Current Report Filing (8-k)

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):

June 15, 2015

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 1.01 Entry into a Material Definitive Agreement

On June 14, 2015, Comverse, Inc., a Delaware corporation (the “Company”), entered into an agreement (the “Purchase Agreement”) with Bergkamp Coöperatief U.A., a cooperative with excluded liability formed under the laws of the Netherlands (the “Seller”) relating to the sale and purchase of Acision Global Limited, a private company formed under the laws of the United Kingdom (the “Target”). Pursuant to the Purchase Agreement, the Company will acquire the Target for a purchase price consisting of $135 million in cash, certain earnout payments (as discussed below) and 3.13 million shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”) which will be issued in a private placement transaction conducted pursuant to Section 4(a)(2) or Regulation S under the Securities Act of 1933, as amended, subject to certain adjustments (the “Transaction”). The Company expects to finance the cash portion of the purchase price with cash-on-hand. The parties have further agreed that an amount up to $35 million of cash consideration will be subject to an earnout, contingent on the achievement of certain revenue objectives by certain of the Target’s business lines. To secure claims the Company may have under the Purchase Agreement, $10 million of the initial cash consideration will be retained in escrow, which amount will be increased in the event that further consideration is triggered under the earnout, up to a total maximum aggregate escrow retention of $25 million. Such monies will be released to the Seller two years after completion of the Transaction, subject to any claims. In addition, the Target, in consultation with the Company, will seek an amendment and waiver (the “Amendment”) to the Target’s credit agreement (the “Target Credit Agreement”) governing the Target’s existing approximately $157 million senior credit facility (the “Target Senior Debt”), pursuant to which the Target Senior Debt will remain in place during the pendency of and following completion of the Transaction. Subject to provisions allowing the Company to obtain alternative financing, both the Company and the Seller are permitted to terminate the Purchase Agreement in the event the requisite lenders under the Target Credit Agreement do not consent to the Amendment. Pursuant to the terms of the Target Credit Agreement the Target Senior Debt bears interest at a rate per annum, at the option of the Target, of either (i) a customary adjusted Eurocurrency interest rate plus 9.75% or (ii) a customary base rate plus 8.75%, and matures, subject to the terms and conditions of the Target Credit Agreement, on December 15, 2018. In connection with the Amendment, the Company has agreed to pay certain costs imposed on the Target by its lenders under the Target Senior Debt.

The Purchase Agreement contains customary representations, warranties and covenants, by the parties thereto and completion of the Transaction as set forth therein is subject to certain closing conditions including (i) the completion of the sale of the substantial majority of the Company’s business support systems (“BSS”) to Amdocs Limited in accordance with the asset purchase agreement between Amdocs Limited and the Company, dated April 29, 2015 and (ii) the receipt of the requisite approvals and consents of certain local regulatory authorities in respect of the Transaction. Assuming the satisfaction or waiver of the closing conditions, the Transaction is expected to close no later than the end of the third calendar quarter in 2015.

Each party has agreed to indemnify the other for certain potential liabilities and claims, subject to certain exceptions and limitations.

The foregoing summary of the Purchase Agreement and the transactions contemplated thereby is subject to and qualified in its entirety by reference to the full text of the Purchase Agreement, the terms of which are incorporated herein by reference.

Item 2.02 Results of Operations and Financial Condition

On June 15, 2015, the Company issued a press release providing selected financial information for the three months ended April 30, 2015. 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 Item of 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 Item of 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 (the “Securities Act”), or the Exchange Act except as shall be expressly set forth by a specific reference in such filing.

Item 3.02 Unregistered Sales of Equity Securities

Reference is made to the disclosure provided in response to Item 1.01 of this Current Report on Form 8-K, with respect to the Company’s agreement to issue the Consideration Shares as partial consideration for the Transaction in a private placement transaction pursuant to the terms of the Purchase Agreement, which disclosure is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure

On June 15, 2015, the Company issued a press release relating to its entry into the Purchase Agreement. A copy of the press release is attached as Exhibit 99.2 hereto and is incorporated by reference in its entirety herein.

The information contained in this Item of 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 Exchange Act, or otherwise subject to the liabilities of that Section. The information disclosed in this Item of this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act or the Exchange Act except as shall be expressly set forth by a specific reference in such filing.

Cautionary Statements Regarding Forward-looking Statements

This Current Report includes “forward-looking statements.” These forward-looking statements include statements regarding benefits of the proposed transaction, including future financial and operating results, expected capitalization at the closing of the transaction, expected synergies and anticipated future financial operating performance, our and Target’s plans, objectives, expectations and intentions and the expected timing of completion of the transaction. 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 Current Report. 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 or in subsequently filed periodic, current or other reports. In addition to the risks and uncertainties set forth in our SEC filings, the forward-looking statements described in this Current Report on Form 8-K could be affected by the following, among other things, (i) conditions to the closing of the transaction may not be satisfied; (ii) problems may arise in successfully integrating the Target business into our current business, which may result in our not operating as effectively and efficiently as expected; (iii) we may be unable to achieve expected synergies or it may take longer than expected to achieve such synergies; (iv) the transaction may involve unexpected costs or unexpected liabilities; (v) our business may suffer as a result of uncertainty surrounding the

transaction; (vi) our industry may be subject to future regulatory or legislative actions that could adversely affect us; and (vii) we may be adversely affected by other economic, business, and/or competitive factors.

Item 9.01. Financial Statements and Exhibits



Exhibit No.	Description

99.1	Press Release of Comverse, Inc., dated June 15, 2015.

99.2	Press Release of Comverse, Inc., dated June 15, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized



		COMVERSE, INC.

Date: June 15, 2015	By:	/s/ Jacky Wu
	Name:	Jacky Wu
	Title:	Senior Vice President, Chief Financial Officer

EXHIBIT INDEX





Exhibit No.	Description
99.1	Press Release of Comverse, Inc., dated June 15, 2015.

99.2	Press Release of Comverse, Inc., dated June 15, 2015.

Exhibit 99.1 CONTACT: Mary T. Conway

Conway Communications

for Comverse, Inc.

(781) 772-1679

ir@comverse.com

Comverse Announces Fiscal 2015 First Quarter Results;

Conference Call to be Held Today at 8:00 AM

WAKEFIELD, MA, June 15, 2015 - Comverse, Inc. (“Comverse”; NASDAQ: CNSI) today announced its results for the three months ended April 30, 2015.

Consolidated Highlights: Below is selected consolidated financial information for the three months ended April 30, 2015 and 2014, prepared in accordance with generally accepted accounting principles (“GAAP”), except as noted.



Comverse, Inc.:	Three Months Ended April 30,
(In thousands)	2015			2014
Total revenue	$	45,705		$	65,082
Costs and expenses
Cost of revenue	43,757			50,885
Research and development, net	8,280			8,359
Selling, general and administrative	19,873			25,560
Other operating expenses	3,408			1,872
Total costs and expenses	75,318			86,676
Loss from operations	(29,613		)	(21,594		)
Expense adjustments	7,764			5,877
Comverse performance ⁽¹⁾	(21,849		)	(15,717		)
Depreciation	3,367			3,161
Adjusted EBITDA ⁽¹⁾	(18,482		)	(12,556		)

Loss before income tax expense	(35,193		)	(19,635		)
Income tax expense	(4,787		)	(2,460		)
Loss from continuing operations	(39,980		)	(22,095		)
Income from discontinued operations	13,319			5,964
Net loss	$	(26,661	)	$	(16,131	)

(Loss) earnings per share - basic & diluted:
Continuing operations	$	(1.83	)	$	(0.99	)
Discontinued operations	0.61			0.27
	$	(1.22	)	$	(0.72	)

Adjusted EBITDA loss per share - basic & diluted ⁽¹⁾	$	(0.85	)	$	(0.56	)

Interest expense	(193		)	(123		)

Operating margin	(64.8		)%	(33.2		)%

Comverse performance margin	(47.8		)%	(24.1		)%

Net cash used in operating activities	$	(17,704	)	$	(35,599	)

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

Acision Transaction:

Separately, Comverse today announced it has entered into a definitive agreement to acquire Acision, a privately-held leader in secure mobile messaging and engagement services, based in London, United Kingdom. Under the terms of the agreement, the purchase price consists of $135 million in cash, certain earnout payments of up to $35 million and 3.13 million shares of Comverse’s common stock. Acision, in consultation with Comverse will seek to maintain Acision’s existing $157 million senior credit facility following completion of the transaction. Subject to provisions allowing Comverse to secure alternative financing, both Comverse and the Seller are permitted to terminate the Purchase Agreement in the event the requisite lenders under the Acision credit agreement do not consent to have the Acision debt remain in place following completion of the transaction. The resulting company will reflect the best of breed products and services from both entities, combining complementary market presence and product lines, leading to an expanded solutions portfolio and global footprint for the joint customer base.

“I am very pleased with our recent progress, especially the acquisition we announced today of Acision. I am convinced that these strategic steps are bringing us much closer to our goal of transforming Comverse into a global market leader in the Digital Lifestyle Services sector. These combined efforts secure a stronger foundation for Comverse, and allow us to pursue higher growth and profitability through an expanded product portfolio and compelling platform approach to this market,” said Philippe Tartavull, President and CEO of Comverse, Inc.

Discontinued Operations and Segment Information

Our BSS Business met the criteria to be classified as held for sale as well as discontinued operations. As such, the BSS Business has been reclassified and reflected as discontinued operations in the consolidated statements of operations for all periods presented. The assets and liabilities related to BSS Business were reclassified and reflected as available for sale on the consolidated balance sheet at April 30, 2015. We now operate as a single business segment the results of which are included in the Company's income statement from continuing operations.

Selected Balance Sheet Highlights: Below is selected balance sheet data:



	As of
(In millions)	April 30, 2015		January 31, 2015

Cash and cash equivalents	$	136.1	$	158.1
Restricted cash (including long-term restricted cash) and bank time deposits	43.8		43.7
Total	$	179.9	$	201.8

Conference Call Details

Comverse will be conducting a conference call today, June 15, 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.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.

Comverse Performance and Adjusted EBITDA

Our Chief Executive Officer is our chief operating decision maker (or CODM). The CODM uses Comverse performance, as defined below, as the primary basis for assessing the financial results of the company. Comverse 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.

Comverse 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 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. Strategic related costs include business strategy evaluation and mergers and acquisition efforts.

Adjusted EBITDA is computed by management by adding depreciation to Comverse performance.

Presentation of Non-GAAP Financial Measures

We provide Comverse 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 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.

Comverse empowers people to engage with each other, services, and things as part of their multi-device, 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 two billion people through 450 service providers and enterprises in 125+ countries. You can find us at 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, statements of assumptions relating thereto, statements regarding benefits of the acquisition of Acision, including future financial and operating results, expected capitalization at closing of the acquisition, expected synergies and anticipated future financial operating performance, our and Acision’s plans, objectives, expectations and intentions and the expected timing of completion of the transaction. 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, or in subsequently filed periodic, current or other reports. In addition to the risks and uncertainties set forth in our SEC filings, the forward-looking statements described in this press release could be affected by the following, among other things: (i) conditions to the closing of the acquisition of Acision may not be satisfied; (ii) problems may arise in successfully integrating Acision’s business into our current business, which may result in our not operating as effectively and efficiently as expected; (iii) we may be unable to achieve expected synergies or it may take longer than expected to achieve such synergies; (iv) the transaction may involve unexpected costs or unexpected liabilities; (v) our business may suffer as a result of uncertainty surrounding the acquisition of Acision; (vi) our industry may be subject to future regulatory or legislative actions that could adversely affect us; and (vii) we may be adversely affected by other economic, business and/or competitive factors. 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

(In thousands, except share and per share data)



	Three Months Ended April 30,
	2015			2014
Revenue:
Product revenue	$	10,107		$	17,010
Service revenue	35,598			48,072
Total revenue	45,705			65,082
Costs and expenses:
Product costs	12,953			9,895
Service costs	30,804			40,990
Research and development, net	8,280			8,359
Selling, general and administrative	19,873			25,560
Other operating expenses:
Restructuring expenses	3,408			1,872
Total other operating expenses	3,408			1,872
Total costs and expenses	75,318			86,676
Loss from operations	(29,613		)	(21,594		)
Interest income	84			115
Interest expense	(193		)	(123		)
Foreign currency transaction (loss) gain, net	(5,573		)	2,019
Other income (expense), net	102			(52		)
Loss before income tax expense	(35,193		)	(19,635		)
Income tax expense	(4,787		)	(2,460		)
Loss from continuing operations	(39,980		)	(22,095		)
Income from discontinued operations	13,319			5,964
Net loss	$	(26,661	)	$	(16,131	)
Weighted average common shares outstanding:
Basic & Diluted	21,865,326			22,293,980
(Loss) earnings per share - basic & diluted:
Continuing operations	$	(1.83	)	$	(0.99	)
Discontinued operations	0.61			0.27
	$	(1.22	)	$	(0.72	)

COMVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



	April 30, 2015			January 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	136,096		$	158,121
Restricted cash and bank deposits	36,054			35,802
Accounts receivable, net of allowance of $2,952 and $4,403, respectively	33,914			71,670
Inventories	17,550			17,817
Deferred cost of revenue	3,481			7,059
Deferred income taxes	14,314			13,781
Prepaid expenses	12,635			15,156
Other current assets	13,758			10,570
Assets held for sale	154,829			—
Total current assets	422,631			329,976
Property and equipment, net	39,825			49,230
Goodwill	67,585			151,217
Intangible assets, net	1,561			4,049
Deferred cost of revenue	20,305			30,437
Deferred income taxes	2,875			3,064
Long-term restricted cash	7,714			7,940
Other assets	15,365			30,439
Total assets	$	577,861		$	606,352
LIABILITIES AND (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	106,074		$	121,720
Deferred revenue	116,738			185,323
Deferred income taxes	1,575			1,491
Income taxes payable	4,339			2,166
Liabilities held for sale	134,013			—
Total current liabilities	362,739			310,700
Deferred revenue	56,729			89,999
Deferred income taxes	51,034			56,815
Other long-term liabilities	114,539			135,456
Total liabilities	585,041			592,970
Commitments and contingencies
(Deficit) equity:
Common stock, $0.01 par value - authorized, 100,000,000 shares; issued 22,695,729 and 22,591,411 shares, respectively; outstanding, 21,930,512 and 21,830,081 shares, respectively	227			226
Preferred stock, $0.01 par value - authorized, 100,000 shares	—			—
Treasury stock, at cost, 765,217 and 761,330 shares, respectively	(17,292		)	(17,211		)
Accumulated deficit	(73,051		)	(46,390		)
Additional paid in capital	48,990			45,935
Accumulated other comprehensive income	33,946			30,822
Total (deficit) equity	(7,180		)	13,382
Total liabilities and (deficit) equity	$	577,861		$	606,352

COMVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



	Three Months Ended April 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(26,661	)	$	(16,131	)
Non-cash operating items:
Depreciation and amortization	4,927			4,739
Provision for doubtful accounts	86			254
Stock-based compensation expense	3,056			2,938
Deferred income taxes	(6,039		)	1,150
Inventory write-downs	625			868
Other non-cash items, net	325			71
Changes in assets and liabilities:
Accounts receivable	(296		)	(17,720		)
Inventories	(475		)	(2,652		)
Deferred cost of revenue	2,554			5,822
Prepaid expense and other current assets	(8,603		)	(11,173		)
Accounts payable and accrued expense	13,280			(9,755		)
Income taxes	2,122			(267		)
Deferred revenue	2,757			3,404
Tax contingencies	(721		)	2,479
Other assets and liabilities	(4,641		)	374
Net cash used in operating activities	(17,704		)	(35,599		)
Cash flows from investing activities:
Purchases of property and equipment	(4,999		)	(3,309		)
Net change in restricted cash and bank deposits	(710		)	(4,774		)
Proceeds from asset sales	97			9
Net cash used in investing activities	(5,612		)	(8,074		)
Cash flows from financing activities:
Payment for repurchase of common stock in connection with tax liabilities upon settlement of stock awards	(81		)	(386		)
Proceeds from exercises of stock options	—			40
Net cash used in financing activities	(81		)	(346		)
Effects of exchange rates on cash and cash equivalents	1,372			(465		)
Net decrease in cash and cash equivalents	(22,025		)	(44,484		)
Cash and cash equivalents, beginning of period	158,121			254,580
Cash and cash equivalents, end of period	$	136,096		$	210,096
Non-cash investing transactions:
Accrued but unpaid purchases of property and equipment	$	1,220		$	3,887
Inventory transfers to property and equipment	$	179		$	1,020

COMVERSE, INC. AND SUBSIDIARIES

CONSOLIDATED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(UNAUDITED)



	Three Months Ended April 30,
	2015			2014
	(Dollars in thousands)
Loss from operations	$	(29,613	)	$	(21,594	)
Expense adjustments:
Stock-based compensation expense	2,376			2,153
Amortization of intangible assets	86			—
Compliance-related professional fees	51			369
Compliance-related compensation and other expenses	8			(70		)
Strategic related costs	1,716			1,290
Write-off of property and equipment	26			9
Certain litigation settlements and related costs	42			(36		)
Restructuring expenses	3,408			1,872
Gain on sale of fixed assets	(2		)	(5		)
Other	53			295
Total expense adjustments	7,764			5,877
Comverse performance	(21,849		)	(15,717		)
Depreciation	3,367			3,161
Adjusted EBITDA	$	(18,482	)	$	(12,556	)
Adjusted EBITDA loss per share - basic & diluted (1)	$	(0.85	)	$	(0.56	)

Press Release

Contact:

Michael Grossi

Comverse, Inc.

michael.grossi@comverse.com

+1-781-224-8030

Comverse Signs Definitive Agreement to Acquire Acision; Combined Company to Extend Global Leadership in

Next-Generation Digital Service Solutions

Combined Entity Will Incorporate Best-of-breed Complementary Products and Technologies to Drive Increased Global Footprint, Market Leadership in Messaging and Digital Services

WAKEFIELD, Mass., June 15, 2015 - Comverse, Inc. (Nasdaq: CNSI), a global leader in digital services, today announced that it has entered into a definitive agreement to acquire Acision, a privately-held leader in secure mobile messaging and engagement services, based in Reading, United Kingdom. Comverse will acquire Acision for a purchase price consisting of approximately $135 million in cash, 3.13 million shares of Comverse’s common stock, and potential earnout payments of up to $35 million. In addition, Comverse will seek to maintain Acision’s existing $157 million senior credit facility following completion of the transaction. The Boards of Directors of Comverse and Acision have approved the transaction, which, subject to satisfying closing conditions, is expected to be complete by the end of the third calendar quarter. Following completion of the transaction, the new company will be led by a team comprised of executives from both organizations under the leadership of Comverse CEO Philippe Tartavull and the company will remain headquartered in Wakefield, Massachusetts, USA.

Enabling Today’s Digital Services

In addition to offering market-leading Cloud Multi-VAS and IP messaging solutions, the combined company will provide Service Providers, Over the Top (OTT), and Enterprise customers with a wide array of fast-growing mobile monetization, enterprise messaging and digital services in high growth segments. Comverse helps Communication Service Providers (CSPs) transition to Digital Service Providers (DSPs) and gain competitive advantage through a portfolio of solutions that help them monetize the coming “fourth wave” of digital services. The combined company’s expanded portfolio will extend into new digital application areas including data analytics, secure enterprise application-to-person (A2P) messaging, credit orchestration,

two-factor authentication, and Machine-to-Machine (M2M) communication as well as Rich Communication Services (RCS), WebRTC, and APIs for rapid service creation.

“Continued consolidation in the Service Provider space creates the need for strong suppliers,” said Philippe Tartavull, President and Chief Executive Officer, Comverse. “Our acquisition of Acision underscores Comverse’s commitment to quickly building scale and market leadership in the fast-growing digital services sector. This acquisition creates a formidable platform for innovation that is expected to serve our customers’ current and evolving needs. Acision brings a diverse portfolio of mobile monetization and rich enterprise messaging solutions complementing Comverse’s market leading digital services platform. The combined portfolio will allow us to enable our service provider and enterprise customers to deliver and monetize a new array of advanced digital services to their customers.”

“Today’s acquisition is in line with our growth strategy to broaden our reach and capabilities, and brings two leading companies together to deliver the very latest monetizable, rich communication services for mobile operators and enterprises worldwide,” said Didier Bench, Executive Chairman at Acision. “The two companies are well aligned in their respective visions and strategies, yet were operating in largely complementary markets. We believe that joining forces is in the best interests of both our customers and our employees, and our commitment to them and the products we provide will remain our highest priority. By combining our resources, we can provide our customers and partners with access to an extended portfolio of digital products and services, with high quality innovation as well as the best in class knowledge and expertise.”

“The combination of Acision and Comverse creates a market leader in the high growth digital services segment,” commented Jorg Mohaupt, Head of TMT at Access Industries, majority shareholder of Acision. “We are excited about the potential of this acquisition and the resulting value creation for our shareholders.”

About Acision

Acision connects the world by powering relevant, seamless mobile engagement services that interoperate across IP platforms and enrich the user experience creating value and new communication opportunities for carriers, enterprises and consumers across the world. For more information, visit Acision at http://www.acision.com

About Comverse

Comverse empowers people to engage with each other, services, and things as part of their multi-device, digital lifestyle. We help service providers and enterprises deliver and monetize innovative digital experiences through an award-winning portfolio of cloud-based software solutions, backed by expert services. You can find us at 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. These forward-looking statements include statements regarding benefits of the proposed transaction, including future financial and operating results, expected capitalization at the closing of the transaction, expected synergies and anticipated future financial operating performance, our and Acision’s plans, objectives, expectations and intentions and the expected timing of completion of the transaction. 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, or in subsequently filed periodic, current or other reports. In addition to the risks and uncertainties set forth in our SEC filings, the forward-looking statements described in this press release could be affected by the following, among other things, (i) conditions to the closing of the transaction may not be satisfied; (ii) problems may arise in successfully integrating the Acision business into our current business, which may result in our not operating as effectively and efficiently as expected; (iii) we may be unable to achieve expected synergies or it may take longer than expected to achieve such synergies; (iv) the transaction may involve unexpected costs or unexpected liabilities; (v) our business may suffer as a result of uncertainty surrounding the transaction; (vi) our industry may be subject to future regulatory or legislative actions that could adversely affect us; and (vii) we may be adversely affected by other economic, business, and/or competitive factors. We undertake no commitment to update or revise any forward-looking statements except as required by law.