Form 8-K Comverse, Inc. For: Dec 10

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December 10, 2014 7:03 AM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
December 10, 2014
COMVERSE, INC.
�
(Exact name of registrant as specified in its charter)

Delaware
001-35572
04-3398741
�
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)

200 Quannapowitt Parkway
Wakefield, MA
01880

(Address of Principal Executive Offices)
(Zip Code)

Registrant's telephone number, including area code: (781) 246-9000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02����Results of Operations and Financial Condition
On December 10, 2014, Comverse, Inc. (the Company) issued a press release providing selected financial information for its third fiscal quarter ended October 31, 2014. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated by reference in its entirety herein.
The information contained in this Current Report, including the press release attached as an exhibit hereto, shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that Section. The information disclosed in this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by a specific reference in such filing.

�Item 9.01.����Financial Statements and Exhibits
Exhibit No.
Description
99.1
Press Release of Comverse, Inc., dated December 10, 2014.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized
����
�
�
COMVERSE, INC.
�
�
�
�
�
�
Date: December 10, 2014
By:
/s/ Thomas B. Sabol
�
Name:
Thomas B. Sabol
�
Title:
Senior Vice President, Chief Financial Officer










EXHIBIT INDEX

�
�
�
Exhibit No.
Description
99.1
Press release of Comverse, Inc., dated December 10, 2014
























Exhibit 99.1
CONTACT: Mary T. Conway
Conway Communications
for Comverse, Inc.
(781) 772-1679

Comverse Announces Fiscal 2014 Third Quarter Results;
Conference Call to be Held Today at 8:00 AM

WAKEFIELD, MA, December�10, 2014 - Comverse, Inc. (Comverse; NASDAQ: CNSI) today announced its results for the third fiscal quarter ended October 31, 2014.
Consolidated Highlights: Below is selected consolidated financial information for the three and nine months ended October 31, 2014 and 2013, prepared in accordance with generally accepted accounting principles (GAAP), except as noted.
Comverse, Inc.:
Three Months Ended October 31,
�
Nine Months Ended October 31,
(In thousands)
2014
�
2013
�
2014
�
2013
Total revenue
$
123,119

�
$
160,416

�
$
357,571

�
$
485,987

Costs and expenses
�
�
�
�
�
�
�
Cost of revenue
76,624

�
95,888

�
232,948

�
290,336

Research and development, net
15,007

�
17,536

�
45,285

�
50,476

Selling, general and administrative
25,534

�
31,283

�
89,228

�
103,342

Other operating expenses
8,046

�
1,005

�
12,701

�
7,859

Total costs and expenses
125,211

�
145,712

�
380,162

�
452,013

(Loss) income from operations
(2,092
)
�
14,704

�
(22,591
)
�
33,974

Expense adjustments
12,114

�
5,634

�
27,877

�
10,220

Comverse performance (1)
10,022

�
20,338

�
5,286

�
44,194

�
�
�
�
�
�
�
�
Income (loss) before income tax (expense) benefit
5,138

�
11,816

�
(16,895
)
�
26,361

Income tax (expense) benefit
(4,188
)
�
11,320

�
(15,152
)
�
(23,452
)
Net income (loss)
950

�
23,136

�
(32,047
)
�
2,909

Basic earnings (loss) per share
$
0.04

�
$
1.04

�
$
(1.44
)
�
$
0.13

Diluted earnings (loss) per share
$
0.04

�
$
1.03

�
$
(1.44
)
�
$
0.13

�
�
�
�
�
�
�
�
Interest expense
(122
)
�
(211
)
�
(476
)
�
(565
)
Depreciation and amortization
$
(5,329
)
�
$
(4,753
)
�
$
(14,890
)
�
$
(14,070
)
�
�
�
�
�
�
�
�
Operating margin
(1.7
)%
�
9.2
%
�
(6.3
)%
�
7.0
%
Comverse performance margin
8.1
�%
�
12.7
%
�
1.5
�%
�
9.1
%
�
�
�
�
�
�
�
�
Net cash used in operating activities (2)
$
(16,050
)
�
$
(15,028
)
�
$
(65,434
)
�
$
(5,387
)

(1) "Comverse performance" has not been prepared in accordance with GAAP. See Presentation of Non-GAAP Financial Measures below.
(2) Includes approximately $10.9 million of cash proceeds related to an Italian VAT refund received during the nine months ended October 31, 2013.

"I am pleased to report that in the quarter just completed, we made good progress, both in the marketplace, within the communication service provider and enterprise markets, as well as operationally, in implementing our recent company




realignment. I believe our revised strategy is having an impact and our third quarter results reflect that improvement, compared to the previous quarter, said Philippe Tartavull, President and CEO of Comverse, Inc.�
�Business Segment Highlights:

�
Three Months Ended October 31,
�
Nine Months Ended October 31,
�
2014
�
2013
�
2014
�
2013
�
(Dollars in thousands)
SEGMENT RESULTS
�
�
�
�
�
�
�
BSS
�
�
�
�
�
�
�
Segment revenue
$
68,235

�
$
70,892

�
$
185,262

�
$
221,314

Gross margin
45.1
%
�
40.3
%
�
43.0
%
�
38.6
%
Income from operations
17,925

�
12,513

�
39,280

�
35,301

Operating margin
26.3
%
�
17.7
%
�
21.2
%
�
16.0
%
Segment performance
18,625

�
13,204

�
41,377

�
37,522

Segment performance margin
27.3
%
�
18.6
%
�
22.3
%
�
17.0
%
Digital Services
�
�
�
�
�
�
�
��Segment revenue
$
54,884

�
$
89,524

�
$
172,309

�
$
264,673

Gross margin
38.9
%
�
48.0
%
�
37.6
%
�
46.4
%
Income from operations
12,786

�
35,102

�
42,285

�
98,914

Operating margin
23.3
%
�
39.2
%
�
24.5
%
�
37.4
%
Segment performance
12,885

�
35,063

�
42,388

�
99,093

Segment performance margin
23.5
%
�
39.2
%
�
24.6
%
�
37.4
%
All Other
�
�
�
�
�
�
�
Loss from operations
$
(32,803
)
�
$
(32,911
)
�
$
(104,156
)
�
$
(100,241
)
Segment performance
(21,488
)
�
(27,929
)
�
(78,479
)
�
(92,421
)

Selected Balance Sheet Highlights: Below is selected balance sheet data:
�
As of
�(In millions)
October 31, 2014
�
July 31, 2014
�
�
�
�
Cash and cash equivalents
$
175.5

�
$
181.6

Restricted cash (including long-term restricted cash) and bank time deposits
44.0

�
72.7

Total
$
219.5

�
$
254.3

On August 6, 2014, the escrow under the merger of Verint Systems Inc. and Comverse Technology, Inc. was released and the company received the escrow amount of approximately $25.0 million.
Conference Call Details
Comverse will be conducting a conference call today, December�10, 2014 at 8:00 a.m. ET. To listen to the conference call live, please dial (678) 825-8369. Please dial-in at least ten minutes before the scheduled start time. A live webcast can be accessed at www.comverse.com by following links to the events and presentations page under the Investors section. Following the call, a replay of the webcast will be archived in the same location.





Segment Performance
We evaluate our business by assessing the performance of each of our operating segments. Our Chief Executive Officer is our chief operating decision maker (CODM). The CODM uses segment performance, as defined below, as the primary basis for assessing the financial results of the operating segments and for the allocation of resources. Segment performance, as we define it in accordance with the Financial Accounting Standards Board's guidance relating to segment reporting, is not necessarily comparable to other similarly titled captions of other companies.
Segment performance is computed by management as (loss) income from operations adjusted for the following: (i) stock-based compensation expense; (ii) amortization of intangible assets; (iii) compliance-related professional fees; (iv) compliance-related compensation and other expenses; (v) strategic-related costs (vi) write-off of property and equipment; (vii) certain litigation settlements and related costs; (viii) Italian VAT recovery recorded within operating expense; (ix) restructuring expenses; and (x) certain other gains and expenses. Compliance-related professional fees relate to fees and expenses recorded in connection with our efforts to remediate material weaknesses in internal control over financial reporting for the fiscal year ended January 31, 2014.
Presentation of Non-GAAP Financial Measures
We provide Comverse performance, a non-GAAP financial measure, as additional information for our operating results. This measure is not in accordance with, or an alternative for, GAAP financial measures and may be different from, or not comparable to similarly titled or other non-GAAP financial measures used by other companies. We believe that the presentation of this non-GAAP financial measure provides useful information to investors regarding certain additional financial and business trends relating to our results of operations as viewed by management in monitoring our businesses, reviewing financial results and for planning purposes. See Consolidated Reconciliation of GAAP to Non-GAAP Financial Measures below.
About Comverse, Inc.
At the core of the evolution of how we communicate, exchange information and monetize the digital world, Comverse enables the creation and monetization of innovative digital services for telecom and enterprise service providers through its proven and innovative product portfolio that includes managed BSS and Policy (PCRF), Enterprise Billing and Digital Services - all backed by Managed and Professional Services. Comverses extensive customer base spans more than 125 countries with solutions successfully delivered to over 450 communication service providers serving more than two billion subscribers. Comverses solutions are available in a variety of delivery models, including on-site, cloud, hosted/SaaS and managed services. For more information, visit www.comverse.com.
Forward-Looking Statements
This press release includes forward-looking statements. Forward-looking statements include financial projections, statements of plans and objectives for future operations, statements of future economic performance, and statements of assumptions relating thereto. In some cases, forward-looking statements can be identified by the use of terminology such as may, expects, plans, anticipates, estimates, believes, potential, projects, forecasts, intends, or the negative thereof or other comparable terminology. By their very nature, forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance and the timing of events to differ materially from those anticipated, expressed or implied by the forward-looking statements in this press release. Such risks or uncertainties may give rise to future claims and increase exposure to contingent liabilities. These risks and uncertainties relate to (among other factors) the market price of our stock, operating expenses and cash flows, variability of our tax provision, and the additional risks described in the sections entitled Forward-Looking Statements and Item 1A, Risk Factors and elsewhere in the company's Annual Report on Form 10-K filed with the SEC on April 16, 2014, or in subsequently filed periodic, current or other reports. We undertake no commitment to update or revise any forward-looking statements except as required by law.
These risks and uncertainties discussed above, as well as others, are discussed in greater detail in our filings with the SEC. The documents and reports we file with the SEC are available through us, or our website, www.comverse.com, or through the SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) at www.sec.gov.




COMVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except share and per share data)
�
Three Months Ended October 31,
�
Nine Months Ended October 31,
�
2014
�
2013
�
2014
�
2013
Revenue:
�
�
�
�
�
�
�
Product revenue
$
25,482

�
$
49,413

�
$
73,768

�
$
158,808

Service revenue
97,637

�
111,003

�
283,803

�
327,179

Total revenue
123,119

�
160,416

�
357,571

�
485,987

Costs and expenses:
�
�
�
�
�
�
�
Product costs
13,729

�
23,551

�
39,537

�
79,936

Service costs
62,895

�
72,337

�
193,411

�
210,400

Research and development, net
15,007

�
17,536

�
45,285

�
50,476

Selling, general and administrative
25,534

�
31,283

�
89,228

�
103,342

Other operating expenses:
�
�
�
�
�
�
�
Restructuring expenses and write-off of property and equipment
8,046

�
1,005

�
12,701

�
7,859

Total other operating expenses
8,046

�
1,005

�
12,701

�
7,859

Total costs and expenses
125,211

�
145,712

�
380,162

�
452,013

�(Loss) income from operations
(2,092
)
�
14,704

�
(22,591
)
�
33,974

Interest income
126

�
121

�
341

�
436

Interest expense
(122
)
�
(211
)
�
(476
)
�
(565
)
Foreign currency transaction gain (loss), net
7,257

�
(2,733
)
�
6,327

�
(7,761
)
Other (expense) income, net
(31
)
�
(65
)
�
(496
)
�
277

Income (loss) before income tax (expense) benefit
5,138

�
11,816

�
(16,895
)
�
26,361

Income tax (expense) benefit
(4,188
)
�
11,320

�
(15,152
)
�
(23,452
)
Net income (loss)
$
950

�
$
23,136

�
$
(32,047
)

$
2,909

Weighted average common shares outstanding:
�
�
�
�
�
�
�
Basic
22,216,878

�
22,218,600

�
22,304,366

�
22,138,389

Diluted
22,294,590

�
22,412,267

�
22,304,366

�
22,312,009

Earnings (loss) per share:
�
�
�
�
�
�
�
Basic earnings (loss) per share
$
0.04

�
$
1.04

�
$
(1.44
)
�
$
0.13

Diluted earnings (loss) per share
$
0.04

�
$
1.03

�
$
(1.44
)
�
$
0.13








COMVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share and per share data)
�
October�31,
2014
�
January�31,
2014
ASSETS
�
�
�
Current assets:
�
�
�
Cash and cash equivalents
$
175,462

�
$
254,580

Restricted cash and bank deposits
35,546

�
34,343

Accounts receivable, net of allowance of $4,585 and $6,945, respectively
101,207

�
89,361

Inventories
14,379

�
16,166

Deferred cost of revenue
9,367

�
14,500

Deferred income taxes
2,080

�
2,329

Prepaid expenses
19,723

�
17,000

Other current assets
12,378

�
1,680

Total current assets
370,142

�
429,959

Property and equipment, net
45,998

�
41,541

Goodwill
151,846

�
150,346

Intangible assets, net
5,035

�
5,153

Deferred cost of revenue
33,805

�
45,717

Deferred income taxes
1,119

�
1,720

Long-term restricted cash
8,493

�
33,815

Other assets
33,176

�
40,586

Total assets
$
649,614

�
$
748,837

LIABILITIES AND (DEFICIT) EQUITY
�
�
�
Current liabilities:
�
�
�
Accounts payable and accrued expenses
$
143,938

�
$
168,406

Deferred revenue
220,887

�
239,902

Deferred income taxes
845

�
514

Income taxes payable
158

�
2,102

Total current liabilities
365,828

�
410,924

Deferred revenue
94,197

�
113,426

Deferred income taxes
46,487

�
43,735

Other long-term liabilities
145,930

�
147,942

Total liabilities
652,442

�
716,027

Commitments and contingencies

�

Deficit (equity):
�
�
�
Common stock, $0.01 par value - authorized, 100,000,000 shares; issued 22,575,789 and 22,286,123 shares, respectively; outstanding, 21,910,740 and 22,251,226 shares, respectively
226

�
223

Treasury stock, at cost, 665,049 and 34,897 shares, respectively
(15,291
)
�
(1,024
)
Accumulated deficit
(56,298
)
�
(24,251
)
Additional paid in capital
43,173

�
34,530

Accumulated other comprehensive income
25,362

�
23,332

Total (deficit) equity
(2,828
)
�
32,810

Total liabilities and (deficit) equity
$
649,614

�
$
748,837








COMVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
�
Nine Months Ended October 31,
�
2014
�
2013
Cash flows from operating activities:
�
Net (loss) income
$
(32,047
)
�
$
2,909

Non-cash operating items:
�
�
�
Depreciation and amortization
14,890

�
14,070

Provision for doubtful accounts
740

�
824

Stock-based compensation expense
8,606

�
8,011

Deferred income taxes
3,933

�
15,050

Inventory write-downs
2,174

�
3,916

Other non-cash items, net
1,622

�
(1,355
)
Changes in assets and liabilities:
�
�
�
Accounts receivable
(14,353
)
�
37,156

Inventories
(2,484
)
�
(19
)
Deferred cost of revenue
17,055

�
30,322

Prepaid expense and other current assets
(10,179
)
�
(433
)
Accounts payable and accrued expense
(22,447
)
�
(16,870
)
Income taxes
(2,367
)
�
(1,379
)
Deferred revenue
(33,835
)
�
(89,955
)
Tax contingencies
4,290

�
(4,624
)
Other assets and liabilities
(1,032
)
�
(3,010
)
Net cash used in operating activities
(65,434
)
�
(5,387
)
Cash flows from investing activities:
�
�
�
Proceeds from sales and maturities of investments


�
100

Purchases of property and equipment
(17,698
)
�
(9,832
)
Acquisition of Solaiemes, net of cash acquired
(2,673
)
�


Net change in restricted cash and bank deposits
24,063

�
(27,324
)
Proceeds from asset sales
86

�
78

Other, net


�
743

Net cash provided by (used in) investing activities
3,778

�
(36,235
)
Cash flows from financing activities:
�
�
�
CTI capital contribution


�
25,000

Payment for repurchase of common stock in connection with tax liabilities upon settlement of stock awards
(984
)
�
(820
)
Payment for repurchase of common stock under repurchase program
(13,126
)
�


Proceeds from exercises of stock options
40

�
846

Proceeds from loan
87

�


Net cash (used in) provided by financing activities
(13,983
)
�
25,026

Effects of exchange rates on cash and cash equivalents
(3,479
)
�
(2,139
)
Net decrease in cash and cash equivalents
(79,118
)
�
(18,735
)
Cash and cash equivalents, beginning of period�
254,580

�
262,921

Cash and cash equivalents, end of period
$
175,462

�
$
244,186

Non-cash investing transactions:
�
�
�
Accrued but unpaid purchases of property and equipment
$
3,348

�
$
1,278

Inventory transfers to property and equipment
$
2,082

�
$
3,201








COMVERSE, INC. AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Table of Reconciliation from GAAP Income (loss) from operations to Non GAAP Comverse Performance
Three Months Ended October 31,
�
Nine Months Ended October 31,
2014
�
2013
�
2014
�
2013
�
(Dollars in thousands)
(Loss) income from operations
$
(2,092
)
�
$
14,704

�
$
(22,591
)
�
$
33,974

Expense Adjustments:
�
�
�
�
�
�
�
Stock-based compensation expense
2,683

�
2,668

�
8,606

�
8,011

Amortization of intangible assets
796

�
692

�
2,191

�
2,070

Compliance-related professional fees
55

�
744

�
759

�
1,550

Compliance-related compensation and other expenses


�
(44
)
�
(70
)
�
163

Strategic related costs
186

�


�
2,576

�


Write-off of property and equipment
1,470

�
208

�
1,648

�
251

Certain litigation settlements and related costs
41

�
8

�
46

�
(15
)
Italian VAT refund recovery recorded within operating expenses


�


�


�
(10,861
)
Restructuring expenses
6,582

�
1,005

�
11,237

�
7,859

Gain on sale of fixed assets
(4
)
�
(14
)
�
(21
)
�
(32
)
Other
305

�
367

�
905

�
1,224

Total expense adjustments
12,114

�
5,634

�
27,877

�
10,220

Comverse performance
$
10,022

�
$
20,338

�
$
5,286

�
$
44,194
















COMVERSE, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(UNAUDITED)

�
�

BSS
�

Digital Services
�
All Other
�
Consolidated
�
(In thousands)
Three Months Ended October 31, 2014
�
�
�
�
�
�
�
Total revenue
$
68,235

�
$
54,884

�
$


�
$
123,119

Total costs and expenses
$
50,310

�
$
42,098

�
$
32,803

�
$
125,211

Income (loss) from operations
$
17,925

�
$
12,786

�
$
(32,803
)
�
$
(2,092
)
Computation of segment performance:
�
�
�
�
�
�
�
Segment revenue
$
68,235

�
$
54,884

�
$


�
�
Total costs and expenses
$
50,310

�
$
42,098

�
$
32,803

�
�
Segment expense adjustments:
�
�
�
�
�
�
�
Stock-based compensation expense


�


�
2,683

�
�
Amortization of intangibles assets
698

�
98

�


�
�
Compliance-related professional fees


�


�
55

�
�
Strategic-related costs


�


�
186

�
�
Write-off of property and equipment
2

�
1

�
1,467

�
�
Certain litigation settlements and related cost


�


�
41

�
�
Restructuring expenses


�


�
6,582

�
�
Gain on sale of fixed assets


�


�
(4
)
�
�
Other


�


�
305

�
�
Segment expense adjustments
700

�
99

�
11,315

�
�
Segment expenses
49,610

�
41,999

�
21,488

�
�
Segment performance
$
18,625

�
$
12,885

�
$
(21,488
)
�
�
Interest expense
$


�
$


�
$
(122
)
�
$
(122
)
Depreciation
$
(887
)
�
$
(1,304
)
�
$
(2,342
)
�
$
(4,533
)




















COMVERSE, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
�
BSS
�
Digital Services
�
�All Other
�
Consolidated
�
(In thousands)
Three Months Ended October 31, 2013
�
�
�
�
�
�
�
Total revenue
$
70,892

�
$
89,524

�
$


�
$
160,416

Total costs and expenses
$
58,379

�
$
54,422

�
$
32,911

�
$
145,712

Income (loss) from operations
$
12,513

�
$
35,102

�
$
(32,911
)
�
$
14,704

Computation of segment performance:
�
�
�
�
�
�
�
Segment revenue
$
70,892

�
$
89,524

�
$


�
�
Total costs and expenses
$
58,379

�
$
54,422

�
$
32,911

�
�
Segment expense adjustments:
�
�
�
�
�
�
�
Stock-based compensation expense


�


�
2,668

�
�
Amortization of intangibles assets
692

�


�


�
�
Compliance-related professional fees


�


�
744

�
�
Compliance-related compensation and other expenses


�
(39
)
�
(5
)
�
�
Write-off of property and equipment


�


�
208

�
�
Certain litigation settlements and related cost


�


�
8

�
�
Restructuring expenses


�


�
1,005

�
�
Gain on sale of fixed assets
(1
)
�


�
(13
)
�
�
Other


�


�
367

�
�
Segment expense adjustments
691

�
(39
)
�
4,982

�
�
Segment expenses
57,688

�
54,461

�
27,929

�
�
Segment performance
$
13,204

�
$
35,063

�
$
(27,929
)
�
�
Interest expense
$


�
$


�
$
(211
)
�
$
(211
)
Depreciation
$
(936
)
�
$
(1,268
)
�
$
(1,857
)
�
$
(4,061
)








COMVERSE, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
�

BSS
�

Digital Services
�
All Other
�
Consolidated
�
(In thousands)
Nine Months Ended October 31, 2014
�
�
�
�
�
�
�
Total revenue
$
185,262

�
$
172,309

�
$


�
$
357,571

Total costs and expenses
$
145,982

�
$
130,024

�
$
104,156

�
$
380,162

Income (loss) from operations
$
39,280

�
$
42,285

�
$
(104,156
)
�
$
(22,591
)
Computation of segment performance:
�
�
�
�
�
�
�
Segment revenue
$
185,262

�
$
172,309

�
$


�
�
Total costs and expenses
$
145,982

�
$
130,024

�
$
104,156

�
�
Segment expense adjustments:
�
�
�
�
�
�
�
Stock-based compensation expense


�


�
8,606

�
�
Amortization of intangibles assets
2,093

�
98

�


�
�
Compliance-related professional fees


�


�
759

�
�
Compliance-related compensation and other expenses


�
1

�
(71
)
�
�
Strategic-related costs


�


�
2,576

�
�
Write-off of property and equipment
2

�
3

�
1,643

�
�
Certain litigation settlements and related cost


�


�
46

�
�
Restructuring expenses


�


�
11,237

�
�
Gain on sale of fixed assets
2

�
1

�
(24
)
�
�
Other


�


�
905

�
�
Segment expense adjustments
2,097

�
103

�
25,677

�
�
Segment expenses
143,885

�
129,921

�
78,479

�
�
Segment performance
$
41,377

�
$
42,388

�
$
(78,479
)
�
�
Interest expense
$


�
$


�
$
(476
)
�
$
(476
)
Depreciation
$
(2,632
)
�
$
(3,828
)
�
$
(6,239
)
�
$
(12,699
)





COMVERSE, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
�
BSS
�
Digital Services
�
�All Other
�
Consolidated
�
(In thousands)
Nine Months Ended October 31, 2013
�
�
�
�
�
�
�
Total revenue
$
221,314

�
$
264,673

�
$


�
$
485,987

Total costs and expenses
$
186,013

�
$
165,759

�
$
100,241

�
$
452,013

Income (loss) from operations
$
35,301

�
$
98,914

�
$
(100,241
)
�
$
33,974

Computation of segment performance:
�
�
�
�
�
�
�
Segment revenue
$
221,314

�
$
264,673

�
$


�
�
Total costs and expenses
$
186,013

�
$
165,759

�
$
100,241

�
�
Segment expense adjustments:
�
�
�
�
�
�
�
Stock-based compensation expense


�


�
8,011

�
�
Amortization of intangibles assets
2,070

�


�


�
�
Compliance-related professional fees


�


�
1,550

�
�
Compliance-related compensation and other expenses
122

�
179

�
(138
)
�
�
Write-off of property and equipment
29

�
1

�
221

�
�
Certain litigation settlements and related cost


�


�
(15
)
�
�
Italian VAT refund recovery recorded within operating expense


�


�
(10,861
)
�
�
Restructuring expenses


�


�
7,859

�
�
Gain on sale of fixed assets


�
(1
)
�
(31
)
�
�
Other


�


�
1,224

�
�
Segment expense adjustments
2,221

�
179

�
7,820

�
�
Segment expenses
183,792

�
165,580

�
92,421

�
�
Segment performance
$
37,522

�
$
99,093

�
$
(92,421
)
�
�
Interest expense
$


�
$


�
$
(565
)
�
$
(565
)
Depreciation
$
(2,822
)
�
$
(3,777
)
�
$
(5,401
)
�
$
(12,000
)





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