News Release
Fourth Quarter Results for Fiscal 2010

Amdocs Limited Reports Quarterly Revenue of $762 Million, Up 7.7% YoY
Eli Gelman assuming CEO position on November 15, 2010

ST. LOUIS, Nov. 3, 2010 /PRNewswire via COMTEX/ --

Key highlights:

  • Eli Gelman will be appointed Chief Executive Officer of Amdocs Management Limited on November 15, 2010, accelerated from the previously announced timeframe of the first calendar quarter of 2011
  • Fourth quarter revenue of $762 million, compared to the $755-$770 million guidance range. Foreign currency movements positively impacted revenue by approximately $3 million sequentially relative to the third quarter
  • Fourth quarter non-GAAP operating income of $137 million; non-GAAP operating margin of 18.0%; GAAP operating income of $103 million
  • Fourth quarter diluted non-GAAP EPS of $0.62, compared to the $0.57-$0.60 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 $0.48 for the fourth quarter, compared to the $0.44-$0.49 guidance range
  • Free cash flow of $120 million for the fourth quarter
  • Twelve-month backlog of $2.525 billion at the end of the fourth quarter, up $55 million from the end of the third quarter
  • First quarter fiscal 2011 guidance: Expected revenue of approximately $760-$780 million and diluted non-GAAP EPS of $0.49-$0.58, excluding acquisition-related costs and approximately $0.06-$0.08 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.34-$0.45
  • Repurchased $181 million of ordinary shares during fourth quarter
  • Analyst Day rescheduled for February 23, 2011 from December 8, 2010

Amdocs Limited (NYSE: DOX) today reported that for its fiscal fourth quarter ended September 30, 2010, revenue was $762.2 million, up 1.2% sequentially from the third fiscal quarter of 2010 and up 7.7% as compared to last year's fourth fiscal quarter. Net income on a non-GAAP basis was $122.4 million, or $0.62 per diluted share, compared to non-GAAP net income of $109.2 million, or $0.53 per diluted share, in the fourth quarter of fiscal 2009. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $27.6 million, net of related tax effects, in the fourth quarter of fiscal 2010 and excludes such amortization and equity-based compensation expenses of $23.4 million, net of related tax effects, in the fourth quarter of fiscal 2009. The Company's GAAP net income for the fourth quarter of fiscal 2010 was $94.7 million, or $0.48 per diluted share, compared to GAAP net income of $85.8 million, or $0.42 per diluted share, in the prior year's fourth quarter.

"Our fourth quarter results mark a solid conclusion to fiscal 2010, a year in which Amdocs reached a positive inflection point after a period of significant macroeconomic volatility, improved its competitive position and successfully won new business globally. While there are some near-term challenges ahead, I strongly believe in the opportunities for Amdocs and have great confidence that Eli Gelman will lead the company to success in years to come. Eli has the experience, energy and deep understanding of Amdocs and our industry to reignite our long-term growth engines and invest in the future," said Dov Baharav, retiring chief executive officer of Amdocs Management Limited.

"I would like to thank Dov for his 8 years as CEO during which he has successfully positioned the company for the future. I am assuming the leadership of Amdocs with great humbleness and respect," said Eli Gelman, incoming chief executive officer. "The future of Amdocs remains bright, and I strongly believe Amdocs has the best people, products and business model to address the needs of our industry. In 2011, we plan to execute against the opportunities ahead of us with a keen focus on reaccelerating the long-term growth of the business."

Gelman continued, "In the near-term, however, we expect some pressure on profitability due to three components. We strongly believe that these actions are in the best interest of our shareholders and our customers. First, we are investing in several programs in early fiscal 2011 that span training, knowledge transfer and productivity efforts as we continue to rebuild momentum in the wake of the recession. Second, we are making investments in several customer-centric initiatives. These investments include incremental effort and costs associated with certain on-going implementations, including for customers in the cable industry. We have also identified a highly strategic emerging markets sales opportunity in the first fiscal quarter which may warrant up-front expense. Third, a portion of the implementation program at Clearwire has been suspended due to a change in the customer's business priorities. This is resulting in further pressure on our profitability, though we will continue to support all of Clearwire's subscribers on our systems in a managed services relationship."

Gelman concluded, "We believe fiscal 2011 will mark an important transition year for Amdocs as we overcome our near-term challenges and hone our focus on long-term growth initiatives. As I transition into the CEO office, we plan to provide greater detail on our long-term strategy at our Analyst Day in February. I strongly believe that the opportunities at Amdocs are vast, and I look forward to growing the business, further expanding our market leading position, and driving long-term shareholder value."

Financial Discussion of Fourth Fiscal Quarter Results

Free cash flow was $120 million for the quarter, comprised of cash flow from operations of $148 million less approximately $28 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 $2.525 billion at the end of the fourth quarter of fiscal 2010.

Financial Outlook

Amdocs expects that revenue for the first quarter of fiscal 2011 will be approximately $760-$780 million. Diluted earnings per share on a non-GAAP basis for the first quarter are expected to be $0.49-$0.58, excluding acquisition-related costs and approximately $0.06-$0.08 per share of equity-based compensation expense, net of related tax effects. Amdocs estimates GAAP diluted earnings per share for the first quarter will be $0.34-$0.45.

Fiscal Year 2010 Results

For the fiscal year ended September 30, 2010, revenue increased by 4.2% to $3.0 billion. Fiscal 2010 net income on a non-GAAP basis was $471.7 million, or $2.31 per diluted share (excluding amortization of purchased intangible assets and other acquisition related costs, equity-based compensation expense and loss from divestiture of a subsidiary, net of related tax effects, of $127.8 million), compared to non-GAAP net income of $438.9 million, or $2.11 per diluted share, in fiscal 2009 (excluding amortization of purchased intangible assets, in-process research and development write-off, restructuring charges and equity-based compensation expense, net of related tax effects, of $112.7 million). The Company's GAAP net income in fiscal 2010 was $343.9 million, or $1.69 per diluted share, compared to GAAP net income of $326.2 million, or $1.57 per diluted share, in fiscal 2009.

Conference Call Details

Amdocs will host a conference call on November 3, 2010 at 5 p.m. Eastern Time to discuss the Company's fourth 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 interest and other income (expense), 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;
  • in-process research and development write-off;
  • restructuring charges;
  • equity-based compensation expense;
  • impairment on investment in a subsidiary; 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 income (expense), 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, in-process research and development write-off, restructuring charges, equity-based compensation expense, impairment on investment in a subsidiary 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, interest and other income (expense), 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

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 $3.0 billion in fiscal 2010, Amdocs has over 19,000 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 and in our quarterly 6-Ks filed February 8, 2010, May 13, 2010 and August 9, 2010.

AMDOCS LIMITED

Consolidated Statements of Income

(in thousands, except per share data)




Three months ended


Twelve months ended



September 30,


September 30,



2010


2009


2010


2009

Revenue:









License


$ 25,276


$ 27,267


$ 100,967


$ 135,146

Service


736,918


680,152


2,883,256


2,727,461



762,194


707,419


2,984,223


2,862,607

Operating expenses:









Cost of license


375


589


2,021


2,686

Cost of service


485,916


450,122


1,903,645


1,831,947

Research and development


54,287


50,274


207,836


210,387

Selling, general and administrative


96,531


88,030


373,585


344,335

Amortization of purchased intangible assets
and other


22,197


21,559


86,703


85,153

Restructuring charges and in-process
research and development


-


-


-


20,780



659,306


610,574


2,573,790


2,495,288

Operating income


102,888


96,845


410,433


367,319










Interest and other income (expense), net


2,109


(151)


(25,135)


(1,165)

Income before income taxes


104,997


96,694


385,298


366,154










Income taxes


10,259


10,943


41,392


39,978

Net income


$ 94,738


$ 85,751


$ 343,906


$ 326,176

Basic earnings per share


$ 0.49


$ 0.42*


$ 1.70


$ 1.60*

Diluted earnings per share


$ 0.48


$ 0.42*


$ 1.69


$ 1.57*

Basic weighted average number of shares
outstanding


195,189


204,732*


202,584


204,023*

Diluted weighted average number of shares
outstanding


196,487


205,434*


204,076


208,350*


* The basic and diluted weighted average number of shares outstanding for the three and twelve months ended September 30, 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 reduced basic and dilutive earnings per share by $0.01 for the twelve months ended September 30, 2009.

AMDOCS LIMITED

Selected Financial Metrics

(in thousands, except per share data)




Three months ended


Twelve months ended



September 30,


September 30,



2010


2009


2010


2009










Revenue


$ 762,194


$ 707,419


$ 2,984,223


$ 2,862,607










Non-GAAP operating income


137,212


127,984


541,591


516,163










Non-GAAP net income


122,351


109,198


471,708


438,878










Non-GAAP diluted earnings per share


$ 0.62


$ 0.53*


$ 2.31


$ 2.11*










Diluted weighted average number of shares
outstanding


196,487


205,434*


204,076


208,350*


* The basic and diluted weighted average number of shares outstanding for the three and twelve months ended September 30, 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 reduced non-GAAP diluted earnings per share by $0.01 for the twelve months ended September 30, 2009.

AMDOCS LIMITED

Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

(in thousands)





Three months ended

September 30, 2010




Reconciliation items




GAAP

Amortization
of purchased
intangible
assets and
other

Equity based
compensation
expense

Tax effect

Non-GAAP








Operating expenses:







Cost of license


$ 375

$ -

$ -

$ -

$ 375

Cost of service


485,916

-

(5,438)

-

480,478

Research and development


54,287

-

(1,064)

-

53,223

Selling, general and administrative


96,531

-

(5,625)

-

90,906

Amortization of purchased intangible assets
and other


22,197

(22,197)

-

-

-

Total operating expenses


659,306

(22,197)

(12,127)

-

624,982








Operating income


102,888

22,197

12,127

-

137,212








Income taxes


10,259

-

-

6,711

16,970








Net income


$ 94,738

$ 22,197

$ 12,127

$ (6,711)

$ 122,351






Three months ended

September 30, 2009




Reconciliation items




GAAP

Amortization
of purchased
intangible
assets

Equity based
compensation
expense

Tax 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
and other


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


AMDOCS LIMITED

Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

(in thousands)




Twelve months ended

September 30, 2010




Reconciliation items



GAAP

Amortization of
purchased
intangible assets
and other

Equity based
compensation
expense

Loss from
divestiture of a
subsidiary

Tax effect

Non-GAAP









Operating expenses:








Cost of license


$ 2,021

$ -

$ -

$ -

$ -

$ 2,021

Cost of service


1,903,645

-

(20,061)

-

-

1,883,584

Research and development


207,836

-

(4,218)

-

-

203,618

Selling, general and administrative


373,585

-

(20,176)

-

-

353,409

Amortization of purchased intangible assets
and other


86,703

(86,703)

-

-

-

-

Total operating expenses


2,573,790

(86,703)

(44,455)

-

-

2,442,632









Operating income


410,433

86,703

44,455

-

-

541,591









Interest and other (expense) income, net


(25,135)

-

-

23,399

-

(1,736)









Income taxes


41,392

-

-

-

26,755

68,147









Net income


$ 343,906

$ 86,703

$ 44,455

$ 23,399

$ (26,755)

$ 471,708





Twelve months ended

September 30, 2009




Reconciliation items




GAAP

Amortization
of purchased
intangible
assets

Restructuring
charges and
in-process
research and
development

Equity based
compensation
expense

Tax effect

Non-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 administrative


344,335

-

-

(16,929)

-

327,406

Amortization of purchased intangible assets
and other


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


AMDOCS LIMITED

Condensed Consolidated Balance Sheets

(in thousands)



As of



September 30,
2010


September 30,
2009






ASSETS










Current assets





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


$ 1,433,299


$ 1,173,041

Accounts receivable, net, including unbilled of $62,246 and $21,749, respectively


580,000


454,965

Deferred income taxes and taxes receivable


126,083


117,848

Prepaid expenses and other current assets


112,417


126,704

Total current assets


2,251,799


1,872,558






Equipment and leasehold improvements, net


258,273


279,659

Goodwill and other intangible assets, net


1,856,178


1,766,761

Other noncurrent assets


454,354


409,439

Total assets


$ 4,820,604


$ 4,328,417






LIABILITIES AND SHAREHOLDERS' EQUITY










Current Liabilities





Accounts payable, accruals and other


$ 621,549


$ 415,371

Short-term financing arrangements


200,000


-

Deferred revenue


184,481


186,158

Deferred income taxes and taxes payable


18,117


9,338

Total current liabilities


1,024,147


610,867

Noncurrent liabilities and other


567,077


504,497

Shareholders' equity


3,229,380


3,213,053

Total liabilities and shareholders' equity


$ 4,820,604


$ 4,328,417


AMDOCS LIMITED

Consolidated Statements of Cash Flows

(in thousands)



Year ended September 30,




2010


2009


Cash Flow from Operating Activities:






Net income


$ 343,906


$ 326,176


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






Depreciation and amortization


195,940


198,119


Loss from divestiture of a subsidiary


23,399


-


In-process research and development expenses


-


5,640


Equity-based compensation expense


44,455


42,911


Loss on sale of equipment


400


197


Deferred income taxes


(22,235)


16,249


Gain on repurchase of convertible notes


-


(2,185)


Excess tax benefit from equity-based compensation


(126)


(18)


(Gain) loss from short-term interest-bearing investments


(1,284)


4,449


Net changes in operating assets and liabilities, net of amounts
acquired:






Accounts receivable, net


(131,387)


131,527


Prepaid expenses and other current assets


9,009


(13,614)


Other noncurrent assets


(35,948)


(2,690)


Accounts payable, accrued expenses and accrued personnel


187,652


(160,321)


Deferred revenue


33,927


20,956


Income taxes payable, net


20,272


(19,980)


Other noncurrent liabilities


17,218


(28,260)


Net cash provided by operating activities


685,198


519,156








Cash Flow from Investing Activities:






Payments for purchase of equipment and leasehold
improvements, net


(86,945)


(82,331)


Proceeds from sale of short-term interest-bearing investments


1,503,231


1,045,278


Purchase of short-term interest-bearing investments


(1,449,494)


(963,433)


Net cash paid for acquisitions


(200,307)


(65,890)


Net cash received from divestiture of a subsidiary and other


22,009


-


Net cash used in investing activities


(211,506)


(66,376)








Cash Flow from Financing Activities:






Borrowings under financing arrangements


200,000


450,000


Payments under financing arrangements


-


(450,000)


Redemption and repurchase of convertible notes


-


(446,795)


Repurchase of shares


(389,287)


(20,014)


Proceeds from employee stock options exercised


23,644


27,893


Payments under capital lease, short-term financing arrangements
and other


(616)


(3,952)


Net cash used in financing activities


(166,259)


(442,868)








Net increase in cash and cash equivalents


307,433


9,912


Cash and cash equivalents at beginning of year


728,762


718,850


Cash and cash equivalents at end of year


$ 1,036,195


$ 728,762



AMDOCS LIMITED

Supplementary Information

(in millions)




Three months ended



September 30,
2010


June 30,
2010


March 31,
2010


December 31,
2009


September 30,
2009

North America


$ 569.7


$ 572.3


$ 572.4


$ 547.6


$ 528.0

Europe


91.0


80.6


92.1


89.5


93.0

Rest of World


101.5


100.3


79.5


87.7


86.4

Total Revenue


$ 762.2


$ 753.2


$ 744.0


$ 724.8


$ 707.4





Three months ended



September 30,
2010


June 30,
2010


March 31,
2010


December 31,
2009


September 30,
2009

Customer Experience
Systems


$ 714.9


$ 693.0


$ 689.0


$ 678.4


$ 668.6

Directory


47.3


60.2


55.0


46.4


38.8

Total Revenue


$ 762.2


$ 753.2


$ 744.0


$ 724.8


$ 707.4





As of



September 30,
2010


June 30,
2010


March 31,
2010


December 31,
2009


September 30,
2009

12-Month Backlog


$ 2,525


$ 2,470


$ 2,460


$ 2,425


$ 2,385


SOURCE Amdocs