News Release

ST. LOUIS, April 28, 2011 /PRNewswire via COMTEX/ --

Key highlights:

• Second fiscal quarter revenue of $789 million, compared to the $775-$790 million guidance range. Foreign currency movements positively impacted revenue by approximately $5 million relative to the first fiscal quarter of 2011
• Second fiscal quarter non-GAAP operating income of $128 million; non-GAAP operating margin of 16.2%; GAAP operating income of $107 million
• Second fiscal quarter diluted non-GAAP EPS of $0.58, compared to the $0.53-$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 $0.50 for the second fiscal quarter, compared to the $0.43-$0.51 guidance range
• Free cash flow of $55 million for the second fiscal quarter
• Twelve-month backlog of $2.59 billion at the end of the second fiscal quarter, up $30 million from the end of the first fiscal quarter of 2011
• Third quarter fiscal 2011 guidance: Expected revenue of approximately $790-$805 million and diluted non-GAAP EPS of $0.57-$0.63, 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 $0.45-$0.53
• Repurchased $161 million of ordinary shares during the second fiscal quarter. Completed the previous $700 million share repurchase plan in April 2011

Amdocs Limited (NYSE: DOX) today reported that for its second fiscal quarter ended March 31, 2011, revenue was $788.9 million, up 1.8% sequentially from the first fiscal quarter of 2011 and up 6.0% as compared to last year's second fiscal quarter. Net income on a non-GAAP basis was $110.3 million, or $0.58 per diluted share, compared to non-GAAP net income of $116.9 million, or $0.56 per diluted share, in the second quarter of fiscal 2010. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $16.2 million, net of related tax effects, in the second quarter of fiscal 2011 and excludes such amortization, impairment on investment in a subsidiary and equity-based compensation expenses of $48.3 million, net of related tax effects, in the second quarter of fiscal 2010. The Company's GAAP net income for the second quarter of fiscal 2011 was $94.1 million, or $0.50 per diluted share, compared to GAAP net income of $68.6 million, or $0.33 per diluted share, in the prior year's second quarter.

"Our performance in the second fiscal quarter of 2011 benefitted from solid demand trends consistent with those discussed in depth at our Analyst Day on February 23. Managed services contributed strong revenue in the second fiscal quarter fueled primarily by our North American clients. Deal momentum in the emerging markets remained healthy, and the demand environment in Europe showed signs of improvement throughout the first half of fiscal 2011 relative to a year ago. In terms of profitability, we continued to make progress on our current investment initiatives which resulted in a sequential improvement in our non-GAAP operating margin within our projected range," said Eli Gelman, chief executive officer of Amdocs Management Limited.

Gelman continued, "Factoring in recent business trends and our expectations for the third fiscal quarter, we now expect revenue growth toward the upper-end of our 4-6% guidance range for fiscal 2011. As we continue to make progress in meeting key delivery milestones on several of our market-leading implementations and in achieving the benefits from investments in our employee knowledge programs, we anticipate a modest improvement in profitability in the second half of fiscal 2011. Additionally, in April 2011, we completed our $700 million repurchase plan within the twelve month authorization period. Going forward, we plan to continue executing on the $1 billion share repurchase program that was announced in February 2011."

Gelman concluded, "Leading service providers are getting larger, both organically and through consolidation, more diverse in their offerings, and more global every day. Against these dynamics, our customers are increasingly relying on strong partners like Amdocs to help manage highly competitive and complex operating environments."

Financial Discussion of Second Fiscal Quarter Results

Free cash flow was $55 million for the second fiscal quarter, comprised of cash flow from operations of approximately $75 million less $20 million in net capital expenditures and other. Free cash flow for the second fiscal quarter included the forecasted impact of $60 million in annual cash 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 $2.59 billion at the end of the second quarter of fiscal 2011.

Financial Outlook

Amdocs expects that revenue for the third quarter of fiscal 2011 will be approximately $790-$805 million. Diluted earnings per share on a non-GAAP basis for the third quarter are expected to be $0.57-$0.63, 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 fiscal quarter will be $0.45-$0.53.

Conference Call Details

Amdocs will host a conference call on April 28, 2011 at 5:00 p.m. Eastern Time to discuss the Company's second fiscal 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 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;
• 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 and other acquisition related costs, 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, 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 approximately $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 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, 2010 filed on December 7, 2010 and in our quarterly 6-K filed on February 8, 2011.

SOURCE Amdocs