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Fourth Quarter Results for Fiscal 2009
Nov 04, 2009
Key highlights:
- Fourth quarter revenue of $707 million, above the $670-$690 million guidance range
- Fourth quarter non-GAAP operating income of $128 million; non-GAAP operating margin of 18.1%; GAAP operating income of $97 million
- Fourth quarter diluted non-GAAP EPS of $0.53, excluding amortization of purchased intangible assets and equity-based compensation expense, net of related tax effects
- Diluted GAAP EPS of $0.42 for the fourth quarter
- Free cash flow of $166 million for the fourth quarter
- 12-month backlog of $2.385 billion at the end of the fourth quarter
- First quarter fiscal 2010 guidance: Expected revenue of approximately $705-$725 million and diluted non-GAAP EPS of $0.51-$0.55, 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 $0.38-$0.44
"After experiencing a challenging fiscal year, we are pleased that our fourth quarter results demonstrated stronger-than-expected performance across our four key financial metrics: revenue, profitability, earnings and free cash flow. We believe this reflects positively on the value of
Baharav continued, "Reflecting on our relative successes in 2009, we experienced rising interest and strong signings in managed services which we believe addresses the communications industry's need to streamline cost structures, while concurrently offering the option to modernize systems. Additionally, we performed very well in cable and satellite in a tough economy, and we validated our market position by establishing and expanding important relationships with leading operators. We expect these two growth drivers - managed services and cable and satellite - to continue to perform well and provide a strong foundation for our results again in 2010. On the other hand, our project-oriented activities contracted in 2009 as they naturally reacted more sharply to deteriorating economic conditions. We believe, in aggregate, our project-oriented revenue is showing early signs of stabilization; however, decision cycles remain extended and results may still vary quarter to quarter in individual product areas and geographies."
Baharav concluded, "Lastly, we believe we have made the right investments to drive our future long-term growth. Over the course of the recession, we have deepened our relationships with key customers, led the industry in R&D investment, and continued to streamline our cost structure. As a result, we truly believe we are emerging from the global economic crisis in a stronger competitive position than we entered."
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
Fiscal Year 2009 Results
For the fiscal year ended
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 Twelve months ended
September 30, September 30,
----------------------- -----------------------
2009 2008 2009 2008
--------- --------- ---------- ----------
Revenue:
License $ 27,267 $ 41,917 $ 135,146 $ 135,487
Service 680,152 783,360 2,727,461 3,026,609
--------- --------- ---------- ----------
707,419 825,277 2,862,607 3,162,096
Operating expenses:
Cost of license 589 462 2,686 2,729
Cost of service 450,122 530,428 1,831,947 2,023,562
Research and
development 50,274 57,252 210,387 225,492
Selling, general and
administrative 88,030 103,171 344,335 404,134
Amortization of
purchased intangible
assets 21,559 20,385 85,153 86,687
Restructuring charges
and in-process
research and
development (1) - 12,116 20,780 13,896
--------- --------- ---------- ----------
610,574 723,814 2,495,288 2,756,500
--------- --------- ---------- ----------
Operating income 96,845 101,463 367,319 405,596
Interest (expense)
income and other, net (151) (11,842) (1,165) 11,955
--------- --------- ---------- ----------
Income before income
taxes 96,694 89,621 366,154 417,551
Income taxes 10,943 6,910 39,978 38,645
--------- --------- ---------- ----------
Net income $ 85,751 $ 82,711 $ 326,176 $ 378,906
========= ========= ========== ==========
Basic earnings per
share $ 0.42 $ 0.40 $ 1.61 $ 1.83
========= ========= ========== ==========
Diluted earnings per
share (2) $ 0.42 $ 0.38 $ 1.58 $ 1.74
========= ========= ========== ==========
Basic weighted average
number of shares
outstanding 203,587 205,164 202,867 206,590
========= ========= ========== ==========
Diluted weighted
average number of
shares outstanding 204,883 217,479 207,606 219,606
========= ========= ========== ==========
(1) Restructuring charges and in-process research and development for the
twelve months ended September 30, 2009 and 2008 include restructuring
charges of $15,140 and $12,116 and in-process research and development
of $5,640 and $1,780 , respectively.
(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 twelve
months ended September 30, 2009 , respectively, and $985 and $3,940
were added back to net income for the three and twelve months ended
September 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 Twelve months ended
September 30, September 30,
--------------------- -------------------------
2009 2008 2009 2008
--------- --------- ----------- -----------
Revenue $ 707,419 $ 825,277 $ 2,862,607 $ 3,162,096
Non-GAAP operating
income 127,984 147,744 516,163 563,669
Non-GAAP net income 109,198 117,208 438,878 499,608
Non-GAAP diluted
earnings per share (1) $ 0.53 $ 0.54 $ 2.12 $ 2.29
Diluted weighted
average number of
shares outstanding 204,883 217,479 207,606 219,606
(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 twelve
months ended September 30, 2009 , respectively, and $985 and $3,940
were added back to net income for the three and twelve months ended
September 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
September 30, 2009
-----------------------------------------------------
Reconciliation items
----------------------------------
Amortization
of
GAAP purchased Equity based
intangible compensation Tax
assets expense effect Non-GAAP
-----------------------------------------------------
Operating expenses:
Cost of license $ 589 $ - $ - $ - $ 589
Cost of service 450,122 - (4,957) - 445,165
Research and
development 50,274 - (972) - 49,302
Selling, general
and administrative 88,030 - (3,651) - 84,379
Amortization of
purchased
intangible
assets 21,559 (21,559) - - -
-----------------------------------------------------
Total operating
expenses 610,574 (21,559) (9,580) - $579,435
-----------------------------------------------------
-----------------------------------------------------
Operating income 96,845 21,559 9,580 - 127,984
-----------------------------------------------------
-----------------------------------------------------
Income taxes 10,943 - - 7,692 18,635
-----------------------------------------------------
-----------------------------------------------------
Net income $ 85,751 $ 21,559 $ 9,580 $ (7,692) $ 109,198
-----------------------------------------------------
Three months ended
September 30, 2008
--------------------------------------------------------------
Reconciliation items
----------------------------------------------
Amortization
GAAP of purchased Equity based
intangible Restructuring compensation Tax Non-
assets charges expense effect GAAP
--------------------------------------------------------------
Operating
expenses:
Cost of
license $ 462 $ - $ - $ - $ - $ 462
Cost of
service 530,428 - - (5,836) - 524,592
Research
and
develop-
ment 57,252 - - (1,088) - 56,164
Selling,
general
and
admini-
strative 103,171 - - (6,856) - 96,315
Amortization
of purchased
intangible
assets 20,385 (20,385) - - - -
Restructuring
charges and
in-process
research and
develop-
ment 12,116 - (12,116) - - -
--------------------------------------------------------------
Total
operating
expenses 723,814 (20,385) (12,116) (13,780) - $677,533
--------------------------------------------------------------
--------------------------------------------------------------
Operating
income 101,463 20,385 12,116 13,780 - 147,744
--------------------------------------------------------------
--------------------------------------------------------------
Income
taxes 6,910 - - - 11,784 18,694
--------------------------------------------------------------
--------------------------------------------------------------
Net income $82,711 $20,385 $12,116 $13,780 $ (11,784) $117,208
--------------------------------------------------------------
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Twelve months ended
September 30, 2009
--------------------------------------------------------------
Reconciliation items
-------------------------------------------
Restructuring
Amortization charges and
of in-process Equity
purchased research and based
intangible development compensation Tax Non-
GAAP assets expense effect GAAP
--------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,686 $ - $ - $ - $ - $ 2,686
Cost of
service 1,831,947 - - (21,733) - 1,810,214
Research
and
development 210,387 - - (4,249) - 206,138
Selling,
general and
admini-
strative 344,335 - - (16,929) - 327,406
Amortization
of purchased
intangible
assets 85,153 (85,153) - - - -
Restructuring
charges and
in-process
research and
development 20,780 - (20,780) - - -
--------------------------------------------------------------
Total
operating
expenses 2,495,288 (85,153) (20,780) (42,911) - 2,346,444
--------------------------------------------------------------
--------------------------------------------------------------
Operating
income 367,319 85,153 20,780 42,911 - 516,163
--------------------------------------------------------------
--------------------------------------------------------------
Income taxes 39,978 - - - 36,142 76,120
--------------------------------------------------------------
--------------------------------------------------------------
Net income $ 326,176 $ 85,153 $ 20,780 $ 42,911 $ (36,142) $ 438,878
--------------------------------------------------------------
Twelve months ended
September 30, 2008
--------------------------------------------------------------
Reconciliation items
-------------------------------------------
Restructuring
Amortization charges and
of in-process Equity
purchased research and based
intangible development compensation Tax Non-
GAAP assets expense effect GAAP
--------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,729 $ - $ - $ - $ - $ 2,729
Cost of
service 2,023,562 - - (23,547) - 2,000,015
Research
and
development 225,492 - - (4,714) - 220,778
Selling,
general
and
admini-
strative 404,134 - - (29,229) - 374,905
Amortization
of purchased
intangible
assets 86,687 (86,687) - - - -
Restructuring
charges and
in-process
research
and
development 13,896 - (13,896) - - -
--------------------------------------------------------------
--------------------------------------------------------------
Total
operating
expenses 2,756,500 (86,687) (13,896) (57,490) - 2,598,427
--------------------------------------------------------------
--------------------------------------------------------------
Operating
income 405,596 86,687 13,896 57,490 - 563,669
--------------------------------------------------------------
--------------------------------------------------------------
Income taxes 38,645 - - - 37,371 76,016
--------------------------------------------------------------
--------------------------------------------------------------
Net income $ 378,906 $ 86,687 $ 13,896 $ 57,490 $ (37,371) $ 499,608
--------------------------------------------------------------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
------------------------------
September 30, September 30,
2009 2008
------------- -------------
ASSETS
Current assets
Cash, cash equivalents and short-term
interest-bearing investments $ 1,173,041 $ 1,244,378
Accounts receivable, net, including unbilled
of $21,749 and $48,264, respectively 454,965 573,764
Deferred income taxes and taxes receivable 117,848 84,515
Prepaid expenses and other current assets 126,704 102,930
------------- -------------
Total current assets 1,872,558 2,005,587
Equipment, vehicles and leasehold
improvements, net 279,659 317,081
Goodwill and other intangible assets, net 1,766,761 1,796,922
Other noncurrent assets 409,439 459,473
------------- -------------
Total assets $ 4,328,417 $ 4,579,063
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable, accruals and other $ 415,371 $ 601,945
Deferred revenue 186,158 197,851
Deferred income taxes and taxes payable 9,338 30,228
------------- -------------
Total current liabilities 610,867 830,024
0.50% Convertible notes 1,020 450,000
Noncurrent liabilities and other 503,477 493,848
Shareholders' equity 3,213,053 2,805,191
------------- -------------
Total liabilities and shareholders' equity $ 4,328,417 $ 4,579,063
============= =============
AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands)
Year ended September 30,
--------------------------
2009 2008
------------ ------------
Cash Flow from Operating Activities:
Net income $ 326,176 $ 378,906
Reconciliation of net income to net
cash provided by operating activities:
Depreciation and amortization 198,119 192,937
In-process research and development
expenses 5,640 1,780
Equity-based compensation expense 42,911 57,490
Loss (gain) on sale of equipment 197 (970)
Deferred income taxes 16,249 1,111
Gain on repurchase of convertible
notes (2,185) -
Excess tax benefit from equity-based
compensation (18) (211)
Loss from short-term interest-bearing
investments 4,449 4,945
Net changes in operating assets and
liabilities, net of amounts acquired:
Accounts receivable, net 131,527 (118,291)
Prepaid expenses and other current assets (13,614) 4,173
Other noncurrent assets (2,690) (31,739)
Accounts payable, accrued expenses
and accrued personnel (160,321) (27,501)
Deferred revenue 20,956 28,408
Income taxes payable, net (19,980) (26,824)
Noncurrent liabilities and other (28,260) 18,799
------------ ------------
Net cash provided by operating activities 519,156 483,013
------------ ------------
Cash Flow from Investing Activities:
Proceeds from sale of equipment,
vehicles and leasehold improvements 994 2,655
Payments for purchase of equipment
and leasehold improvements (83,325) (135,823)
Proceeds from sale of short-term
interest-bearing investments 1,045,278 708,708
Purchase of short-term
interest-bearing investments (963,433) (685,873)
Net cash paid for acquisitions (65,890) (58,772)
------------ ------------
Net cash used in investing activities (66,376) (169,105)
------------ ------------
Cash Flow from Financing Activities:
Borrowings under long-term financing
arrangements 450,000 -
Payments under long-term financing
arrangements (450,000) -
Redemption of convertible notes (330,780) (175)
Repurchase of convertible notes (116,015) -
Repurchase of shares (20,014) (247,630)
Proceeds from employee stock options
exercised 27,893 37,577
Payments under capital lease and
short-term financing arrangements (3,970) (542)
Excess tax benefit from equity-based
compensation 18 211
------------ ------------
Net cash used in financing activities (442,868) (210,559)
------------ ------------
Net increase in cash and cash
equivalents 9,912 103,349
Cash and cash equivalents at
beginning of year 718,850 615,501
------------ ------------
Cash and cash equivalents at end of
year $ 728,762 $ 718,850
============ ============
AMDOCS LIMITED
Supplementary Information
(in millions)
-----------------------------------------------------------
Three months ended
-----------------------------------------------------------
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
------------- -------- --------- ------------ -------------
North America $ 528.0 $ 527.7 $ 539.8 $ 561.6 $ 558.7
Europe 93.0 84.4 105.0 111.4 150.9
Rest of World 86.4 78.2 66.3 80.8 115.7
------------- -------- --------- ------------ -------------
Total Revenue $ 707.4 $ 690.3 $ 711.1 $ 753.8 $ 825.3
============= ======== ========= ============ =============
-----------------------------------------------------------
Three months ended
-----------------------------------------------------------
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
------------- -------- --------- ------------ -------------
Customer
Experience $ 668.6 $ 647.9 $ 668.0 $ 701.0 $ 756.5
Systems
Directory 38.8 42.4 43.1 52.8 68.8
------------- -------- --------- ------------ -------------
Total Revenue $ 707.4 $ 690.3 $ 711.1 $ 753.8 $ 825.3
============= ======== ========= ============ =============
-----------------------------------------------------------
As of
-----------------------------------------------------------
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
------------- -------- --------- ------------ -------------
12-Month
Backlog $ 2,385 $ 2,370 $ 2,370 $ 2,400 $ 2,420
------------- -------- --------- ------------ -------------
SOURCE
Elizabeth Grausam, Director of Investor Relations, Amdocs Limited, +1-314-212-8328, dox_info@amdocs.com