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First Quarter Results for Fiscal 2010
Jan 20, 2010
Expects Sequential Revenue Growth to Continue in Fiscal 2010
- First fiscal quarter revenue of $725 million, compared to the $705-$725 million guidance range
- First quarter non-GAAP operating income of $131 million; non-GAAP operating margin of 18.1%; GAAP operating income of $99 million
- First quarter diluted non-GAAP EPS of $0.55, excluding amortization of purchased intangible assets and equity-based compensation expense, net of related tax effects, compared to the $0.51-$0.55 guidance range
- Diluted GAAP EPS of $0.43 for the first quarter, compared to the $0.38-$0.44 guidance range
- Record free cash flow of $170 million for the first quarter
- 12-month backlog of $2.425 billion at the end of the first quarter
- Second quarter fiscal 2010 guidance: Expected revenue of approximately $730-$750 million and diluted non-GAAP EPS of $0.52-$0.56, 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 $0.40-$0.45
ST. LOUIS, Jan 20, 2010 /PRNewswire via COMTEX/ -- Amdocs Limited (NYSE: DOX) today reported that for its fiscal first quarter of 2010 ended December 31, 2009, revenue was $724.8 million, up 2.5% sequentially from the fiscal fourth quarter of 2009. As compared to last year's first fiscal quarter, revenue decreased 3.9%. Net income on a non-GAAP basis was $113.1 million, or $0.55 per diluted share, compared to non-GAAP net income of $116.3 million, or $0.55 per diluted share, in the first quarter of fiscal 2009. Non-GAAP net income excludes amortization of purchased intangible assets and equity-based compensation expenses of $24.8 million, net of related tax effects, in the first quarter of fiscal 2010 and excludes such amortization, in-process research and development write-off, restructuring charges and equity-based compensation expenses of $42.0 million, net of related tax effects, in the first quarter of fiscal 2009. The Company's GAAP net income for the first quarter of fiscal 2010 was $88.4 million, or $0.43 per diluted share, compared to GAAP net income of $74.2 million, or $0.35 per diluted share, in the prior year's first quarter.
"We are encouraged by our performance in the first fiscal quarter of 2010 as our business benefitted from a continued improvement in demand, strong execution, and modestly more favorable foreign exchange rates," said Dov Baharav, chief executive officer of Amdocs Management Limited.
Baharav continued, "As anticipated, managed services remains an area of strength for Amdocs. Today we announced two key agreements signed in the first quarter with AT&T and Bell Canada, demonstrating the strength of our long-term relationships with our largest managed services customers. We have also successfully proven that our managed services solutions, including modernization, can address the needs of smaller and emerging service providers, and we saw momentum with several new wins in this customer group during the first quarter, including DAVE Wireless. Additionally, activity has improved in our project-oriented businesses, and we are increasingly optimistic that Europe has stabilized."
Baharav concluded, "As we emerge from the economic crisis, we feel even better about our competitive position than when we entered. We have improved our operating efficiencies and cost competitiveness, yet we have continued investing in innovation, exemplified by yesterday's launch of Amdocs CES 8. These efforts, combined with our superior business model, are driving our success in winning new business globally with large and emerging service providers alike. Given our market position and the improved demand outlook, we are guiding to sequential revenue growth again in the second fiscal quarter, and we are now internally planning for sequential revenue growth of roughly 1-2% to persist throughout fiscal 2010."
Financial Discussion of First Fiscal Quarter Results
Free cash flow was $170 million for the quarter, comprised of cash flow from operations of $194 million less approximately $24 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 $2.425 billion at the end of the first quarter of fiscal 2010.
Financial Outlook
Amdocs expects that revenue for the second quarter of fiscal 2010 will be approximately $730-$750 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the second quarter to be $0.52-$0.56, 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 second quarter will be $0.40-$0.45.
Amdocs will host a conference call on January 20, 2010 at 5 p.m. Eastern Time to discuss the Company's first 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. 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 approximately 18,000 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, 2009 filed on December 7, 2009.
AMDOCS LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
Three months ended
December 31,
------------
2009 2008
---- ----
Revenue:
License $24,150 $44,601
Service 700,661 709,238
------- -------
724,811 753,839
Operating expenses:
Cost of license 442 991
Cost of service 462,215 484,051
Research and development 50,106 56,229
Selling, general and
administrative 91,580 90,265
Amortization of purchased
intangible assets 21,319 20,254
Restructuring charges and
in-process research and
development - 20,780
--- ------
625,662 672,570
------- -------
Operating income 99,149 81,269
Interest (expense) income
and other, net (715) 2,235
---- -----
Income before income taxes 98,434 83,504
Income taxes 10,081 9,257
------ -----
Net income $88,353 $74,247
======= =======
Basic earnings per share $0.43 $0.36*
===== =====
Diluted earnings per share $0.43 $0.35*
===== =====
Basic weighted average
number of shares
outstanding 205,430 203,578*
======= ========
Diluted weighted average
number of shares
outstanding 206,656 213,069*
======= ========
* The basic and diluted weighted average number of shares
outstanding for the three months ended December 31, 2008 has
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 three months ended December 31, 2008.
AMDOCS LIMITED
Selected Financial Metrics
(in thousands, except per share data)
Three months ended
December 31,
------------
2009 2008
---- ----
Revenue $724,811 $753,839
Non-GAAP operating income 131,321 135,720
Non-GAAP net income 113,127 116,250
Non-GAAP diluted earnings per share $0.55 $0.55*
Diluted weighted average number of
shares outstanding 206,656 213,069*
* The basic and diluted weighted average number of shares outstanding
for the three months ended December 31, 2008 has 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 three months ended December 31, 2008.
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Three months ended
December 31, 2009
-----------------
Reconciliation items
-------------------------------------
Equity
GAAP Amortization based Tax Non-
of Compensation effect GAAP
purchased expense
intangible
assets
--------------------------------------------------------
Operating
expenses:
Cost of license $442 $- $- $- $442
Cost of service 462,215 - (4,785) - 457,430
Research and
development 50,106 - (1,133) - 48,973
Selling,
general and
administrative 91,580 - (4,935) - 86,645
Amortization of
purchased
intangible
assets 21,319 (21,319) - - -
------ ------- --- --- ---
Total operating
expenses 625,662 (21,319) (10,853) - 593,490
------- ------- ------- --- -------
Operating
income 99,149 21,319 10,853 - 131,321
------ ------ ------ --- -------
Income taxes 10,081 - - 7,398 17,479
------ --- --- ----- ------
Net income $88,353 $21,319 $10,853 $(7,398) $113,127
------- ------- ------- ------- --------
Three months ended
December 31, 2008
-------------------------------------------------------------
Reconciliation items
--------------------------------------------
Restructuring
GAAP Amortization charges and Equity Tax Non-
of in-process based effect GAAP
purchased research and compensation
intangible development expense
assets
-------------------------------------------------------------
Operating
expenses:
Cost of
license $991 $- $- $- $- $991
Cost of
service 484,051 - - (5,711) - 478,340
Research
and
development 56,229 - - (1,062) - 55,167
Selling,
general
and
admini-
strative 90,265 - - (6,644) - 83,621
Amortization
of
purchased
intangible
assets 20,254 (20,254) - - - -
Restructuring
charges
and in-
process
research
and
development 20,780 - (20,780) - - -
------ --- ------- --- --- ---
Total
operating
expenses 672,570 (20,254) (20,780) (13,417) - 618,119
------- ------- ------- ------- --- -------
Operating
income 81,269 20,254 20,780 13,417 - 135,720
------ ------ ------ ------ --- -------
Income
taxes 9,257 - - - 12,448 21,705
----- --- --- --- ------ ------
Net income $74,247 $20,254 $20,780 $13,417 $(12,448) $116,250
------- ------- ------- ------- -------- --------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
December September
31, 2009 30, 2009
--------- ----------
ASSETS
Current assets
Cash, cash equivalents and short-term
interest-bearing investments $1,292,150 $1,173,041
Accounts receivable, net, including
unbilled of $25,421 and $21,749,
respectively 486,783 454,965
Deferred income taxes and taxes receivable 131,507 117,848
Prepaid expenses and other current assets 112,169 126,704
------- -------
Total current assets 2,022,609 1,872,558
Equipment and leasehold improvements, net 266,224 279,659
Goodwill and other intangible assets, net 1,820,747 1,766,761
Other noncurrent assets 416,516 409,439
------- -------
Total assets $4,526,096 $4,328,417
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable, accruals and other $438,755 $415,371
Deferred revenue 214,091 186,158
Deferred income taxes and taxes payable 14,516 9,338
------ -----
Total current liabilities 667,362 610,867
Noncurrent liabilities and other 548,199 504,497
Shareholders' equity 3,310,535 3,213,053
--------- ---------
Total liabilities and shareholders' equity $4,526,096 $4,328,417
========== ==========
AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands)
Three months ended December
31,
----------------------------
2009 2008
---- ----
Cash Flow from Operating Activities:
Net income $88,353 $74,247
Reconciliation of net income to net
cash provided by operating
activities:
Depreciation and amortization 50,050 48,762
In-process research and development - 5,640
Equity-based compensation expense 10,853 13,417
Deferred income taxes (8,501) 744
Gain on repurchase of convertible
notes - (2,112)
Excess tax benefit from equity-based
compensation (17) (1)
(Gain) loss from short-term interest-
bearing investments (329) 2,640
Net changes in operating assets and
liabilities, net of amounts acquired:
Accounts receivable (22,161) 34,495
Prepaid expenses and other current
assets 6,159 900
Other noncurrent assets (14,409) 18,461
Accounts payable, accrued expenses and
accrued personnel 28,258 24,885
Deferred revenue 47,599 (50,011)
Income taxes payable 4,534 (4,614)
Noncurrent liabilities and other 3,118 (24,969)
----- -------
Net cash provided by operating
activities 193,507 142,484
------- -------
Cash Flow from Investing Activities:
Proceeds from sale of equipment,
vehicles and leasehold improvements 212 123
Payments for purchase of equipment and
leasehold improvements (23,801) (30,235)
Proceeds from sale of short-term
interest-bearing investments 278,183 112,372
Purchase of short-term interest-
bearing investments (348,662) (248,538)
Net cash paid for acquisitions (56,454) (55,543)
------- -------
Net cash used in investing activities (150,522) (221,821)
-------- --------
Cash Flow from Financing Activities:
Borrowings under long-term financing
arrangements - 100,000
Repurchase of convertible notes - (97,888)
Repurchase of shares - (20,014)
Proceeds from employee stock options
exercised 5,141 1,109
(Payments) borrowings under capital
lease and short-term financing
arrangements (121) 540
Excess tax benefit from equity-based
compensation 17 1
--- ---
Net cash provided by (used in)
financing activities 5,037 (16,252)
----- -------
Net increase (decrease) in cash and
cash equivalents 48,022 (95,589)
Cash and cash equivalents at beginning
of period 728,762 718,850
------- -------
Cash and cash equivalents at end of
period $776,784 $623,261
======== ========
AMDOCS LIMITED
Supplementary Information
(in millions)
-------------------------------------------------------------
Three months ended
-------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2009 2009 2009 2009 2008
------------ ------------- -------- --------- ------------
North
America $547.6 $528.0 $527.7 $539.8 $561.6
Europe 89.5 93.0 84.4 105.0 111.4
Rest of
World 87.7 86.4 78.2 66.3 80.8
------------ ------------- -------- --------- ------------
Total
Revenue $724.8 $707.4 $690.3 $711.1 $753.8
============ ============= ======== ========= ============
-------------------------------------------------------------
Three months ended
-------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2009 2009 2009 2009 2008
------------ ------------- -------- --------- ------------
Customer
Experience
Systems $678.4 $668.6 $647.9 $668.0 $701.0
Directory 46.4 38.8 42.4 43.1 52.8
------------ ------------- -------- --------- ------------
Total Revenue $724.8 $707.4 $690.3 $711.1 $753.8
============ ============= ======== ========= ============
-------------------------------------------------------------
As of
-------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2009 2009 2009 2009 2008
------------ ------------- -------- --------- ------------
12-Month
Backlog $2,425 $2,385 $2,370 $2,370 $2,400
------------ ------------- -------- --------- ------------
SOURCE Amdocs Limited