Comverse Technology Announces Record Second Quarter Results: Excluding One-Time Acquisition Charges, EPS -Diluted- Of $0.36 Vs. $0.26; Sales Up 35%, Net Income Up 52% To Record Levels

Business Wire, August 29, 2000

Business Editors

WOODBURY, N.Y.--(BUSINESS WIRE)--Aug. 29, 2000

Comverse Technology, Inc. (NASDAQ:CMVT) announced for the second quarter of fiscal year 2000, ended July 31, 2000, net income growth of 52%, excluding one-time acquisition charges, to a record $62,489,000 ($0.36 per diluted share), compared with $41,023,000 ($0.26 per diluted share) for the second quarter of fiscal 1999.

The Company also achieved record sales of $292,070,000 for the second quarter of fiscal 2000, an increase of 35% over the $216,810,000 posted for the second quarter of fiscal 1999.

During the second quarter of fiscal 2000, Comverse acquired Loronix Information Systems, Inc. and Syborg Informationsysteme GmbH, and took one-time after-tax charges totaling $10,786,000 for acquisition related costs. Prior-period figures have been restated to account for the pooling-of-interests transaction with Loronix.

Kobi Alexander, Chairman, President and CEO of Comverse, stated, "The acceleration in our second quarter sales growth reflects continued strong demand for Comverse's products, particularly among wireless network operators, which account for the majority of our sales. More than 340 wireless and wireline telecommunications network operators have selected Comverse Network Systems Division's enhanced services systems and software, which enable the provision of revenue-generating value-added services including call answering, wireless data and Internet-based information services, prepaid wireless services, unified messaging (voice, fax, and email in a single mailbox), one-touch call return, voice-controlled wireless web portal and other speech recognition-based services, and other personal communication services. In addition, our Comverse Infosys Division, which markets digital multimedia recording and monitoring systems and contact center quality assurance and customer relationship management tools, continues to benefit from the growth in contact centers and the increased use of performance evaluation and improvement tools."

The Company ended the quarter with cash and cash equivalents, bank time deposits and short-term investments of $895,059,000, working capital of $1,013,577,000, total assets of $1,606,656,000 and stockholders' equity of $915,696,000, all of which represent record levels.

Financial highlights at and for the six and three month periods ended July 31, 2000 and prior year comparisons are as follows:

                         Financial Highlights
            (In thousands, except per share data; unaudited)

      Operations Data (excluding one-time acquisition charges):


                         Six Months Ended          Three Months Ended

                       July 31,     July 31,    July 31,     July 31,
                         1999         2000        1999         2000


Sales                 $ 424,707   $ 560,539    $ 216,810    $292,070


Cost of sales           165,800     212,040       83,839     109,989

Research and
 development, net        79,713     105,845       40,913      55,128

Selling, general
 and administrative      90,544     118,217       45,812      61,705

Royalties and
 license fees             9,472      10,207        4,732       5,327

Income from operations   79,178     114,230       41,514      59,921

Interest and other
 income, net              6,332      13,950        3,322       7,405

Income before income
 tax provision           85,510     128,180       44,836      67,326

Income tax provision      7,361       9,485        3,813       4,837

Net income             $ 78,149   $ 118,695     $ 41,023    $ 62,489

Net income per
 share, diluted          $ 0.50     $  0.68       $ 0.26      $ 0.36

Net income per
 share, basic            $ 0.55     $  0.75       $ 0.29      $ 0.40


      Note: The above amounts for the three months and six months ended
July 31, 2000 have been adjusted to eliminate the one-time
acquisition-related charges, recognized during the second quarter
ended July 31, 2000, of $10,786, net of tax. The above amounts for the
six months ended July 31, 1999 have been adjusted to eliminate the
one-time acquisition-related charges, recognized during the first
quarter ended April 30, 1999, of $934, net of tax.

                         Financial Highlights
           (In thousands, except per share data; unaudited)

      Operations Data (including one-time acquisition charges,
recognized during the second quarter ended July 31, 2000, of $10,786,
net of tax, and one-time acquisition-related charges, recognized
during the first quarter ended April 30, 1999, of $934, net of tax):

                            Six Months Ended       Three Months Ended

                           July 31,    July 31,   July 31,    July 31,
                             1999        2000       1999        2000

Sales                     $ 424,707  $ 560,539   $ 216,810   $292,070

Cost of sales               165,800    212,040      83,839    109,989

Research and
 development, net            79,713    105,845      40,913     55,128

Selling, general and
 administrative              90,544    118,217      45,812     61,705

Royalties and license fees    9,472     10,207       4,732      5,327

One-time acquisition-
 related charges              1,018     11,623          -      11,623

Income from operations       78,160    102,607      41,514     48,298

Interest and other
 income, net                  6,332     13,950       3,322      7,405

Income before income
 tax provision               84,492    116,557      44,836     55,703

Income tax provision          7,277      8,648       3,813      4,000

Net income                 $ 77,215   $107,909    $ 41,023   $ 51,703

Net income per share,
 diluted                    $  0.49    $  0.62     $  0.26    $  0.30

Net income per share,
 basic                      $  0.55    $  0.68     $  0.29    $  0.33


                         Financial Highlights
                            (In thousands)
Balance Sheet Data:

ASSETS
                                           January 31,     July 31,
                                               2000          2000
                                                         (Unaudited)
CURRENT ASSETS:
     Cash and cash equivalents              $ 342,535       $ 474,900
     Bank time deposits and short-term
      investments                             439,054         420,159
     Accounts receivable, net                 266,203         306,141
     Inventories                              101,728         116,688
     Prepaid expenses and
      other current assets                     41,243          53,209

TOTAL CURRENT ASSETS                        1,190,763       1,371,097
PROPERTY AND EQUIPMENT, net                   126,101         141,660
INVESTMENTS                                    19,749          42,702
OTHER ASSETS                                   36,234          51,197
TOTAL ASSETS                              $ 1,372,847     $ 1,606,656

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable and accrued expenses  $ 235,860       $ 249,376
     Advance payments from customers           94,777         104,556
     Other current liabilities                  1,822           3,588

TOTAL CURRENT LIABILITIES                     332,459         357,520
CONVERTIBLE SUBORDINATED DEBENTURES           300,000         300,000
LIABILITY FOR SEVERANCE PAY                     6,185           8,090
OTHER LIABILITIES                               9,364          25,350
TOTAL LIABILITIES                             648,008         690,960

STOCKHOLDERS' EQUITY:
 Common stock, $0.10 par value -
 authorized, 300,000,000
 shares; issued and outstanding,
 155,776,298 and 159,006,020 shares            15,577          15,901

 Additional paid-in capital                   424,075         505,875

 Retained earnings                            282,764         390,148

 Accumulated other
  comprehensive income                          2,423           3,772

TOTAL STOCKHOLDERS' EQUITY                    724,839         915,696

TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                     $ 1,372,847     $ 1,606,656