Letter to Shareholders
Dear Fellow Shareholders,Fiscal 2013 marked another year of solid progress for Amdocs as we won strategically important deals across the globe and further extended our market leadership with the launch of Amdocs CES 9, the most advanced product suite available to service providers today. We also demonstrated the quality of our execution by successfully delivering on a number of major transformational deals. Moreover, we remained focused on continually delivering cost and efficiency improvements across our organization in order to support strategic investments in future growth.
Demonstrating our commitment to driving long-term shareholder value, we exited fiscal 2013 with record revenues, stable profitability and earnings per share growth that was consistent with the high-end of our expectations at the beginning of the year. In addition, the Board of Directors authorized the company’s first increase in the quarterly cash dividend, subject to approval by shareholders at the upcoming annual meeting.
Launched Innovative Amdocs CES 9
One of the highlights of fiscal 2013 was the launch of Amdocs CES 9. This innovative product suite redefines the service provider’s operating environment by delivering real-time integration from the device to the network, breaking down the traditional barriers to service and system convergence and enabling enriched customer experiences.
Amdocs CES 9 also marks the introduction of big data analytics into Amdocs products and solutions, allowing service providers to utilize valuable customer insights in their offerings.
North America and Emerging Markets Drove Results
We delivered a strong year in North America as our customers refocused on strategic investments. Our business with AT&T was particularly strong, but we also benefited from a broader pick-up in activity as we helped our customers respond to rapidly changing competitive dynamics in the North American communications market.
Additionally, we continued to enhance our presence in the emerging markets, sustaining double-digit revenue growth in these markets in fiscal 2013. We penetrated new accounts, including our first project with the Telefónica Group in Latin America for business support systems (BSS) transformation at Telefónica Argentina. On the other side of the world, we continued delivering a major transformation program at Globe Telecom of the Philippines, amongst others. The project at Globe represents one of the fastest transformations in the industry and, we believe, embodies a “market-first” in the Asia Pacific region due to its complexity and scope.
In Europe, we experienced a year-over-year revenue decline in the fiscal year, although we maintained relatively stable sequential revenue throughout the year. Difficult economic and regulatory conditions continued to pressure the region and have driven long decision cycles. Despite this, we made significant progress in bolstering our relationships with several leading customers. As an example, we secured a five-year managed services contract with the Vodafone Group. Under this agreement, we have established a Shared Service and Development Center to support customer care and billing applications development, operations and maintenance across multiple Vodafone affiliates.
Accelerated Our Network Software Strategy through Acquisitions
During the fiscal year, we began to accelerate our network software strategy with the strategic acquisition of Actix, which closed in the fourth fiscal quarter. We quickly followed the Actix transaction by signing a definitive agreement to acquire Celcite, which we announced in the first fiscal quarter of 2014 and expect to close in the first half of the current fiscal year. Together, Actix and Celcite represent an expansion of our network software strategy to include network optimization and self-optimizing network (SON) solutions. By combining the leading product and services capabilities of these two companies within Amdocs, we believe we will be well-positioned to capture the network optimization opportunity and execute our successful product-led services business model in a new, growing domain.
Continued Focus on Shareholder Returns
Another highlight of our financial performance in fiscal 2013 was a strong free cash flow of $563 million. Our financial strength enabled us to return $367 million to shareholders by way of our share repurchase program, which contributed to record earnings per share. We returned an additional $84 million to shareholders through our quarterly dividend program. Our Board has also approved a 19% increase in our cash dividend rate to 62 cents a year, commencing in April 2014, subject to shareholder approval. The decision to raise the dividend demonstrates our confidence in the future success of Amdocs and is consistent with our view that a dependable income stream will further enhance the total return we provide to our shareholders.
As a result of the continued progress we made in fiscal 2013, we enter the coming year well-positioned to execute on our strategic objectives. We see opportunities for growth in our core business and our fiscal 2014 outlook is enhanced by our recent acquisition of Actix and our pending Celcite acquisition. Overall, we feel confident in our ability to continue providing value both to our customers and to our shareholders over the coming year.
Thank you for your continued support, confidence and commitment.
|President and CEO,|
|Robert A. Minicucci|
|Chairman of the Board,|