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First Quarter Results for Fiscal 2010
Amdocs Limited Reports Quarterly Revenue of $725 Million
Expects Sequential Revenue Growth to Continue in Fiscal 2010
Key highlights:

  • 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