
administrative - - 88,577
Amortization of
purchased
intangible
assets and other - - -
--- --- ---
Total operating
expenses - - 615,475
--- --- -------
Operating income - - 137,774
--- --- ------
Interest and
other income
(expense), net 1,599 - (2,169)
----- --- -----
Income taxes - 7,009 16,245
--- ----- ------
Net income $1,599 $(7,009) $119,360
------ ------- --------
Three months ended
June 30, 2009
-------------
Reconciliation items
-------------------------------
GAAP Amortization of Equity based
---- purchased compensation
intangible expense
assets -------
-----------
Operating expenses:
Cost of license $537 $- $-
Cost of service 441,777 - (6,115)
Research and
development 51,134 - (1,238)
Selling, general
and
administrative 81,732 - (2,044)
Amortization of
purchased
intangible
assets and other 21,839 (21,839) -
Total operating
expenses 597,019 (21,839) (9,397)
------- ------- ------
Operating income 93,246 21,839 9,397
----- ------ -----
Income taxes 10,212 - -
----- --- ---
Net income $85,548 $21,839 $9,397
------- ------- ------
Three months ended
June 30, 2009
-------------
Reconciliation items
--------------------
Tax effect Non-GAAP
---------- --------
Operating expenses:
Cost of license $- $537
Cost of service - 435,662
Research and
development - 49,896
Selling, general
and
administrative - 79,688
Amortization of
purchased
intangible
assets and other - -
Total operating
expenses - 565,783
--- -------
Operating income - 124,482
--- -------
Income taxes 8,229 18,441
----- ------
Net income $(8,229) $108,555
------- --------
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Nine months ended
June 30, 2010
-------------
Reconciliation items
-----------------------------
Amortization
GAAP of Equity based
---- purchased compensation
intangible expense
assets and -------
other
-----
Operating expenses:
Cost of license $1,646 $- $-
Cost of service 1,417,729 - (14,623)
Research and
development 153,549 -
(3,154)
Selling,
general and
administrative 277,054 -
(14,551)
Amortization of
purchased
intangible
assets and
other 64,506 (64,506) -
Total operating
expenses 1,914,484 (64,506) (32,328)
--------- ------- -------
Operating income 307,545 64,506 32,328
------- ------ ------
Interest and
other income
(expense), net (27,244) -
------ ---
-
---
Income taxes 31,133 - -
------ --- ---
Net income $249,168 $64,506 $32,328
-------- ------- -------
Nine months ended
June 30, 2010
-------------
Reconciliation items
------------------------
Loss from Tax effect Non-GAAP
Divestiture ---------- --------
of
a subsidiary
------------
Operating expenses:
Cost of license $- $- $1,646
Cost of service - - 1,403,106
Research and
development - - 150,395
Selling,
general and
administrative - - 262,503
Amortization of
purchased
intangible
assets and
other - - -
Total operating
expenses - - 1,817,650
--- --- ---------
Operating
income - - 404,379
--- --- -------
Interest and
other income
(expense), net 23,399 (3,845)
------- -----
Income taxes - 20,044 51,177
--- ------ ------
Net income $23,399 $(20,044) $349,357
------- -------- --------
Nine months ended
June 30, 2009
-------------
Reconciliation items
------------------------------
GAAP Amortization Restructuring
of charges and
---- purchased in-process
intangible research and
assets development
------ -----------
Operating expenses:
Cost of license $2,097 $- $-
Cost of service 1,381,825 - -
Research and
development 160,113 - -
Selling, general
and
administrative 256,305 - -
Amortization of
purchased
intangible assets
and other 63,594 (63,594) -
Restructuring
charges and in-
process research
and development 20,780 - (20,780)
Total operating
expenses 1,884,714 (63,594) (20,780)
--------- ------- -------
Operating income 270,474 63,594 20,780
------ ------ ------
Income taxes 29,035 - -
----- --- ---
Net income $240,425 $63,594 $20,780
-------- ------- -------
Nine months ended
June 30, 2009
-------------
Reconciliation items
----------------------
Tax
Equity based effect Non-GAAP
compensation ------- --------
expense
-------
Operating expenses:
Cost of license $- $- $2,097
Cost of service (16,776) - 1,365,049
Research and
development (3,277) - 156,836
Selling, general
and
administrative (13,278) - 243,027
Amortization of
purchased
intangible assets
and other - - -
Restructuring
charges and in-
process research
and development - - -
Total operating
expenses (33,331) - 1,767,009
------- --- ---------
Operating income 33,331 - 388,179
------ --- -------
Income taxes - 28,450 57,485
--- ------ ------
Net income $33,331 $(28,450) $329,680
------- -------- --------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
September
June 30, 30,
2010 2009
---- ----
ASSETS
Current assets
Cash, cash equivalents and short-term interest-
bearing investments $1,289,939 $1,173,041
Accounts receivable, net, including unbilled of
$65,543 and $21,749, respectively 506,778 454,965
Deferred income taxes and taxes receivable 111,560 117,848
Prepaid expenses and other current assets 84,449 126,704
-------
Total current assets 1,992,726 1,872,558
Equipment and leasehold improvements, net 246,728 279,659
Goodwill and other intangible assets, net 1,877,210 1,766,761
Other noncurrent assets 454,101 409,439
Total assets $4,570,765 $4,328,417
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable, accruals and other $538,138 $415,371
Deferred revenue 167,209 186,158
Deferred income taxes and taxes payable 19,378 9,338
------ -----
Total current liabilities 724,725 610,867
Noncurrent liabilities and other 550,259 504,497
Shareholders' equity 3,295,781 3,213,053
Total liabilities and shareholders' equity $4,570,765 $4,328,417
========== ==========
AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands)
Nine months ended June 30,
--------------------------
2010 2009
---- ----
Cash Flow from Operating Activities:
Net income $249,168 $240,425
Reconciliation of net income to net
cash provided by operating activities:
Depreciation and amortization 146,046 147,869
Loss from divestiture of a subsidiary 23,399 -
In-process research and development - 5,640
Loss on sale of equipment 223 67
Equity-based compensation expense 32,328 33,331
Deferred income taxes (14,431) 13,097
Gain on repurchase of convertible notes - (2,185)
Excess tax benefit from equity-based
compensation (103) (10)
(Gain) loss from short-term interest-
bearing investments (581) 5,821
Net changes in operating assets and
liabilities, net of amounts acquired:
Accounts receivable (60,923) 63,843
Prepaid expenses and other current
assets 33,181 6,875
Other noncurrent assets (23,960) 2,263
Accounts payable, accrued expenses and
accrued personnel 112,705 (139,466)
Deferred revenue 22,532 8,815
Income taxes payable 16,463 (12,638)
Noncurrent liabilities and other 1,513 (38,268)
Net cash provided by operating
activities 537,560 335,479
------- -------
Cash Flow from Investing Activities:
Payments for purchase of equipment and
leasehold improvements, net (59,504) (65,045)
Proceeds from sale of short-term
interest-bearing investments 1,070,065 601,844
Purchase of short-term interest-
bearing investments (1,239,792) (676,472)
Net cash paid for acquisitions (199,496) (61,890)
Net cash received from divestiture of a
subsidiary 20,336 -
------ ---
Net cash used in investing activities (408,391) (201,563)
-------- --------
Cash Flow from Financing Activities:
Borrowing under long-term financing
arrangements - 450,000
Payments under long-term financing
arrangements - (150,000)
Redemption and repurchase of
convertible notes - (446,795)
Repurchase of shares (208,643) (20,014)
Payments under capital lease and short-
term financing arrangements (262) (3,092)
Proceeds from employee stock options
exercised 22,025 2,026
Excess tax benefit from equity-based
compensation 103 10
Net cash used in financing activities (186,777) (167,865)
-------- --------
Net decrease in cash and cash
equivalents (57,608) (33,949)
Cash and cash equivalents at beginning
of period 728,762 718,850
------- -------
Cash and cash equivalents at end of
period $671,154 $684,901
======== ========
AMDOCS LIMITED
Supplementary Information
(in millions)
Three months ended
------------------
June 30, March 31, December 31, September 30, June 30,
2010 2010 2009 2009 2009
---- ---- ---- ---- ----
North America $572.3 $572.4 $547.6 $528.0 $527.7
Europe 80.6 92.1 89.5 93.0 84.4
Rest of World 100.3 79.5 87.7 86.4 78.2
Total Revenue $753.2 $744.0 $724.8 $707.4 $690.3
====== ====== ====== ====== ======
Three months ended
------------------
June 30, March 31, December 31, September 30, June 30,
2010 2010 2009 2009 2009
---- ---- ---- ---- ----
Customer
Experience
Systems $693.0 $689.0 $678.4 $668.6 $647.9
Directory 60.2 55.0 46.4 38.8 42.4
Total Revenue $753.2 $744.0 $724.8 $707.4 $690.3
====== ====== ====== ====== ======
As of
-----
June 30, March 31, December 31, September 30, June 30,
2010 2010 2009 2009 2009
---- ---- ---- ---- ----
12-Month
Backlog $2,470 $2,460 $2,425 $2,385 $2,370
------ ------ ------ ------ ------
SOURCE Amdocs