Comverse Technology, Inc. : Comverse Technology Announces Fiscal 2012 Second Quarter Results; Conference Call to Discuss Selected Financial Information to be Held Today at 8:30 AM

NEW YORK, Sept. 7, 2012 (GLOBE NEWSWIRE) -- Comverse Technology, Inc. ("CTI") (Nasdaq:CMVT) today announced its results for the three months ended July 31, 2012.

Consolidated Highlights: Below is selected consolidated financial information for the three and six months ended July 31, 2012 and 2011 prepared in accordance with generally accepted accounting principles ("GAAP") and, where indicated, not in accordance with GAAP ("non-GAAP").

CTI is a holding company that conducts business through its subsidiaries, principally, its wholly-owned subsidiary, Comverse, Inc. ("Comverse"), and its majority-owned subsidiaries, Verint Systems Inc. ("Verint") and Starhome B.V. ("Starhome"). As previously disclosed, CTI intends to distribute 100% of the outstanding common shares of Comverse to CTI shareholders on a pro rata basis. In addition, on August 1, 2012, CTI entered into an agreement (the "Share Purchase Agreement") to sell its interest in Starhome B.V. ("Starhome") to unaffiliated purchasers and on August 12, 2012, entered into an agreement and plan of merger (the "Verint Merger Agreement") with Verint pursuant to which CTI will merge with and into a subsidiary of Verint.

CTI's reportable segments are Comverse Business Support Systems ("Comverse BSS"), Comverse Value-Added Services ("Comverse VAS"), and Verint. The results of all of the other operations of the company, including the Comverse Mobile Internet operating segment ("Comverse MI"), Comverse's Netcentrex operations, Comverse's global corporate functions which include CTI's holding company operations, are included in the column captioned "All Other" in the business segment information provided. As a result of CTI entering into the Starhome Share Purchase Agreement, Starhome's results of operations, which previously were included in "All Other," are included in discontinued operations for the three and six months ended July 31, 2012.

Charles Burdick, Chairman and Chief Executive Officer of CTI said, "We have made excellent progress toward separating the three CTI operating companies from common ownership. The previously-announced sale of our majority-owned subsidiary Starhome is expected to close by mid-October, yielding proceeds of approximately $37.4 million, the CTI holding company plans to be acquired by our majority-owned subsidiary Verint in early 2013 in a stock-for-stock transaction announced last month, and we remain on track to spin-off our Comverse subsidiary as a well-capitalized publicly-traded company, with distribution targeted for October 31. We will be holding a Shareholder Meeting on October 10 to approve the spin-off of Comverse. We think these transactions represent the most cost and tax efficient way to distribute Comverse and Verint to our shareholders, and put both companies in the best position to maximize value.

"Operationally, we welcome Philippe Tartavull as CEO and Tom Sabol as CFO of Comverse, who are preparing Comverse for life as a public company. In the second quarter Comverse saw sequential revenue and cash flow performance improvement, positive operating income and we expect to generate positive cash flow from operations in the second half of fiscal 2012, along with modest bookings growth for the full fiscal year. In addition, Verint, which announced second quarter results on September 5, continues to achieve solid growth and profitability."

Comverse Subsidiary Highlights: Below is selected financial information for the three and six months ended July 31, 2012 and 2011 for the company's Comverse subsidiary.

Revenue from customer solutions for the three months ended July 31, 2012 and 2011 was $99.7 million and $92.5 million, respectively, and maintenance revenue for such fiscal periods was $71.6 million and $89.6 million, respectively.

Revenue from customer solutions for the six months ended July 31, 2012 and 2011 was $172.6 million and $184.3 million, respectively, and maintenance revenue for such fiscal periods was $136.4 million and $161.5 million, respectively.

Comverse BSS and VAS Segment Highlights: Below is selected financial information for the three and six months ended July 31, 2012 and 2011 for the company's Comverse BSS and Comverse VAS segments, as well as Comverse Other:

Revenue from Comverse BSS customer solutions for the three months ended July 31, 2012 and 2011 was $33.3 million and $42.8 million, respectively, and Comverse BSS maintenance revenue for such fiscal periods was $35.7 million and $42.7 million, respectively.

Revenue from Comverse BSS customer solutions for the six months ended July 31, 2012 and 2011 was $60.2 million and $86.0 million, respectively, and Comverse BSS maintenance revenue for such fiscal periods was $66.6 million and $74.6 million, respectively.

Revenue from Comverse VAS customer solutions for the three months ended July 31, 2012 and 2011 was $58.2 million and $40.3 million, respectively, and Comverse VAS maintenance revenue for such fiscal periods was $33.1 million and $43.8 million, respectively.

Revenue from Comverse VAS customer solutions for the six months ended July 31, 2012 and 2011 was $93.3 million and $82.8 million, respectively, and Comverse VAS maintenance revenue for such fiscal periods was $64.0 million and $80.8 million, respectively.

Revenue from customer solutions at Comverse Other for three months ended July 31, 2012 and 2011 was $8.2 million and $9.4 million, respectively, and maintenance revenue at Comverse Other for such fiscal periods was $2.7 million and $3.1 million, respectively.

Revenue from customer solutions at Comverse Other for six months ended July 31, 2012 and 2011 was $19.1 million and $15.5 million, respectively, and maintenance revenue at Comverse Other for such fiscal periods was $5.9 million and $6.1 million, respectively.

Selected Balance Sheet Highlights: Below is selected balance sheet data as of July 31, 2012 and April 30, 2012 for CTI and its Comverse subsidiary:

During the three months ended July 31, 2012, CTI and Comverse made significant disbursements, including approximately $6.5 million paid for professional fees and other expenses in connection with our evaluation of strategic alternatives, and $2.3 million in restructuring payments. In addition, during the three months ended July 31, 2012, CTI's holding company operations and Comverse experienced negative cash flows from operations.

Verint Segment

Verint is a majority-owned subsidiary of CTI. Its common stock is traded on the NASDAQ Global Market under the symbol "VRNT." As previously disclosed, on August 12, 2012, CTI entered into the Verint Merger Agreement with Verint pursuant to which CTI will merge with and into a subsidiary of Verint and become a wholly-owned subsidiary of Verint (the "Verint Merger").

For additional information concerning Verint's results for the three and six months ended July 31, 2012 and 2011, please see the press release issued by Verint on September 5, 2012, which is available on Verint's website, www.verint.com and included as an exhibit to the Current Report on Form 8-K filed by Verint with the Securities and Exchange Commission (the "SEC"), and Verint's quarterly report on Form 10-Q for the three months ended July 31, 2012.

Conference Call Information

We will be conducting a conference call today at 8:30 am Eastern Daylight Time to discuss our results for the three months ended July 31, 2012.  An on-line, real-time webcast of the conference call will be available on our website at www.cmvt.com. The conference call can also be accessed live via telephone at 1-678-825-8369.  Please dial in 5-10 minutes prior to the scheduled start time. A live webcast can be accessed at www.cmvt.com.

A replay of the call will be available, beginning at approximately 11:00 am on September 7, 2012, for seven days, at 1-404-537-3406, and archived via webcast at www.cmvt.com. The replay access code is 27030074.

Segment Performance

CTI evaluates its business by assessing the performance of each of its operating segments. CTI's Chief Executive Officer is its 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 the company defines it in accordance with the Financial Accounting Standard Board's ("FASB") guidance relating to segment reporting, is not necessarily comparable to other similarly titled captions of other companies.

Segment performance is computed by management as income (loss) from operations adjusted for the following: (i) stock-based compensation expense; (ii) amortization of acquisition-related intangibles; (iii) compliance-related professional fees; (iv) compliance-related compensation and other expenses; (v) strategic evaluation related costs; (vi) impairment of property and equipment; (vii) litigation settlements and related costs; (viii) acquisition-related charges; (ix) restructuring charges; and (x) certain other gains and charges, including changes in the fair value of contingent consideration liabilities associated with business combinations. Compliance-related professional fees and compliance-related compensation and other expenses relate to fees and expenses recorded in connection with the company's efforts to (a) complete certain financial statements and audits of such financial statements, and (b) become current in its periodic reporting obligations under the federal securities laws, and (c) remediate material weaknesses in internal control over financial reporting. Strategic evaluation related costs include financial advisory, accounting, tax, consulting and legal fees incurred in connection with company's evaluation of strategic alternatives, including the proposed share distribution and the Verint Merger.

In evaluating each segment's performance, management uses segment revenue, which consists of revenue generated by the segment. Certain segment performance adjustments relate to expenses included in the calculation of income (loss) from operations, while, from time to time, certain segment performance adjustments may be presented as adjustments to revenue. In calculating Verint's segment performance for the three and six months ended July 31, 2012 and 2011, the presentation of segment revenue gives effect to segment revenue adjustments that represent the impact of fair value adjustments required under the FASB's guidance relating to acquired customer support contracts that would have otherwise been recognized as revenue on a stand-alone basis with respect to acquisitions consummated by Verint.

Presentation of Non-GAAP Financial Measures

CTI provides Non-GAAP net income (loss) attributable to Comverse Technology, Inc. and Non-GAAP earnings (loss) per share attributable to Comverse Technology, Inc.'s shareholders as additional information for its operating results. These measures are not in accordance with, or alternatives 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. CTI believes that the presentation of these non-GAAP financial measures provides useful information to investors regarding certain additional financial and business trends relating to its results of operations as viewed by management in monitoring the company's businesses. In addition, management uses these non-GAAP financial measures for reviewing financial results and for planning purposes. See "Consolidated Reconciliation of GAAP to Non-GAAP Financial Measures" below.

About Comverse Technology, Inc.

Comverse Technology, Inc., through its wholly-owned subsidiary Comverse, is the world's leading provider of software and systems enabling converged billing and active customer management and value-added voice, messaging and mobile Internet services. Comverse's extensive customer base spans more than 125 countries and covers over 450 communication service providers serving more than two billion subscribers. CTI also holds majority ownership positions in Verint (Nasdaq:VRNT) and privately-held Starhome.

The Comverse Technology logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=13267

Forward-Looking Statements

Certain statements appearing in this press release constitute "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. The risks, uncertainties and other important factors that could cause actual results, performance and the timing of events to differ materially are described in CTI's filings with the SEC, including, without limitation, in Item 1A, "Risk Factors" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual report on Form 10-K for the fiscal year ended January 31, 2012 and in Part II, Item 1A, "Risk Factors" of subsequently filed Quarterly Reports, and include the risk that we will not be able to complete the proposed Comverse share distribution due to our inability to satisfy the requisite conditions thereto, including, among others, receipt of CTI shareholder approval, completion of the review process of the related registration statement by the SEC or for any other reason, including a decision of our Board of Directors not to proceed with the Comverse share distribution; risks associated with the Comverse share distribution, including the potential harm to our business as a result of management's distraction from our business due to our efforts to complete the Comverse share distribution, the incurrence of expenses in connection therewith in excess of our expectations, and the risks that if the Comverse share distribution is completed, each of CTI (until elimination of the holding company structure) and Comverse will be smaller companies that may be subject to increased instability, our share price may decline if there are excessive sales of our stock by shareholders that invested in our company because of our holdings in Comverse and, prior to any elimination of the CTI holding company structure, our dependence on Comverse's performance of various transition services agreements necessary for our ongoing operations; the effect of the Comverse share distribution on our and Comverse's business relationships, operating results and business generally; the risks relating to CTI's failure to consummate the proposed Comverse share distribution, including Verint's resulting ability to terminate the Verint Merger Agreement and, in certain circumstances, if so terminated for a period of 18 months following such termination, (i) Verint would have the right to purchase for cash a number of our shares of Verint preferred stock (or shares of Verint common stock if necessary) that would cause CTI to lose its majority controlling interest in Verint and (ii) CTI would not be able to nominate more than two directors to Verint's board of directors, would be subject to other limitations on the voting of its Verint voting securities and would be prohibited from acquiring any additional Verint capital stock; uncertainties regarding the tax consequences of the Verint Merger; the risk that we will not be able to complete the Verint Merger; the risk of diminishment in our capital resources as a result of, among other things, future negative cash flows from operations at Comverse, the continued incurrence of professional fees by CTI and Comverse in connection with the filing by CTI of periodic reports under the federal securities laws and the remediation of a material weakness in internal control over financial reporting and the costs associated with the proposed Comverse share distribution; the risk that if Comverse BSS customer solution order activity does not increase, Comverse's revenue and profitability would likely be materially adversely affected and we, if the Comverse share distribution is not completed, and Comverse, if the Comverse share distribution is completed, may be required to implement further cost reduction measures to preserve or enhance our operating results and cash position; risks related to the implementation of Comverse's strategy to expand its BSS business and pursue primarily higher margin VAS projects that resulted and may continue to result in lower VAS revenue, which may not be offset by increases in BSS revenue, if any; Comverse's advanced offerings may not be widely adopted by existing and potential customers and increases in revenue from Comverse's advanced offerings, if any, may not exceed or fully offset potential declines in revenue from traditional solutions; the potential loss of business opportunities due to continued concern on the part of customers and partners, about our or Comverse's financial condition; the difficulty in predicting quarterly and annual operating results as a result of a high percentage of orders typically generated late in fiscal quarters and in fiscal years, lengthy and variable sales cycles, the competitive bidding process required by customers, focus on large customers and installations and short delivery windows required by customers; the effects of any potential decline or weakness in the global economy (due to among other things, the downgrade of the U.S. credit rating and European sovereign debt crisis) on the telecommunications industry, which may result in reduced information technology spending and reduced demand for our subsidiaries' products and services; the risk that, if CTI ceases to maintain a majority of the voting power of Verint Systems' outstanding equity securities and ceases to maintain control over Verint's operations, it may be required to no longer consolidate Verint's financial statements within its consolidated financial statements and, in such event, the presentation of CTI's consolidated financial statements would be materially different from the presentation for prior fiscal periods; the continuation of a material weakness related to income taxes or the discovery of additional material weaknesses in our internal control over financial reporting and any delay in the implementation of remedial measures; the risk of disruption in the credit and capital markets which may limit our ability to access capital; rapidly changing technology in our subsidiaries' industries and our subsidiaries' ability to enhance existing products and develop and market new products; our subsidiaries' dependence on contracts for large systems and large installations for a significant portion of their sales and operating results, including, among other things, the lengthy, complex and highly competitive bidding and selection process, the difficulty predicting their ability to obtain particular contracts and the timing and scope of these opportunities; the deferral or loss of one or more significant orders or customers or a delay in an expected implementation of such an order could materially and adversely affect our results of operations in any fiscal period, particularly if there are significant sales and marketing expenses associated with the deferred, lost or delayed sales; the potential incurrence by our subsidiaries of penalties if our subsidiaries' solutions develop operational problems and significant costs to correct previously undetected operational problems in their complex solutions; and other risks described in the company's filings with the SEC. The documents and reports we file with the SEC are available through CTI, or its website, www.cmvt.com, or through the SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) at www.sec.gov. CTI undertakes no commitment to update or revise any forward-looking statements except as required by law.

CONTACT: Paul D. Baker

         Comverse Technology, Inc.

         (212) 739-1060