Syniverse Reports Second Quarter 2007 Results

Share Name	Share Symbol	Market	Type
Syniverse Holdings	NYSE:SVR	NYSE	Ordinary Share

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	0.00	0.00%	30.98				0.00	01:00:00

Syniverse Hlgs (NYSE:SVR)
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Syniverse Technologies (NYSE:SVR), a leading provider of technology and business solutions for the global mobile telecommunications industry, today reported results for the second quarter 2007. Total revenues were $91.4 million for the second quarter 2007, an 11.2% increase compared to the second quarter 2006. Net revenues, which exclude off-network database queries or pass-through revenue, were $89.8 million for the second quarter 2007, a 13.7% increase compared to the second quarter 2006. Net income was $11.7 million in the second quarter 2007, a 23.0% increase compared to $9.5 million in the second quarter 2006. Cash net income, a non-GAAP measure of profitability, was $17.9 million for the second quarter 2007, a 38.7% increase compared to the second quarter 2006. Cash net income reflects the positive cash impact resulting from the significant difference in amortization of goodwill for financial reporting and tax purposes, and is determined by adding the cash savings arising from the tax deductible goodwill amortization to adjusted net income. Cash net income per diluted share was $0.26 in the second quarter 2007, a 36.8% increase compared to the second quarter 2006. Adjusted EBITDA, a non-GAAP measure of operating cash flow, was $37.1 million for the second quarter 2007, a 26.7% increase compared to $29.3 million in the second quarter 2006. �Syniverse continued to execute its strategic plan in the second quarter, with strong growth in data services and global expansion driving financial outperformance. Key data services such as SMS-IG for SMS interoperability and mobile data roaming saw accelerating growth, while new contracts in Singapore, Hong Kong and Georgia expanded our global reach,� said Tony Holcombe, CEO and President of Syniverse. �Given the robust results through six months, combined with strong organic trends that we anticipate for the remainder of 2007, we are increasing our full year outlook.� Chief Financial Officer David Hitchcock added: �Syniverse delivered strong financial results in the second quarter, with organic revenue growth of 6.3% year over year. This growth, combined with continued cost management, led to a significant expansion in our margins. Syniverse continues to generate significant free cash flow from operations, and we�ve increased our free cash flow expectations for the full year.� Second Quarter 2007 Service Line Revenue Technology Interoperability Services Technology Interoperability Services revenues were $42.1 million in the second quarter 2007, a 36.6% increase compared to the second quarter 2006, primarily driven by increases in data services such as SMS interoperability and mobile data roaming as well as acquired revenues from ITHL. Organic revenue growth was 17.6% while the services acquired from ITHL in June 2006 contributed $5.8 million. Network Services Network Services revenues were $31.2 million in the second quarter 2007, a 1.0% decrease compared to the second quarter 2006, as wireline migrations were mostly offset by organic increases in data networking and SS7 connectivity. Number Portability Services Number Portability Services revenues were $6.9 million in the second quarter 2007, a 3.9% decrease compared to the second quarter 2006, as the price impact of certain renewals was partially offset by increased revenues from new services provided to Canadian mobile operators. Call Processing Services Call Processing Services revenues were $8.4 million in the second quarter 2007, a 15.6% increase compared to the second quarter 2006, driven higher by Signaling Solutions revenue from increased domestic and international roaming. Enterprise Solutions Enterprise Solutions revenues were $1.1 million in the second quarter 2007. Off-Network Database Queries (Pass-Through) Pass-through revenues for the second quarter 2007 were $1.6 million. Second Quarter 2007 Business Highlights Agreement to acquire the wireless clearing and financial settlement business of Billing Services Group. This transaction remains subject to European Commission approval, and Syniverse has filed for a 20-day extension to the Commission�s Phase 2 review. Named David Hitchcock as Chief Financial Officer. Appointed as Singapore�s only number portability centralized database administrator. New GSM clearing contracts with SmartTone Vodafone of Hong Kong and Mobitel of Georgia. Outlook Based on strong results from the first six months and an improved outlook for the remainder of the year, the company is increasing its outlook as follows: Net Revenues $345 - $350 million Adjusted EBITDA $133 - $138 million Cash Net Income $60 - $65 million Additionally, the company expects to generate operating free cash flow in excess of $75 million. Non-GAAP Measures Syniverse's Cash Net Income is determined by adding the cash benefit of our tax-deductible goodwill to Adjusted Net Income. This benefit is a result of the differing treatments of approximately $362 million of goodwill on our balance sheet created primarily from our acquisitions from Verizon and of IOS North America. While not amortized for GAAP purposes, goodwill amortization is deductible in calculating our taxable income and, hence, reduces cash tax liabilities. Syniverse's Adjusted Net Income is determined by adding the following to net income (loss): provision for income taxes, restructuring costs, amortization of intangibles recorded in purchase accounting, loss on extinguishment of debt, headquarters facilities move expenses, transition expenses of integrating the IOS North America business, loss from disposal of assets, SFAS 123R non-cash compensation, data processing contract termination fee, litigation settlement and less non-operating gains to arrive at Adjusted Net Income (loss) before provision for income taxes. This adjusted pre-tax result is then further adjusted for a provision for income taxes at an assumed long-term tax rate of 39%, which excludes the effect of our NOLs. We present Adjusted Net Income and Cash Net Income because we believe that Adjusted Net Income and Cash Net Income provide useful information regarding our operating results in addition to our GAAP measures. We believe that Adjusted Net Income provides our investors with valuable insight into our profitability exclusive of unusual adjustments, and Cash Net Income provides further insight into the cash impact resulting from the different treatments of goodwill for financial reporting and tax purposes. Neither of these non-GAAP measures should be reviewed without consideration of our net income and other GAAP measures. Syniverse's Adjusted EBITDA is determined by adding the following to net income (loss): net interest expense, provision for income taxes, depreciation, amortization, restructuring charges, loss on extinguishment of debt, headquarters facilities move expenses, the transition expenses of integrating the IOS North America business, loss from disposal of assets, SFAS 123R non-cash compensation, data processing contract termination fee, litigation settlement and less non-operating gains. A reconciliation of Adjusted EBITDA, Adjusted Net Income and Cash Net Income to net income (loss) is presented in the financial tables contained herein. Syniverse's Free Cash Flow is determined by adding (or subtracting) the following to Net cash provided by operating activities: (capital expenditures), cash paid (received) in legal settlement and (accrued but not yet paid acquisition earn-out). We present Adjusted EBITDA and Free Cash Flow because we believe that Adjusted EBITDA and Free Cash Flow provide useful information regarding our continuing operating results. We rely on Adjusted EBITDA and Free Cash Flow as primary measures to review and assess the operating performance of our company and our management team in connection with our executive compensation and bonus plans. We also review Adjusted EBITDA and Free Cash Flow to compare our current operating results with corresponding periods and with the operating results of other companies in our industry. In addition, we also utilize Adjusted EBITDA and Free Cash Flow as an assessment of our overall liquidity and our ability to meet our debt service obligations. We believe that Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Cash Net Income are useful to investors to provide disclosures of our operating results on the same basis as that used by our management. We also believe that these measures can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items which do not directly affect our ongoing operating performance or cash flows. Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Cash Net Income have limitations as analytical tools, and you should not consider them in isolation or as a substitute for net income, cash flows from operating activities, and other consolidated income or cash flows statement data prepared in accordance with accounting principles generally accepted in the United States. Because of these limitations, Adjusted EBITDA and Free Cash Flow should not be considered as measures of discretionary cash available to us to invest in the growth of our business, and Adjusted Net Income and Cash Net Income should not be considered as a replacement for net income. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Cash Net Income as supplemental information. Second quarter 2007 Earnings Call Syniverse Technologies will host a conference call today at 4:30 p.m. ET to discuss these results. To participate on this call, U.S. callers may dial toll-free 1-866-272-9941; international callers may dial direct (+1) 617-213-8895. The passcode for this call is 77001491. This event will be webcast live over the Internet in listen-only mode at www.syniverse.com/investorevents. A replay of this call will be available beginning shortly after the call concludes through August 14, 2007, at 11:59 p.m. ET. To access the replay, U.S. callers may dial toll-free 1-888-286-8010; international callers may dial direct (+1) 617-801-6888. The replay passcode is 94860182. In addition, this earnings call will be archived on the Syniverse Technologies corporate web site www.syniverse.com under Investors � Webcasts and Presentations. About Syniverse Syniverse Technologies (NYSE:SVR) makes it possible for over 350 communications companies in more than 50 countries to address market changes and demands as they deliver everything from voice calls to sophisticated data and video services. By ensuring that disparate technologies and standards interoperate, Syniverse allows operators to provide seamless, interactive mobile services to their subscribers wherever and whenever they need them. Celebrating its 20th anniversary in 2007, Syniverse is headquartered in Tampa, Florida, U.S.A., and has offices in major cities around the globe. Syniverse is ISO 9001:2000 certified and TL 9000 approved, adhering to the principles of customer focus and quality improvement practices. More information is available at www.syniverse.com. Cautions about Forward-Looking Statements This press release contains forward-looking statements, including statements about business outlook and strategy, and statements about historical results that may suggest trends for our business. These statements are based on estimates and information available to us at the time of this press release and are not guarantees of future performance. Actual results could differ materially from our current expectations as a result of many factors, including: unpredictable quarterly fluctuations in our business; the effects of competition or consumer and merchant use of our service; any adverse changes in our agreements with our listings providers; the impact of international expansion efforts on our business; changes in our tax status; risks or uncertainties inherent in or related to the integration of the business we proposed to acquire (including unanticipated operating costs and business disruptions following the proposed transaction); our ability to secure financing for the proposed acquisition; the timing or impact of any regulatory or governmental approvals; satisfaction of the various closing conditions set forth in the share purchase agreement for the proposed acquisition, and the timing of the closing of the proposed acquisition. These and other risks and uncertainties associated with our business are described in our filings with the Securities and Exchange Commission. Syniverse Holdings, Inc. Condensed Consolidated Statements of Operations (unaudited) (In thousands except per share information) � Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2006 June 30, 2007 June 30, 2006 June 30, 2007 Technology Interoperability Services $ 30,798 $ 42,061 $ 56,634 $ 79,856 Network Services 31,549 31,245 63,043 61,669 Number Portability Services 7,220 6,938 13,950 13,044 Call Processing Services 7,288 8,422 14,479 15,630 Enterprise Solution � 2,084 � � 1,089 � � 4,214 � � 2,280 � Revenues excluding Off Network Database Queries 78,939 89,755 152,320 172,479 Off Network Database Queries � 3,255 � � 1,620 � � 5,291 � � 3,274 � Total Revenues 82,194 91,375 157,611 175,753 � Cost of operations � 33,545 � � 34,075 � � 64,751 � � 67,516 � � Gross Margin 48,649 57,300 92,860 108,237 � Gross Margin % 59.2 % 62.7 % 58.9 % 61.6 % Gross Margin % before Off Network Database Queries 61.6 % 63.8 % 61.0 % 62.8 % � Sales and marketing 6,871 7,652 12,364 14,464 General and administrative 13,673 13,616 30,984 27,603 Depreciation and amortization 9,868 10,724 19,849 21,003 Restructuring � - � � 773 � � 338 � � 2,555 � � Operating income 18,237 24,535 29,325 42,612 � Other expense, net Interest expense, net (6,262 ) (5,572 ) (12,370 ) (11,196 ) Loss on extinguishment of debt - - (924 ) - Other, net � 211 � � 75 � � 330 � � 128 � � (6,051 ) � (5,497 ) � (12,964 ) � (11,068 ) � Income before provision for income taxes 12,186 19,038 16,361 31,544 � Provision for income taxes � 2,699 � � 7,370 � � 3,324 � � 12,230 � � Net income $ 9,487 � $ 11,668 � $ 13,037 � $ 19,314 � � � Net income per share Basic $ 0.14 $ 0.17 $ 0.20 $ 0.29 Diluted $ 0.14 $ 0.17 $ 0.19 $ 0.29 � Shares used in calculation Basic 66,909 67,294 66,828 67,257 Diluted 67,873 67,439 67,568 67,396 � � Selected Balance Sheet Data (unaudited): As of (in thousands) June 30, 2007 Cash $ 48,239 � Senior subordinated notes $ 175,000 Term note B � 135,865 � Total debt $ 310,865 � � � Common stock and additional paid-in capital $ 460,804 Accumulated deficit and other comprehensive income � (27,831 ) Total stockholders' equity $ 432,973 � Syniverse Holdings, Inc. Reconciliation of Non GAAP Measures to GAAP (unaudited) (In thousands except per share information) � Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2006 June 30, 2007 June 30, 2006 June 30, 2007 � Reconciliation to adjusted EBITDA Net income $ 9,487 $ 11,668 $ 13,037 $ 19,314 Interest expense, net 6,262 5,572 12,370 11,196 Provision for income taxes 2,699 7,370 3,324 12,230 Depreciation and amortization 9,868 10,724 19,849 21,003 Restructuring - 773 338 2,555 SFAS 123R non-cash compensation 329 984 329 1,469 IOS North America transition expenses (258 ) - 794 - Facilities move expense 1,104 - 5,438 - Loss on extinguishment of debt - - 924 - Non-operating gains � (211 ) � - � � (330 ) � - � Adjusted EBITDA $ 29,280 � $ 37,091 � $ 56,073 � $ 67,767 � � Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2006 June 30, 2007 June 30, 2006 June 30, 2007 Reconciliation to adjusted net income and cash net income Net income $ 9,487 $ 11,668 $ 13,037 $ 19,314 Add provision for income taxes � 2,699 � � 7,370 � � 3,324 � � 12,230 � Income before provision for income taxes 12,186 19,038 16,361 31,544 � Restructuring - 773 338 2,555 SFAS 123R non-cash compensation 329 984 329 1,469 Purchase accounting amortization 4,188 4,703 8,414 9,406 IOS North America transition expenses (258 ) - 794 - Facilities move expense 1,104 - 5,438 - Loss on extinguishment of debt - - 924 - Non-operating gains � (211 ) � - � � (330 ) � - � Adjusted income before provision for income taxes 17,338 25,498 32,268 44,974 � Less assumed provision for income taxes at 39% � (6,762 ) � (9,944 ) � (12,585 ) � (17,540 ) � Adjusted net income 10,576 15,554 19,683 27,434 � Add cash savings of tax deductible goodwill(1) � 2,300 � � 2,301 � � 4,600 � � 4,602 � � Cash net income $ 12,876 � $ 17,855 � $ 24,283 � $ 32,036 � � Adjusted net income per share $ 0.16 $ 0.23 $ 0.29 $ 0.41 Cash net income per share $ 0.19 $ 0.26 $ 0.36 $ 0.48 Diluted shares outstanding 67,873 67,439 67,568 67,396 � (1) Represents the cash benefit realized currently as a result of the tax deductibility of goodwill amortization. � Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2006 June 30, 2007 June 30, 2006 June 30, 2007 Reconciliation to free cash flow Cash from operations $ 24,997 $ 17,705 $ 26,348 $ 38,735 Capital expenditures (6,046 ) (6,464 ) (10,821 ) (16,053 ) Less cash received in legal settlement - - - (2,500 ) Change in working capital due to ITHL contingent payment � - � � 6,895 � � - � � 6,160 � Free Cash Flows $ 18,951 � $ 18,136 � $ 15,527 � $ 26,342 � � Supplemental information: Cash interest paid $ 3,066 $ 2,511 $ 13,303 $ 11,763 Cash income taxes paid 21 1,650 21 1,650

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SVR Syniverse Holdings