EX-99.1 2 exhibit991tocnsiform8-kq22.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1
CONTACT: Todd, Luke - Xura,Inc
(781) 213-2131
Luke.Todd@Xura.com
Xura Announces Fiscal 2015 Second Quarter Results;
Conference Call to be Held Today at 8:00 AM

WAKEFIELD, MA, September 9, 2015 - Xura, Inc. (“Xura”; NASDAQ: MESG) formerly known as Comverse, Inc. (NASDAQ: CNSI) today announced its results for the second fiscal quarter ended July 31, 2015.
Consolidated Highlights: Below is selected consolidated financial information for the three and six months ended July 31, 2015 and 2014, prepared in accordance with generally accepted accounting principles (“GAAP”), except as noted.
Xura, Inc.:
Three Months Ended July 31,
 
Six Months Ended July 31,
(In thousands)
2015
 
2014
 
2015
 
2014
Total revenue
$
61,629

 
$
74,988

 
$
107,334

 
$
140,070

Costs and expenses
 
 
 
 
 
 
 
Cost of revenue
39,964

 
57,956

 
83,721

 
108,841

Research and development, net
8,235

 
9,813

 
16,515

 
18,172

Selling, general and administrative
19,686

 
23,059

 
39,559

 
48,619

Other operating expenses
4,238

 
1,171

 
7,646

 
3,043

Total costs and expenses
72,123

 
91,999

 
147,441

 
178,675

Loss from operations
(10,494
)
 
(17,011
)
 
(40,107
)
 
(38,605
)
Expense adjustments
9,878

 
5,489

 
17,642

 
11,366

Xura performance (1)
(616
)
 
(11,522
)
 
(22,465
)
 
(27,239
)
Depreciation
3,339

 
3,261

 
6,706

 
6,422

Adjusted EBITDA (1)
2,723

 
(8,261
)
 
(15,759
)
 
(20,817
)
 
 
 
 
 
 
 
 
Loss before income tax benefit (expense)
(14,697
)
 
(20,504
)
 
(49,890
)
 
(40,139
)
Income tax benefit (expense)
2,534

 
(1,877
)
 
(2,253
)
 
(4,337
)
Loss from continuing operations
(12,163
)
 
(22,381
)
 
(52,143
)
 
(44,476
)
Income from discontinued operations
175,060

 
5,515

 
188,379

 
11,479

Net income (loss)
$
162,897

 
$
(16,866
)
 
$
136,236

 
$
(32,997
)
 
 
 
 
 
 
 
 
Earnings (loss) per share - basic & diluted:
 
 
 
 
 
 
 
Continuing operations
$
(0.55
)
 
$
(1.00
)
 
$
(2.38
)
 
$
(1.99
)
Discontinued operations
7.95

 
0.25

 
8.59

 
0.51

 
$
7.40

 
$
(0.75
)
 
$
6.21

 
$
(1.48
)
 
 
 
 
 
 
 
 
Adjusted EBITDA earnings (loss) per share - basic & diluted (1)
$
0.12

 
$
(0.37
)
 
$
(0.72
)
 
$
(0.93
)
 
 
 
 
 
 
 
 
Interest expense
(167
)
 
(231
)
 
(360
)
 
(354
)
 
 
 
 
 
 
 
 
Operating margin
(17.0
)%
 
(22.7
)%
 
(37.4
)%
 
(27.6
)%
 
 
 
 
 
 
 
 
Xura performance margin
(1.0
)%
 
(15.4
)%
 
(20.9
)%
 
(19.4
)%
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
4.4
 %
 
(11.0
)%
 
(14.7
)%
 
(14.9
)%
 
 
 
 
 
 
 
 
Net cash used in operating activities
$
(31,559
)
 
$
(13,785
)
 
$
(49,263
)
 
$
(49,384
)

(1) "Xura performance", "Adjusted EBITDA" and "Adjusted EBITDA earnings (loss) per share" have not been prepared in accordance with GAAP. See “Presentation of Non-GAAP Financial Measures” below.




"We are proud to be in a position today to unveil our new company name and brand identity, Xura, along with our new stock symbol, MESG, which effectively redefines our role in enabling digital communications for both consumers and enterprise customers. We are pushing forward aggressively to stake our leadership in the rapidly evolving digital communications space. All the actions we have taken in 2015, including our partnership with Tech Mahindra, completion of the sale of the BSS segment to Amdocs and our acquisition of Acision, have helped position us to achieve the high operational and financial goals we have established for our new, combined company, Xura. We are very excited about leveraging our merged opportunities into strong results and begin truly disrupting digital," said Philippe Tartavull, President and Chief Executive Officer, Xura, Inc.
Discontinued Operations and Segment Information
Pursuant to the Amdocs Purchase Agreement, we agreed to sell substantially all of our assets required for operating the BSS Business. We substantially completed the disposition and have re-classified and reflected its operations as discontinued operations on the consolidated statements of earnings for all periods presented. As of July 31, 2015, certain assets and liabilities continued to meet the held for sale criteria due to deferred closings.
Selected Balance Sheet Highlights: Below is selected balance sheet data:
 
As of
 (In millions)
July 31, 2015
 
April 30, 2015
 
 
 
 
Cash and cash equivalents
$
346.1

 
$
136.1

Restricted cash (including long-term restricted cash) and bank time deposits
60.8

 
43.8

Total
$
406.9

 
$
179.9

As previously disclosed, on August 6, 2015, the company paid approximately $136 million in cash as part of the consideration for the acquisition of Acision.
Conference Call Details
Xura will be conducting a conference call today, September 9, 2015 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 and presentation can be accessed at www.Xura.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.
Xura Performance and Adjusted EBITDA
Our Chief Executive Officer is our chief operating decision maker (or CODM). The CODM uses Xura performance, as defined below, as the primary basis for assessing the financial results of the company. Xura 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.
Xura performance is computed by management as loss 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) restructuring expenses; and (ix) certain other gains, losses and expenses. Strategic related costs include business strategy evaluation and mergers and acquisition efforts.
Adjusted EBITDA is computed by management by adding depreciation to Xura performance.





Presentation of Non-GAAP Financial Measures
We provide Xura performance, Adjusted EBITDA and Adjusted EBITDA per share, non-GAAP financial measures, as additional information for our 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. We believe that the presentation of these non-GAAP financial measures provide 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 Xura, Inc.
Xura empowers people to engage with each other, across services, and through devices as part of their digital lifestyle. We help service providers and enterprises deliver and monetize innovative digital experiences through an award-winning portfolio of software solutions, backed by expert services. Our solutions touch more than three billion people through 450 service providers and enterprises in 130+ countries. You can find us at www.Xura.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, its Quarterly Report on Form 10-Q for the quarter ended July 31, 2015, or in other 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.Xura.com, or through the SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) at www.sec.gov.




XURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
 
Three Months Ended July 31,
 
Six Months Ended July 31,
 
2015
 
2014
 
2015
 
2014
Revenue:
 
 
 
 
 
 
 
Product revenue
$
17,005

 
$
20,062

 
$
27,112

 
$
37,072

Service revenue
44,624

 
54,926

 
80,222

 
102,998

Total revenue
61,629

 
74,988

 
107,334

 
140,070

Costs and expenses:
 
 
 
 
 
 
 
Product costs
12,715

 
18,808

 
25,668

 
28,703

Service costs
27,249

 
39,148

 
58,053

 
80,138

Research and development, net
8,235

 
9,813

 
16,515

 
18,172

Selling, general and administrative
19,686

 
23,059

 
39,559

 
48,619

Other operating expenses:
 
 
 
 
 
 
 
Restructuring expenses
4,238

 
1,171

 
7,646

 
3,043

Total other operating expenses
4,238

 
1,171

 
7,646

 
3,043

Total costs and expenses
72,123

 
91,999

 
147,441

 
178,675

Loss from operations
(10,494
)
 
(17,011
)
 
(40,107
)
 
(38,605
)
Interest income
89

 
100

 
173

 
215

Interest expense
(167
)
 
(231
)
 
(360
)
 
(354
)
Foreign currency transaction loss, net
(4,202
)
 
(2,949
)
 
(9,775
)
 
(930
)
Other income (expense), net
77

 
(413
)
 
179

 
(465
)
Loss before income tax benefit (expense)
(14,697
)
 
(20,504
)
 
(49,890
)
 
(40,139
)
Income tax benefit (expense)
2,534

 
(1,877
)
 
(2,253
)
 
(4,337
)
Loss from continuing operations
(12,163
)
 
(22,381
)
 
(52,143
)
 
(44,476
)
Income from discontinued operations
175,060

 
5,515

 
188,379

 
11,479

Net income (loss)
$
162,897

 
$
(16,866
)
 
$
136,236

 
$
(32,997
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic & diluted
22,005,116

 
22,401,902

 
21,936,379

 
22,348,835

Earnings (loss) per share - basic & diluted:
 
 
 
 
 
 
 
Continuing operations
$
(0.55
)
 
$
(1.00
)
 
$
(2.38
)
 
$
(1.99
)
Discontinued operations
7.95

 
0.25

 
8.59

 
0.51

 
$
7.40

 
$
(0.75
)
 
$
6.21

 
$
(1.48
)



XURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 
July 31, 2015
 
January 31, 2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
346,074

 
$
158,121

Restricted cash and bank deposits
55,584

 
35,802

Accounts receivable, net of allowance of $3,225 and $4,403, respectively
29,653

 
71,670

Inventories
14,296

 
17,817

Deferred cost of revenue
2,855

 
7,059

Deferred income taxes
14,298

 
13,781

Prepaid expenses
11,288

 
15,156

Other current assets
31,663

 
10,570

Total current assets
505,711

 
329,976

Property and equipment, net
38,496

 
49,230

Goodwill
67,622

 
151,217

Intangible assets, net
1,440

 
4,049

Deferred cost of revenue
19,303

 
30,437

Deferred income taxes
1,731

 
3,064

Long-term restricted cash
5,253

 
7,940

Other assets
16,406

 
30,439

Total assets
$
655,962

 
$
606,352

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
145,150

 
$
121,720

Deferred revenue
103,574

 
185,323

Deferred income taxes
1,593

 
1,491

Income taxes payable
—

 
2,166

Total current liabilities
250,317

 
310,700

Deferred revenue
62,313

 
89,999

Deferred income taxes
51,088

 
56,815

Other long-term liabilities
132,350

 
135,456

Total liabilities
496,068

 
592,970

Commitments and contingencies

 

Equity:
 
 
 
Common stock, $0.01 par value - authorized, 100,000,000 shares; issued 22,908,954 and 22,591,411 shares, respectively; outstanding, 21,993,027 and 21,830,081 shares, respectively
229

 
226

Preferred stock, $0.01 par value - authorized, 100,000 shares
—

 
—

Treasury stock, at cost, 915,927 and 761,330 shares, respectively
(20,353
)
 
(17,211
)
Accumulated earnings (deficit)
89,846

 
(46,390
)
Additional paid in capital
52,065

 
45,935

Accumulated other comprehensive income
38,107

 
30,822

Total equity
159,894

 
13,382

Total liabilities and equity
$
655,962

 
$
606,352




XURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Six Months Ended July 31,
 
2015
 
2014
Cash flows from operating activities:
 
Net income (loss)
$
136,236

 
$
(32,997
)
Non-cash operating items:
 
 
 
Depreciation and amortization
9,364

 
9,561

Gain on BSS Business sale
(201,602
)
 
—

Provision for doubtful accounts
331

 
331

Stock-based compensation expense
6,133

 
5,923

Deferred income taxes
(4,850
)
 
3,131

Inventory write-downs
1,303

 
1,108

Other non-cash items, net
420

 
446

Changes in assets and liabilities:
 
 
 
Accounts receivable
3,701

 
(16,392
)
Inventories
1,417

 
(8,624
)
Deferred cost of revenue
4,747

 
11,592

Prepaid expense and other current assets
(32,838
)
 
(5,580
)
Accounts payable and accrued expense
25,642

 
(16,195
)
Income taxes
(4,223
)
 
(1,053
)
Deferred revenue
(4,954
)
 
(5,750
)
Tax contingencies
15,352

 
3,598

Other assets and liabilities
(5,442
)
 
1,517

Net cash used in operating activities
(49,263
)
 
(49,384
)
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(7,982
)
 
(11,472
)
Advance payment for acquisition of Solaiemes
—

 
(2,678
)
Net change in restricted cash and bank deposits
(18,477
)
 
(4,027
)
Proceeds from asset sales
110

 
46

Proceeds from BSS Business sale net of escrow withheld of $26 million
266,081

 
—

Net cash provided by (used in) investing activities
239,732

 
(18,131
)
Cash flows from financing activities:
 
 
 
Payment for repurchase of common stock in connection with tax liabilities upon settlement of stock awards
(532
)
 
(972
)
Payment for repurchase of common stock under repurchase program
(2,351
)
 
(3,573
)
Proceeds from exercises of stock options
—

 
40

Net cash used in financing activities
(2,883
)
 
(4,505
)
Effects of exchange rates on cash and cash equivalents
367

 
(973
)
Net increase (decrease) in cash and cash equivalents
187,953

 
(72,993
)
Cash and cash equivalents, beginning of period 
158,121

 
254,580

Cash and cash equivalents, end of period
$
346,074

 
$
181,587

Non-cash investing transactions:
 
 
 
Accrued but unpaid purchases of property and equipment
$
785

 
$
4,587

Inventory transfers to property and equipment
$
824

 
$
1,673







XURA, INC. AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

 
Three Months Ended July 31,
 
Six Months Ended July 31,
 
2015
 
2014
 
2015
 
2014
 
(Dollars in thousands)
Loss from operations
$
(10,494
)
 
$
(17,011
)
 
$
(40,107
)
 
$
(38,605
)
Expense adjustments:
 
 
 
 
 
 
 
Stock-based compensation expense
2,589

 
2,382

 
4,965

 
4,535

Amortization of intangible assets
86

 
—

 
172

 
—

Compliance-related professional fees
654

 
335

 
705

 
704

Compliance-related compensation and other expenses
229

 
—

 
237

 
(70
)
Strategic related costs
1,875

 
1,100

 
3,769

 
2,390

Write-off of property and equipment
78

 
169

 
104

 
178

Certain litigation settlements and related costs
12

 
41

 
54

 
5

Restructuring expenses
4,201

 
1,171

 
7,609

 
3,043

Loss (gain) on sale of fixed assets
154

 
(14
)
 
152

 
(19
)
Other
—

 
305

 
(125
)
 
600

Total expense adjustments
9,878

 
5,489

 
17,642

 
11,366

Xura Performance
(616
)
 
(11,522
)
 
(22,465
)
 
(27,239
)
Depreciation
3,339

 
3,261

 
6,706

 
6,422

Adjusted EBITDA
2,723

 
(8,261
)
 
(15,759
)
 
(20,817
)
Adjusted EBITDA earnings (loss) per share - basic & diluted
$
0.12

 
$
(0.37
)
 
$
(0.72
)
 
$
(0.93
)