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Second Quarter Results for Fiscal 2010
$700 Million Share Repurchase Program Authorized

ST. LOUIS, April 22, 2010 /PRNewswire via COMTEX/ --Key highlights:

  • Second fiscal quarter revenue of $744 million, compared to the $730-$750 million guidance range. Foreign currency movements negatively impacted revenue by approximately $6 million relative to the Company's expectations when it issued guidance on January 20, 2010
  • Second quarter non-GAAP operating income of $135 million; non-GAAP operating margin of 18.2%; GAAP operating income of $103 million
  • Second quarter diluted non-GAAP EPS of $0.56, excluding amortization of purchased intangible assets and other acquisition related costs, impairment on investment in a subsidiary, and equity-based compensation expense, net of related tax effects, compared to the $0.52-$0.56 guidance range
  • Diluted GAAP EPS of $0.33 for the second quarter, lower than the $0.40-$0.45 guidance range due to a $0.10 one-time charge resulting from the impairment of the Company's investment in Longshine
  • Free cash flow of $148 million for the second quarter
  • Twelve-month backlog of $2.46 billion at the end of the second quarter, up $35 million from the end of the first quarter of 2010
  • Third fiscal quarter of 2010 guidance: Expected revenue of approximately $750-$765 million and diluted non-GAAP EPS of $0.55-$0.58, 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 $0.41-$0.46
  • The board of directors has authorized a share repurchase plan allowing the repurchase of up to $700 million of ordinary shares over the next twelve months

Amdocs Limited (NYSE: DOX) today reported that for its second fiscal quarter of 2010 ended March 31, 2010, revenue was $744.0 million, up 2.6% sequentially from the first fiscal quarter of 2010 and up 4.6% as compared to last year's second fiscal quarter. Net income on a non-GAAP basis was $116.9 million, or $0.56 per diluted share, compared to non-GAAP net income of $104.9 million, or $0.50 per diluted share, in the second quarter of fiscal 2009. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs, impairment on investment in a subsidiary and equity-based compensation expense of $48.3 million, net of related tax effects, in the second quarter of fiscal 2010 and excludes such amortization, and equity-based compensation expense of $24.2 million, net of related tax effects, in the second quarter of fiscal 2009. The Company's GAAP net income for the second quarter of fiscal 2010 was $68.6 million, or $0.33 per diluted share, compared to GAAP net income of $80.6 million, or $0.39 per diluted share, in the prior year's second quarter.

"We are very pleased with our performance in the second fiscal quarter, and we believe our results and outlook are evidence of our competitive advantages which are, in turn, driving improved new project activity globally and continued strength in managed services and cable/satellite. Our CES 8 product launch has begun to resonate in the market and is now providing Amdocs an incremental tailwind for demand for our products and services, compounding on the effects of improving economic conditions," said Dov Baharav, chief executive officer of Amdocs Management Limited.

Baharav continued, "Additionally, in our ongoing effort to align the business with the greatest opportunities in the market and augment our core strategies through focused corporate development actions, we made several important decisions recently. First, we acquired MX Telecom to continue building our presence in mobile payments and expand the OpenMarket footprint outside of the US. Second, we just signed an agreement this week to acquire Streamezzo, a mobile internet application development platform, to broaden our solutions in digital services delivery, and we expect to close the transaction during the third quarter, subject to customary closing conditions. Last, we believe we have better aligned our strategy to the specific needs of Chinese service providers by divesting a majority stake in Longshine."

Baharav concluded, "As a result of the trends we are observing in the business, we believe we can achieve at least the 1-2% sequential quarterly revenue growth (in constant currency) we had previously planned for throughout the remainder of fiscal 2010. Additionally, our Board has authorized a $700 million share repurchase program given the strength of our capital position and our confidence in the long-term growth opportunities for Amdocs."

Financial Discussion of Second Fiscal Quarter Results

Free cash flow was $148 million for the quarter, comprised of cash flow from operations of $165 million less approximately $17 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 $2.46 billion at the end of the second quarter of fiscal 2010.

Financial Outlook

Amdocs expects that revenue for the third quarter of fiscal 2010 will be approximately $750-$765 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the third quarter to be $0.55-$0.58, 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 quarter will be $0.41-$0.46.

Share Repurchase Plan

Amdocs Limited's board of directors has authorized a share repurchase plan allowing the repurchase of up to $700 million of its outstanding ordinary shares over the next twelve months. The authorization permits Amdocs to purchase its ordinary shares in open market or privately negotiated transactions at times and prices considered appropriate by the Company.

About Streamezzo

Streamezzo is a provider of a development platform for the creation and the deployment of Rich Mobile Internet Applications across multiple mobile operating systems and devices. Streamezzo's Rich Mobile Internet Applications, such as Mobile TV, Music store, and StoreFront, provide attractive revenue opportunities for mobile operators, content providers, and application developers.

Conference Call Details

Amdocs will host a conference call on April 22, 2010 at 5 p.m. Eastern Time to discuss the Company's second quarter results. The call will be carried live on the Internet via 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 operating margin, 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;
  • in-process research and development write-off;
  • restructuring charges;
  • equity-based compensation expense; and
  • impairment on investment in a subsidiary;
  • 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 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 and in our quarterly 6-K filed February 8, 2010.




                                 AMDOCS LIMITED
                        Consolidated Statements of Income
                      (in thousands, except per share data)

                           Three months ended          Six months ended
                                March 31,                  March 31,
                                ---------                  ---------
                            2010            2009      2010           2009
                            ----            ----      ----           ----

    Revenue:
      License            $25,949         $37,203   $50,099        $81,804
      Service            718,020         673,881 1,418,681      1,383,119
                         -------         ------- ---------      ---------
                         743,969         711,084 1,468,780      1,464,923
    Operating
     expenses:
      Cost of license        745             569     1,187          1,560
      Cost of service    475,440         455,997   937,655        940,048
      Research and
       development        51,190          52,750   101,296        108,979
      Selling, general
       and
       administrative     92,028          84,308   183,608        174,573
      Amortization of
       purchased
       intangible assets
       and other          21,439          21,501    42,758         41,755
      Restructuring
       charges and in-
       process research
       and development         -               -         -         20,780
                         -------         ------- ---------      ---------
                         640,842         615,125 1,266,504      1,287,695
                         -------         ------- ---------      ---------
    Operating income     103,127          95,959   202,276        177,228

    Interest expense
     and other, net       22,761           5,763    23,476          3,528
                         -------         ------- ---------      ---------
    Income before
     income taxes         80,366          90,196   178,800        173,700

    Income taxes          11,816           9,566    21,897         18,823
                         -------         ------- ---------      ---------
    Net income           $68,550         $80,630  $156,903       $154,877
                         =======         ======= =========      =========
    Basic earnings per
     share                 $0.33          $0.40*     $0.76         $0.76*
                         =======         ======= =========      =========
    Diluted earnings
     per share             $0.33          $0.39*     $0.76         $0.74*
                         =======         ======= =========      =========
    Basic weighted
     average number of
     shares
     outstanding         206,025        203,827*   205,724       203,701*
                         =======        ======== =========      =========
    Diluted weighted
     average number of
     shares
     outstanding         207,691        210,645*   207,174       211,857*
                         =======        ======== =========      =========


* The basic and diluted weighted average number of shares outstanding for the three and six months ended March 31, 2009 have 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 had no impact on the basic and diluted earnings per share for the three and six months ended March 31, 2009.


                                  AMDOCS LIMITED
                            Selected Financial Metrics
                       (in thousands, except per share data)


                            Three months ended            Six months ended
                                March 31,                     March 31,
                                ---------                     ---------
                            2010             2009       2010             2009
                            ----             ----       ----             ----

    Revenue             $743,969         $711,084 $1,468,780       $1,464,923

    Non-GAAP operating
     income              135,284          127,977    266,605          263,697

    Non-GAAP net income  116,870          104,875    229,997          221,125

    Non-GAAP diluted
     earnings per share    $0.56           $0.50*      $1.11           $1.05*

    Diluted weighted
     average number of
     shares outstanding  207,691         210,645*    207,174         211,857*



* The basic and diluted weighted average number of shares outstanding for the three and six months ended March 31, 2009 have 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 had no impact on the basic and diluted earnings per share for the three and six months ended March 31, 2009.



                               AMDOCS LIMITED
     Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                               (in thousands)

                                        Three months ended
                                        ------------------
                                           March 31, 2010
                                           --------------
                                    Reconciliation items
                        ---------------------------------------------
                 GAAP  Amortization
                       of purchased               Impairment on
                        intangible   Equity based  investment
                        assets and   compensation    in a        Tax    Non-
                          other        expense     subsidiary   effect  GAAP
                 ----  ------------  ------------ ------------- ------  ----
    Operating
     expenses:
      Cost of
       license    $745       $-           $-          $-        $-       $745
      Cost of
       service 475,440        -       (4,967)          -         -    470,473
      Research
       and
       develop-
       ment     51,190        -       (1,004)          -         -     50,186
      Selling,
       general
       and
       admini-
       strative 92,028        -       (4,747)          -         -     87,281
      Amortization
       of purchased
       intangible
       assets
       and
       other    21,439  (21,439)           -           -         -          -
                ------  -------          ---         ---       ---        ---
    Total
     operating
     expenses  640,842  (21,439)     (10,718)          -         -    608,685
               -------  -------      -------         ---       ---    -------

    Operating
     income    103,127   21,439       10,718           -         -    135,284
                ------   ------       ------         ---       ---     ------

    Interest
     expense
     and other,
     net        22,761        -            -     (21,800)        -        961
                ------      ---          ---     -------       ---        ---

    Income
     taxes      11,816        -            -           -     5,637     17,453
                ------      ---          ---         ---     -----     ------

    Net
     income    $68,550  $21,439      $10,718     $21,800   $(5,637)  $116,870
               -------  -------      -------     -------   -------   --------



                                  AMDOCS LIMITED
        Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                                  (in thousands)

                                       Three months ended
                                         March 31, 2009
                                      Reconciliation items
                              -------------------------------------
                              Amortization
                              of purchased    Equity based
                               intangible     compensation    Tax
                       GAAP       assets         expense     effect   Non-GAAP
                       ----   -------------  -------------  -------   --------
    Operating
     expenses:
      Cost of
       license          $569            $-             $-        $-       $569
      Cost of
       service       455,997             -         (4,950)        -    451,047
      Research and
        development   52,750             -           (977)        -     51,773
      Selling,
       general and
       administrative 84,308             -         (4,590)        -     79,718
      Amortization
       of purchased
       intangible
       assets and
       other          21,501       (21,501)             -         -          -
    Total
     operating
     expenses        615,125       (21,501)       (10,517)        -    583,107
                     -------       -------        -------       ---    -------

    Operating
     income           95,959        21,501         10,517         -    127,977
                      ------        ------         ------       ---    -------

    Income taxes       9,566             -              -     7,773     17,339
                        ----           ---            ---     -----     ------

    Net income       $80,630       $21,501        $10,517   $(7,773)  $104,875
                     -------       -------        -------   -------   --------



                               AMDOCS LIMITED
     Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                               (in thousands)

                                      Six months ended
                                       March 31, 2010
                                       --------------
                                       Reconciliation items
                         -----------------------------------------------
                   GAAP  Amortization
                         of purchased               Impairment on
                          intangible   Equity based  investment
                          assets and   compensation    in a        Tax    Non-
                            other        expense     subsidiary   effect  GAAP
                   ----  ------------  ------------ ------------- ------  ----
    Operating
     expenses:
      Cost of
       license    $1,187       $-            $-          $-      $-     $1,187
      Cost of
       service   937,655        -        (9,752)          -       -    927,903
      Research
       and
       develop-
       ment      101,296       -         (2,137)          -       -     99,159

      Selling,
       general
       and
       admini-
       strative  183,608       -         (9,682)          -       -    173,926

       Amortization
       of
       purchased
       intangible
       assets and
       other      42,758 (42,758)             -           -       -          -
    Total
     operating
     expenses  1,266,504 (42,758)       (21,571)          -       -  1,202,175
               --------- -------        -------         ---     ---  ---------

    Operating
     income      202,276  42,758         21,571           -       -    266,605
                 -------  ------         ------         ---     ---    -------

    Interest
     expense
     and other,
     net          23,476        -             -     (21,800)             1,676
                  ------      ---           ---     -------                ---

    Income
     taxes        21,897        -             -           -   13,035    34,932
                  ------      ---           ---         ---   ------    ------

    Net
     income     $156,903  $42,758       $21,571     $21,800 $(13,035) $229,997
                --------  -------       -------     -------  -------- --------




                               AMDOCS LIMITED
     Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                               (in thousands)

                                            Six months ended
                                             March 31, 2009
                                            ----------------
                                       Reconciliation items
                       ------------------------------------------------
                 GAAP  Amortization Restructuring
                            of       charges and     Equity
                        purchased     in-process      based
                        intangible   research and  compensation   Tax    Non-
                         assets      development     expense     effect  GAAP
                 ----  ------------ -------------  ------------  ------  ----
    Operating
     expenses:
      Cost of
       license    $1,560       $-         $-          $-         $-     $1,560
      Cost of
       service   940,048        -          -     (10,661)        -     929,387
      Research and
       Develop-
       ment      108,979        -          -      (2,039)        -     106,940
      Selling,
       general and
       admini-
       strative  174,573        -          -     (11,234)        -     163,339

      Amortization
       of purchased
       intangible
       assets and
       other      41,755  (41,755)         -           -         -           -
      Restructuring
       charges and
       in-process
       research and
       develop-
       ment       20,780        -    (20,780)          -         -           -
    Total
     operating
     expenses  1,287,695  (41,755)   (20,780)    (23,934)        -   1,201,226
               ---------  -------    -------     -------       ---   ---------

    Operating
     income      177,228   41,755     20,780      23,934         -     263,697
                 -------   ------     ------      ------       ---     -------

    Income
     taxes        18,823        -          -           -    20,221      39,044
                  ------      ---        ---         ---    ------      ------

    Net income  $154,877  $41,755    $20,780     $23,934  $(20,221)   $221,125
                --------  -------    -------     -------  --------    --------



                                 AMDOCS LIMITED
                     Condensed Consolidated Balance Sheets
                                 (in thousands)


                                                         As of
                                               March 31,        September
                                                   2010          30, 2009
                                              ----------       ----------

    ASSETS

    Current assets
    Cash, cash equivalents and short-term
     interest-bearing investments              $1,361,499       $1,173,041
    Accounts receivable, net, including
     unbilled of $38,807 and $21,749,
     respectively                                 484,764          454,965
    Deferred income taxes and taxes
     receivable                                   118,794          117,848
    Prepaid expenses and other current assets      90,317          126,704
                                                                   -------
        Total current assets                    2,055,374        1,872,558

    Equipment and leasehold improvements, net     254,180          279,659
    Goodwill and other intangible assets, net   1,883,765        1,766,761
    Other noncurrent assets                       433,614          409,439
    Total assets                               $4,626,933       $4,328,417

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
    Accounts payable,  accruals and other        $463,457         $415,371
    Deferred revenue                              189,489          186,158
    Deferred income taxes and taxes payable        13,507            9,338
                                                   ------            -----
        Total current liabilities                 666,453          610,867
    Noncurrent liabilities and other              557,085          504,497
    Shareholders' equity                        3,403,395        3,213,053
    Total liabilities and shareholders'
     equity                                    $4,626,933       $4,328,417
                                               ==========       ==========



                                  AMDOCS LIMITED
                      Consolidated Statements of Cash Flows
                                  (in thousands)


                                                  Six months ended March
                                                           31,
                                                -----------------------
                                                    2010             2009
                                                    ----             ----

    Cash Flow from Operating Activities:
    Net income                                  $156,903         $154,877
    Reconciliation of net income to net cash
     provided by operating activities:
      Depreciation and amortization               97,524           98,491
      Impairment on investment in a subsidiary    21,800                -
      In-process research and development              -            5,640
      Loss on sale of equipment                      148                -
      Equity-based compensation expense           21,571           23,934
      Deferred income taxes                       (4,312)          11,258
      Gain on repurchase of convertible notes          -           (2,185)
      Excess tax benefit from equity-based
       compensation                                  (98)              (2)
      (Gain) loss from short-term interest-
       bearing investments                          (427)           4,991
    Net changes in operating assets and
     liabilities, net of amounts acquired:
      Accounts receivable                        (12,355)          67,244
      Prepaid expenses and other current assets   28,485            5,905
      Other noncurrent assets                    (26,540)          21,725
      Accounts payable, accrued expenses and
       accrued personnel                          34,846          (61,315)
      Deferred revenue                            30,586          (49,005)
      Income taxes payable                         2,571          (15,932)
      Other noncurrent liabilities                 7,373          (44,027)
    Net cash provided by operating activities    358,075          221,599
                                                 -------          -------

    Cash Flow from Investing Activities:
    Payments for purchase of equipment, net      (40,074)         (47,478)
    Proceeds from sale of short-term interest-
     bearing investments                         747,201          323,234
    Purchase of short-term interest-bearing
     investments                                (871,945)        (376,579)
    Net cash paid for acquisitions              (149,685)         (61,855)
                                                --------          -------
    Net cash used in investing activities       (314,503)        (162,678)
                                                --------         --------

    Cash Flow from Financing Activities:
    Borrowing under long-term financing
     arrangements                                      -          450,000
    Redemption and repurchase of convertible
     notes                                             -         (446,795)
    Repurchase of shares                               -          (20,014)
    Proceeds from employee stock options
     exercised                                    17,325            1,797
    Payments under capital lease and short-term
     financing arrangements                         (223)            (410)
    Excess tax benefit from equity-based
     compensation                                     98                2
    Net cash provided by (used in) financing
     activities                                   17,200          (15,420)
                                                  ------          -------

    Net increase in cash and cash equivalents     60,772           43,501
    Cash and cash equivalents at beginning of
     period                                      728,762          718,850
    Cash and cash equivalents at end of period  $789,534         $762,351






                                        AMDOCS LIMITED
                                  Supplementary Information
                                        (in millions)

                                      Three months ended
                                      ------------------
                       March 31, December 31, September 30, June 30, March 31,
                          2010      2009         2009         2009      2009
                       --------- ------------ ------------- -------- ---------
      North America     $572.4      $547.6       $528.0      $527.7    $539.8
      Europe              92.1        89.5         93.0        84.4     105.0
      Rest of World       79.5        87.7         86.4        78.2      66.3

    Total Revenue       $744.0      $724.8       $707.4      $690.3    $711.1
                        ======      ======       ======      ======    ======




                                        Three months ended
                                        ------------------
                       March 31, December 31, September 30, June 30, March 31,
                          2010      2009         2009         2009      2009
                       --------- ------------ ------------- -------- ---------
    Customer
       Experience
       Systems          $689.0     $678.4        $668.6       $647.9   $668.0
      Directory           55.0       46.4          38.8         42.4     43.1

    Total Revenue       $744.0     $724.8        $707.4       $690.3   $711.1
                        ======     ======        ======       ======   ======




                                            As of
                                            -----
                       March 31, December 31, September 30, June 30, March 31,
                          2010      2009         2009         2009      2009
                       --------- ------------ ------------- -------- ---------
    12-Month
     Backlog            $2,460      $2,425       $2,385      $2,370    $2,370
                        ------      ------       ------      ------    ------



SOURCE Amdocs