News Release
Third Quarter Results for Fiscal 2011

Amdocs Limited Reports Quarterly Revenue of $801 Million, Up 6.4% YoY

ST. LOUIS, July 27, 2011 /PRNewswire via COMTEX/ --

Key highlights:

  • After 14 years, Bruce Anderson will retire as Chairman of the Board of Directors at the end of the current fiscal year, but has agreed to stand for reelection for one additional term as a Director to facilitate the transition in leadership. Robert Minicucci, a current Director also with a14-year tenure on the Board, has been appointed to succeed Mr. Anderson in the role of Chairman, effective October 1, 2011.
  • Third fiscal quarter revenue of $801 million, compared to the $790-$805 million guidance range. Foreign currency movements positively impacted revenue by approximately $5 million sequentially relative to the second fiscal quarter of 2011
  • Third fiscal quarter non-GAAP operating income of $132 million; non-GAAP operating margin of 16.4%; GAAP operating income of $106 million
  • Third fiscal quarter diluted non-GAAP EPS of $0.61, compared to the $0.57-$0.63 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 $0.50 for the third fiscal quarter, compared to the $0.45-$0.53 guidance range
  • Free cash flow of $125 million for the third fiscal quarter
  • Twelve-month backlog of $2.62 billion at the end of the third fiscal quarter, up $30 million from the end of the second fiscal quarter of 2011
  • Fourth quarter fiscal 2011 guidance (excluding the impact of the pending acquisition of Bridgewater Systems Corporation): Expected revenue of approximately $800-$815 million and diluted non-GAAP EPS of $0.58-$0.64, excluding amortization of purchased intangible assets and other 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 $0.46-$0.54
  • Repurchased $157 million of ordinary shares during the third fiscal quarter

Amdocs Limited (NYSE: DOX) today reported that for its third fiscal quarter ended June 30, 2011, revenue was $801.4 million, up 1.6% sequentially from the second fiscal quarter of 2011 and up 6.4% as compared to last year's third fiscal quarter. Net income on a non-GAAP basis was $113.3 million, or $0.61 per diluted share, compared to non-GAAP net income of $119.4 million, or $0.58 per diluted share, in the third quarter of fiscal 2010. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $21.5 million, net of related tax effects, in the third quarter of fiscal 2011 and excludes such amortization, loss from divestiture of a subsidiary and equity-based compensation expenses of $27.1 million, net of related tax effects, in the third quarter of fiscal 2010. The Company's GAAP net income for the third quarter of fiscal 2011 was $91.8 million, or $0.50 per diluted share, compared to GAAP net income of $92.3 million, or $0.45 per diluted share, in the prior year's third quarter.

"Our solid third fiscal quarter results reflect global demand for Amdocs solutions, on-going momentum in the emerging markets, and improving execution in Europe. In the emerging markets, activity levels among current and new customers remain high as service providers in Asia and Latin America increasingly require more sophisticated BSS and OSS systems to support a better customer experience. Additionally, in Europe we are beginning to see the results of our greater focus and management re-alignment in the region. We are also beginning to reap the benefits from our recent investment initiatives, which drove the modest sequential improvement in profitability during the third quarter," said Eli Gelman, chief executive officer of Amdocs Management Limited.

Gelman continued, "We continue to execute on our share repurchase plan, demonstrating our confidence in Amdocs' future and our commitment to enhancing shareholder value. Since we resumed our buyback activity in April 2010, we have repurchased $821 million of our ordinary shares, or approximately 14% of our shares outstanding."

Gelman said, "During the third quarter we signed a definitive agreement to acquire Bridgewater Systems Corporation which, when closed, will mark an additional step forward in our strategy to redefine the ways in which service providers can monetize data services. Service providers today need to find more advanced and innovative methods to fairly charge for the value and usage of data. The combination of Amdocs and Bridgewater will enable service providers to support virtually any pricing strategy for data services, based on the combination of advanced customer models coupled with network level information. We look forward to closing the deal by the end of the current quarter and officially welcoming the Bridgewater team to Amdocs."

Gelman concluded, "Looking into the fourth fiscal quarter, we are pleased that our outlook reflects similar trends to those we delivered in the third quarter (excluding the effects of currency fluctuations). Global demand remains stable, and we believe the investments we are currently making in our customers, our products and our people are serving to strengthen our competitive position. Last, we would like to thank Bruce Anderson for his outstanding contributions to Amdocs over the past 14 years as Chairman of the Board. His leadership capabilities have positively impacted the success of Amdocs. We also welcome our long-time Director Rob Minicucci as our new Chairman and look forward to working with him in the next stage of Amdocs' growth."

Financial Discussion of Third Fiscal Quarter Results

Free cash flow was $125 million for the third fiscal quarter, comprised of cash flow from operations of approximately $150 million less $25 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 $2.62 billion at the end of the third quarter of fiscal 2011.

Financial Outlook

Amdocs expects that revenue for the fourth quarter of fiscal 2011 will be approximately $800-$815 million. Diluted earnings per share on a non-GAAP basis for the fourth quarter are expected to be $0.58-$0.64, excluding amortization of purchased intangible assets and other 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 fourth fiscal quarter will be $0.46-$0.54.

Conference Call Details

Amdocs will host a conference call on July 27, 2011 at 5:00 p.m. Eastern Time to discuss the Company's third fiscal 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 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;
  • equity-based compensation expense;
  • loss from divestiture of 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 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 and other acquisition related costs, 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, interest and other 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 approximately $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, 2010 filed on December 7, 2010 and in our quarterly 6-K filed on February 8, 2011 and May 11, 2011.

AMDOCS LIMITED


Consolidated Statements of Income


(in thousands, except per share data)




Three months ended


Nine months ended



June 30,


June 30,



2011


2010


2011


2010








Revenue:









License


$ 29,093


$ 25,592


$ 87,694


$ 75,691

Service


772,316


727,657


2,277,831


2,146,338



801,409


753,249


2,365,525


2,222,029

Operating expenses:









Cost of license


630


459


1,528


1,646

Cost of service


521,113


480,074


1,542,489


1,417,729

Research and development


54,414


52,253


162,942


153,549

Selling, general and administrative


102,315


93,446


305,736


277,054

Amortization of purchased intangible assets and other


17,265


21,748


53,018


64,506



695,737


647,980


2,065,713


1,914,484

Operating income


105,672


105,269


299,812


307,545










Interest and other expense, net


184


3,768


3,252


27,244

Income before income taxes


105,488


101,501


296,560


280,301










Income taxes


13,703


9,236


37,274


31,133

Net income


$ 91,785


$ 92,265


$ 259,286


$ 249,168

Basic earnings per share


$ 0.50


$ 0.45


$ 1.38


$ 1.21

Diluted earnings per share


$ 0.50


$ 0.45


$ 1.37


$ 1.21

Basic weighted average number of shares outstanding


183,273


203,786


187,566


205,078

Diluted weighted average number of shares outstanding


184,682


205,471


188,973


206,606


AMDOCS LIMITED

Selected Financial Metrics

(in thousands, except per share data)



Three months ended


Nine months ended



June 30,


June 30,



2011


2010


2011


2010










Revenue


$ 801,409


$ 753,249


$ 2,365,525


$ 2,222,029










Non-GAAP operating income


131,709


137,774


379,758


404,379










Non-GAAP net income


113,303


119,360


323,393


349,357










Non-GAAP diluted earnings per share


$ 0.61


$ 0.58


$ 1.71


$ 1.69










Diluted weighted average number of shares outstanding


184,682


205,471


188,973


206,606


AMDOCS LIMITED

Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

(in thousands)



Three months ended

June 30, 2011



Reconciliation items



GAAP

Amortization of
purchased
intangible assets
and other

Equity based
compensation
expense

Tax effect


Non-GAAP

Operating expenses:






Cost of license

$ 630

$ -

$ -

$ -

$ 630

Cost of service

521,113

-

(3,783)

-

517,330

Research and development

54,414

-

(821)

-

53,593

Selling, general and administrative

102,315

-

(4,168)

-

98,147

Amortization of purchased intangible assets and other

17,265

(17,265)

-

-

-

Total operating expenses

695,737

(17,265)

(8,772)

-

669,700







Operating income

105,672

17,265

8,772

-

131,709







Income taxes

13,703

-

-

4,519

18,222







Net income

$ 91,785

$ 17,265

$ 8,772

$ (4,519)

$ 113,303















Three months ended

June 30, 2010



Reconciliation items




GAAP

Amortization of
purchased
intangible assets
and other

Equity based
compensation
expense

Impairment on
investment
in a
subsidiary

Tax effect

Non-GAAP


Operating expenses:









Cost of license


$ 459

$ -

$ -

$ -

$ -

$ 459


Cost of service


480,074

-

(4,871)

-

-

475,203


Research and development


52,253

-

(1,017)

-

-

51,236


Selling, general and administrative


93,446

-

(4,869)

-

-

88,577


Amortization of purchased intangible assets and other


21,748

(21,748)

-

-

-

-


Total operating expenses


647,980

(21,748)

(10,757)

-

-

615,475











Operating income


105,269

21,748

10,757

-

-

137,774











Interest and other expense, net


(3,768)

-

-

1,599

-

(2,169)











Income taxes


9,236

-

-

-

7,009

16,245











Net income


$ 92,265

$ 21,748

$ 10,757

$ 1,599

$ (7,009)

$ 119,360



AMDOCS LIMITED

Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

(in thousands)



Nine months ended

June 30, 2011



Reconciliation items



GAAP

Amortization of
purchased
intangible assets
and other

Equity based
compensation
expense

Tax effect

Non-GAAP

Operating expenses:






Cost of license

$ 1,528

$ -

$ -

$ -

$ 1,528

Cost of service

1,542,489

-

(9,923)

-

1,532,566

Research and development

162,942

-

(1,987)

-

160,955

Selling, general and administrative

305,736

-

(15,018)

-

290,718

Amortization of purchased intangible assets and other

53,018

(53,018)

-

-

-

Total operating expenses

2,065,713

(53,018)

(26,928)

-

1,985,767







Operating income

299,812

53,018

26,928

-

379,758







Income taxes

37,274

-

-

15,839

53,113







Net income

$ 259,286

$ 53,018

$ 26,928

$ (15,839)

$ 323,393

















Nine months ended

June 30, 2010




Reconciliation items



GAAP

Amortization of
purchased
intangible assets
and other

Equity based
compensation
expense

Impairment on
investment
in a
subsidiary

Tax effect

Non-GAAP









Operating expenses:








Cost of license


$ 1,646

$ -

$ -

$ -

$ -

$ 1,646

Cost of service


1,417,729

-

(14,623)

-

-

1,403,106

Research and development


153,549

-

(3,154)

-

-

150,395

Selling, general and administrative


277,054

-

(14,551)

-

-

262,503

Amortization of purchased intangible assets and other


64,506

(64,506)

-

-

-

-

Total operating expenses


1,914,484

(64,506)

(32,328)

-

-

1,817,650









Operating income


307,545

64,506

32,328

-

-

404,379









Interest and other expense, net


(27,244)

-

-

23,399

-

(3,845)









Income taxes


31,133

-

-

-

20,044

51,177









Net income


$ 249,168

$ 64,506

$ 32,328

$ 23,399

$ (20,044)

$ 349,357


AMDOCS LIMITED

Condensed Consolidated Balance Sheets

(in thousands)



As of



June 30,
2011


September 30,
2010






ASSETS










Current assets





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


$ 1,133,844


$ 1,433,299

Accounts receivable, net, including unbilled of $96,687 and $62,246, respectively


589,103


580,000

Deferred income taxes and taxes receivable


121,802


126,083

Prepaid expenses and other current assets


126,156


112,417

Total current assets


1,970,905


2,251,799






Equipment and leasehold improvements, net


243,572


258,273

Goodwill and other intangible assets, net


1,804,176


1,856,178

Other noncurrent assets


486,694


454,354

Total assets


$ 4,505,347


$ 4,820,604






LIABILITIES AND SHAREHOLDERS' EQUITY










Current liabilities





Accounts payable, accruals and other


$ 562,237


$ 621,549

Short-term financing arrangements


-


200,000

Deferred revenue


181,237


184,481

Deferred income taxes and taxes payable


17,310


18,117

Total current liabilities


760,784


1,024,147






Other noncurrent liabilities


604,289


567,077

Shareholders' equity


3,140,274


3,229,380

Total liabilities and shareholders' equity


$ 4,505,347


$ 4,820,604


AMDOCS LIMITED

Consolidated Statements of Cash Flows

(in thousands)




Nine months ended June 30,



2011


2010






Cash Flow from Operating Activities:





Net income


$ 259,286


$ 249,168

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





Depreciation and amortization


138,219


146,046

Impairment on investment in a subsidiary


-


23,399

Equity-based compensation expense


26,928


32,328

Deferred income taxes


11,171


(14,431)

Excess tax benefit from equity-based compensation


(158)


(103)

Loss (gain) from short-term interest-bearing investments


1,423


(581)

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





Accounts receivable


(2,763)


(60,923)

Prepaid expenses and other current assets


(6,373)


33,181

Other noncurrent assets


(33,747)


(23,960)

Accounts payable, accrued expenses and accrued personnel


(48,957)


112,705

Deferred revenue


6,314


22,532

Income taxes payable


12,711


16,463

Other noncurrent liabilities


23,797


1,736

Net cash provided by operating activities


387,851


537,560






Cash Flow from Investing Activities:





Payments for purchase of equipment and leasehold improvements, net


(80,048)


(59,504)

Proceeds from sale of short-term interest-bearing investments


506,986


1,070,065

Purchase of short-term interest-bearing investments


(440,083)


(1,239,792)

Net cash paid for acquisitions


-


(199,496)

Other


(22,907)


20,336

Net cash used in investing activities


(36,052)


(408,391)






Cash Flow from Financing Activities:





Payments under financing arrangements


(200,000)


-

Repurchase of shares


(431,770)


(208,643)

Proceeds from employee stock options exercised


49,696


22,025

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


(748)


(159)

Net cash used in financing activities


(582,822)


(186,777)






Net decrease in cash and cash equivalents


(231,023)


(57,608)

Cash and cash equivalents at beginning of period


1,036,195


728,762

Cash and cash equivalents at end of period


$ 805,172


$ 671,154







AMDOCS LIMITED

Supplementary Information

(in millions)




Three months ended



June 30,
2011


March 31,
2011


December 31,
2010


September 30,
2010


June 30,
2010

North America


$ 584.9


$ 598.4


$ 564.6


$ 569.7


$ 572.3

Europe


105.5


97.2


98.4


91.0


80.6

Rest of World


111.0


93.3


112.2


101.5


100.3

Total Revenue


$ 801.4


$ 788.9


$ 775.2


$ 762.2


$ 753.2





Three months ended



June 30,
2011


March 31,
2011


December 31,
2010


September 30,
2010


June 30,
2010

Emerging Markets Revenue


$ 73.2


$ 52.1


$ 67.8


$ 69.5


$ 56.2





Three months ended



June 30,
2011


March 31,
2011


December 31,
2010


September 30,
2010


June 30,
2010

Managed Services Revenue


$ 384.2


$ 382.6


$ 371.2


$ 355.5


$ 368.7














Three months ended



June 30,
2011


March 31,
2011


December 31,
2010


September 30,
2010


June 30,
2010

Customer Experience Systems


$ 751.1


$ 737.2


$ 725.4


$ 714.9


$ 693.0

Directory


50.3


51.7


49.8


47.3


60.2

Total Revenue


$ 801.4


$ 788.9


$ 775.2


$ 762.2


$ 753.2





As of



June 30,
2011


March 31,
2011


December 31,
2010


September 30,
2010


June 30,
2010

12-Month Backlog


$ 2,620


$ 2,590


$ 2,560


$ 2,525


$ 2,470


SOURCE Amdocs