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|Fourth Quarter Results for Fiscal 2006|
Amdocs Reports 28% Growth in Quarterly Diluted Non-GAAP Earnings Per Share to $0.50; Diluted GAAP Earnings Per Share of $0.35
St. Louis, MO - November 1, 2006 - Amdocs Limited (NYSE: DOX) today reported that for the quarter ended September 30, 2006, revenue was $665.4 million, an increase of 16.1% from last year's fourth quarter. Net income on a non-GAAP basis was $109.5 million, or $0.50 per diluted share (excluding acquisition-related costs, which include amortization of purchased intangible assets and the write-off of in-process research and development, and excluding equity-based compensation expense, net of related tax effects, of $33.5 million), compared to non-GAAP net income of $83.9 million, or $0.39 per diluted share, in the fourth quarter of fiscal 2005 (excluding acquisition-related costs, which include amortization of purchased intangible assets, in-process research and development write-off and other, and excluding restructuring charges, net of related tax effects, of $16.1 million). The Company's GAAP net income was $76.0 million, or $0.35 per diluted share, compared to GAAP net income of $67.8 million, or $0.32 per diluted share, in the fourth quarter of fiscal 2005. Free cash flow for the quarter was $100.8 million, comprised of cash flow from operations of $129.0 million less $26.6 million in net capital expenditures and less $1.6 million in other items.
"The strong market that we saw in 2006 was a result of the transformation that service providers are undergoing," said Dov Baharav, chief executive officer of Amdocs Management Limited. "We see strong demand as our customers cope with competition, consolidation and convergence; our customers continue to introduce IP-based services to capture new revenue streams. Amdocs expanded its offering this year with the acquisitions of Qpass in the content area and Cramer in OSS. Amdocs is the leading vendor in our market because we offer end-to-end solutions that address service providers' needs."
Baharav continued "Our record revenue in the fourth quarter and in fiscal 2006 was driven by a strong market and by the actions we took to capitalize on this market. Amdocs record of successful execution is built on product innovation and service excellence, making us the choice of leading service providers around the world. Our achievements this year position Amdocs for a strong fiscal 2007."
During the fourth quarter, Amdocs new business included ten key wins, across geographies and lines of business. With Bell Canada the Company signed an extension of its managed services agreement through 2012. Amdocs will work with Bell Canada to improve its competitiveness and help it introduce new next-generation services. In the broadband cable and satellite market, Amdocs is enjoying momentum with deals to extend the managed services agreement and provide additional services to DIRECTV, and to add software functionality for another customer. For a new customer, Amdocs will provide billing and mediation capabilities. Two customers in Europe have chosen Amdocs for projects related to OSS and product catalog.
The Company also noted that for the fiscal year ended September 30, 2006, revenue increased by 21.7% to $2.48 billion. Fiscal 2006 net income on a non-GAAP basis was $401.2 million, or $1.85 per diluted share (excluding acquisition-related costs, which include amortization of purchased intangible assets and the write-off of in-process research and development, and excluding equity-based compensation expense, net of related tax effects, of $82.6 million), compared to non-GAAP net income of $311.0 million, or $1.45 per diluted share, in fiscal 2005 (excluding acquisition-related costs, which include amortization of purchased intangible assets, in-process research and development write-off and other, and excluding restructuring charges, net of related tax effects, of $22.4 million). The Company's GAAP net income in fiscal 2006 was $318.6 million, or $1.48 per diluted share, compared to GAAP net income of $288.6 million, or $1.35 per diluted share, in fiscal 2005.
Amdocs expects that revenue for the first quarter of fiscal 2007 will be approximately $690 million. Diluted earnings per share on a non-GAAP basis for the first quarter are expected to be $0.50, excluding acquisition-related costs and the impact of approximately $0.05-$0.06 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.39-$0.40.
Updated fiscal 2007 guidance: Expected revenue of approximately $2.89-$2.97 billion and diluted non-GAAP EPS of $2.08-$2.16, which excludes acquisition-related costs and approximately $0.22-$0.26 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $1.62-$1.74.
Amdocs will host a conference call on November 1, 2006 at 5 p.m. Eastern Time to discuss the Company's fourth quarter results. The call will be carried live on the Internet via www.InvestorCalendar.com and 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 income taxes and non-GAAP net income. These non-GAAP measures exclude the following items:
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 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.
Amdocs combines innovative software and services with deep business knowledge to accelerate implementation of integrated customer management by the world's leading service providers. By delivering a comprehensive portfolio of software and services that spans the customer lifecycle, Amdocs enables service companies to deliver an intentional customer experienceTM, which results in stronger, more profitable customer relationships. Service providers also benefit from a rapid return on investment, lower total cost of ownership and improved operational efficiencies. A global company with revenue of $2.48 billion in fiscal 2006, Amdocs has over 16,000 employees and serves customers in more than 50 countries around the world. 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, filed on December 28, 2005 and our quarterly 6-K furnished on February 15, May 15, and August 15, 2006.