Key highlights:
- Third quarter revenue of $690 million, within the $670-$690 million guidance range
- Third quarter non-GAAP operating income of $124 million; non-GAAP operating margin of 18.0%; GAAP operating income of $93 million
- Third quarter diluted non-GAAP EPS of $0.53, excluding acquisition-related costs and equity-based compensation expense, net of related tax effects
- Diluted GAAP EPS of $0.42 for the third quarter
- Free cash flow of $96 million for the third quarter
- 12-month backlog of $2.37 billion at the end of the third quarter
- Fourth quarter fiscal 2009 guidance: Expected revenue of approximately $670-$690 million and diluted non-GAAP EPS of $0.47-$0.51, excluding 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 $0.34-$0.39
ST. LOUIS, July 22 /PRNewswire-FirstCall/ -- Amdocs Limited (NYSE: DOX) today reported that for its fiscal third quarter ended June 30, 2009, revenue was $690.3 million, a decrease of 15.9% from last year's third quarter and down 2.9% sequentially. Net income on a non-GAAP basis was $108.6 million, or $0.53 per diluted share, compared to non-GAAP net income of $132.5 million, or $0.61 per diluted share, in the third quarter of fiscal 2008. Non-GAAP net income excludes amortization of purchased intangible assets and equity-based compensation expenses of $23.0 million, net of related tax effects, in the third quarter of fiscal 2009 and excludes such amortization, in-process research and development write-off and equity-based compensation expenses of $31.8 million, net of related tax effects, in the third quarter of fiscal 2008. The Company's GAAP net income for the third quarter of fiscal 2009 was $85.5 million, or $0.42 per diluted share, compared to GAAP net income of $100.7 million, or $0.46 per diluted share, in the prior year's third quarter.
"We are pleased with our results for the third fiscal quarter, particularly in light of the on-going strain in the global economy. Favorable foreign currency movements increased third quarter revenue and EPS relative to our expectations for the quarter. Even without currency benefits, our results were at or above the mid-point of our guidance ranges. Additionally, backlog remained stable and we continued to meet our profit and cash flow objectives, all of which are encouraging," said Dov Baharav, chief executive officer of Amdocs Management Limited.
Baharav continued, "Demand conditions, however, remain weak, particularly for large transformational projects, as our customers manage their budgets tightly. As a result, we anticipate that our revenue may continue to trend down sequentially, albeit at a moderating pace, until we see demand improve. This view is reflected in our fourth fiscal quarter guidance, and we believe this trend could persist into early fiscal 2010."
Baharav concluded, "While the pace of new deal activity is still slow, we signed important deals in the third quarter. We saw relative strength in our cable, managed services and Interactive domains, highlighted by several key wins."
- For J:COM, Japan's largest multiple system and channel operator, Amdocs is fully modernizing the customer's billing system and replacing a competitor's CRM system, all based on the CES 7.5 product platform.
- Amdocs signed a six-year managed services contract with Elisa, a Finnish service provider, to consolidate eight billing systems across Elisa's wireless, wireline, Internet and cable TV lines of business onto the Amdocs Billing platform, as well as, deploy Amdocs Enterprise Product Catalog 7.5 to centralize information from five different existing catalogs. The new contract builds on an existing relationship with the customer, where Amdocs billing, ordering and CRM systems were previously deployed to support Elisa's wireless operations.
- Within Interactive, Amdocs signed several contracts during the third quarter, including two within the emerging markets. In Latin America, Amdocs signed a key contract with a large service provider to support its wireless portal development, digital commerce and personalization across all of its affiliates. Importantly, the deal included products based on both the QPass and ChangingWorlds technologies, demonstrating early synergies within our Interactive portfolio. Amdocs also signed two additional ChangingWorlds contracts, both in the Asia-Pacific region.
Free cash flow was $96 million for the quarter, comprised of cash flow from operations of $114 million less approximately $18 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 $2.37 billion at the end of the third quarter of fiscal 2009.
Financial Outlook
Amdocs expects that revenue for the fourth quarter of fiscal 2009 will be approximately $670-$690 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the fourth quarter to be $0.47-$0.51, excluding 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 quarter will be $0.34-$0.39.
Amdocs will host a conference call on July 22, 2009 at 5 p.m. Eastern Time to discuss the Company's third quarter results. The call will be carried live on the Internet via the Amdocs website, 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 income taxes and non-GAAP net income. These non-GAAP measures exclude the following items:
- amortization of purchased intangible assets;
- in-process research and development write-off;
- restructuring charges;
- equity-based compensation expense; 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 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, 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, 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, enabling world-leading service providers to deliver an integrated, innovative and the intentional customer experience((TM)) - at every point of service. Amdocs provides solutions that deliver customer experience excellence, combining the software, service and expertise to help its customers execute their strategies and achieve service, operational and financial excellence. A global company with revenue of $3.16 billion in fiscal 2008, Amdocs has approximately 17,000 employees and serves customers in more than 50 countries around the world. For more information, visit Amdocs at 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, 2008 filed on December 8, 2008 and in our quarterly 6-K furnished on February 9, 2009 and May 12, 2009.
AMDOCS LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
-------------------- -----------------------
2009 2008 2009 2008
--------- --------- ----------- ----------
Revenue:
License $ 26,075 $ 35,244 $ 107,879 $ 93,570
Service 664,190 785,044 2,047,309 2,243,249
--------- --------- ----------- ----------
690,265 820,288 2,155,188 2,336,819
Operating expenses:
Cost of license 537 555 2,097 2,267
Cost of service 441,777 528,437 1,381,825 1,493,134
Research and development 51,134 56,137 160,113 168,240
Selling, general and
administrative 81,732 104,632 256,305 300,963
Amortization of purchased
intangible assets 21,839 22,796 63,594 66,302
Restructuring charges and
in-process research and
development (1) - 1,780 20,780 1,780
--------- --------- ----------- ----------
597,019 714,337 1,884,714 2,032,686
--------- --------- ----------- ----------
Operating income 93,246 105,951 270,474 304,133
Interest income (expense)
and other, net 2,514 6,159 (1,014) 23,797
--------- --------- ----------- ----------
Income before income taxes 95,760 112,110 269,460 327,930
Income taxes 10,212 11,438 29,035 31,735
--------- --------- ----------- ----------
Net income $ 85,548 $ 100,672 $ 240,425 $ 296,195
========= ========= =========== ==========
Basic earnings per share $ 0.42 $ 0.49 $ 1.19 $ 1.43
========= ========= =========== ==========
Diluted earnings per
share (2) $ 0.42 $ 0.46 $ 1.16 $ 1.36
========= ========= =========== ==========
Basic weighted average
number of shares
outstanding 202,750 206,329 202,624 207,069
========= ========= =========== ==========
Diluted weighted average
number of shares
outstanding 203,515 219,120 208,514 220,315
========= ========= =========== ==========
(1) Restructuring charges and in-process research and development for
the nine months ended June 30, 2009 includes restructuring charges
of $15,140, and in-process research and development of $5,640.
(2) To reflect the impact of assumed conversion of the convertible notes,
$0 and $1,486, representing interest expense and amortization of
issuance costs, were added back to net income for the three and nine
months ended June 30, 2009, respectively, and $985 and $2,955 were
added back to net income for the three and nine months ended June
30, 2008, respectively, for the purpose of computing diluted
earnings per share.
AMDOCS LIMITED
Selected Financial Metrics
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
--------------------- -------------------------
2009 2008 2009 2008
--------- --------- ----------- -----------
Revenue $ 690,265 $ 820,288 $ 2,155,188 $ 2,336,819
Non-GAAP operating
income 124,482 146,608 388,179 415,925
Non-GAAP net income 108,555 132,463 329,680 382,400
Non-GAAP diluted
earnings per
share (1) $ 0.53 $ 0.61 $ 1.59 $ 1.75
Diluted weighted
average number of
shares outstanding 203,515 219,120 208,514 220,315
(1) To reflect the impact of assumed conversion of the convertible
notes, $0 and $1,486, representing interest expense and
amortization of issuance costs, were added back to net income for
the three and nine months ended June 30, 2009, respectively, and
$985 and $2,955 were added back to net income for the three and
nine months ended June 30, 2008, respectively, for the purpose of
computing diluted earnings per share.
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Three months ended
June 30, 2009
------------------------------------------------------
Reconciliation items
---------------------------------
Amortization
of
purchased Equity based
intangible compensation Tax
GAAP assets expense effect Non-GAAP
------------------------------------------------------
Operating
expenses:
Cost of license $ 537 $ - $ - $ - $ 537
Cost of service 441,777 - (6,115) - 435,662
Research and
development 51,134 - (1,238) - 49,896
Selling, general
and
administrative 81,732 - (2,044) - 79,688
Amortization of
purchased
intangible
assets 21,839 (21,839) - - -
------------------------------------------------------
Total operating
expenses 597,019 (21,839) (9,397) - 565,783
------------------------------------------------------
------------------------------------------------------
Operating income 93,246 21,839 9,397 - 124,482
------------------------------------------------------
------------------------------------------------------
Income taxes 10,212 - - 8,229 18,441
------------------------------------------------------
------------------------------------------------------
Net income $ 85,548 $ 21,839 $ 9,397 $ (8,229) $ 108,555
------------------------------------------------------
Three months ended
June 30, 2008
------------------------------------------------------------
Reconciliation items
--------------------------------------------
Amortization
of In-process
purchased research Equity based
intangible and compensation Tax Non-
GAAP assets development expense effect GAAP
------------------------------------------------------------
Operating
expenses:
Cost of
license $ 555 $ - $ - $ - $ - $ 555
Cost of
service 528,437 - - (5,998) - 522,439
Research
and
development 56,137 - - (1,104) - 55,033
Selling,
general
and
administ-
rative 104,632 - - (8,979) - 95,653
Amortization
of
purchased
intangible
assets 22,796 (22,796) - - - -
Restruct-
uring
charges and
in-process
research
and
development 1,780 - (1,780) - - -
------------------------------------------------------------
Total
operating
expenses 714,337 (22,796) (1,780) (16,081) - 673,680
------------------------------------------------------------
------------------------------------------------------------
Operating
income 105,951 22,796 1,780 16,081 - 146,608
------------------------------------------------------------
------------------------------------------------------------
Income
taxes 11,438 - - - 8,866 20,304
------------------------------------------------------------
------------------------------------------------------------
Net income $100,672 $ 22,796 $ 1,780 $ 16,081 $(8,866) $132,463
------------------------------------------------------------
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Nine months ended
June 30, 2009
---------------------------------------------------------------
Reconciliation items
-----------------------------------------
Restruct-
uring
charges
Amortiz- and Equity
ation of in-process based
purchased research compen-
intangible and sation Tax Non-
GAAP assets development expense effect GAAP
---------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,097 $ - $ - $ - $ - $ 2,097
Cost of
service 1,381,825 - - (16,776) - 1,365,049
Research
and
develop-
ment 160,113 - - (3,277) - 156,836
Selling,
general
and
administ-
rative 256,305 - - (13,278) - 243,027
Amortiz-
ation
of
purchased
intangible
assets 63,594 (63,594) - - - -
Restruct-
uring
charges
and
in-
process
research
and
develop-
ment 20,780 - (20,780) - - -
---------------------------------------------------------------
Total
operating
expenses 1,884,714 (63,594) (20,780) (33,331) - 1,767,009
---------------------------------------------------------------
---------------------------------------------------------------
Operating
income 270,474 63,594 20,780 33,331 - 388,179
---------------------------------------------------------------
---------------------------------------------------------------
Income
taxes 29,035 - - - 28,450 57,485
---------------------------------------------------------------
---------------------------------------------------------------
Net
income $ 240,425 $ 63,594 $ 20,780 $ 33,331 $(28,450) $ 329,680
---------------------------------------------------------------
Nine months ended
June 30, 2008
---------------------------------------------------------------
Reconciliation items
----------------------------------------
Amortiz- Equity
ation of In-process based
purchased research compen-
intangible and sation Tax Non-
GAAP assets development expense effect GAAP
---------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,267 $ - $ - $ - $ - $ 2,267
Cost of
service 1,493,134 - - (17,711) - 1,475,423
Research
and
develop-
ment 168,240 - - (3,626) - 164,614
Selling,
general
and
administ-
rative 300,963 - - (22,373) - 278,590
Amortiz-
ation
of
purchased
intangible
assets 66,302 (66,302) - - - -
Restruct-
uring
charges
and
in-
process
research
and
develop-
ment 1,780 - (1,780) - - -
---------------------------------------------------------------
Total
operating
expenses 2,032,686 (66,302) (1,780) (43,710) - 1,920,894
---------------------------------------------------------------
---------------------------------------------------------------
Operating
income 304,133 66,302 1,780 43,710 - 415,925
---------------------------------------------------------------
---------------------------------------------------------------
Income
taxes 31,735 - - - 25,587 57,322
---------------------------------------------------------------
---------------------------------------------------------------
Net
income $ 296,195 $ 66,302 $1,780 $43,710 $(25,587) $ 382,400
---------------------------------------------------------------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
---------------------------
June 30, September 30,
2009 2008
----------- -------------
ASSETS
Current assets
Cash, cash equivalents and short-term
interest-bearing investments $ 1,280,289 $ 1,244,378
Accounts receivable, net, including unbilled
of $44,439 and $48,264 respectively 507,507 573,764
Deferred income taxes and taxes receivable 106,906 84,515
Prepaid expenses and other current assets 95,224 102,930
----------- -------------
Total current assets 1,989,926 2,005,587
Equipment and leasehold improvements, net 279,247 317,081
Goodwill and other intangible assets, net 1,790,572 1,796,922
Other noncurrent assets 439,104 459,473
----------- -------------
Total assets $ 4,498,849 $ 4,579,063
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accruals $ 429,533 $ 600,285
Short-term portion of financing arrangements 1,037 1,660
Deferred revenue 185,097 197,851
Deferred income taxes and taxes payable 24,358 30,228
----------- -------------
Total current liabilities 640,025 830,024
0.50% Convertible notes 1,020 450,000
Long-term loan 300,000 -
Noncurrent liabilities and other 483,135 493,848
Shareholders' equity 3,074,669 2,805,191
----------- -------------
Total liabilities and shareholders' equity $ 4,498,849 $ 4,579,063
=========== =============
AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands)
Nine months ended June 30,
--------------------------
2009 2008
----------- ----------
Cash Flow from Operating Activities:
Net income $ 240,425 $ 296,195
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 147,869 143,978
In-process research and development 5,640 1,780
Loss (gain) on sale of equipment 67 (55)
Equity-based compensation expense 33,331 43,710
Deferred income taxes 13,097 6,378
Gain on repurchase of convertible notes (2,185) -
Excess tax benefit from equity-based
compensation (10) (209)
Loss from short-term interest-bearing
investments 5,821 1,771
Net changes in operating assets and
liabilities, net of amounts acquired:
Accounts receivable 63,843 (148,472)
Prepaid expenses and other current assets 6,875 8,166
Other noncurrent assets 2,263 (40,420)
Accounts payable, accrued expenses and
accrued personnel (139,466) (20,728)
Deferred revenue 8,815 12,283
Income taxes payable (12,638) (25,429)
Noncurrent liabilities and other (38,268) 26,590
----------- ----------
Net cash provided by operating activities 335,479 305,538
----------- ----------
Cash Flow from Investing Activities:
Proceeds from sale of equipment and
leasehold improvements 429 1,103
Payments for purchase of equipment and
leasehold improvements (65,474) (101,530)
Proceeds from sale of short-term
interest-bearing investments 601,844 575,602
Purchase of short-term interest-bearing
investments (676,472) (513,462)
Net cash paid for acquisition (61,890) (56,970)
----------- ----------
Net cash used in investing activities (201,563) (95,257)
----------- ----------
Cash Flow from Financing Activities:
Borrowing under long-term financing
arrangements 450,000 -
Payments under long-term financing
arrangements (150,000) -
Redemption of convertible notes (330,780) (174)
Repurchase of convertible notes (116,015) -
Repurchase of shares (20,014) (172,339)
Payments under capital lease and
short-term financing arrangements (3,632) -
Borrowing under short-term financing
arrangements 540 -
Proceeds from employee stock options
exercised 2,026 33,755
Excess tax benefit from equity-based
compensation 10 209
----------- ----------
Net cash used in financing activities (167,865) (138,549)
----------- ----------
Net (decrease) increase in cash and cash
equivalents (33,949) 71,732
Cash and cash equivalents at beginning of
period 718,850 615,501
----------- ----------
Cash and cash equivalents at end of
period $ 684,901 $ 687,233
=========== ==========
AMDOCS LIMITED
Supplementary Information
(in millions)
----------------------------------------------------------
Three months ended
----------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
-------- --------- ------------ ------------- --------
North America $ 527.7 $ 539.8 $ 561.6 $ 558.7 $ 570.5
Europe 84.4 105.0 111.4 150.9 133.0
Rest of World 78.2 66.3 80.8 115.7 116.8
-------- --------- ------------ ------------- --------
Total Revenue $ 690.3 $ 711.1 $ 753.8 $ 825.3 $ 820.3
======== ========= ============ ============= ========
----------------------------------------------------------
Three months ended
----------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
-------- --------- ------------ ------------- --------
Customer
Experience $ 647.9 $ 668.0 $ 701.0 $ 756.5 $ 756.9
Systems
Directory 42.4 43.1 52.8 68.8 63.4
-------- --------- ------------ ------------- --------
Total Revenue $ 690.3 $ 711.1 $ 753.8 $ 825.3 $ 820.3
======== ========= ============ ============= ========
----------------------------------------------------------
As of
----------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
-------- --------- ------------ ------------- --------
12-Month
Backlog $ 2,370 $ 2,370 $ 2,400 $ 2,420 $ 2,420
-------- --------- ------------ ------------- --------
SOURCE Amdocs Limited
