Comverse Technology Fourth Quarter Fiscal 2004 Results: Sales Of $259,141,000, Up 28% Year-Over-Year; GAAP and Pro Forma Earnings Per Diluted Share Of $0.10

Business Wire, March 14, 2005

NEW YORK -- Comverse Technology, Inc. (NASDAQ: CMVT) announced sales of $259,141,000 for the fourth quarter of fiscal year 2004, ended January 31, 2005, an increase of 27.6% compared to sales of $203,029,000 for the fourth quarter of fiscal year 2003, ended January 31, 2004. Net income on a generally accepted accounting principles ("GAAP") basis for the fourth quarter of fiscal 2004 was $21,043,000 ($0.10 per diluted share), compared to net income of $4,928,000 ($0.02 per diluted share) for the fourth quarter of fiscal 2003. Net income on a pro forma basis was $22,299,000 ($0.10 per diluted share) in the fourth quarter of fiscal 2004, compared to pro forma net income of $3,248,000 ($0.02 per diluted share) in the fourth quarter of fiscal 2003. A reconciliation between results on a GAAP basis and results on a pro forma basis is provided in a table immediately following the Pro Forma Consolidated Statements of Operations.

Kobi Alexander, Chairman and CEO of Comverse Technology, stated, "Each of our three major operating units achieved year-over-year growth in both profitability and revenue in the fourth quarter. Comverse, our network systems division, saw demand for its Total Communication portfolio, which enables a broad range of telecommunications applications, including call answering and call completion services, advanced messaging and other data applications such as wireless content delivery, and real-time prepaid billing. Our Verint Systems unit continued to expand its activities providing actionable intelligence for security and business intelligence applications. Our Ulticom division saw demand for its service enabling software across several application areas, including prepaid billing for wireless voice and data services, and IP softswitching."

The Company ended the quarter with record cash and cash equivalents, bank time deposits and short-term investments of $2,249,630,000, working capital of $2,139,789,000, record total assets of $2,925,286,000 and record stockholders' equity of $1,794,029,000.

Financial highlights at and for the twelve and three month periods ended January 31, 2005 and prior year comparisons are as follows:

Consolidated Statements of Operations (Gaap Basis)
                 (in Thousands, Except Per Share Data)
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                                    Twelve Months   Three Months Ended
                                         Ended         (unaudited)
                                  ------------------------------------
                                  January  January  January  January
                                     31,      31,      31,      31,
                                    2004     2005     2004     2005
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Sales                             $765,892 $959,442 $203,029 $259,141
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Cost of sales                      327,560  380,710   83,194  101,058
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Research and development, net      216,457  236,657   54,355   63,806
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Selling, general and
 administrative                    254,376  290,445   65,420   76,676
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In-process research and
 development and other
 acquisition-related charges             -    4,635        -        -
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Workforce reduction, restructuring
 and impairment charges (credits)   (2,123)      62   (1,890)       -
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Income (loss) from operations      (30,378)  46,933    1,950   17,601
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Interest and other income, net      38,958   36,223    7,538   11,253
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Income before income tax
 provision, minority interest and
 equity in the earnings (losses)
 of affiliates                       8,580   83,156    9,488   28,854
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Income tax provision                 8,206   13,214    2,112    4,003
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Minority interest and equity in
 the earnings (losses) of
 affiliates                         (5,760) (12,612)  (2,448)  (3,808)
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Net income (loss)                  $(5,386) $57,330   $4,928  $21,043
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Earnings (loss) per share:
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Diluted                             $(0.03)   $0.28    $0.02    $0.10
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Basic                               $(0.03)   $0.29    $0.03    $0.11
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Weighted average shares:
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Diluted                            190,351  204,804  199,986  211,029
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Basic                              190,351  196,033  193,074  197,762
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