<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-15502
COMVERSE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
New York 13-3238402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
170 Crossways Park Drive, Woodbury, NY 11797
(Address of principal executive offices) (Zip Code)
(516) 677-7200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [_] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of Common Stock, par value $0.10 per share,
outstanding as of July 31, 1996 was 21,567,125.
Page 1 of 16 Total Pages
(Exhibit Index Appears on Page 13)
<PAGE>
PART I
Financial Information
ITEM 1. Financial Statements. Page
-------------------- ----
1. Condensed Consolidated Balance Sheets as
of December 31, 1995 and June 30, 1996. 3
2. Condensed Consolidated Statements of Income
for the Three Month and Six Month Periods Ended
June 30, 1995 and June 30, 1996. 4
3. Condensed Consolidated Statements of
Stockholders' Equity for the Year Ended
December 31, 1995 and the Six Month
Period Ended June 30, 1996. 5
4. Condensed Consolidated Statements of Cash
Flows for the Six Month Periods Ended
June 30, 1995 and June 30, 1996. 6
5. Notes to Condensed Consolidated Financial
Statements. 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9
Page 2 of 16 Total Pages
<PAGE>
COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30, December 31, June 30,
1995* 1996 1995* 1996
(Unaudited) (Unaudited)
Current assets: Current liabilities:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 99,862 $ 87,833 Accounts payable and
Bank time deposits and accrued expenses $ 27,230 $ 37,520
short-term investments 23,070 36,202 Advance payments
Accounts receivable, net 43,009 49,226 from customers 4,988 3,821
Inventories 15,773 21,918 Due to related parties 364 443
Prepaid expenses and Other current liabilities 2,604 373
other current assets 8,536 13,108 ---------- ----------
-------- --------
Total current liabilities 35,186 42,157
Total current assets 190,250 208,287 5-1/4% Convertible
Subordinated Debentures 60,000 60,000
Long-term receivables, net 2,105 1,945 Liability for severance pay 2,299 2,786
Other liabilities 1,939 2,171
Property and equipment 22,718 25,337 Minority interest 264 -
Less: accumulated depreci- ---------- ----------
ation and amortization (10,887) (12,323) Total liabilities 99,688 107,114
-------- --------
11,831 13,014
Stockholders' equity:
Investments 3,880 6,255 Common Stock, $.10 par value
authorized 100,000,000 shares;
Goodwill, net 1,106 401 issued and outstanding
21,362,598 and 21,566,225 2,136 2,157
Software development costs, net 8,756 9,411 Additional paid-in-capital 75,752 76,823
Cumulative translation adjustment (136) (58)
Other intangible assets, net 1,597 1,464 Unrealized gain on available for
sale securities, net of tax 646 808
Deferred costs and other assets, net 1,929 1,793 Retained earnings 43,368 55,726
-------- -------- ---------- ----------
Total stockholders' equity 121,766 135,456
---------- ----------
$221,454 $242,570 $221,454 $242,570
======== ======== ========== ==========
</TABLE>
*The Condensed Consolidated Balance Sheet as of December 31, 1995 has been
summarized from the Company's audited Consolidated Balance Sheet as of that
date.
The accompanying notes are an integral part of these financial statements.
Page 3 of 16 Total Pages
<PAGE>
COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Revenues:
Sales $ 63,010 $ 87,039 $ 33,627 $ 46,629
Interest and other income 4,324 3,864 2,185 2,078
-------- -------- -------- --------
Total revenues 67,334 90,903 35,812 48,707
Costs and expenses:
Research and development 12,728 16,374 6,816 8,601
Less reimbursement (3,302) (3,925) (1,790) (2,108)
-------- -------- -------- --------
Net research and development 9,426 12,449 5,026 6,493
Cost of sales 27,214 37,366 14,293 20,014
Selling, general and
administrative 18,951 23,614 9,853 12,827
Royalties and license fees 1,277 1,760 667 921
Minority interest and
equity in loss of affiliates (45) (150) (35) (150)
Interest expense and other 2,442 2,621 1,232 1,482
-------- -------- -------- --------
Total costs and expenses 59,265 77,660 31,036 41,587
-------- -------- -------- --------
Income before gain on issuance
of subsidiary shares
and income tax provision 8,069 13,243 4,776 7,120
Gain on issuance of subsidiary
shares - 535 - 535
-------- -------- -------- --------
Income before income tax
provision 8,069 13,778 4,776 7,655
Income tax provision 904 1,420 500 804
-------- -------- -------- --------
Net income $ 7,165 $ 12,358 $ 4,276 $ 6,851
======== ======== ======== ========
Earnings per share:
Primary $ 0.32 $ 0.53 $ 0.19 $ 0.29
======== ======== ======== ========
Fully diluted $ 0.32 $ 0.52 $ 0.19 $ 0.29
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4 of 16 Total Pages
<PAGE>
COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Common Stock Additional Cumulative Unrealized
Number Par Paid in Translation Gains Retained
of Shares Value Capital Adjustment (Losses) Earnings Total
--------- ----- ------- ---------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 21,362,598 $ 2,136 $ 75,752 $ (136) $ 646 $ 43,368 $ 121,766
Unrealized gain on available-for-sale
securities, net of tax - - - - 162 - 162
Common stock issued in connection with
exercise of stock options 198,127 20 923 - - - 943
Common stock issued in connection with
acquisition of additional interest in
majority-owned subsidiary 5,500 1 148 - - - 149
Translation adjustment - - - 78 - - 78
Net income, six months ended
June 30, 1996 - - - - - 12,358 12,358
---------- ------ ------- ------ ------ -------- --------
BALANCE, JUNE 30, 1996 21,566,225 $ 2,157 $ 76,823 $ (58) $ 808 $ 55,726 $ 135,456
========== ======= ======== ========= ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5 of 16 Total Pages
<PAGE>
COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net cash from operations after adjustment
for non-cash items $ 12,017 $ 12,257
Changes in assets and liabilities:
Accounts receivable and long-term receivables (5,847) (6,057)
Inventories (2,781) (6,145)
Prepaid expenses and other current assets (843) (4,232)
Accounts payable and accrued expenses 3,211 10,290
Advance payments from customers 570 (1,167)
Due to related parties 7 79
Liability for severance pay 624 487
-------- --------
Net cash provided by operating activities 6,958 5,512
Cash flows from investing activities:
Maturities and sales (purchases) of
bank time deposits and investments, net 23,616 (13,493)
Purchases of property and equipment ( 2,456) ( 2,619)
Increase in software development costs ( 2,536) ( 2,322)
Other - 25
-------- --------
Net cash provided by (used in) investing activities 18,624 (18,409)
Cash flows from financing activities:
Proceeds from issuance of common stock 788 1,092
Increase (decrease) in short and long-term debt, net 1,817 (224)
-------- --------
Net cash provided by financing activities 2,605 868
Net increase (decrease) in cash and cash equivalents 28,187 (12,029)
Cash and cash equivalents, beginning of period 39,225 99,862
-------- --------
Cash and cash equivalents, end of period $ 67,412 $ 87,833
======== ========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
Page 6 of 16 Total Pages
<PAGE>
COMVERSE TECHNOLOGY, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Basis of Presentation. The accompanying financial information should
be read in conjunction with the financial statements, including the notes
thereto, for the year ended December 31, 1995. The financial information
included herein is unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the interim periods.
The results of operations for the three month and six month periods ended June
30, 1996 are not necessarily indicative of the results to be expected for the
full year.
Inventories. The composition of inventories at December 31, 1995 and
June 30, 1996 is as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
(In thousands)
<S> <C> <C>
Raw materials $10,364 $12,138
Work in process 2,638 6,357
Finished goods 2,771 3,423
------- -------
$15,773 $21,918
======= =======
</TABLE>
Research and Development Expenses. The Company has historically
supported a substantial portion of its research and development activities
through participation in government sponsored funding programs, which in general
provide reimbursement for a portion of research and development expenditures
incurred under project budgets approved on an annual basis by the applicable
funding agencies. During the six month and three month periods ended June 30,
1996, gross research and development expenses amounted to approximately
$16,374,000 and $8,601,000, respectively, of which approximately $3,925,000 and
$2,108,000, respectively, was reimbursed.
Gain on Issuance of Subsidiary Stock. In June 1996, Newbridge
Networks Corporation invested approximately $1.5 million in Applied Silicon Inc.
Canada ("ASIC"), a majority-owned subsidiary of the Company, in exchange for
newly issued shares of ASIC. This resulted in a gain to the Company of
approximately $535,000. As a result of this transaction, the Company's equity
interest in ASIC decreased to 47.6%. Accordingly, the Company's investment in
ASIC is now carried on the equity method.
Earnings Per Share. For the six month and three month periods ended
June 30, 1995 and 1996, the computation of primary earnings per share is based
on the weighted average
Page 7 of 16 Total Pages
<PAGE>
number of outstanding common shares and additional shares assuming the exercise
of stock options. The computation of fully diluted earnings per share for the
six month and three month periods ended June 30, 1996, further assumes the
conversion of the 5-1/4% Convertible Subordinated Debentures (the "Debentures").
For the six month and three month periods ended June 30, 1995, the assumed
conversion of the Debentures was antidilutive. The shares used in the
computations are as follows (also see Exhibit 11):
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
(In thousands)
Primary 22,290 23,105 22,440 23,280
Fully diluted 22,454 26,345 22,663 26,512
</TABLE>
Page 8 of 16 Total Pages
<PAGE>
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
---------------------------------------------
Results of Operations.
Total Revenues. Total revenues for the six month and three month
--------------
periods ended June 30, 1996 increased by approximately $23,569,000 (35%) and
approximately $12,895,000 (36%), respectively, from the corresponding periods in
1995. The increase is attributable to a higher volume of sales of systems,
parts, and related services. Sales for the six month and three month periods
ended June 30, 1996 increased by approximately $24,029,000 (38%) and
approximately $13,002,000 (39%), respectively, from the 1995 periods. The
growth in sales occurred in both the TRILOGUE and AUDIODISK product lines.
Interest and other income for the six month and three month periods ended June
30, 1996 decreased by approximately $460,000 (11%) and approximately $107,000
(5%), respectively, from the corresponding periods in 1995.
Cost of Sales. Cost of sales for the six month and three month periods
-------------
ended June 30, 1996 increased by approximately $10,152,000 (37%) and
approximately $5,721,000 (40%), respectively, from the corresponding periods in
1995. The increase is attributable primarily to the increase in sales. Gross
margins (expressed as a percentage of sales) for the six month and three month
periods ended June 30, 1995 and 1996 were approximately 57%.
Research and Development Expenses. Gross research and development
---------------------------------
expenses for the six month and three month periods ended June 30, 1996 increased
by approximately $3,646,000 (29%) and approximately $1,785,000 (26%),
respectively, from the corresponding periods in 1995. Net research and
development expenses, after reimbursement under government funding programs, for
the six month and three month periods ended June 30, 1996 increased by
approximately $3,023,000 (32%) and approximately $1,467,000 (29%), respectively,
from the corresponding periods in 1995. Such increases are due to the overall
growth of research and development operations, new research and development
projects for both product lines, and increases in salaries and other costs
associated with research and development operations in Israel.
Selling, General and Administrative Expenses. Selling, general and
--------------------------------------------
administrative expenses for the six month and three month periods ended June 30,
1996 increased by approximately $4,663,000 (25%) and approximately $2,974,000
(30%), respectively, from the corresponding periods in 1995. Such increases
were the result of increased sales, marketing and administrative activities
associated with the overall growth of the Company's operations, and particularly
with the expansion of direct sales and marketing activities internationally and
in the United States.
Royalties and License Fees. Royalties and license fees for the six
--------------------------
month and three month periods ended June 30, 1996 increased by approximately
$483,000 (38%) and approximately $254,000 (38%), respectively, from the
corresponding periods in 1995. Royalties
Page 9 of 16 Total Pages
<PAGE>
and license fees, for the six month and three month periods ended June 30, 1996
and 1995, as a percentage of total sales, were approximately 2.0%.
Income Tax Provision. Provision for income taxes for the six month and
--------------------
three month periods ended June 30, 1996 increased by approximately $516,000
(57%) and approximately $304,000 (61%), respectively, from the corresponding
periods in 1995. The Company's overall effective tax rate decreased from
approximately 11.2% during the six month period ended June 30, 1995 to
approximately 10.3% in the corresponding period of 1996, and remained at
approximately 10.5% in the three month periods ended June 30, 1995 and 1996.
The Company's overall rate of tax is reduced significantly by the tax benefits
associated with qualified activities of one of its subsidiaries in Israel.
Net Income. Net income after taxes for the six month and three month
----------
periods ended June 30, 1996 increased by approximately $5,193,000 (72%) and
approximately $2,575,000 (60%), respectively, from the corresponding periods in
1995, primarily as a result of the factors described above. Net income after
taxes as a percentage of total revenues increased to approximately 13.6% and
14.1%, respectively, in the six month and three month periods ended June 30,
1996 from approximately 10.6% and 11.9% in the corresponding periods in 1995.
Liquidity and Capital Resources. At June 30, 1996, the Company had cash and
cash equivalents of approximately $87,833,000, short-term investments of
approximately $36,202,000 and working capital of approximately $166,130,000. The
Company believes that its existing working capital, together with funds
generated from operations, will be sufficient to provide for its planned
operations for the foreseeable future.
The Company regularly examines opportunities for strategic acquisitions of
other companies or lines of business and anticipates that it may from time to
time issue additional debt and/or equity securities either as direct
consideration for such acquisitions or to raise additional funds to be used (in
whole or in part) in payment for acquired securities or assets. The issuance of
such securities could be expected to have a dilutive impact on the Company's
shareholders, and there can be no assurance as to whether or when any acquired
business would contribute positive operating results commensurate with the
associated investment.
The Company's liquidity and capital resources have not been, and are not
anticipated to be, materially affected by restrictions pertaining to the ability
of its foreign subsidiaries to pay dividends or by withholding taxes associated
with any such dividend payments.
Certain Trends and Uncertainties. The industries in which the Company is
principally involved are highly competitive and characterized by frequent
technological and market changes.
The voice processing and message management industry has undergone
consolidation in recent periods, as a result of corporate acquisitions and
attrition. In addition, the industry has experienced a continuing evolution of
product offerings and alternatives for delivery of services.
Page 10 of 16 Total Pages
<PAGE>
These trends have affected and may be expected to have a significant continuing
influence on conditions in the industry, although the impact on the industry
generally and on the Company's position in the industry cannot be predicted with
assurance. Significant changes in the industry make planning decisions more
difficult and increase the risk inherent in the planning process.
The market for telecommunications monitoring systems is also in a period of
significant transition. Budgetary constraints, uncertainties resulting from the
introduction of new technologies in the telecommunications environment and
shifts in the pattern of government expenditures resulting from geopolitical
events have increased uncertainties in the market, resulting in certain
instances in the attenuation of government procurement programs beyond their
originally expected performance periods and an increased incidence of delay,
cancellation or reduction of planned projects. Competitive conditions in this
sector have also been affected by the efforts of government contractors,
particularly developers and integrators of technology products, to redirect
their marketing strategies and product plans in reaction to cut-backs in their
traditional areas of focus, resulting in an increase in the number of
competitors and the range of products offered in response to particular requests
for proposals. The lack of predictability in the timing and scope of government
procurements have similarly made planning decisions more difficult and have
increased the associated risks.
The Company has historically derived a significant portion of its revenue
and operating profit from a relatively small number of contracts for large
system installations with customers in both the commercial and government
sectors. While the growth of the Company's business has reduced its dependence
on any specific customers, it continues to emphasize large capacity systems in
its product development and marketing strategies. Contracts for large
installations typically involve a lengthy and complex bidding and selection
process, and the ability of the Company to obtain particular contracts is
inherently difficult to predict. The Company believes that opportunities for
large installations will continue to grow in both its commercial and government
markets, and intends to continue to expand its research and development,
manufacturing, sales and marketing and product support capabilities in
anticipation of such growth. However, the timing and scope of these
opportunities and the pricing and margins associated with any eventual contract
award are difficult to forecast, and may vary substantially from transaction to
transaction. The Company's future operating results may accordingly exhibit a
higher degree of volatility than the operating results of other companies in its
industries that have adopted different strategies, and than the Company has
experienced in prior periods. Although the Company is actively pursuing a number
of significant procurement opportunities in the United States and
internationally, both the timing of any eventual procurements and the
probability of the Company's receipt of significant contract awards are
uncertain. The degree of dependence by the Company on large orders, and the
investment required to enable the Company to perform such orders, without
assurance of continuing order flow from the same customers and predictability of
gross margins on any future orders, increase the risk associated with its
business.
The Company has significantly increased its expenditures in all areas of
its operations during recent periods, including the areas of research and
development and marketing and sales, and the Company plans to further increase
these expenditures during 1996. The increase in research and development
expenditures reflects the Company's concentration on enhancing the
Page 11 of 16 Total Pages
<PAGE>
range of features and capabilities of its existing product lines and developing
new generations of its products. The Company believes that these efforts are
essential for the long- and short- term competitiveness of its product offerings
and for positioning itself to participate in future growth opportunities in both
the commercial and government sectors. The increase in sales and marketing
expenditures primarily results from the Company's decision to expand its
activities and direct presence in a number of world markets. The Company's costs
of operations have also been affected by increases in the cost of its operations
in Israel, resulting both from general inflation and increases in the cost of
attracting and retaining qualified scientific, engineering and technical
personnel in Israel, where the demand for such personnel is growing rapidly with
the expansion of technology-based industries in that country. The increase in
these costs in recent periods has not been offset by proportional devaluation of
the Israeli shekel against the U.S. dollar, and accordingly has had a negative
impact on the Company's overall results of operations.
The Company currently derives a majority of its total sales from sales to
customers outside of the United States. International transactions involve
particular risks, including political decisions affecting tariffs and trade
conditions, rapid and unforeseen changes in economic conditions in individual
countries, turbulence in foreign currency and credit markets, and increased
costs resulting from lack of proximity to the customer. Volatility in
international currency exchange rates may have a significant impact on the
Company's operating results to the extent that it is unable to completely hedge
the exchange rate risk of long term contracts denominated in foreign currencies,
or by the cost of such hedging.
The trading price of the Company's shares may be affected by the factors
noted above as well as prevailing economic and financial trends and conditions
in the public securities markets. During recent periods, share prices of
companies in technology and government contracting businesses, and particularly
smaller and medium-sized publicly traded companies such as the Company, have
exhibited a high degree of volatility. Shortfalls in revenues or earnings from
the levels anticipated by the public markets could have an immediate and
significant effect on the trading price of the Company's shares in any given
period. Such shortfalls may result from events that are beyond the Company's
immediate control, can be unpredictable and, since a significant proportion of
the Company's sales during each fiscal quarter tend to occur in the latter
stages of the quarter, may not be discernible until the end of a financial
reporting period, which may contribute to the volatility of the trading value of
its shares regardless of the Company's long-term prospects. The trading price of
the Company's shares may also be affected by developments, including reported
financial results and fluctuations in trading prices of the shares of other
publicly-held companies in the voice processing industry, which may not have any
direct relationship with the Company's business or prospects.
Page 12 of 16 Total Pages
<PAGE>
PART II
Other Information
-----------------
ITEM 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibit Index.
-------------
Item
Number Exhibit Page
------ ------- ----
11. Statement of Computation of
Earnings Per Share. 15-16
27. Financial data schedule. Filed electronically
(b) Reports on Form 8-K.
-------------------
None
Page 13 of 16 Total Pages
<PAGE>
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 thereunto duly authorized.
COMVERSE TECHNOLOGY, INC.
Dated: August 13, 1996 /s/ Kobi Alexander
------------------------------------
Kobi Alexander
President, Chairman of the Board
and Chief Executive Officer
Dated: August 13, 1996 /s/ Igal Nissim
------------------------------------
Igal Nissim
Chief Financial Officer
Page 14 of 16 Total Pages
<PAGE>
Exhibit 11
COMVERSE TECHNOLOGY, INC.
Statement of Computation of Earnings Per Share
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
June 30,
1995/1/ 1996
<S> <C> <C>
Primary earnings per share:
Net income $ 4,276 $ 6,851
======= =======
Weighted average number of outstanding common shares 21,043 21,518
Additional shares assuming exercise of stock options 1,397 1,762
------- -------
Weighted average number of outstanding common
and common equivalent shares 22,440 23,280
======= ======
Primary earnings per share $ 0.19 $ 0.29
======= =======
Fully diluted earnings per share:
Net income $ 4,276 $ 6,851
Interest expense on 5-1/4% Convertible Subordinated
Debentures, net of tax /(1)/ - 709
------- -------
Fully diluted earnings $ 4,276 $ 7,560
======= =======
Weighted average number of outstanding common shares 21,043 21,518
Additional shares assuming exercise of stock options 1,620 1,897
Additional shares assuming conversion of
5-1/4% Convertible Subordinated Debentures (1) - 3,097
------- ------
Weighted average number of outstanding common shares
assuming full dilution 22,663 26,512
======= =======
Fully diluted earnings per share $ 0.19 $ 0.29
======= =======
</TABLE>
/1/ The assumed conversion of the 5-1/4% Convertible Subordinated Debentures for
the three month period ended June 30, 1995 was antidilutive and is omitted.
Page 15 of 16 Total Pages
<PAGE>
Exhibit 11
(continued)
COMVERSE TECHNOLOGY, INC.
Statement of Computation of Earnings Per Share
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1996
<S> <C> <C>
Primary earnings per share:
Net income $ 7,165 $12,358
======= =======
Weighted average number of outstanding common shares 21,019 21,456
Additional shares assuming exercise of stock options 1,271 1,649
------- -------
Weighted average number of outstanding common
and common equivalent shares 22,290 23,105
======= =======
Primary earnings per share $ 0.32 $ 0.53
======= =======
Fully diluted earnings per share:
Net income $ 7,165 $12,358
Interest expense on 5-1/4% Convertible Subordinated
Debentures, net of tax /(1)/ - 1,418
------- -------
Fully diluted earnings $ 7,165 $13,776
======= =======
Weighted average number of outstanding common shares 21,019 21,456
Additional shares assuming exercise of stock options 1,435 1,792
Additional shares assuming conversion of
5-1/4% Convertible Subordinated Debentures /1/ - 3,097
------- -------
Weighted average number of outstanding common shares
assuming full dilution 22,454 26,345
======= =======
Fully diluted earnings per share $ 0.32 $0.52
======= =======
</TABLE>
/1/ The assumed conversion of the 5-1/4% Convertible Subordinated Debentures for
the six month period ended June 30, 1995 was antidilutive and is omitted.
Page 16 of 16 Total Pages
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-Q FOR
6/30/96 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 87,833
<SECURITIES> 36,202
<RECEIVABLES> 49,226
<ALLOWANCES> 0
<INVENTORY> 21,918
<CURRENT-ASSETS> 208,287
<PP&E> 25,337
<DEPRECIATION> 12,323
<TOTAL-ASSETS> 242,570
<CURRENT-LIABILITIES> 42,157
<BONDS> 60,000
0
0
<COMMON> 2,157
<OTHER-SE> 133,299
<TOTAL-LIABILITY-AND-EQUITY> 242,570
<SALES> 87,039
<TOTAL-REVENUES> 90,903
<CGS> 37,366
<TOTAL-COSTS> 77,660
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,621
<INCOME-PRETAX> 13,778
<INCOME-TAX> 1,420
<INCOME-CONTINUING> 12,358
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,358
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.52
</TABLE>
