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Second Quarter Results for Fiscal 2013
Delivers Quarterly Diluted Non-GAAP EPS of $0.73, Up 9% YoY
Quarterly Diluted GAAP EPS of $0.64, Up 7% YoY

ST. LOUIS, April 30, 2013 /PRNewswire/ --

Key highlights:

  • Second fiscal quarter revenue of $833 million, within the $820-$850 million guidance range. Foreign currency movements negatively affected revenue by approximately $2 million relative to the first quarter of fiscal 2013
  • Second fiscal quarter non-GAAP operating income of $140 million; non-GAAP operating margin of 16.8%; GAAP operating income of $123 million
  • Second fiscal quarter diluted non-GAAP EPS of $0.73, compared to the $0.69-$0.75 guidance range, excluding amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expense, net of related tax effects
  • Diluted GAAP EPS of $0.64 for the second fiscal quarter, compared to the $0.58-$0.66 guidance range
  • Free cash flow of $91 million for the second fiscal quarter
  • Twelve-month backlog of $2.81 billion at the end of the second fiscal quarter, up $10 million from the end of the first quarter of fiscal 2013
  • Repurchased $109 million of ordinary shares during the second fiscal quarter
  • The board of directors approved a $0.13 per share quarterly cash dividend to be paid on July 19, 2013
  • Third quarter fiscal 2013 guidance: Expected revenue of approximately $825-$855 million and diluted non-GAAP EPS of $0.70-$0.76, excluding amortization of purchased intangible assets and other acquisition-related costs and 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 $0.60-$0.68

Amdocs Limited (NYSE: DOX) today reported that for its fiscal quarter ended March 31, 2013, revenue was $832.9 million, up 0.8% sequentially from the first fiscal quarter of 2013 and up 3.0% as compared to last year's second fiscal quarter. Net income on a non-GAAP basis was $119.3 million, or $0.73 per diluted share, compared to non-GAAP net income of $114.7 million, or $0.67 per diluted share, in the second quarter of fiscal 2012. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $14.4 million, net of related tax effects, in the second quarter of fiscal 2013 and excludes such amortization and other acquisition related costs, gain on sale of investment and equity-based compensation expenses of $12.8 million, net of related tax effects, in the second quarter of fiscal 2012. The Company's GAAP net income for the second quarter of fiscal 2013 was $104.9 million, or $0.64 per diluted share, compared to GAAP net income of $101.9 million, or $0.60 per diluted share, in the prior fiscal year's second quarter. 

"We followed-up our strong start to fiscal 2013 by delivering record revenues in the second fiscal quarter. We achieved year-on-year improvement in North America for the second consecutive quarter, driven by AT&T and other key customers. This compensated for currency headwinds, the effects of macroeconomic uncertainty, and longer decision making cycles in Europe. Operating margin remained comfortably within our targeted range, and, with the contribution from our continued share repurchase activity, we delivered non-GAAP earnings per share growth of 9% year-on-year in the second fiscal quarter," said Eli Gelman, chief executive officer of Amdocs Management Limited.

Gelman continued, "During the quarter, we continued to sign new business and achieve key milestones with new and existing customers. For example, we have achieved the first of several important delivery milestones under the pivotal managed transformation with Globe Telecom.  Additionally, in the second fiscal quarter we reached key production milestones in the modernization of both US Cellular and Vodafone Netherland's Business Support Systems. In Broadband, Cable & Satellite, Amdocs has expanded its Comcast relationship to provide managed services for Comcast's Operational Support Systems, in addition to its billing systems."

Gelman concluded, "Our free cash flow continues to be strong and we remain focused on efficiently allocating our cash over the long-term. Looking toward the second half of fiscal 2013, we will continue to monitor macroeconomic and industry conditions closely, which include the uncertainty arising from announced M&A activity among operators in North America and macroeconomic pressures, especially in Europe.  Based on our current market outlook, we believe that we can perform within the fiscal year 2013 guidance ranges furnished at the beginning of the year and provide an attractive total return to our shareholders."

Financial Discussion of Second Fiscal Quarter Results 
Free cash flow was $91 million for the quarter, comprised of cash flow from operations of $120 million less $29 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 $2.81 billion at the end of the second quarter of fiscal 2013. 

Financial Outlook 
Amdocs expects that revenue for the third quarter of fiscal 2013 will be approximately $825-$855 million. Diluted earnings per share on a non-GAAP basis for the third fiscal quarter are expected to be $0.70-$0.76, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.05-$0.06 per share of equity-based compensation expense, net of related tax effects. Amdocs estimates GAAP diluted earnings per share for the third fiscal quarter will be $0.60-$0.68.

Quarterly Cash Dividend Program
On April 30, 2013, the Board approved the Company's next quarterly cash dividend payment and set June 28, 2013 as the record date for determining the shareholders entitled to receive the dividend, which is payable on July 19, 2013.

Conference Call Details
Amdocs will host a conference call on April 30, 2013 at 5:00 p.m. Eastern Time to discuss the Company's second fiscal 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 interest and other (expense) income, net, 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;
  • gain on sale of investment;
  • 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 interest and other (expense) income, net, 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 and other acquisition related costs, gain on sale of investment, 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 items in reviewing its results and those of its competitors, because the amounts of the items between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the items.

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, interest and other (expense) income, net, 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 
For 30 years, Amdocs has ensured service providers' success and embraced their biggest challenges. To win in the connected world, service providers rely on Amdocs to simplify the customer experience, harness the data explosion, stay ahead with new services and improve operational efficiency. The global company uniquely combines a market-leading BSS, OSS and network control product portfolio with value-driven professional services and managed services operations.  With revenue of $3.2 billion in fiscal 2012, Amdocs and its approximately 20,000 employees serve customers in more than 60 countries.

Amdocs: Embrace Challenge, Experience Success.

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, 2012 filed on December 11, 2012 and our Form 6-K furnished for the first quarter of fiscal 2013 on February 12, 2013.

 

AMDOCS LIMITED

 

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








Three months ended


Six months ended



March 31,


March 31,



2013


2012


2013


2012








Revenue:









License


$           21,901


$          26,238


$       40,817


$       62,034

Service


811,037


782,690


1,618,480


1,553,904



832,938


808,928


1,659,297


1,615,938

Operating expenses:









Cost of license


642


995


1,278


1,926

Cost of service


538,094


517,549


1,073,107


1,033,730

Research and development


60,059


60,350


119,419


121,657

Selling, general and administrative


102,683


106,842


210,143


213,179

Amortization of purchased intangible assets and other


8,605


13,320


19,838


26,526



710,083


699,056


1,423,785


1,397,018

Operating income


122,855


109,872


235,512


218,920










Interest and other (expense) income, net


(1,757)


5,286


(1,865)


1,673

Income before income taxes


121,098


115,158


233,647


220,593










Income taxes


16,186


13,288


29,720


25,992

Net income


$         104,912


$        101,870


$       203,927


$       194,601

Basic earnings per share


$               0.65


$              0.60


$             1.26


$             1.14

Diluted earnings per share


$               0.64


$              0.60


$             1.25


$             1.13

Basic weighted average number of shares outstanding


160,955


169,739


161,569


171,231

Diluted weighted average number of shares outstanding


162,884


170,971


163,239


172,397

Cash dividends declared per share


$               0.13


$                    -


$             0.26


$                  -


AMDOCS LIMITED

 

Selected Financial Metrics

(in thousands, except per share data)








Three months ended


Six months ended



March 31,


March 31,



2013


2012


2013


2012










Revenue


$     832,938


$     808,928


$    1,659,297


$    1,615,938










Non-GAAP operating income


140,169


134,312


277,384


267,119










Non-GAAP net income


119,300


114,703


238,724


225,957










Non-GAAP diluted earnings per share


$         0.73


$         0.67


$             1.46


$              1.31










Diluted weighted average number of shares outstanding


162,884


170,971


163,239


172,397

 

AMDOCS LIMITED

Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

(in thousands)




Three months ended

March 31, 2013



Reconciliation items



GAAP

Amortization of
purchased intangible
assets and other

Equity based
compensation
expense

Tax effect

Non-GAAP

Operating expenses:






Cost of license

$         642

$                 -

$             -

$             -

$       642

Cost of service

538,094

-

(4,470)

-

533,624

Research and 
      development

60,059

-

(975)

-

59,084

Selling, general and 
     
administrative

102,683

-

(3,264)

-

99,419

Amortization of purchased
  intangible assets and other

8,605

(8,605)

-

-

-

Total operating expenses

710,083

(8,605)

(8,709)

-

692,769







Operating income

122,855

8,605

8,709

-

140,169







Income taxes

16,186

-

-

2,926

19,112







Net income

$    104,912

$     8,605

$      8,709

$   (2,926)

$    119,300













 


Three months ended

March 31, 2012



Reconciliation items



GAAP

Amortization of
purchased 
intangible
assets and other

Equity based
compensation
expense

Gain on sale 
of
investment

Tax effect

 

Non-GAAP

Operating expenses:







Cost of license

$         995

$                 -

$             -

$             -

$             -

$       995

Cost of service

517,549

-

(5,763)

-

-

511,786

Research and 
      development

60,350

-

(1,172)

-

-

59,178

Selling, general and 
     
administrative

106,842

-

(4,185)

-

-

102,657

Amortization of purchased
  intangible assets and other

13,320

(13,320)

-

-

-

-

Total operating expenses

699,056

(13,320)

(11,120)

-

-

674,616








Operating income

109,872

13,320

11,120

-

-

134,312








Interest and other
 (expense) income, net

5,286

-

-

(6,270)

-

(984)








Income taxes

13,288

-

-

-

5,337

18,625








Net income

$    101,870

$     13,320

$      11,120

$        (6,270)

$   (5,337)

$    114,703















 


           AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

(in thousands)





Six months ended

March 31, 2013



Reconciliation items



GAAP

Amortization of
purchased intangible
assets and other

Equity based
compensation
expense

Tax effect

Non-GAAP

Operating expenses:






Cost of license

$      1,278

$                 -

$                 -

$             -

$      1,278

Cost of service

1,073,107

-

(9,503)

-

1,063,604

Research and
      development

119,419

-

 

(2,000)

-

117,419

Selling, general and 
     
administrative

210,143

-

 

(10,531)

-

199,612

Amortization of purchased
  intangible assets and other

19,838

(19,838)

-

-

-

Total operating expenses

1,423,785

(19,838)

(22,034)

-

1,381,913







Operating income

235,512

19,838

22,034

-

277,384







Income taxes

29,720

-

-

7,075

36,795







Net income

$  203,927

$       19,838

$       22,034

$ (7,075)

$ 238,724








Six months ended

March 31, 2012



Reconciliation items



GAAP

Amortization of
purchased
intangible assets
and other

Equity based
compensation
expense

Gain on sale 
of investment

Tax effect

Non-GAAP

Operating expenses:







Cost of license

$      1,926

$                 -

$                 -

$             -

$             -

$       1,926

Cost of service

1,033,730

-

(11,366)

-

-

1,022,364

Research and 
      development

121,657

-

 

(2,213)

-

-

119,444

Selling, general and 
     
administrative

213,179

-

 

(8,094)

-

-

205,085

Amortization of purchased
  intangible assets and other

26,526

(26,526)

-

-

-

-

Total operating expenses

1,397,018

(26,526)

(21,673)

-

-

1,348,819








Operating income

218,920

26,526

21,673

-

-

267,119








Interest and other 
 (expense) income, net

1,673

-

-

(6,270)

-

(4,597)








Income taxes

25,992

-

-

-

10,573

36,565








Net income

$    194,601

$       26,526

$       21,673

$        (6,270)

$   (10,573)

$    225,957















AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)




As of



March 31,
2013


September 30,
2012






ASSETS










Current assets





Cash, cash equivalents and short-term interest-bearing investments


$      978,157


$      1,118,177

Accounts receivable, net, including unbilled of $124,415 
    and $130,697, respectively


669,531


687,223

Deferred income taxes and taxes receivable


123,428


109,282

Prepaid expenses and other current assets


166,347


126,388

    Total current assets


1,937,463


2,041,070






Equipment and leasehold improvements, net


268,962


277,907

Goodwill and other intangible assets, net


1,862,805


1,883,064

Other noncurrent assets


424,447


443,182

Total assets


$      4,493,677


$      4,645,223






LIABILITIES AND SHAREHOLDERS' EQUITY










Current Liabilities





Accounts payable, accruals and other


$      587,551


$      690,823

Short-term financing arrangements


-


200,000

Deferred revenue


160,681


145,184

Deferred income taxes and taxes payable


33,126


29,551

    Total current liabilities


781,358


1,065,558

Other noncurrent liabilities


562,747


546,463

Shareholders' equity


3,149,572


3,033,202

Total liabilities and shareholders' equity


$      4,493,677


$      4,645,223

 

AMDOCS LIMITED

Consolidated Statements of Cash Flows

(in thousands)






Six months ended March 31,



2013


2012






Cash Flow from Operating Activities:





Net income


$             203,927


$             194,601

Reconciliation of net income to net cash provided by operating activities:





    Depreciation and amortization


73,623


79,873

    Equity-based compensation expense


22,034


21,673

    Deferred income taxes


2,879


(8,283)

Excess tax benefit from equity-based compensation


(257)


(127)

Gain on sale of investment


-


(6,270)

    Loss from short-term interest-bearing investments


1,680


895

Net changes in operating assets and liabilities:





    Accounts receivable


30,051


(36,831)

    Prepaid expenses and other current assets


(26,919)


(18,626)

    Other noncurrent assets


3,741


(1,299)

    Accounts payable, accrued expenses and accrued personnel


(72,007)


8,972

    Deferred revenue


8,456


(27,129)

    Income taxes payable


(597)


13,888

    Other noncurrent liabilities


18,923


3,145

Net cash provided by operating activities


265,534


224,482






Cash Flow from Investing Activities:





Payments for purchase of equipment and leasehold improvements, net


(58,366)


(50,204)

Proceeds from sale of short-term interest-bearing investments


144,612


210,703

Purchase of short-term interest-bearing investments


(223,077)


(192,857)

Cash received from sale of investment


-


6,270

Other


(3,599)


(4,429)

Net cash used in investing activities


(140,430)


(30,517)






Cash Flow from Financing Activities:





Payments under financing arrangements


(200,000)


(250,000)

Repurchase of shares


(212,512)


(256,545)

Proceeds from employee stock options exercised


112,849


53,715

Payments of dividends


(42,152)


-

Payments under capital lease and other


(659)


(248)

Net cash used in financing activities


(342,474)


(453,078)






Net decrease in cash and cash equivalents


(217,370)


(259,113)

Cash and cash equivalents at beginning of period


879,158


831,371

Cash and cash equivalents at end of period


$             661,788


$             572,258






 

AMDOCS LIMITED
Supplementary Information
(in millions)






Three months ended



March 31,
2013


December 31,
2012


September 30,
2012


June 30,
2012


March 31,
2012

North America


$      601.3


$      593.6


$      570.4


$      558.7


$      563.2

Europe


99.3


99.2


113.1


106.5


111.8

Rest of World


132.3


133.6


138.6


143.6


133.9

Total Revenue


$      832.9


$      826.4


$      822.1


$      808.8


$      808.9






Three months ended



March 31,
2013


December 31,
2012


September 30,
2012


June 30,
2012


March 31,
2012

Emerging Markets Revenue


$      98.1


$      98.2


$      99.9


$      101.7


$      89.4






Three months ended



March 31,
2013


December 31,
2012


September 30,
2012


June 30,
2012


March 31,
2012

Managed Services Revenue


$      439.8


$      429.8


$      423.7


$      426.8


$      414.4






Three months ended



March 31,
2013


December 31,
2012


September 30,
2012


June 30,
2012


March 31,
2012

Customer Experience Systems


$      789.3


$      783.8


$      783.1


$      766.2


$      758.9

Directory


43.6


42.6


39.0


42.6


50.0

Total Revenue


$      832.9


$      826.4


$      822.1


$      808.8


$      808.9






As of



March 31,
2013


December 31,
2012


September 30,
2012


June 30,
2012


March 31,
2012

12-Month Backlog


$      2,810


$      2,800


$      2,790


$      2,760


$      2,725

 

SOURCE Amdocs

Elizabeth W. Grausam McDermon, Vice President, Corporate Strategy and Investor Relations, Amdocs, 314-212-8328, dox_info@amdocs.com