Edgar Filing: SYNIVERSE HOLDINGS INC

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Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 333-176382

SYNIVERSE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

30-0041666

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

8125 Highwoods Palm Way

Tampa, Florida 33647

(Address of principal executive office) (Zip code)

(813) 637-5000

(Registrant’s telephone number, including area code)

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. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of common stock outstanding as of May 9, 2012 was 1,000.

TABLE OF CONTENTS


		Page

PART I:	FINANCIAL INFORMATION

ITEM 1:	Financial Statements (Unaudited)		3

	Condensed Consolidated Balance Sheets		3

	Condensed Consolidated Statements of Operations		4

	Condensed Consolidated Statements of Comprehensive Income (Loss)		5

	Condensed Consolidated Statements of Cash Flows		6

	Notes to Unaudited Condensed Consolidated Financial Statements		7

ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		33

ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk		45

ITEM 4:	Controls and Procedures		45

PART II:	OTHER INFORMATION

ITEM 1:	Legal Proceedings		46

ITEM 1A:	Risk Factors		46

ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds		46

ITEM 3:	Defaults Upon Senior Securities		46

ITEM 4:	Mine Safety Disclosures		46

ITEM 5:	Other Information		46

ITEM 6:	Exhibits		47

SIGNATURES			48

EXHIBIT INDEX			49

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)


	March 31, 2012			December 31, 2011
	(Unaudited)
ASSETS
Current assets:
Cash	$	231,814		$	226,753
Accounts receivable, net of allowances of $8,986 and $7,374, respectively		167,358			159,422
Deferred tax assets		9,115			9,103
Income taxes receivable		5,367			5,374
Prepaid and other current assets		29,086			26,917

Total current assets		442,740			427,569
Property and equipment, net		80,718			82,630
Capitalized software, net		201,657			208,683
Deferred costs, net		44,541			46,234
Goodwill		1,684,856			1,684,856
Identifiable intangibles, net		548,573			572,404
Other assets		7,088			8,366

Total assets	$	3,010,173		$	3,030,742

LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities:
Accounts payable	$	15,741		$	14,107
Income taxes payable		2,653			—
Accrued liabilities		61,971			92,507
Deferred revenues		8,220			5,973
Current portion of capital lease obligation		119			117
Current portion of long term debt, net of original issue discount		9,800			9,800

Total current liabilities		98,504			122,504
Long-term liabilities:
Deferred tax and other tax liabilities		235,272			236,737
Long-term debt, net of current portion and original issue discount		1,466,944			1,469,075
Long-term capital lease obligation, less current maturities		351			381
Other long-term liabilities		8,262			7,932

Total liabilities		1,809,333			1,836,629


Commitments and contingencies

Stockholder equity:
Common stock, $0.01 par value; one thousand shares authorized, issued and outstanding as of March 31, 2012 and December 31, 2011		—			—
Additional paid-in capital		1,211,031			1,208,365
Accumulated deficit		(18,190	)		(21,472	)
Accumulated other comprehensive income		2,042			2,400

Total Syniverse Holdings, Inc. stockholder equity		1,194,883			1,189,293
Noncontrolling interest		5,957			4,820

Total equity		1,200,840			1,194,113

Total liabilities and stockholder equity	$	3,010,173		$	3,030,742

See Notes to Unaudited Condensed Consolidated Financial Statements

SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS)


	Successor						Predecessor
	Three Months Ended March 31,			Period from January 13 to March 31,			Period from January 1 to January 12,
	2012			2011
	(Unaudited)
Revenues	$	185,065		$	152,681		$	22,014


Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)		67,016			56,459			9,274
Sales and marketing		17,822			14,302			2,376
General and administrative		25,011			18,260			3,664
Depreciation and amortization		43,184			43,691			2,720
Restructuring and management termination benefits		374			—			—
Merger expenses		—			40,549			47,203

		153,407			173,261			65,237


Operating income (loss)		31,658			(20,580	)		(43,223	)

Other income (expense), net:
Interest income		232			26			—
Interest expense		(26,534	)		(33,149	)		(859	)
Other, net		1,314			559			(349	)

		(24,988	)		(32,564	)		(1,208	)


Income (loss) before provision for (benefit from) income taxes		6,670			(53,144	)		(44,431	)
Provision for (benefit from) income taxes		2,157			(18,430	)		(13,664	)


Net income (loss)		4,513			(34,714	)		(30,767	)
Net income (loss) attributable to noncontrolling interest		1,231			552			(3	)

Net income (loss) attributable to Syniverse Holdings, Inc.	$	3,282		$	(35,266	)	$	(30,764	)

See Notes to Unaudited Condensed Consolidated Financial Statements

SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(AMOUNTS IN THOUSANDS)


	Successor						Predecessor
	Three Months Ended March 31,			Period from January 13 to March 31,			Period from January 1 to January 12,
	2012			2011
	(Unaudited)
Net income (loss)	$	4,513		$	(34,714	)	$	(30,767	)
Other comprehensive loss (net of tax):
Foreign currency translation adjustment, net of tax benefit of $(571), $(1,996) and $0, respectively		(452	)		(2,167	)		(2,366	)

Other comprehensive loss		(452	)		(2,167	)		(2,366	)


Comprehensive income (loss)		4,061			(36,881	)		(33,133	)
Less: comprehensive income (loss) attributable to noncontrolling interest		1,137			644			4

Comprehensive income (loss) attributable to Syniverse Holdings, Inc.		2,924			(37,525	)		(33,137	)

See Notes to Unaudited Condensed Consolidated Financial Statements

SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)


	Successor						Predecessor
	Three Months Ended March 31,			Period from January 13 to March 31,			Period from January 1 to January 12,
	2012			2011
	(Unaudited)
Cash flows from operating activities
Net income (loss)	$	4,513		$	(34,714	)	$	(30,767	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		43,184			43,691			2,720
Amortization of deferred debt issuance costs and original issue discount		2,017			1,887			56
Allowance for uncollectible accounts		177			(278	)		46
Allowance for credit losses		2,524			1,901			164
Deferred income tax expense (benefit)		(2,048	)		(4,871	)		2,095
Excess tax benefit from stock-based compensation		—			—			8,599
Stock-based compensation		2,688			—			29,162
Other, net		801			—			31
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(10,256	)		(20,877	)		11,650
Income tax receivable or payable		2,780			(8,038	)		(34,313	)
Prepaid and other current assets		(1,998	)		(15,047	)		(1,920	)
Accounts payable		1,599			(10,779	)		11,111
Accrued liabilities		(28,854	)		653			14,167
Other assets and liabilities		545			(2,596	)		(962	)

Net cash provided by (used in) operating activities		17,672			(49,068	)		11,839


Cash flows from investing activities
Capital expenditures		(9,887	)		(9,833	)		—
Acquisitions, net of cash acquired		—			(2,733,121	)		—

Net cash used in investing activities		(9,887	)		(2,742,954	)		—


Cash flows from financing activities
Debt issuance costs paid		—			(56,000	)		—
Principal payments on Senior Credit Facility due 2017		(2,563	)		(2,563	)		—
Borrowings under Senior Credit Facility, net of discount		—			1,012,500			—
Proceeds from issuance of 9.125% senior unsecured notes		—			475,000			—
Carlyle contribution from Holdings		—			1,200,000			—
Payments on capital lease obligation		(29	)		(11	)		—
Minimum tax withholding on stock-based compensation plans		(22	)		—			(619	)
Excess tax benefit from stock-based compensation		—			—			8,599

Net cash (used in) provided by financing activities		(2,614	)		2,628,926			7,980


Effect of exchange rate changes on cash		(110	)		(4,321	)		15


Net increase (decrease) in cash		5,061			(167,417	)		19,834
Cash at beginning of period		226,753			239,290			219,456


Cash at end of period	$	231,814		$	71,873		$	239,290


Supplemental cash flow information
Interest paid	$	36,474		$	202		$	—
Income taxes paid		1,724			3,484			71

See Notes to Unaudited Condensed Consolidated Financial Statements

SYNIVERSE HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

1. Description of Business

We are a leading enabler of wireless voice and data services for telecommunications companies worldwide. Since 1987, including our time as part of our former parent company, we have served as one of the mobile telecommunication industry’s operator-neutral intermediaries, solving the challenges that arise as new technologies, standards and protocols emerge. Our data clearing house, network and technology services solve technical and operational challenges for the wireless industry by translating incompatible communication standards and protocols and simplifying operator interconnectivity. Our integrated suite of transaction-based services allows operators to deliver seamless voice, data and next generation services to mobile subscribers, including wireless voice and data roaming, Short Message Service (“SMS”), Multimedia Messaging Services (“MMS”), number portability and wireless value-added services. We currently provide our services to over 750 telecommunications operators and to more than 150 enterprise customers in over 160 countries.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

On January 13, 2011, pursuant to the Merger Agreement, dated as of October 28, 2010, among Syniverse Holdings, Inc. (“Syniverse, Inc.”), Buccaneer Holdings, Inc., a Delaware corporation (“Holdings”) formed by an affiliate of The Carlyle Group (“Carlyle”) and Buccaneer Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Holdings (“Merger Sub”) formed solely for the purpose of entering into the merger, Merger Sub merged with and into Syniverse, Inc. with Syniverse, Inc. as the surviving corporation (also referred herein as the “Merger”). We also refer to the Merger together with all related transactions to effect the Merger discussed in our Annual Report on Form 10-K as the “Transactions”. As a result of the Merger, Syniverse, Inc. became a wholly-owned subsidiary of Holdings.

Merger Sub was determined to be the acquirer for accounting purposes and therefore, the Merger was accounted for using the acquisition method of accounting in accordance with the accounting guidance for business combinations. Accordingly, the purchase price of the Merger has been allocated to the Company’s assets and liabilities based upon their estimated fair values at the acquisition date. Periods prior to January 13, 2011 reflect the financial position, results of operations, and changes in financial position of the Company prior to the Merger (the “Predecessor”) and periods on and after January 13, 2011 reflect the financial position, results of operations, and changes in financial position of the Company after the Merger (the “Successor”). Certain Merger expenses and financing costs incurred prior to January 13, 2011 by Merger Sub are included in the Successor period. The only activity undertaken by Merger Sub prior to January 13, 2011 related to the financing and completion of the Merger. For accounting purposes, the purchase price allocation was applied on January 13, 2011.

The accompanying unaudited condensed consolidated financial statements of Syniverse Holdings, Inc. have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and on a basis that is consistent with the accounting principles applied in our audited financial statements for the fiscal year ended December 31, 2011 (“2011 financial statements”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes included in our 2011 financial statements. Operating results for the interim periods noted herein are not necessarily indicative of the results that may be achieved for a full year.

The unaudited condensed consolidated financial statements include the accounts of Syniverse, Inc. and all of its wholly owned subsidiaries and a variable interest entity (“VIE”) for which Syniverse, Inc. is deemed to be the primary beneficiary. References to “the Company,” “us,” or “we” include all of the consolidated companies. Noncontrolling interest is recognized for the portion not owned by us of a consolidated joint venture. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and present our financial position, results of operations and cash flows. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

We prepare our financial statements using accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the period. Actual results could differ from those estimates.

Revenue Recognition

The majority of our revenues are transaction-based charges under long-term contracts, typically averaging three years in duration. From time to time, if a contract expires and we have not previously negotiated a new contract or renewal with the customer, we continue to provide services under the terms of the expired contract on a month-to-month billing schedule as we negotiate new agreements or renewals. Our revenues are primarily the result of the sale of our Network, Messaging, Roaming and Other services to wireless and enterprise operators throughout the world. Generally, there is a seasonal increase in wireless roaming telephone usage and corresponding revenues in the high-travel months of our second and third fiscal quarters.

•

Network services primarily consist of our intelligent network products such as Signaling System 7 (“SS7”) solutions, interstandard roaming solutions, Mobile Data Roaming (“MDR”), call setup and tear down, internet protocol (“IP”) platform solutions, Real-Time Intelligence (“RTI”) tools, database solutions and number portability services.

•

Signaling solutions provide a cost effective connectivity to other networks, thereby avoiding the cost and complexity of managing individual network connections with multiple operators and facilitate the signaling requirements for call delivery and SMS delivery when roaming on Global System for Mobile Communication (“GSM”) and Code Division Multiple Access (“CDMA”) Networks around the world. These services are primarily billed on per-transaction fees, based on the number of validation, authorization and other call processing messages generated by wireless subscribers.

•

Interstandard roaming solutions and MDR services enable CDMA roaming. Interstandard roaming solutions allow certain CDMA handsets to roam on GSM networks. Revenues for these services are based on the duration of use, number and size of data/messaging records provided to us by our customers for aggregation, translation and distribution among operators. MDR services allow CDMA data devices to roam on other CDMA operator networks. MDR generates revenue based on the size of data/messaging records processed.

•

Call setup and tear down involves the process of retrieving, processing and routing information in order for a call to transpire. This service is based on a per-transaction fee.

•

IP platform solutions enable operators a means of secure transport of roaming, messaging, interworking packet exchange (“IPX”) and signaling traffic to consolidate global network connections via one network for all traffic types. These services optimize streams of data delivered to mobile devices accelerating download speeds and relieving network load by reducing the volume of data being exchanged between our customer’s networks. These services are primarily based on fixed monthly charges.

•

RTI tools analyze the real and near real time traffic data being processed through our platforms and networks to provide multiple use cases that enable our customers to more effectively manage their subscriber’s quality of experience (“QoE”) and satisfaction. These services generate revenue mainly by transaction based fees.

•

Database solutions enable caller ID on various technology platforms provided to subscriber devices and intelligent network-based queries to support accurate call routing. These services are based on per-subscriber or per-transaction fees.

•

Number portability services allow subscribers to maintain their phone numbers when changing to a different mobile service provider. These services primarily generate revenues by charging per-transaction processing fees, monthly fixed fees, and fees for customer implementations.

In addition, we provide our customers with the ability to connect to various third-party intelligent network database providers (“Off-Network Database Queries”). We pass these charges onto our customers, with little or no margin, based upon the charges we receive from the third-party intelligent network database providers on a per-transaction basis.

For all of our services based on a per-transaction processing fee, we recognize revenues at the time the transactions are processed. We recognize monthly fixed fees as revenues on a monthly basis as the services are performed. We defer revenues and incremental customer-specific costs related to customer implementations and recognize these fees and costs on a straight-line basis over the life of the initial customer agreements.

•

Messaging services primarily consist of SMS and MMS services which predominantly generate revenues by charging per-transaction processing fees. For our SMS and MMS services, revenues vary based on the number of messaging records provided to us by our customers for aggregation, translation and distribution among operators. We recognize revenues at the time the transactions are processed.

•

Roaming services primarily consist of roaming, data and financial clearing house services which principally generate revenues by charging per-transaction processing fees. For our wireless roaming clearing house and DataNet services, revenues are based on the number of records provided to us by our customers for aggregation, translation and distribution among operators. We recognize revenues at the time the transactions are processed. For our financial clearing house and settlement services, revenues are based on the number of invoices or roaming agreements managed on the customer’s behalf. We recognize revenues at the time the services are performed.

•

Other services include turn-key solutions with multiple product and service elements which may include software and third-party hardware products, as well as installation services, post-contract customer support and training. In those cases, we recognize revenue attributable to an element in a customer arrangement when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured.

Joint Venture Interest

In February 2009, we entered into a joint venture agreement to implement number portability services in India. Our economic interest in the joint venture is 37.5%. We expect to provide India’s telecommunications operators with number portability clearing house and centralized database solutions until March 2019. We consider this joint venture to be a VIE and consolidate the operations of this joint venture, as we retain the contractual power to direct the activities of this entity which most significantly and directly impact its economic performance. The assets of this joint venture are restricted, from the standpoint of the Company, in that they are not available for our general business use outside the context of the joint venture. The holders of the liabilities of the joint venture have no recourse to the Company.

Customer Accounts

We provide financial settlement services to wireless operators to support the payment of roaming related charges to their roaming network partners. In accordance with our contract with the customer, funds are held by us as an agent on behalf of our customers to settle their roaming related charges to other operators. These funds and the corresponding liability are not reflected in our condensed consolidated balance sheets. The off-balance sheet amounts totaled approximately $144,541 and $129,796 as of March 31, 2012 and December 31, 2011, respectively.

Foreign Currencies

We have operations in subsidiaries in Europe, primarily the United Kingdom and Germany, and the Asia-Pacific region whose functional currency is their local currency. Gains and losses on transactions denominated in currencies other than the functional currencies are included in other, net in the condensed consolidated statements of operations. For the three months ended March 31, 2012, we recorded foreign currency gains of $1,314. For the period January 13, 2011 through March 31, 2011, and January 1 through January 12, 2011, we recorded foreign currency transaction gains (losses) of $559 and $(349), respectively.

The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are translated at the period-end rate of exchange. The resulting translation adjustment is recorded as a component of accumulated other comprehensive income (loss) and is included in stockholder equity. Translation gains and losses on intercompany balances which are deemed to be of a long-term investment nature are also recorded as a component of other comprehensive income (loss). Statement of operations items are translated at the average rates prevailing during the period.

Segment Information

Based on our evaluation of our portfolio of product offerings and reportable segments in accordance with the applicable accounting guidance and how our chief operating decision maker reviews financial information for purposes of making resource allocation decisions. As a result of our evaluation, we determined that we have one operating segment and one reporting segment

The following financial information presents the revenues by service offering and other information by geographic region. Revenues by service offering were as follows:


	Successor				Predecessor
	Three months ended March 31,		Period from January 13 to March 31,		Period from January 1 to January 12,
	2012		2011
	(Unaudited)
Network services	$	84,636	$	64,970	$	9,181
Messaging services		47,008		42,448		6,198
Roaming services		49,143		41,691		6,368
Other		4,278		3,572		267

Revenues	$	185,065	$	152,681	$	22,014

Revenues by geographic region, based on the “bill to” location on the invoice, were as follows:


	Successor				Predecessor
	Three months ended March 31,		Period from January 13 to March 31,		Period from January 1 to January 12,
	2012		2011
	(Unaudited)
North America	$	141,938	$	120,698	$	17,294
Asia Pacific		16,361		11,690		1,295
Caribbean and Latin America		13,123		8,849		1,428
Europe, Middle East and Africa		13,643		11,444		1,997

Revenues	$	185,065	$	152,681	$	22,014

For the three months ended March 31, 2012, we derived 71.2% of our revenues from customers in the United States. For the period January 13, 2011 through March 31, 2011 and January 1 through January 12, 2011, we derived 71.6% and 80.5%, respectively, of our revenues from customers in the United States. During the three months ended March 31, 2012 and during the periods January 13 through March 31 and January 1 through January 12, 2011, we did not generate revenue in excess of 10% of revenues in any other individual country.

Long-lived assets by geographic location were as follows:


	March 31, 2012		December 31, 2011
	(Unaudited)

North America	$	271,014	$	279,931
Asia Pacific		6,094		5,164
Caribbean and Latin America		317		293
Europe, Middle East and Africa		4,950		5,925

Total long-lived assets	$	282,375	$	291,313

3. Recent Accounting Pronouncements

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which is included in the ASC in Topic 820 (Fair Value Measurement). ASU 2011-04 amends the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This accounting standard does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards within U.S. GAAP or International Financial Reporting Standards (“IFRS”). This accounting standard is effective for our financial statements beginning January 1, 2012. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

In June 2011, the FASB issued ASU 2011-05 and ASU 2011-12, Presentation of Comprehensive Income, which is included in the ASC in Topic 220 (Comprehensive Income). The ASU requires companies to present items of net income, items of other comprehensive income (“OCI”) and total comprehensive income in one continuous statement or two separate consecutive statements for interim and annual reports. This statement is effective for presentation of comprehensive income for fiscal years beginning January 1, 2012 and interim periods within those years and will be applied retrospectively. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

In March 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment, which is included in the ASC in Topic 350 (Intangibles—Goodwill and Other). ASU 2011-08 permits companies to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If a greater than 50 percent likelihood exists that the fair value is less than the carrying amount then a two-step goodwill impairment test as described in Topic 350 must be performed. Under the amendments in this ASU, a company has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. A company may resume performing the qualitative assessment in any subsequent period. This statement is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

4. Detail of Accrued Liabilities

Accrued liabilities, consists of the following:


	March 31, 2012		December 31, 2011
	(Unaudited)

Accrued payroll and related benefits	$	15,304	$	37,190
Accrued interest		19,921		31,831
Accrued network payables		7,915		7,052
Accrued revenue share expenses		3,647		1,799
Other accrued liabilities		15,184		14,635

Total accrued liabilities	$	61,971	$	92,507

5. Income Taxes

We provide for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. The effective tax rate for the three months ended March 31, 2012, the period January 13, 2011 through March 31, 2011, and the period from January 1 through January 12, 2011, was an expense of 32.3%, a benefit of 34.7% and a benefit of 30.8%, respectively.

The change in our effective tax rate is chiefly attributable to costs related to the Merger in 2011, some of which are non-deductible for income tax purposes, a change in our valuation allowances in certain foreign jurisdictions, and state and local income tax rate changes and their effect on our deferred tax liabilities.

We, and our eligible subsidiaries, file a consolidated U.S. federal income tax return under Buccaneer Holdings, Inc. All subsidiaries incorporated outside of the U.S. are consolidated for financial reporting purposes; however, they are not eligible to be included in our consolidated U.S. federal income tax return. Separate provisions for income taxes have been recorded for these entities. We intend to reinvest substantially all of the unremitted earnings of our non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes for these non-U.S. subsidiaries was recorded in the accompanying condensed consolidated statements of operations.

6. Debt and Credit Facilities

The following are the amounts outstanding at March 31, 2012 and December 31, 2011:


	March 31, 2012			December 31, 2011
	(Unaudited)
Senior Credit Facility:
Term Loan B, due 2017,	$	1,012,188		$	1,014,750
$150 million revolving credit facility		—			—
Original issue discount		(10,444	)		(10,875	)
Notes:
9.125% senior unsecured notes, due 2019		475,000			475,000

Total debt		1,476,744			1,478,875
Less: current portion
Current portion		(10,250	)		(10,250	)
Original issue discount, current portion		450			450

Long-term debt	$	1,466,944		$	1,469,075

Maturities of long-term debt excluding the original issue discount as of March 31, 2012 for each of the five succeeding fiscal years are as follows:


Period ended December 31, 2012		7,688
Year ended December 31, 2013		10,250
Year ended December 31, 2014		10,250
Year ended December 31, 2015		10,250
Year ended December 31, 2016		10,250
Thereafter		1,438,500

	$	1,487,188

We incurred debt issuance costs of $36,164 associated with our Senior Credit Facility (as defined below) and $20,436 associated with our 9.125% senior unsecured notes. The amounts are included in prepaid and other current assets and deferred costs, net on the condensed consolidated balance sheets. We amortize these costs to interest expense using the effective interest method over the term of the debt. We also recorded the upfront fees paid related to our Senior Credit Facility as an original issue discount. The discount is amortized over the term of the debt to interest expense using the effective interest method. Amortization expense for the three months ended March 31, 2012 for debt issuance costs and original issue discount was $2,017. Amortization expense for the period January 13, 2011 through March 31, 2011, and the period January 1 through January 12, 2011, for debt issuance costs and original issue discount was $1,887 and $56, respectively. The net book value of debt issuance costs included in the accompanying condensed consolidated balance sheets is as follows:


	March 31, 2012		December 31, 2011
	(Unaudited)
Debt issuance costs:
Prepaid and other current assets	$	4,651	$	4,543
Deferred costs, net		44,541		46,235

Total	$	49,192	$	50,778

Senior Credit Facility

On December 21, 2010, we entered into our Senior Credit Facility consisting of a $150,000 revolving credit facility and a $1,025,000 Term Loan B, and on January 13, 2011, our Senior Credit Facility became effective. The term loan facility was used to fund, in part, the Transactions. The Company received net proceeds of $1,012,500 after payment of upfront fees of $12,500 to Barclays Capital, Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA and Sumitomo Mitsui Banking Corporation. We

have recorded an original issue discount of $12,500. These costs are amortized over the life of the debt to interest expense using the effective interest method. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt using the effective interest method. The revolving portion of our Senior Credit Facility was undrawn at March 31, 2012. We had $148,143 of unused commitments under this facility, including an outstanding Euro letter of credit of $1,857 at March 31, 2012, which is considered a reduction against this facility under the credit agreement.

Borrowings bear interest at a floating rate which can be, at our option, either (i) a Eurodollar borrowing rate for a specified interest period plus an applicable margin or, (ii) an alternative base rate plus an applicable margin, in each case, subject to a Eurodollar rate floor of 1.50% or a base rate floor of 2.50%, as applicable. The applicable margin for the term loan and revolving loans under our Senior Credit Facility is 3.75% per annum for Eurodollar loans and 2.75% per annum for base rate loans, and in the case of the revolving loans, subject to an adjustment based on a total net leverage ratio test.

The following fees are applicable under our revolving credit facility: (i) an unused line fee of 0.50% per annum, subject to an adjustment based on a total net leverage ratio test, based on the unused portion of our new revolving credit facility; (ii) a letter of credit participation fee on the aggregate stated amount of each letter of credit available to be drawn equal to the applicable margin for Eurodollar rate loans; (iii) a letter of credit fronting fee equal to 0.125% per annum (or 0.25% per annum if the letter of credit is provided by Barclays Bank PLC, Credit Suisse AG, Cayman Islands Branch or Deutsche Bank) on the daily amount of each letter of credit available to be drawn; and (iv) certain other customary fees and expenses payable to our letter of credit issuers.

Our revolving credit facility matures five years after the closing date of the facility, or December 21, 2015, and our term loan facility matures seven years after the closing date of the facility, or December 21, 2017. Commencing with the first full quarter ending after the closing date of our term loan facility, our term loan facility will amortize in equal quarterly installments in an amount equal to 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity.

We may voluntarily prepay loans or reduce commitments under our Senior Credit Facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty, except that certain refinancings of our term loan facility within one year after the closing date of our Senior Credit Facility will be subject to a prepayment premium of 1.0% of the principal amount prepaid.

We must prepay our term loan facility with the net cash proceeds of asset sales, casualty and condemnation events, the incurrence or issuance of indebtedness and 50% of excess cash flow (with steps down to 25% and 0% based on the total senior secured leverage ratio), in each case, subject to certain reinvestment rights and other exceptions. We made no such excess cashflow payments as our total senior secured leverage ratio led us to a step down percentage of 0%. We are also required to make prepayments under our revolving credit facility at any time when, and to the extent that, the aggregate amount of the outstanding loans and letters of credit under our revolving credit facility exceeds the aggregate amount of commitments in respect of our revolving credit facility.

Our obligations under our Senior Credit Facility are guaranteed by Holdings and each of our current and future direct and indirect wholly owned domestic subsidiaries and are secured by a first lien on substantially all of their assets, including capital stock of subsidiaries (in each case subject to certain exceptions). Our subsidiaries that guarantee our Senior Credit Facility also guarantee the notes. The subsidiary guarantors of our Senior Credit Facility and the Senior Notes (defined below) are Syniverse Technologies LLC, Syniverse ICX Corporation and The Rapid Roaming Company.

Our Senior Credit Facility contain customary negative covenants, including, but not limited to, our and our restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of certain junior indebtedness, enter into transactions with affiliates, or change our fiscal year. Our Senior Credit Facility requires the maintenance of a minimum cash interest coverage ratio and a maximum total net leverage ratio, tested, in each case, on a quarterly basis.

Our Senior Credit Facility contains customary affirmative covenants, including, but not limited to, delivery of financial and other information to the administrative agent, notice to the administrative agent upon the occurrence of certain material events, preservation of existence, payment of material taxes and other claims, maintenance of properties and insurance, maintenance of books and records, access to properties and records for inspection by administrative agent and, during the continuance of any event of default, the lenders, compliance with applicable laws and regulations, including environmental laws, further assurances and provision of additional collateral and guarantees.

As of March 31, 2012, the applicable interest rate was 5.25% on the term loan based on the Eurodollar option.

9.125% senior unsecured notes

On December 22, 2010, we issued $475,000 senior unsecured notes bearing interest at 9.125% that will mature on January 15, 2019 (“Senior Notes”). Interest on the Senior Notes will be paid on January 15 and July 15 of each year, commencing July 15, 2011.

On and after January 15, 2015, we may redeem the Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on January 15 of the years set forth below:


Period	Redemption Price
2015		104.563	%
2016		102.281	%
2017 and thereafter		100.000	%

In addition, at any time prior to January 15, 2015, we may redeem the Senior Notes at our option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Applicable Premium, with respect to any Senior Note on any applicable redemption date, is defined as the greater of 1.0% of the then outstanding principal amount of the Senior Note; and the excess of the present value at such redemption date of (i) the redemption price of the note at January 15, 2015 plus (ii) all required interest payments due on the Senior Note through January 15, 2015 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over the then outstanding principal amount of the Senior Note.

The Senior Notes are guaranteed on a senior basis by the following domestic subsidiary guarantors: Syniverse Technologies, LLC (formerly known as Syniverse Technologies, Inc.), Syniverse ICX Corporation and The Rapid Roaming Company. In addition, we have the ability to designate certain of our subsidiaries as unrestricted subsidiaries pursuant to the terms of the indenture governing our Senior Notes, and any subsidiary so designated will not be a guarantor of the notes.

The Senior Notes contain customary negative covenants including, but not limited to, restrictions on our and our restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay certain subordinated indebtedness or enter into transactions with affiliates.

7. Fair Value of Financial Instruments

The accounting standards for fair value require disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows:

Level 1—Quoted prices for identical assets and liabilities in active markets.

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs for the asset or liability.

Transfers between levels are determined at the end of the reporting period. No transfers between levels have been recognized for the three month period ending March 31, 2012.

Cash, accounts receivable, accounts payable and accrued liabilities are reflected in the financial statements at their carrying value, which approximate their fair value due to their short maturity.

The carrying amounts, excluding original issue discount, and fair values of our long-term debt as of March 31, 2012 and December 31, 2011 are as follows:


	March 31, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior Credit Facility, due 2017	$	1,012,188	$	1,017,249	$	1,014,750	$	1,016,018
9.125% senior unsecured notes, due 2019		475,000		522,500		475,000		503,500

The fair values of the Senior Credit Facility due 2017 and the 9.125% senior unsecured notes due 2019 are based upon quoted market prices in inactive markets for similar instruments (Level 2).

8. Commitments and Contingencies

We are currently a party to various claims and legal actions that arise in the ordinary course of business. We believe such claims and legal actions, individually and in the aggregate, will not have a material adverse effect on our business, financial condition or results of operations. As of March 31, 2012 and December 31, 2011, we have considered all of the claims and disputes of which we are aware and have provided for probable losses which are not significant.

9. Stockholder’s Equity Information

The following table provides a reconciliation of the beginning and the ending carrying amounts of total equity, equity attributable to the stockholder of Syniverse Holdings, Inc. and equity attributable to the noncontrolling interest:


	Total			Syniverse Holdings, Inc. Shareholder’s Equity			Noncontrolling Interest
Predecessor balance, December 31, 2010	$	722,481		$	722,406		$	75

Net income	$	(30,767	)	$	(30,764	)	$	(3	)
Other Comprehensive income (loss) from foreign currency translation adjustments	$	(2,366	)	$	(2,373	)	$	7
Stock-based compensation		29,162			29,162			—
Tax benefit from acceleration of stock-based compensation		8,599			8,599			—
Minimum tax withholding on restricted stock awards		(619	)		(619	)		—

Predecessor balance, January 12, 2011	$	726,490		$	726,411		$	79

Purchase accounting adjustments		(723,058	)		(726,411	)		3,353
Successor
Capital contribution from Holdings		1,200,000			1,200,000			—
Net income		(34,714	)		(35,266	)		552
Other Comprehensive income (loss) from foreign currency translation adjustments		(2,167	)		(2,259	)		92

Successor balance, March 31, 2011 (Unaudited)	$	1,166,551		$	1,162,475		$	4,076


Successor Balance, December 31, 2011	$	1,194,113		$	1,189,293		$	4,820

Net Income		4,513			3,282			1,231
Other Comprehensive income (loss) from foreign currency translation adjustments		(452	)		(358	)		(94	)
Stock-based compensation		2,688			2,688			—
Minimum tax withholding on stock-based compensation plans		(22	)		(22	)		—

Successor Balance, March 31, 2012 (Unaudited)	$	1,200,840		$	1,194,883		$	5,957

10. Stock-Based Compensation

Buccaneer Holdings, Inc. Plan

Effective April 6, 2011, Holdings established the 2011 Equity Incentive Plan (the “BHI Plan”) for the employees, consultants and directors of Holdings and its subsidiaries. The BHI Plan provides incentive compensation through grants of incentive or non-qualified stock options, stock purchase rights, restricted stock awards, restricted stock units, or any combination of the foregoing. Holdings will issue shares of common stock of Holdings to satisfy equity based compensation instruments. The maximum number of shares of common stock of Holdings that may be issued under the BHI Plan may not exceed 9,291,667. Of that amount, 625,000 shares are restricted for purchase by the Board and certain members of management.

The number of shares and exercise price per share is determined by the Compensation Committee (the “Committee”) of the Board of Directors of Holdings for those awards granted. However, the exercise price of any option may not be less than 100% of the fair market value of a share of common stock of Holdings on the date of grant and the exercise price of an incentive option awarded to a person who owns stock constituting more than 10% of Holdings’ voting power may not be less than 110% of the fair market value on the date of grant. The exercise price of the option is set at the time of grant and shall not be less than the fair value of the underlying stock, and is specified in the option agreement. Those eligible to participate in the BHI Plan are limited to employees, consultants and directors (including non-employee directors) of Holdings and its subsidiaries selected by the Committee, including participants located outside the United States. Determinations made by the Committee under the BHI Plan need not be uniform and may be made selectively among eligible participants.

In accordance with the BHI Plan, each option has an exercisable life of no more than 10 years from the date of grant for both non-qualified and incentive stock options. Employee stock option vesting is dependent on both the service of the employee and

performance of the Company. The service based portion, based on continued employment, is 75% of each option grant which vests ratably over a five year period on each December 31. The remaining 25% of the option grant vests upon achievement of certain annual and cumulative earnings based targets. Director stock option vesting is dependent on active service of the Board member. These options vest 20% each year on the grant anniversary date. As of March 31, 2012, there were 7,530,007 options outstanding under the BHI Plan.

Directors have the option to receive restricted shares in lieu of a portion of their director fee. During the three months ended March 31, 2012, 3,409 restricted shares were issued in lieu of director fees and are fully vested. Restricted stock awards are issued and measured at market value on the date of grant.

The fair values of stock option grants are amortized as compensation expense on a straight-line basis over the vesting period of the grants and the fair values of the restricted stock awards are recognized as compensation expense on the applicable date of grants. The performance-based restricted stock awards are amortized as compensation expense using the accelerated attribution method. The fair value for options as of March 31, 2012 was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:


Risk-free interest rate	1.4	%
Volatility factor	55.0	%
Dividend yield	—
Weighted average expected life of options (in years)	6.5

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions including the expected stock price volatility. Although we have a history of publicly traded stock, our common stock is currently 100% owned by Holdings. As such, we used the historical volatility for our Predecessor from the initial public offering (February 10, 2005) through the delist date (January 12, 2011). For the period subsequent to the delist date, we used the average historical volatility factor of comparable companies. We based our assumptions for the expected life of the options on our analysis of the historical exercise patterns of options under our Predecessor incentive plans.

The accounting guidance requires companies to estimate potential forfeitures of stock grants and adjust compensation cost recorded accordingly. Forfeitures are estimated based on historical experience.

The following table summarizes information about our Successor stock option activity:


Stock Options	Shares			Weighted- Average Exercise Price
Outstanding at December 31, 2011		7,406,672		$	10.00
Granted		483,334			11.00
Exercised		(66,667	)		10.00
Cancelled or expired		(293,332	)		10.00

Outstanding at March 31, 2012		7,530,007		$	10.06

The impact to our income (loss) from operations of recording stock-based compensation under the BHI Plan for the three months ended March 31, 2012 and for the period January 13, 2011 through March 31, 2011 is as follows:


	Successor				Predecessor
	Three months ended March 31,		Period from January 13 to March 31,		Period from January 1 to January 12,
	2012		2011
Cost of operations	$	210	$	—	$	—
Sales and marketing		1,027		—		—
General and administrative		1,451		—		—
Merger Expenses		—		—		29,162

Total stock-based compensation	$	2,688	$	—	$	29,162

All outstanding Syniverse, Inc. options, restricted stock awards and restricted stock unit awards granted prior to January 13, 2011 vested upon the closing of the Transactions, which included 2,868,722 stock options, 801,994 service-based restricted stock and restricted stock unit awards, of which 20,000 shares vested in 2011 prior to the Transactions and 286,160 performance-based restricted stock awards. As a result of the accelerated vesting, the Company recognized a charge of $29,162, which is included in merger expenses, in the period from January 1, 2011 to January 12, 2011. From the date of the definitive agreement for the Merger, there were no new grants or awards under any of the Syniverse, Inc. Plans. The Syniverse, Inc. stock-based compensation plans were terminated effective January 13, 2011.

11. Restructuring and Management Termination Benefits

In December 2010, we completed a restructuring plan primarily to realign certain senior management functions. As a result of this plan, we incurred severance related costs of $2,296. Through March 31, 2012, we have paid $2,107 related to this plan.

In June 2011, we implemented a restructuring plan primarily to realign certain sales management positions. As a result of this plan, we incurred severance related costs of $1,303 and have paid $984 related to this plan through March 31, 2012. In addition, effective July 1, 2011, our former Chief Executive Officer and President retired from the Company. In conjunction with his retirement, we have incurred management termination benefits of $1,067 for year ended December 31, 2011 which were included within restructuring and management termination benefits expense.

In December 2011, we implemented a restructuring plan primarily to regionalize our customer support workforce for better alignment with our customers’ needs. We incurred additional charges of $398 related to a leased facility we exited effective March 1, 2012. As a result of this plan, we incurred severance related costs of $3,503 and $398 related to the exit of a leased facility. We have paid $2,238 related to this plan through March 31, 2012.

We expect to pay the remainder of the benefits outstanding under each of these plans by June 30, 2013.

For the three months ended March 31, 2012, we had the following activity in our restructuring and management termination benefits accrual:


	December 31, 2011 Balance		Additions			Payments			Adjustments			March 31, 2012 Balance
December 2010 Plan	$	336	$	—		$	(147	)	$	—		$	189
June 2011 Plan		1,354		(25	)		(916	)		23			436
December 2011 Plan		2,961		399			(1,695	)		(6	)		1,659

Total	$	4,651	$	374		$	(2,758	)	$	17		$	2,284

12. Merger Expenses

Predecessor period merger expenses incurred in the period January 1, 2011 through January 12, 2011 consist of stock-based compensation of $29,162 related to the acceleration of the existing equity awards prior to the Merger, advisory costs of $15,690 and professional services costs including legal, tax and audit services of $2,351. Successor period merger expenses consist of advisory costs of $35,023, of which a portion relates to the transaction fee and expenses paid to Carlyle, and legal, accounting and insurance costs of $5,526.

13. Related Party Transactions

At the effective time of the Merger, the Company entered into a consulting services agreement with Carlyle, a related party, for advisory, consulting and other services which are provided to us and our subsidiaries. We recorded $750 associated with the annual consulting fee within general and administrative expenses for the three months ended March 31, 2012 and $633 for the period January 13 through March 31, 2011. Carlyle also received a one-time transaction fee and related expenses associated with the Transactions, of $31,549 on the effective date of the Merger, of which $20,507 is recorded in Merger expenses for the Successor period and $11,042 was included in the capitalized debt issuance costs.

14. Pro Forma Financial Information

The following unaudited pro forma financial information presents a summary of our consolidated revenue and net loss for the three months ended March 31, 2011 assuming that the Merger had taken place on January 1, 2010:


	Three Months Ended March 31, 2011
	Pro Forma
Revenues	$	174,695
Net income (loss)		(5,119	)

The above unaudited pro forma financial information has been prepared for comparative purposes only and includes certain adjustments to actual financial results, such as imputed interest costs, and estimated additional depreciation and amortization expense as a result of property and equipment and intangible assets acquired. The pro forma financial information does not purport to be indicative of the results of operations that would have been achieved had the acquisition taken place on the date indicated or the results of operations that may result in the future.

15. Subsequent Event

On April 23, 2012, Syniverse, Inc. entered into a credit agreement (the “Credit Agreement”) with Holdings, Barclays Bank PLC, as administrative agent, swing line lender and letters of credit issuer, and the other financial institutions and lenders from time to time party thereto, providing for a new senior credit facility (the “New Senior Credit Facility”) consisting of (i) a $950.0 million term loan facility (the “Term Loan Facility”); and (ii) a $150.0 million revolving credit facility (the “Revolving Credit Facility”) for the making of revolving loans, swing line loans and issuance of letters of credit.

Subject to specified conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the Term Loan Facility or Revolving Credit Facility may be expanded (or a new term loan facility or revolving credit facility added to the New Senior Credit Facility) by up to (i) $425 million plus (ii) an additional amount as will not cause the net senior secured leverage ratio after giving effect to the incurrence of such additional amount to exceed 4.0:1.0 (calculated by treating any unsecured debt incurred in reliance on this clause (ii) as if it were secured).

with an event of default; provided that (a) in the event that more than $50 million of the Senior Notes remain outstanding on the date that is 91 days prior to the stated maturity of the Senior Notes (the “First Springing Maturity Date”), the maturity date for the Term Loan Facility will be the First Springing Maturity Date and (b) in the event that more than $50 million in aggregate principal amount of any refinancing indebtedness in respect of the Senior Notes remains outstanding on the date that is 91 days prior to the stated maturity of such refinancing indebtedness (the “Second Springing Maturity Date”), the maturity date for the Term Loan Facility will be the earlier of the Second Springing Maturity Date and April 23, 2019.

Our Revolving Credit Facility will mature the earlier of (i) April 23, 2017 and (ii) the date of termination in whole of the commitments under the Revolving Credit Facility, the letter of credit sublimit, and the swing line facility under the Credit Agreement.

Commencing on September 30, 2012, our Term Loan Facility will begin amortizing in equal quarterly installments in an amount equal to 0.25% per quarter of the original principal amount thereof, with the remaining balance due at final maturity.

We may voluntarily prepay loans or reduce commitments under our New Senior Credit Facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty, except that prepayments and certain refinancings of our Term Loan Facility within one year after the closing date of our New Senior Credit Facility will be subject to a prepayment premium of 1.0% of the principal amount prepaid. We must prepay our Term Loan Facility with the net cash proceeds of asset sales, casualty and condemnation events, the incurrence or issuance of indebtedness (other than indebtedness permitted to be incurred under our New Senior Credit Facility unless specifically incurred to refinance a portion of our New Senior Credit Facility) and, for the year ended December 31, 2013 and thereafter, 50% of excess cash flow (such percentage to be subject to a reduction to zero based on the achievement of a net senior secured leverage ratio of 2.75:1.0), in each case, subject to certain reinvestment rights and other exceptions, as well as the right of the lenders to decline certain prepayments. We are also required to make prepayments under our Revolving Credit Facility at any time when, and to the extent that, the aggregate amount of the outstanding loans and letters of credit under our revolving credit facility exceeds the aggregate amount of commitments in respect of our Revolving Credit Facility.

Borrowings bear interest at a floating rate which can be, at our option, either (i) a Eurodollar borrowing rate for a specified interest period plus an applicable margin or, (ii) an alternative base rate plus an applicable margin, in the case of term loans under the New Senior Credit Facility, subject to a Eurodollar rate floor of 1.25% or a base rate floor of 2.25%, as applicable. The applicable margin for the term loans and revolving loans under our New Senior Credit Facility is 3.75% per annum for Eurodollar loans and 2.75% per annum for base rate loans, and in the case of the revolving loans, subject to an adjustment to 3.50% and 2.50%, respectively, based on a net senior secured leverage ratio of 1.75:1.0.

The following fees are applicable under our revolving credit facility: (i) an unused line fee of 0.50% per annum, subject to an adjustment to 0.25% based on a net senior secured leverage ratio of 1.75:1.0, accruing in respect of the unused portion of our Revolving Credit Facility; (ii) a letter of credit participation fee on the aggregate stated amount of each letter of credit available to be drawn equal to the applicable margin for Eurodollar rate loans; (iii) a letter of credit fronting fee equal to 0.125% per annum on the daily amount of each letter of credit available to be drawn; and (iv) certain other customary fees and expenses payable to our letter of credit issuers.

Our obligations under our New Senior Credit Facility are guaranteed by Holdings and each of our current and future direct and indirect wholly owned domestic subsidiaries (the “Subsidiary Guarantors”) (other than (i) subsidiaries designated as unrestricted, (ii) immaterial subsidiaries, (iii) any subsidiary that is prohibited by applicable law or certain contractual obligations from guaranteeing our New Senior Credit Facility or which would require governmental approval to provide a guarantee, (iv) certain holding companies of foreign subsidiaries, (v) not-for-profit subsidiaries, if any, (vi) certain receivables financing subsidiaries, (vii) any subsidiary with respect to which the Company and the administrative agent reasonably agree that the burden, cost or other consequences of providing a guarantee will be excessive in view of the benefits obtained by the lenders therefrom and (viii) any subsidiary whose guaranteeing of the New Senior Credit Facility would result in a material adverse tax consequence, and will be secured by a first lien on substantially all of their assets, including capital stock of subsidiaries (subject to certain exceptions)). The Subsidiary Guarantors under our New Senior Credit Facility also guarantee the Senior Notes and are the same guarantors of the previous Senior Credit Facility: Syniverse Technologies Inc., Syniverse ICX Corporation and The Rapid Roaming Company.

Our New Senior Credit Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are limited to the following: limitations on the incurrence of debt, liens, fundamental changes, restrictions on subsidiary distributions, transactions with affiliates, further negative pledge, asset sales, restricted payments, investments and acquisitions, repayment of certain debt in the event of a change of control, amendments of certain debt documents and the activities of Holdings. The negative covenants are subject to the customary exceptions.

There are no financial covenants included in our New Senior Credit Facility other than a springing maximum net senior secured leverage ratio of 4.25 to 1.0, which will be tested only for the benefit of the Revolving Lenders and only (i) when, at the end of a fiscal quarter, (a) the aggregate amount of any revolving loans, any swing line loans or any letter of credit obligations outstanding exceeds 10% of all commitments under the Revolving Credit Facility in effect as of April 23, 2012 or (b) the aggregate amount of any letter of credit obligations outstanding exceeds 15% of all commitments under the Revolving Credit Facility in effect as of April 23, 2012 and (ii) upon an extension of credit under the Revolving Credit Facility in the form of the making of a revolving loan or a swing line loan, or the issuance of a letter of credit.

The Company is in the process of evaluating the financial effect of the refinancing of the Senior Credit Facility.

16. Supplemental Consolidating Financial Information

We have presented supplemental consolidating guarantor and non-guarantor subsidiaries’ balance sheets, statements of operations, statements of comprehensive income and statements of cash flows for all periods presented to reflect the guarantor structure under the 9.125% senior unsecured notes as discussed in Note 6.

Syniverse Holdings, Inc.’s payment obligations under the Senior Notes are guaranteed by certain wholly owned domestic subsidiaries of Syniverse, Inc. including Syniverse Technologies LLC (formerly known as Syniverse Technologies, Inc.), Syniverse ICX Corporation and The Rapid Roaming Company (collectively, the “Subsidiary Guarantors”). The results of Highwoods Corporation, Syniverse Technologies BV, Syniverse Technologies Holdings LLC, Perfect Profits International Limited, Syniverse Technologies K.K., Syniverse Technologies (India) Private Limited and Syniverse Brience LLC are included as non-guarantors. Such guarantees are irrevocable, unconditional and joint and several. The following supplemental financial information sets forth, on an unconsolidated basis, balance sheets, statements of operations, statements of comprehensive income (loss) and statements of cash flows information for Syniverse, Inc., the Guarantors and the non-guarantor subsidiaries. The supplemental financial information reflects the investment of Syniverse, Inc. using the equity method of accounting.

CONSOLIDATING BALANCE SHEET (UNAUDITED)

AS OF MARCH 31, 2012

(AMOUNTS IN THOUSANDS)


	Syniverse, Inc.			Subsidiary Guarantors		Subsidiary Non-Guarantors			Adjustments			Consolidated
ASSETS
Current assets:
Cash	$	44		$	207,996	$	23,774		$	—		$	231,814
Accounts receivable, net of allowances		—			142,761		24,597			—			167,358
Accounts receivable - affiliates		1,417,434			—		224,561			(1,641,995	)		—
Deferred tax assets		—			9,115		—			—			9,115
Income tax receivable		—			3,587		6,593			(4,813	)		5,367
Prepaid and other current assets		4,764			17,457		6,865			—			29,086

Total current assets		1,422,242			380,916		286,390			(1,646,808	)		442,740
Property and equipment, net		—			72,479		8,239			—			80,718
Capitalized software, net		—			198,535		3,122			—			201,657
Deferred costs, net		44,541			—		—			—			44,541
Goodwill		—			1,684,856		—			—			1,684,856
Identifiable intangibles, net		—			544,611		3,962			—			548,573
Long-term note receivable - affiliates		—			—		7,229			(7,229	)		—
Other assets		—			6,947		141			—			7,088
Investment in subsidiaries		1,224,788			286,069		—			(1,510,857	)		—

Total assets	$	2,691,571		$	3,174,413	$	309,083		$	(3,164,894	)	$	3,010,173


LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities:
Accounts payable	$	—		$	13,799	$	1,942		$	—		$	15,741
Accounts payable - affiliates		—			1,647,998		—			(1,647,998	)		—
Income taxes payable		—			7,466		—			(4,813	)		2,653
Accrued liabilities		19,944			32,021		10,006			—			61,971
Deferred revenues		—			4,774		3,446			—			8,220
Current portion of capital lease obligation		—			119		—			—			119
Current portion of long term debt, net of original issue discount		9,800			—		—			—			9,800

Total current liabilities		29,744			1,706,177		15,394			(1,652,811	)		98,504
Long-term liabilities:
Long-term note payable - affiliates		—			7,183		—			(7,183	)		—
Deferred tax and other tax liabilities		—			235,272		—			—			235,272
Long-term debt, net of current portion and original issue discount		1,466,944			—		—			—			1,466,944
Long-term capital lease obligation, less current maturities		—			351		—			—			351
Other long-term liabilities		—			642		7,620			—			8,262

Total liabilities		1,496,688			1,949,625		23,014			(1,659,994	)		1,809,333


Stockholder equity:
Common stock		—			—		125			(125	)		—
Additional paid-in capital		1,211,031			529,580		356,113			(885,693	)		1,211,031
Retained earnings (accumulated deficit)		(18,190	)		686,876		(45,665	)		(641,211	)		(18,190	)
Accumulated other comprehensive income (loss)		2,042			8,332		(24,504	)		16,172			2,042

Total Syniverse Holdings Inc. stockholder equity		1,194,883			1,224,788		286,069			(1,510,857	)		1,194,883
Noncontrolling interest		—			—		—			5,957			5,957

Total equity		1,194,883			1,224,788		286,069			(1,504,900	)		1,200,840

Total liabilities and stockholder equity	$	2,691,571		$	3,174,413	$	309,083		$	(3,164,894	)	$	3,010,173

CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(AMOUNTS IN THOUSANDS)


	Successor
	Syniverse, Inc.			Subsidiary Guarantors		Subsidiary Non-Guarantors			Adjustments			Consolidated
Revenues	$	—		$	161,971	$	23,094		$	—		$	185,065

Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)		—			58,447		8,569			—			67,016
Sales and marketing		—			12,767		5,055			—			17,822
General and administrative		—			26,343		(1,332	)		—			25,011
Depreciation and amortization		—			41,638		1,546			—			43,184
Restructuring and management termination benefits		—			399		(25	)		—			374

		—			139,594		13,813			—			153,407

Operating income		—			22,377		9,281			—			31,658
Other income (expense), net:
Income from equity investment		20,820			8,403		—			(29,223	)		—
Interest income		—			62		170			—			232
Interest expense		(26,534	)		—		—			—			(26,534	)
Other, net		—			91		1,223			—			1,314

		(5,714	)		8,556		1,393			(29,223	)		(24,988	)

Income (loss) before provision for (benefit from) income taxes		(5,714	)		30,933		10,674			(29,223	)		6,670
Provision for (benefit from) income taxes		(10,227	)		10,113		2,271			—			2,157

Net income		4,513			20,820		8,403			(29,223	)		4,513
Net income attributable to noncontrolling interest		—			—		—			1,231			1,231

Net income attributable to Syniverse Holdings, Inc.	$	4,513		$	20,820	$	8,403		$	(30,454	)	$	3,282

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(AMOUNTS IN THOUSANDS)


	Successor
	Syniverse, Inc.		Subsidiary Guarantors		Subsidiary Non-Guarantors			Adjustments			Consolidated

Net income	$	4,513	$	20,820	$	8,403		$	(29,223	)	$	4,513
Other comprehensive loss (net of tax):
Foreign currency translation adjustment, net of tax benefit of ($98)		—		—		(452	)		—			(452	)

Other comprehensive loss		—		—		(452	)		—			(452	)


Comprehensive income		4,513		20,820		7,951			(29,223	)		4,061
Less: comprehensive income attributable to noncontrolling interest		—		—		—			1,137			1,137

Comprehensive income attributable to Syniverse Holdings, Inc	$	4,513	$	20,820	$	7,951		$	(30,360	)	$	2,924

CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(AMOUNTS IN THOUSANDS)


	Successor
	Syniverse, Inc.			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments			Consolidated
Cash flows from operating activities
Net income	$	4,513		$	20,820		$	8,403		$	(29,223	)	$	4,513
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		—			41,638			1,546			—			43,184
Amortization of deferred debt issuance costs and original issue discount		2,017			—			—			—			2,017
Allowance for uncollectible accounts		—			141			36			—			177
Allowance for credit losses		—			1,754			770			—			2,524
Deferred income tax benefit		—			(2,048	)		—			—			(2,048	)
Income from equity investment		(20,820	)		(8,403	)		—			29,223			—
Stock-based compensation		2,688			—			—			—			2,688
Other, net		—			805			(4	)		—			801
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		—			(6,736	)		(3,520	)		—			(10,256	)
Accounts receivable - Affiliates		26,185			(205	)		(5,046	)		(20,934	)		—
Income tax receivable or payable		—			4,154			(1,374	)		—			2,780
Prepaids and other current assets		(113	)		(1,292	)		(593	)		—			(1,998	)
Accounts payable		—			1,421			178			—			1,599
Accounts payable - Affiliates		—			(21,230	)		296			20,934			—
Accrued liabilities		(11,885	)		(15,779	)		(1,190	)		—			(28,854	)
Other assets and liabilities		—			479			66			—			545

Net cash provided by (used in) operating activities		2,585			15,519			(432	)		—			17,672

Cash flows from investing activities
Capital expenditures		—			(9,244	)		(643	)		—			(9,887	)

Net cash used in investing activities		—			(9,244	)		(643	)		—			(9,887	)

Cash flows from financing activities
Principal payments on Senior Credit Facility due 2017		(2,563	)		—			—			—			(2,563	)
Payments on capital lease obligation		—			(29	)		—			—			(29	)
Minimum tax withholding on restricted stock awards		(22	)		—			—			—			(22	)

Net cash used in financing activities		(2,585	)		(29	)		—			—			(2,614	)

Effect of exchange rate changes on cash		—			—			(110	)		—			(110	)

Net (decrease) increase in cash		—			6,246			(1,185	)		—			5,061
Cash at beginning of period		44			201,750			24,959			—			226,753

Cash at end of period	$	44		$	207,996		$	23,774		$	—		$	231,814

CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2011

(AMOUNTS IN THOUSANDS)


	Syniverse, Inc.			Subsidiary Guarantors		Subsidiary Non-Guarantors			Adjustments			Consolidated
ASSETS
Current assets:
Cash	$	44		$	201,750	$	24,959		$	—		$	226,753
Accounts receivable, net of allowances		—			137,920		21,502			—			159,422
Accounts receivable - affiliates		1,444,777			—		219,515			(1,664,292	)		—
Deferred tax assets		—			9,103		—			—			9,103
Income tax receivable		—			275		5,099			—			5,374
Prepaid and other current assets		4,543			16,165		6,209			—			26,917

Total current assets		1,449,364			365,213		277,284			(1,664,292	)		427,569
Property and equipment, net		—			74,460		8,170			—			82,630
Capitalized software, net		—			205,462		3,221			—			208,683
Deferred costs, net		46,234			—		—			—			46,234
Goodwill		—			1,684,856		—			—			1,684,856
Identifiable intangibles, net		—			568,082		4,322			—			572,404
Long-term note receivable - affiliates		—			—		7,299			(7,299	)		—
Other assets		—			8,225		141			—			8,366
Investment in subsidiaries		1,204,399			277,278		—			(1,481,677	)		—

Total assets	$	2,699,997		$	3,183,576	$	300,437		$	(3,153,268	)	$	3,030,742


LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities:
Accounts payable	$	—		$	12,378	$	1,729		$	—		$	14,107
Accounts payable - affiliates		—			1,669,228		—			(1,669,228	)		—
Accrued liabilities		31,829			49,485		11,193			—			92,507
Deferred revenues		—			3,090		2,883			—			5,973
Current portion of capital lease obligation		—			117		—			—			117
Current portion of long term debt, net of original issue discount		9,800			—		—			—			9,800

Total current liabilities		41,629			1,734,298		15,805			(1,669,228	)		122,504
Long-term liabilities:
Long-term note payable - affiliates		—			7,183		—			(7,183	)		—
Deferred tax and other tax liabilities		—			236,737		—			—			236,737
Long-term debt, net of current portion and original issue discount		1,469,075			—		—			—			1,469,075
Long-term capital lease obligation, less current maturities		—			381		—			—			381
Other long-term liabilities		—			578		7,354			—			7,932

Total liabilities		1,510,704			1,979,177		23,159			(1,676,411	)		1,836,629


Stockholder equity:
Common stock		—			—		125			(125	)		—
Additional paid-in capital		1,208,365			529,580		356,113			(885,693	)		1,208,365
Retained earnings (accumulated deficit)		(21,472	)		666,059		(54,068	)		(611,991	)		(21,472	)
Accumulated other comprehensive income (loss)		2,400			8,760		(24,892	)		16,132			2,400

Total Syniverse Holdings Inc. stockholder equity		1,189,293			1,204,399		277,278			(1,481,677	)		1,189,293
Noncontrolling interest		—			—		—			4,820			4,820

Total equity		1,189,293			1,204,399		277,278			(1,476,857	)		1,194,113

Total liabilities and stockholder equity	$	2,699,997		$	3,183,576	$	300,437		$	(3,153,268	)	$	3,030,742

CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE PERIOD JANUARY 13, 2011 THROUGH MARCH 31, 2011

(AMOUNTS IN THOUSANDS)


	Successor
	Syniverse, Inc.			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments		Consolidated

Revenues	$	—		$	134,607		$	18,074		$	—	$	152,681


Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)		—			49,130			7,329			—		56,459
Sales and marketing		—			9,804			4,498			—		14,302
General and administrative		—			19,430			(1,170	)		—		18,260
Depreciation and amortization		—			42,359			1,332			—		43,691
Merger expenses		—			40,549			—			—		40,549

		—			161,272			11,989			—		173,261


Operating income (loss)		—			(26,665	)		6,085			—		(20,580	)

Other income (expense), net:
Income (loss) from equity investment		(14,683	)		7,931			—			6,752		—
Interest income		—			2			24			—		26
Interest expense		(33,149	)		—			—			—		(33,149	)
Other, net		—			601			(42	)		—		559

		(47,832	)		8,534			(18	)		6,752		(32,564	)


Income (loss) before provision for (benefit from) income taxes		(47,832	)		(18,131	)		6,067			6,752		(53,144	)
Benefit from income taxes		(13,118	)		(3,448	)		(1,864	)		—		(18,430	)


Net income (loss)		(34,714	)		(14,683	)		7,931			6,752		(34,714	)
Net income attributable to noncontrolling interest		—			—			—			552		552

Net income (loss) attributable to Syniverse Holdings, Inc.	$	(34,714	)	$	(14,683	)	$	7,931		$	6,200	$	(35,266	)

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE PERIOD JANUARY 13, 2011 THROUGH MARCH 31, 2011

(AMOUNTS IN THOUSANDS)


	Successor
	Syniverse, Inc.			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments		Consolidated

Net income (loss)	$	(34,714	)	$	(14,683	)	$	7,931		$	6,752	$	(34,714	)
Other comprehensive loss (net of tax):
Foreign currency translation adjustment, net of tax benefit of ($1,996)		—			—			(2,167	)		—		(2,167	)

Other comprehensive loss		—			—			(2,167	)		—		(2,167	)


Comprehensive income (loss)		(34,714	)		(14,683	)		5,764			6,752		(36,881	)
Less: comprehensive income attributable to noncontrolling interest		—			—			—			644		644

Comprehensive income (loss) attributable to Syniverse Holdings, Inc	$	(34,714	)	$	(14,683	)	$	5,764		$	6,108	$	(37,525	)

(AMOUNTS IN THOUSANDS) CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

FOR THE PERIOD JANUARY 13, 2011 THROUGH MARCH 31, 2011

(AMOUNTS IN THOUSANDS)


	Successor
	Syniverse, Inc.			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments			Consolidated
Cash flows from operating activities
Net income (loss)	$	(34,714	)	$	(14,683	)	$	7,931		$	6,752		$	(34,714	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			42,359			1,332			—			43,691
Amortization of deferred debt issuance costs and original issue discount		1,887			—			—			—			1,887
Allowance for uncollectible accounts		—			(143	)		(135	)		—			(278	)
Allowance for credit losses		—			1,660			241			—			1,901
Deferred income tax (benefit) expense		—			(6,143	)		1,272			—			(4,871	)
Income from equity investment		14,683			(7,931	)		—			(6,752	)		—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		—			(18,527	)		(2,350	)		—			(20,877	)
Accounts receivable - affiliates		66,982			184,226			257,595			(508,803	)		—
Income tax receivable or payable		—			(5,078	)		(2,960	)		—			(8,038	)
Prepaids and other current assets		(151	)		(9,555	)		(5,341	)		—			(15,047	)
Accounts payable		—			(46,157	)		35,378			—			(10,779	)
Accounts payable - affiliates		37,555			(221,470	)		(324,888	)		508,803			—
Accrued liabilities		17,942			(47,145	)		29,856			—			653
Other assets and liabilities		—			(1,292	)		(1,304	)		—			(2,596	)

Net cash provided by (used in) operating activities		104,184			(149,879	)		(3,373	)		—			(49,068	)

Cash flows from investing activities
Capital expenditures		—			(9,099	)		(734	)		—			(9,833	)
Acquisitions, net of acquired cash		(2,733,121	)		—			—			—			(2,733,121	)

Net cash used in investing activities		(2,733,121	)		(9,099	)		(734	)		—			(2,742,954	)

Cash flows from financing activities
Debt issuance costs paid		(56,000	)		—			—			—			(56,000	)
Principal payments on Senior Credit Facility due 2017		(2,563	)		—			—			—			(2,563	)
Borrowings under Senior Credit Facility, net of discount		1,012,500			—			—			—			1,012,500
Proceeds from issuance of 9.125% senior unsecured notes		475,000			—			—			—			475,000
Carlyle contribution from Holdings		1,200,000			—			—			—			1,200,000
Payments on capital lease obligation		—			(11	)		—			—			(11	)

Net cash provided by (used in) financing activities		2,628,937			(11	)		—			—			2,628,926

Effect of exchange rate changes on cash		—			—			(4,321	)		—			(4,321	)

Net (decrease) increase in cash		—			(158,989	)		(8,429	)		—			(167,417	)
Cash at beginning of period		44			216,551			22,695			—			239,290

Cash at end of period	$	44		$	57,562		$	14,266		$	—		$	71,873

CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE PERIOD JANUARY 1, 2011 THROUGH JANUARY 12, 2011

(AMOUNTS IN THOUSANDS)


	Predecessor
	Syniverse, Inc.			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments			Consolidated
Revenues	$	—		$	19,576		$	2,438		$	—		$	22,014

Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)		—			8,132			1,142			—			9,274
Sales and marketing		—			1,762			614			—			2,376
General and administrative		—			3,195			469			—			3,664
Depreciation and amortization		—			2,225			495			—			2,720
Merger expenses		20,735			21,371			5,097			—			47,203

		20,735			36,685			7,817			—			65,237

Operating loss		(20,735	)		(17,109	)		(5,379	)		—			(43,223	)
Other income (expense), net:
Loss from equity investment		(18,235	)		(5,482	)		—			23,717			—
Interest income		—			—			—			—			—
Interest expense		—			(859	)		—			—			(859	)
Other, net		—			18			(367	)		—			(349	)

		(18,235	)		(6,323	)		(367	)		23,717			(1,208	)

Loss before benefit from income taxes		(38,970	)		(23,432	)		(5,746	)		23,717			(44,431	)
Benefit from income taxes		(8,203	)		(5,197	)		(264	)		—			(13,664	)

Net loss		(30,767	)		(18,235	)		(5,482	)		23,717			(30,767	)
Net loss attributable to noncontrolling interest		—			—			—			(3	)		(3	)

Net loss attributable to Syniverse Holdings, Inc.	$	(30,767	)	$	(18,235	)	$	(5,482	)	$	23,720		$	(30,764	)

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE PERIOD JANUARY 1, 2011 THROUGH JANUARY 12, 2011

(AMOUNTS IN THOUSANDS)


	Predecessor
	Syniverse, Inc.			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments		Consolidated

Net loss	$	(30,767	)	$	(18,235	)	$	(5,482	)	$	23,717	$	(30,767	)
Other comprehensive loss (net of tax):
Foreign currency translation adjustment, net of tax benefit of $0		—			(425	)		(1,941	)		—		(2,366	)

Other comprehensive loss		—			(425	)		(1,941	)		—		(2,366	)


Comprehensive loss		(30,767	)		(18,660	)		(7,423	)		23,717		(33,133	)
Less: comprehensive income attributable to noncontrolling interest		—			—			—			4		4

Comprehensive loss attributable to Syniverse Holdings, Inc	$	(30,767	)	$	(18,660	)	$	(7,423	)	$	23,713	$	(33,137	)

CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE PERIOD JANUARY 1, 2011 THROUGH JANUARY 12, 2011

(AMOUNTS IN THOUSANDS)


	Predecessor
	Syniverse, Inc.			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments			Consolidated
Cash flows from operating activities
Net (loss)	$	(30,767	)	$	(18,235	)	$	(5,482	)	$	23,717		$	(30,767	)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		—			2,225			495			—			2,720
Amortization of deferred debt issuance costs		—			56			—			—			56
Allowance for uncollectible accounts		—			(24	)		70			—			46
Allowance for credit losses		—			21			143			—			164
Deferred income tax expense (benefit)		—			3,802			(1,707	)		—			2,095
(Income) loss from equity investment		18,235			5,482			—			(23,717	)		—
Excess tax benefit from stock-based compensation		8,599			—			—			—			8,599
Stock-based compensation		29,162			—			—			—			29,162
Other, net		—			16			15			—			31
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		—			11,124			526			—			11,650
Accounts receivable - affiliates		8,968			(69,024	)		(106,723	)		166,779			—
Income tax receivable or payable		—			(33,273	)		(1,040	)		—			(34,313	)
Prepaids and other current assets		—			(2,419	)		499			—			(1,920	)
Accounts payable		—			46,500			(35,389	)		—			11,111
Accounts payable - affiliates		(48,131	)		38,214			176,696			(166,779	)		—
Accrued liabilities		5,954			34,060			(25,847	)		—			14,167
Other assets and liabilities		—			(840	)		(122	)		—			(962	)

Net cash provided by (used in) operating activities		(7,980	)		17,685			2,134			—			11,839

Cash flows from investing activities

Net cash used in investing activities		—			—			—			—			—

Cash flows from financing activities
Minimum tax withholding on restricted stock awards		(619	)		—			—			—			(619	)
Excess tax benefit from stock-based compensation		8,599			—			—			—			8,599

Net cash provided by financing activities		7,980			—			—			—			7,980

Effect of exchange rate changes on cash		—			—			15			—			15

Net increase in cash		—			17,685			2,149			—			19,834
Cash at beginning of period		44			198,866			20,546			—			219,456

Cash at end of period	$	44		$	216,551		$	22,695		$	—		$	239,290

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain of the statements in this Quarterly Report on Form 10-Q, including, without limitation, those related to our future operations or results under the caption entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute “forward-looking statements” for purposes of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, targets, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, and which may cause our actual results, performance or achievements, or the global telecommunications industry or economy generally, to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that may be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “target,” “point to,” “project,” “predict,” “could,” “intend,” “potential,” and other similar words and expressions of the future or otherwise regarding the outlook for our future business and financial performance and/or the performance of the global telecommunications industry and economy generally. Such forward looking statements include, without limitation, statements regarding:

•

expectations of growth of the global wireless telecommunications industry, including increases in new wireless technologies such as smartphones and other connected devices, wireless subscribers, wireless usage, roaming, mobile data, number portability and text and multimedia messaging;

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increases in demand for our services due to growth of the global wireless telecommunications industry, greater technology complexity and the introduction of new and incompatible wireless technologies;

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expectations of changes in our revenues from prior periods to future periods;

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our beliefs concerning the effects that the current economic conditions will have on our business;

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capital expenditures in future periods; and

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the sufficiency of our cash on hand, cash available from operations and cash available from the revolving portion of our New Senior Credit Facility (as defined in Note 15 of this Quarterly Report on Form 10-Q) to fund our operations, debt service and capital expenditures.

These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. Many factors could affect our actual financial results and could cause actual results to differ materially from those expressed in the forward-looking statements.

The forward-looking statements may not be realized due to a variety of factors, including, without limitation:

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system failures, security breaches, delays and other problems;

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the loss of major customers and the resulting decrease in revenue;

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future consolidation among our customers that may cause decreased transaction volume and/or a reduction in our pricing;

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the failure to adapt to rapid technological changes in the telecommunications industry;

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intense competition in our market for services and the advantages that many of our competitors have or may develop over us, through acquisitions or technological innovations;

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customer migrations from our services to in-house solutions;

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the failure to achieve or sustain desired pricing levels or transaction volumes;

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certain risks with our continued expansion into international markets;

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the costs and difficulties of acquiring and integrating complementary businesses and technologies;

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the inability of our customers to successfully implement our services;

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the risk exposure related to our reliance on third-party providers for communications software, hardware and infrastructure;

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our inability to develop or maintain relationships with material vendors;

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fluctuations in currency exchange rates;

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the failure to obtain additional capital on acceptable terms, or at all;

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the impairment of our intangible assets or goodwill;

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regulations affecting our customers and us and future regulations to which they or we become subject;

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the capacity limits on our network and application platforms and inabilities to expand and upgrade our systems to meet demand;

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the inability to obtain or retain licenses or authorizations that may be required to sell our services internationally;

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the failure to protect our intellectual property rights;

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claims that we are in violation of intellectual property rights of others and any indemnities to our customers that may result therefrom;

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the loss of key personnel and the potential inability to successfully attract and retain personnel;

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unfavorable general economic conditions in the U.S. or in other major global markets;

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our exposure to, and the expense of defending and resolving, lawsuits that arise in the ordinary course of business;

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other factors disclosed in this Quarterly Report on Form 10-Q; and

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other factors beyond our control.

In light of these risks, uncertainties and assumptions, the forward-looking statements contained in this Quarterly Report on Form 10-Q for the three months ended March 31, 2012 might not prove to be accurate and you should not place undue reliance upon them. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as otherwise may be required by law.

The following discussion and analysis of our financial condition and results of operations covers periods before and after the Merger and the related Transactions. Accordingly, the discussion and analysis of periods prior to January 13, 2011 do not reflect the significant impact that the Transactions have had on us, including increased levels of indebtedness and the impact of purchase accounting. However, the general nature of our operations was not impacted by the Transactions. As such, for comparative purposes we will discuss changes between the three months ended March 31, 2012 and March 31, 2011 without reference to the effects of the Predecessor and Successor periods, which is consistent with the manner in which management evaluates our results of operations. The following discussion of our financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the audited consolidated financial statements, the accompanying notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K, as well as the unaudited condensed consolidated financial statements and the related notes presented in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Business

In today’s highly competitive wireless industry, a key priority for the roughly 1,100 mobile operators around the world is to offer uninterrupted network coverage to, and seamless wireless connectivity for, subscribers. When subscribers connect using their own mobile operator’s network or with other subscribers of the same mobile operator, this objective is more readily achieved. However, when subscribers roam on other operators’ networks or connect with subscribers of a different mobile operator, new layers of complexity are introduced as a result of varying and often incompatible technologies, networks and devices. The latter scenario requires physical connections between operators’ networks and numerous agreements that govern these interactions. We believe it is costly and inefficient for mobile operators to connect directly for certain data and transaction types, such as roaming. These transactions require visibility into proprietary subscriber data and usage patterns, it is impractical to do so with other mobile operators who may also be competitors. Therefore, it is important to have a neutral and trusted expert third-party intermediary, such as the Company, as the interface between operators to process these transactions.

We clear, process, route, translate and transport over a billion transactions on average each day. A “transaction” is generated by, among other things, an individual phone call, a text or a multimedia message that is sent or received, or the initiation of a mobile data session between different operators’ networks or while roaming. We also have a secure physical network infrastructure, consisting of 14 data centers and 14 network points-of-presence worldwide, for the connections to complete these transactions. Such connections can be between mobile operators or between mobile operators and enterprises, multiple service operators (“MSOs”) or others. Our Network services provide connectivity to mobile operators and other telecommunications providers, allow subscribers to keep (or “port”) their phone numbers when switching mobile operators, and allow subscribers to utilize caller identification (“caller ID”) services. Our Messaging services allow mobile operators’ subscribers to send text and multimedia messages to other mobile operators’ subscribers and also facilitate text and multimedia messaging between enterprises and their customers. Through the use of our Roaming services by mobile operators, subscribers are able to make phone calls, send and receive texts, multimedia messages, and email and browse the web or use applications while roaming on another mobile operator’s network.

We generate the majority of our revenues on a per-transaction basis, at times generating multiple transactions from a single subscriber call, text message or data session. Demand for transactions is driven primarily by wireless subscriber growth, the frequency of subscriber roaming activity, the volume of wireless voice calls and data sessions, the number of Short Messaging Service (“SMS”) and Multimedia Messaging Service (“MMS”) messages exchanged, subscriber adoption of new wireless data services and the rapid proliferation of smartphones and other connected devices.

Services

We provide an integrated suite of Network, Messaging and Roaming services for our customers, which are primarily utilized when mobile operators need to interact with one another. Most of our customers use multiple services from us, often spanning two or more of our service offerings.

Our primary service offerings are as follows:

Network services. We offer Network services which chiefly consist of our intelligent network products such as Signaling System 7 (“SS7”) solutions, interstandard roaming solutions, Mobile Data Roaming (“MDR”), call setup and tear down, internet protocol (“IP”) platform solutions, Real-Time Intelligence (“RTI”) tools, database solutions and number portability services.

•

Call setup and tear down involves the process of retrieving, processing and routing information in order for a call to transpire. This service is based on a per-transaction fee.

•

Number portability services allow subscribers to retain their phone numbers when changing mobile service providers. These services primarily generate revenues by charging per-transaction processing fees, monthly fixed fees, and fees for customer implementations.

Messaging services. We provide mobile operators with routing, translation and delivery services for SMS and MMS messages sent from one operator’s network to another. While mobile operators have routing and delivery capabilities for subscribers within their

own networks, they do not generally have an efficient way to directly route and deliver messages to other operators’ networks as this would require a direct connection with each of over a thousand mobile operators throughout the world, as well as sophisticated translation capabilities between numerous mobile standards. Once one of our customers has determined that an SMS or an MMS message needs to be delivered outside of its network, the message is sent to us. From there, we determine where the message is going, translate the message so it can be read by the receiving network and deliver it. This is known as Peer-to-Peer (“P2P”) messaging. As part of our enterprise messaging business, known as Application-to-Peer (“A2P”) messaging, we provide enterprise customers with routing, translation and delivery services for direct communication with their customers and employees via SMS and MMS alerts. Our Messaging revenues are typically generated on a per-transaction (or per-message) basis and paid to us by the customer on whose network the message originated.

Roaming services. We operate the largest roaming clearing house in the world and process hundreds of billions of roaming transactions each year. A roaming transaction is generated whenever a subscriber from one mobile operator makes or receives a call, sends or receives an SMS or MMS message, or initiates a data session, in each case, while roaming on another operator’s network. Subscribers typically roam in places where their home operator’s network coverage is relatively limited or non-existent. In order to provide seamless global coverage, mobile operators enter into roaming agreements with one another to provide access for their subscribers to other operators’ networks in a given geography. When its subscribers roam, the home operator must pay the visited operator for use of the network. Through our clearing house, we clear and settle roaming transactions generated by calls, messages and data sessions initiated by the home operator’s subscriber while roaming on the visited operator’s network. The information we provide determines the amount of roaming charges owed by one mobile operator to another. Fees are paid to us by the visited operator who ultimately bills the home operator for use of its network. In addition to this core service, we provide mobile operators a number of other value-added services, including roaming data analytics, roaming agreement management, fraud prevention and financial settlement services. Our Roaming revenues are typically generated on a per-transaction basis.

We provide technology turn-key solutions, including operator solutions for number portability readiness, prepaid applications, interactive video, value-added roaming services and mobile broadband solutions. Our turn-key solutions business provides software services to customers primarily in the Asia Pacific region.

Executive Overview

Financial Highlights

For the three months ended March 31, 2012, revenues increased $10.4 million, or 5.9%, to $185.1 million from $174.7 million for the three months ended March 31, 2011. The increase was primarily driven by transaction volume increases in our Network service offering, specifically our MDR, number portability and our IPX products. For the three months ended March 31, 2012, operating expenses increased $5.5 million, primarily due to higher headcount-related expenses of $4.2 million, including non-cash stock-based compensation and performance-based compensation and higher cost of operations driven by higher variable costs including message termination fees. Depreciation and amortization expenses decreased $3.2 million to $43.2 million for the three months ended March 31, 2012 from $46.4 million for the same period in 2011 primarily due to reduced intangible asset amortization resulting from our pattern of consumption amortization method for customer related intangibles valued in the Merger. Restructuring and management termination benefits expenses were $0.4 for the three months ended March 31, 2012 resulting from our December 2011 restructuring plans and relate to a liability for a leased facility we exited effective March 1, 2012. Operating income (loss) increased $95.5 million to $31.7 million for the three months ended March 31, 2012 from $63.8 million in loss for the same period in 2011. The change in operating income (loss) was primarily driven by the $87.8 million in Merger expenses in the three months ended March 31, 2011 and the stronger business performance for the three months ended March 31, 2012 compared to the prior year quarter.

Business Development

Verizon Wireless Renewal

In September 2011, contracts with Verizon Wireless, our largest customer, expired. Verizon Wireless uses a large suite of our services for its data clearing and roaming operations – products such as interstandard roaming solutions, MDR, data clearing house, RTI tools and a number of other services. Verizon Wireless’ new terms and pricing are under negotiation and may result in reduced pricing in future periods. We believe we will be successful in renewing our contract with Verizon Wireless and continue to provide services on a month-to-month basis at existing terms pending this contract renewal.

Senior Credit Facility Refinancing

$9.5 million; and (ii) commitments of $150.0 million Revolving Credit Facility for the making of revolving loans, swing line loans and issuance of letters of credit, which was issued with an original issue discount of $1.8 million. In conjunction with this refinancing, we utilized $81.3 million of cash to pay down the principal balance of the term loan under the Senior Credit Facility of approximately $62.2 million, original issue discount on the New Senior Credit Facility of $11.3 million, $7.2 million in financing costs and $0.5 million of accrued interest and fees for the Senior Credit Facility.

Revenues

Most of our revenues are transaction-based charges under long-term contracts, typically with terms averaging three years in duration. From time to time, if a contract expires and we have not previously negotiated a new contract or renewal with the customer, we continue to provide services on a month to month billing schedule under the terms of the expired contract as we negotiate new agreements or renewals. Most of the services and solutions we offer to our customers are based on applications, network connectivity and technology platforms owned and operated by us. We generate our revenues through the sale of our Network, Messaging, Roaming and Other services to telecommunications operators and enterprise customers throughout the world. Generally, there is a seasonal increase in wireless roaming usage and corresponding revenues in the high-travel months of our second and third fiscal quarters. Products primarily affected by this seasonality include signaling solutions, interstandard roaming, MDR and roaming clearing house.

Future increases or decreases in revenues are dependent on many factors, such as industry subscriber growth, subscriber habits, and volume and pricing trends, with few of these factors known in advance. From time to time, specific events such as customer contract renewals at different terms, a customer contract termination, a customer’s decision to change technologies or to provide solutions in-house, or a consolidation of operators will be known to us and then we can estimate their impact on our revenues.

Costs and Expenses

Our costs and expenses consist of cost of operations, sales and marketing, general and administrative, depreciation and amortization, restructuring and management termination benefits and Merger expenses.

•

Cost of operations includes data processing costs, network costs, revenue share service provider arrangements, message termination fees, facilities costs, hardware costs, licensing fees, personnel costs associated with service implementation, training and customer care and off-network database query charges.

•

Sales and marketing includes personnel costs, advertising and website costs, trade show costs and related marketing costs.

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General and administrative includes research and development expenses, a portion of the expenses associated with our facilities, business development expenses, and expenses for executive, finance, legal, human resources and other administrative departments and professional service fees relating to these functions. Our research and development expenses, which are primarily personnel, relate to technology creation, enhancement and maintenance of new and existing services.

•

Depreciation and amortization relate primarily to our property and equipment including our SS7 network, computer equipment, infrastructure facilities related to information management, capitalized software and other intangible assets recorded in purchase accounting.

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Restructuring and management termination benefits represents termination costs including severance, benefits and other related employee costs and facility costs.

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Merger expenses includes stock-based compensation related to the acceleration of the existing equity awards in connection with the Merger, advisory costs, professional services costs including legal, tax and audit services, insurance costs and transaction fees and expenses paid to Carlyle incurred in connection with the Transactions.

Consolidated Results of Operations

The following tables present an overview of our results of operations for the three months ended March 31, 2012 and 2011:


	Successor						Combined Predecessor & Successor						Successor						Predecessor			% of Revenues			Three months ended March 31, 2012 vs. 2011 $			Three months ended March 31, 2012 vs. 2011 %
	Three months ended March 31, 2012			% of Revenues			Three months ended March 31, 2011			% of Revenues			Period from January 13 to March 31, 2011			% of Revenues			Period from January 1 to January 12, 2011			% of Revenues			Three months ended March 31, 2012 vs. 2011 $			Three months ended March 31, 2012 vs. 2011 %
	(dollars in thousands)
Revenues:
Network services	$	84,636			45.7	%	$	74,151			42.4	%	$	64,970			42.6	%	$	9,181			41.7	%	$	10,485			14.1	%
Messaging services		47,008			25.4	%		48,646			27.9	%		42,448			27.8	%		6,198			28.2	%		(1,638	)		(3.4	)%
Roaming services		49,143			26.6	%		48,059			27.5	%		41,691			27.3	%		6,368			28.9	%		1,084			2.3	%
Other		4,278			2.3	%		3,839			2.2	%		3,572			2.3	%		267			1.2	%		439			11.4	%

Revenues		185,065			100.0	%		174,695			100.0	%		152,681			100.0	%		22,014			100.0	%		10,370			5.9	%
Costs and expenses:
Cost of operations		67,016			36.2	%		65,733			37.6	%		56,459			37.0	%		9,274			42.1	%		1,283			2.0	%
Sales and marketing		17,822			9.7	%		16,678			9.6	%		14,302			9.4	%		2,376			10.8	%		1,144			6.9	%
General and administrative		25,011			13.5	%		21,924			12.5	%		18,260			12.0	%		3,664			16.6	%		3,087			14.1	%
Depreciation and amortization		43,184			23.3	%		46,411			26.6	%		43,691			28.6	%		2,720			12.4	%		(3,227	)		(7.0	)%
Restructuring and management termination benefits		374			0.2	%		—			0.0	%		—			0.0	%		—			0.0	%		374			100.0	%
Merger expenses		—			0.0	%		87,752			50.2	%		40,549			26.5	%		47,203			214.4	%		(87,752	)		(100.0	)%

		153,407			82.9	%		238,498			136.5	%		173,261			113.5	%		65,237			296.3	%		(85,091	)		(35.7	)%

Operating income (loss)		31,658			17.1	%		(63,803	)		(36.5	)%		(20,580	)		(13.5	)%		(43,223	)		(196.3	)%		95,461			(149.6	)%
Other income (expense), net:
Interest income		232			0.1	%		26			0.0	%		26			0.0	%		—			0.0	%		206			792.3	%
Interest expense		(26,534	)		(14.3	)%		(34,008	)		(19.5	)%		(33,149	)		(21.7	)%		(859	)		(3.9	)%		7,474			(22.0	)%
Other, net		1,314			0.7	%		210			0.1	%		559			0.4	%		(349	)		(1.6	)%		1,104			525.7	%

		(24,988	)		(13.5	)%		(33,772	)		(19.4	)%		(32,564	)		(21.3	)%		(1,208	)		(5.5	)%		8,784			(26.0	)%

Income (loss) before provision for (benefit from) income taxes		6,670			3.6	%		(97,575	)		(55.9	)%		(53,144	)		(34.8	)%		(44,431	)		(201.8	)%		104,245			(106.8	)%
Provision for (benefit from) income taxes		2,157			1.2	%		(32,094	)		(18.4	)%		(18,430	)		(12.1	)%		(13,664	)		(62.1	)%		34,251			(106.7	)%

Net income (loss)		4,513			2.4	%		(65,481	)		(37.5	)%		(34,714	)		(22.7	)%		(30,767	)		(139.7	)%		69,994			(106.9	)%
Net income (loss) attributable to noncontrolling interests		1,231			0.7	%		549			0.3	%		552			0.4	%		(3	)		(0.0	)%		682			124.0	%

Net income (loss) attributable to Syniverse Holdings, Inc.	$	3,282			1.8	%	$	(66,030	)		(37.8	)%	$	(35,266	)		(23.1	)%	$	(30,764	)		(139.7	)%	$	69,312			(105.0	)%

Revenues

Revenues increased $10.4 million to $185.1 million for the three months ended March 31, 2012 from $174.7 million for the same period in 2011. The increase in revenues was primarily due to transaction volume growth driven by our Network service offering.

Network services revenues increased $10.5 million, or 14.1%, to $84.6 million for the three months ended March 31, 2012 from $74.1 million for the same period in 2011. The increase is primarily due to continued volume increases across our MDR platform of $7.5 million, increased porting volumes from number portability of $1.3 million primarily generated in North America and India and our IPX solution of $1.3 million.

Messaging services revenues decreased $1.6 million, or 3.4%, to $47.0 million for the three months ended March 31, 2012 from $48.6 million for the same period in 2011. The decrease is primarily due to the SMS/MMS impact of lower pricing for 2011 customer contract renewals and slower volume growth. These decreases are partially offset by volume growth in our enterprise messaging product of $4.5 million.

Roaming services revenues increased $1.1 million, or 2.3%, to $49.1 million for the three months ended March 31, 2012 from $48.1 million for the same period in 2011. The increase was primarily due to growth in our value added roaming services products, including roaming agreement management. The revenue impact of our data clearing house volume growth was partially offset by the impact of lower pricing for customer contract renewals and certain operator infrastructure investments. Volume growth in our data clearing house continues to be predominantly generated by data sessions and SMS compared to the prior year first quarter.

Other services revenues increased $0.4 million, or 11.4%, to $4.3 million for the three months ended March 31, 2012 from $3.8 million for the same period in 2011. The increase relates to a greater number of completed turn-key technology solutions projects.

Expenses

Cost of operations increased $1.3 million to $67.0 million for the three months ended March 31, 2012 from $65.7 million for the same period in 2011. The increase in cost of operations by category of spending is outlined in the table below.


	Successor		Combined Predecessor & Successor		Three months ended March 31, 2012 vs. 2011 $			Three months ended March 31, 2012 vs. 2011 %
	Three months ended March 31, 2012		Three months ended March 31, 2011		Three months ended March 31, 2012 vs. 2011 $			Three months ended March 31, 2012 vs. 2011 %
	(dollars in thousands)
Detail of Cost of Operations:
Headcount and related costs		22,630		22,669	$	(39	)		(0.2	)%
Variable costs		14,100		14,842		(742	)		(5.0	)%
Data processing and related hosting and support costs		18,332		16,336		1,996			12.2	%
Network costs		9,566		9,566		—			0.0	%
Other operating related costs		2,388		2,320		68			2.9	%

Cost of Operations	$	67,016	$	65,733	$	1,283			2.0	%

The increase in data processing and related hosting and support costs is primarily due to increased facility-related hosting costs from our data center expansion to support additional capacity and capability. Variable costs decreased due to a lower revenue share cost resulting from a contractual rate reduction, partially offset by increased volumes in our mobile enterprise services, including messaging termination fees. As a percentage of revenues, cost of operations decreased to 36.2% for the three months ended March 31, 2012 from 37.6% for the three months ended March 31, 2011.

Sales and marketing expenses increased $1.1 million to $17.8 million for the three months ended March 31, 2012 from $16.7 million for the same period in 2011. The increase is driven by higher headcount and travel related expenses associated with expanding our global sales force to support growth in developing markets. The increased headcount costs include non-cash stock-based compensation and performance-based compensation. As a result of the Merger, there were no stock based compensation programs in effect at March 31, 2011. Accordingly, we did recognize non-cash stock based compensation expense, aside from the impact of the Merger, in the three months ended March 31, 2011. As a percentage of revenues, sales and marketing expense slightly increased to 9.7% for the three months ended March 31, 2012 from 9.6% for the three months ended March 31, 2011.

General and administrative expenses increased $3.1 million to $25.0 million for the three months ended March 31, 2012 from $21.9 million for the same period in 2011. The increase was primarily due to higher stock-based compensation and professional services. As a percentage of revenues, general and administrative expense increased to 13.5% for the three months ended March 31, 2012 from 12.5% for the three months ended March 31, 2011.

Depreciation and amortization expenses decreased $3.2 million to $43.2 million for the three months ended March 31, 2012 from $46.4 million for the same period in 2011. The decrease was driven intangible asset amortization resulting from our pattern of consumption amortization method for customer related intangibles valued in the Merger.

Restructuring and management termination benefits expenses were $0.4 million for the three months ended March 31, 2012, resulting from our December 2011 restructuring plans and relate to a liability for a leased facility we exited effective March 1, 2012.

Other Income (Expense)

Interest expense decreased $7.5 million to $26.5 million for the three months ended March 31, 2012 from $34.0 million for the same period in 2011. The decrease is primarily due to pre-Merger interest expense in the Successor period of $10.2 million, which includes $7.1 million in financing costs associated with an unused bridge loan.

Other, net increased $1.1 million to a gain of $1.3 million for the three months ended March 31, 2012 from a $0.2 million gain for the same period in 2011. The increase was primarily due to foreign currency transaction gains on foreign denominated cash balances and intercompany accounts as a result of our global presence.

Provision for (Benefit from) Income Taxes

Provision for (benefit from) income taxes increased $34.3 million to a $2.2 million provision for the three months ended March 31, 2012, from a $32.1 million benefit for the same period in 2011. During the three months ended March 31, 2012 and 2011, the effective tax rate was an expense of 32.3% and a benefit of 32.9%, respectively. The change in our effective tax rate is chiefly attributable to costs related to the Merger in 2011, some of which are non-deductible for income tax purposes, a change in our valuation allowances in certain foreign jurisdictions, and state and local income tax rate changes and their effect on our deferred tax liabilities.

Liquidity and Capital Resources

Our primary sources of liquidity are expected to be cash flow from operations, as well as funds available under the revolving portion of our New Senior Credit Facility, which we entered into on April 23, 2012 to reference our Senior Credit Facility. We believe that, based on projected operating cash flow and the availability of funds from our revolving portion of our New Senior Credit Facility, we have sufficient liquidity to meet currently anticipated growth plans, including short and long-term capital expenditures and working capital requirements. In addition, we believe that this liquidity is sufficient to fund our debt repayment obligations. Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future. Our indebtedness requires us to dedicate a substantial portion of our cash flow from operations to debt service, thereby reducing the availability of our cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts and other general corporate purposes. We may need supplemental funding for these activities, which we believe could be available from the debt markets. Historically, we have been successful in obtaining financing, although the marketplace for such investment capital can become restricted depending on a variety of economic factors. We believe that our cash on hand, together with cash from operations and, if required, borrowings under the revolving portion of our New Senior Credit Facility, will be sufficient for our cash requirements for the next twelve months.

Cash Flow Information

Cash and cash equivalents were $231.8 million at March 31, 2012 as compared to $226.8 million at December 31, 2011. The following table sets forth, for the periods indicated, selected consolidated cash flow information.


	Successor			Combined Predecessor & Successor
	Three months ended March 31,
	2012			2011
	(in thousands)
Net cash provided by (used in) operating activities	$	17,672		$	(37,229	)
Net cash used in investing activities		(9,887	)		(2,742,954	)
Net cash (used in) provided by financing activities		(2,614	)		2,636,906
Effect of exchange rate changes on cash		(110	)		(4,306	)

Net increase (decrease) in cash	$	5,061		$	(147,583	)

Net cash provided by (used in) operating activities increased $54.9 million to $17.7 million for the three months ended March 31, 2012 from $(37.2) million for the same period in 2011. Net income adjusted for non-cash items increased $34.1 million, primarily as a result of the cash Merger expenses in the three months ended March 31, 2011. Cash used for working capital was driven by the changes in the income tax receivable position due to the tax deductible Merger expenses and timing of interest payments under the Senior Notes and Senior Credit Facility entered into in connection with the Merger. No interest payments were required during the three months ended March 31, 2011.

Net cash used in investing activities was $9.9 million for the three months ended March 31, 2012, all related to capital expenditures. Capital expenditures related to investments in internal infrastructure, including capacity increases as well as capitalized software for new products and services. Net cash used in investing activities for the three months ended March 31, 2011 was $2,743.0 million, which includes $9.8 million for capital expenditures and $2,733.1 million of cash consideration for the Merger. Capital expenditures were primarily related to investment in messaging infrastructure and integration and capitalized software for new products and services.

Net cash used in financing activities was $2.6 million for the three months ended March 31, 2012. Net cash provided by financing activities was $2,636.9 million for the three months ended March 31, 2011, which includes $1,487.5 million of borrowings on our Senior Credit Facility and Senior Notes as well as $1,200.0 million of cash equity contributions from Holdings offset by $56.0 million of financing costs paid that were capitalized and $2.6 million of principal payments on our Senior Credit Facility.

Debt and Credit Facilities

Senior Credit Facility

On December 21, 2010, we entered into our Senior Credit Facility consisting of a $150.0 million revolving credit facility and a $1,025.0 million term loan facility and on January 13, 2011, our Senior Credit Facility became effective. On April, 23, 2012, we refinanced our Senior Credit Facility by entering into the New Senior Credit Facility (described below) and terminating the Senior Credit Facility. As of March 31, 2012, the obligations under the Senior Credit Facility were unconditionally guaranteed by Buccaneer Holdings, Inc. and each of the current and future direct and indirect wholly owned domestic subsidiaries of Syniverse Holdings, Inc. and were secured by a security interest in substantially all of the tangible and intangible assets of Syniverse Holdings, Inc. and the guarantors, in each case, subject to certain exceptions. As of March 31, 2012, the obligations under the Senior Credit Facility were also secured by a pledge of the capital stock of Syniverse Holdings, Inc. and its direct and indirect wholly owned domestic subsidiaries subject to certain exceptions.

As of March 31, 2012, borrowings under our Senior Credit Facility bore interest at a floating rate which could be, at our option, either (i) a Eurodollar borrowing rate for a specified interest period plus an applicable margin or, (ii) an alternative base rate plus an applicable margin, in each case, subject to a Eurodollar rate floor of 1.50% or a base rate floor of 2.50%, as applicable. As of March 31, 2012, the applicable margin for the term loan and revolving loans under our Senior Credit Facility was 3.75% per annum for Eurodollar loans and 2.75% per annum for base rate loans, and in the case of the revolving loans, subject to an adjustment based on a total net leverage ratio test.

As of March 31, 2012, we had a carrying amount of $1,012.2 million, excluding original issue discount, of outstanding indebtedness under our Senior Credit Facility. As of March 31, 2012, the applicable interest rate was 5.25% on the term loan facility based on the Eurodollar option.

Our revolving credit facility had an outstanding Euro letter of credit of $1.9 million at March 31, 2012, which was considered a reduction against our revolving credit facility under the credit agreement. The unused commitment under the revolving credit facility was $148.1 million at March 31, 2012.

New Senior Credit Facility

On April, 23, 2012, we refinanced our Senior Credit Facility with Barclays Bank PLC, as administrative agent, swing line lender and letters of credit issuer, and the other financial institutions and lenders from time to time party thereto, providing for the New Senior Credit Facility consisting of (i) the $950.0 million Term Loan Facility; and (ii) the $150.0 million Revolving Credit Facility for the making of revolving loans, swing line loans and issuance of letters of credit. In conjunction with this refinancing, we utilized $81.3 million of cash to pay down the principal balance of the term loan under the Senior Credit Facility of approximately $62.2 million, original issue discount on the New Senior Credit Facility of $11.3 million, $7.2 million in financing costs and $0.5 million of accrued interest and fees for the Senior Credit Facility.

Our Term Loan Facility will mature at the earliest of (i) April 23, 2019, (ii) the date of termination in whole of the commitments under the Term Loan Facility and (iii) the date the loans under the Term Loan Facility are declared due and payable in connection with an event of default; provided that (a) in the event that more than $50 million of the Senior Notes remain outstanding on the date that is 91 days prior to the stated maturity of the Senior Notes (the “First Springing Maturity Date”), the maturity date for the Term Loan Facility will be the First Springing Maturity Date and (b) in the event that more than $50 million in aggregate principal amount of any refinancing indebtedness in respect of the Senior Notes remains outstanding on the date that is 91 days prior to the stated maturity of such refinancing indebtedness (the “Second Springing Maturity Date”), the maturity date for the Term Loan Facility will be the earlier of the Second Springing Maturity Date and April 23, 2019.

Borrowings bear interest at a floating rate which can be, at our option, either (i) a Eurodollar borrowing rate for a specified interest period plus an applicable margin or, (ii) an alternative base rate plus an applicable margin, in the case of term loans under the New Senior Credit Facility, subject to a Eurodollar rate floor of 1.25% or a base rate floor of 2.25%, as applicable. The applicable margin for the term loans and revolving loans under our New Senior Credit Facility is 3.75% per annum for Eurodollar loans and 2.75% per annum for base rate loans, and in the case of the revolving loans, subject to an adjustment to 3.50% and 2.50%, respectively, based on a net senior secured leverage ratio of 1.75:1.0.

Our obligations under our New Senior Credit Facility are guaranteed by Buccaneer Holdings, Inc. and each of our current and future direct and indirect wholly owned domestic subsidiaries (the “Subsidiary Guarantors”) (other than (i) subsidiaries designated as unrestricted, (ii) immaterial subsidiaries, (iii) any subsidiary that is prohibited by applicable law or certain contractual obligations from guaranteeing our New Senior Credit Facility or which would require governmental approval to provide a guarantee, (iv) certain holding companies of foreign subsidiaries, (v) not-for-profit subsidiaries, if any, (vi) certain receivables financing subsidiaries, (vii) any subsidiary with respect to which the Company and the administrative agent reasonably agree that the burden, cost or other consequences of providing a guarantee will be excessive in view of the benefits obtained by the lenders therefrom and (viii) any subsidiary whose guaranteeing of the New Senior Credit Facility would result in a material adverse tax consequence, and will be secured by a first lien on substantially all of their assets, including capital stock of subsidiaries (subject to certain exceptions)). The Subsidiary Guarantors under our New Senior Credit Facility also guarantee the Senior Notes.

Our New Senior Credit Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are limited to the following: limitations on the incurrence of debt, liens, fundamental changes, restrictions on subsidiary distributions, transactions with affiliates, further negative pledge, asset sales, restricted payments, investments and acquisitions, repayment of certain debt in the event of a change of control, amendments of certain debt documents and the activities of Buccaneer Holdings, Inc. The negative covenants are subject to the customary exceptions.

There are no financial covenants included in our New Senior Credit Facility other than a springing maximum net senior secured leverage ratio of 4.25 to 1.0, which will be tested only for the benefit of the revolving lenders and only (i) when, at the end of a fiscal quarter, (a) the aggregate amount of any revolving loans, any swing line loans or any letter of credit obligations outstanding exceeds 10% of all commitments under the Revolving Credit Facility in effect as of April 23, 2012 or (b) the aggregate amount of any letter of credit obligations outstanding exceeds 15% of all commitments under the Revolving Credit Facility in effect as of April 23, 2012 and (ii) upon an extension of credit under the Revolving Credit Facility in the form of the making of a revolving loan or a swing line loan, or the issuance of a letter of credit.

9.125% Senior Unsecured Notes Due 2019

On December 22, 2010, we issued $475.0 million senior unsecured notes bearing interest at 9.125%, referred to herein as the Senior Notes, that will mature on January 15, 2019. Interest on the Senior Notes will be paid on January 15 and July 15 of each year, commencing July 15, 2011.

The indenture governing our outstanding Senior Notes contains certain covenants that among other things, limit our ability to incur additional indebtedness and issue preferred stock, pay dividends, make other restricted payments and investments, create liens, incur restrictions on the ability of our subsidiaries to pay dividends or other payments to them, sell assets, merge or consolidate with other entities, and enter into transactions with affiliates. As of March 31, 2012, we are in compliance with all of the covenants contained in the indenture governing our outstanding Senior Notes.

Non-GAAP Financial Measures

We believe that Adjusted EBITDA, Free Cash Flow and Net Revenues are measures commonly used by investors to evaluate our performance and that of our competitors. We believe issuers of “high-yield” debt securities also present Adjusted EBITDA and the related ratio data because investors, analysts and rating agencies consider it useful in measuring the ability of those issuers to meet debt service obligations. We further believe that the disclosure of Adjusted EBITDA, Free Cash Flow and Net Revenues is useful to investors as these non-GAAP measures form the basis of how our executive team and Board of Directors evaluates our performance. By disclosing these non-GAAP measures, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management team operates our company. Adjusted EBITDA, Free Cash Flow and Net Revenues are not presentations made in accordance with GAAP and our use of the terms Adjusted EBITDA, Free Cash Flow and Net Revenues may vary from that of others in our industry. Adjusted EBITDA, Free Cash Flow and Net Revenues should not be considered as alternatives to net income (loss), operating income (loss), revenues or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or liquidity.

In addition, these non-GAAP measures may not be comparable to other similarly titled measures of other companies. Because of these limitations, Adjusted EBITDA, Free Cash Flow and Net Revenues should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We attempt to compensate for these limitations by relying primarily upon our GAAP results and using Adjusted EBITDA, Free Cash Flow and Net Revenues as supplemental information only.

Adjusted EBITDA, Free Cash Flow and Net Revenues have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. For example, Adjusted EBITDA:

•

excludes certain tax payments that may represent a reduction in cash available to us;

•

does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

•

does not reflect changes in, or cash requirements for, our working capital needs; and

•

does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, including original issue discount amortization on our Senior Credit Facility.

Adjusted EBITDA is determined by adding the following items to net income (loss): other income (expense), net, provision for (benefit from) income taxes, depreciation and amortization, restructuring and management termination benefits, non-cash stock compensation, acquisition related expenses including acquisition, transition and integration costs generally, the Transactions and Merger expenses and the Carlyle annual management fee including related expenses.

We believe that Adjusted EBITDA is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. We rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our management team in connection with our executive compensation and bonus plans. We also review Adjusted EBITDA to compare our current operating results with prior periods and with the operating results of other companies in our industry. In addition, we utilize Adjusted EBITDA as an assessment of our overall liquidity and our ability to meet our debt service obligations.

Free Cash Flow is determined by adding the result of net cash provided by or used in operating activities and Merger expenses (less non-cash stock compensation included in Merger expenses), and pre-Merger interest expense less capital expenditures. Pre-Merger interest expense relates to the repayment and discharge of Predecessor debt and an unused bridge loan financing cost.

We believe that Free Cash Flow is a useful financial metric to assess our ability to pursue opportunities to enhance our growth. We also use Free Cash Flow as a measure to review and assess the operating performance of our management team in connection with our executive compensation and bonus plans. Additionally, we believe this is a useful metric for investors to assess our ability to repay debt.

Reconciliation of Non-GAAP Measures to GAAP

A reconciliation of net income (loss), the closest GAAP financial measure to Adjusted EBITDA, is presented in the following financial tables:


	Successor		Combined Predecessor & Successor
	Three months ended March 31,
	2012		2011
	(in thousands)
Reconciliation to Adjusted EBITDA
Net income (loss)	$	4,513	$	(65,481	)
Other expense (expense), net		24,988		33,772
Provision for (benefit from) income taxes		2,157		(32,094	)
Depreciation and amortization		43,184		46,411
Restructuring and management termination benefits (a)		374		—
Non-cash stock compensation (b)		2,688		—
Acquisition, integration and other expenses (c)		510		813
Carlyle transaction and merger expenses (d)		—		87,752
Management fee and related expenses (e)		736		904

Adjusted EBITDA	$	79,150	$	72,077

(a)	Reflects restructuring costs associated with a liability for a leased facility we exited effective March 1, 2012.

(b)	Reflects non-cash expenses related to equity compensation awards. The acceleration of the Predecessor equity compensation awards is included within the Transactions and Merger expenses (see (d) below).

(c)	Reflects items associated with acquisition and integration expenses, such as incremental contractor, travel and marketing costs, and certain advisory services and employee retention costs.

(d)	Reflects items associated with the Transactions, such as legal, advisory and investment banker fees and accelerated stock-based compensation expense.

(e)	Reflects management fees paid to Carlyle and related expenses.

A reconciliation of Free Cash Flow to net cash provided by operating activities, the closest GAAP measure, is presented in the following financial table:


	Successor			Combined Predecessor & Successor
	Three months ended March 31,
	2012			2011
	(in thousands)
Reconciliation to Free Cash Flow
Net cash provided by (used in) operating activities	$	17,672		$	(37,229	)
Merger expenses		—			87,752
Less: non-cash stock compensation included in Merger expenses		—			(29,162	)
Pre-Merger interest expense		—			10,219
Capital expenditures		(9,887	)		(9,833	)

Free Cash Flow	$	7,785		$	21,747

Off-Balance Sheet Arrangements

We provide financial settlement services to mobile operators to support the payment of roaming related charges to their roaming network partners. In accordance with our contract with the customer, funds are held by us as an agent on behalf of our customers to

settle their roaming related charges to other operators. These funds and the corresponding liability are not reflected in our condensed consolidated balance sheets. The off-balance sheet amounts totaled approximately $144.5 million and $129.8 million as of March 31, 2012 and December 31, 2011, respectively.

We have also used off-balance sheet financing in recent years primarily in the form of operating leases for facility space and some equipment leasing and we expect to continue these practices. We do not use any other type of joint venture or special purpose entities that would create off-balance sheet financing. We believe that our decision to lease our office space is similar to that used by many other companies of our size and does not have a material impact on our financial statements. We intend to continue to enter into operating leases for facilities and equipment as these leases expire or additional capacity may be required.

Related Party Transactions

Consulting Agreement with Carlyle

On January 13, 2011, we entered into a ten-year consulting agreement with Carlyle under which we pay Carlyle a fee for consulting services Carlyle provides to us and our subsidiaries. Under this agreement, subject to certain conditions, we expect to pay an annual consulting fee to Carlyle of $3.0 million, reimburse its out-of-pocket expenses and may pay Carlyle additional fees associated with other future transactions. Carlyle also received a one-time transaction fee and related expenses associated with the Transactions of $31.5 million on the effective date of the Merger.

Consulting Agreement with Mr. Tony G. Holcombe

On June 15, 2011, we entered into a consulting agreement with Mr. Holcombe under which we agreed to engage Mr. Holcombe to provide consulting services to the Company during the time period beginning July 1, 2011 and ending June 30, 2012 and agreed to pay Mr. Holcombe $0.2 million for these services in equal monthly increments. Mr. Holcombe will also receive the same director fees as the independent directors.

Effect of Inflation

Inflation generally affects us by increasing our cost of labor, equipment and new materials. We do not believe that inflation has had any material effect on our results of operations during the three months ended March 31, 2012 and 2011.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses. We consider an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate or different estimates that could have been selected could have a material impact on our consolidated results of operations or financial condition. On an on-going basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions under different future circumstances.

During the three months ended March 31, 2012, we have not adopted any new critical accounting policies, have not changed any critical accounting policies and have not changed the application of any critical accounting policies from the year ended December 31, 2011 that had a material impact on our financial statements. You should read “Risk Factors” and our summary of significant accounting policies in Note 2 of our Notes to Unaudited Condensed Consolidated Financial Statements.

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which is included in the ASC in Topic 820 (Fair Value Measurement). ASU 2011-04 amends the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This accounting standard does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards within U.S. GAAP or International Financial Reporting Standards. We adopted this guidance effective January 1, 2012. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

In June 2011, the FASB issued ASU 2011-05 and ASU 2011-12, Presentation of Comprehensive Income, which is included in the ASC in Topic 220 (Comprehensive Income). The ASU requires companies to present items of net income, items of other comprehensive income (“OCI”) and total comprehensive income in one continuous statement or two separate consecutive statements for interim and annual reports. We adopted this guidance effective January 1, 2012. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

In March 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment, which is included in the ASC in Topic 350 (Intangibles – Goodwill and Other). ASU 2011-08 permits companies to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If a greater than 50 percent likelihood exists that the fair value is less than the carrying amount then a two-step goodwill impairment test as described in Topic 350 must be performed. Under the amendments in this ASU, a company has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. A company may resume performing the qualitative assessment in any subsequent period. This statement is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We have adopted this guidance effective January 1, 2012. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Market Risk

We have been exposed to changes in interest rates on our Senior Credit Facility. Our Senior Credit Facility was subject to variable interest rates dependent upon the Eurodollar floor. Under our credit agreement governing the Senior Credit Facility, the Eurodollar rate floor was 1.50% and the base rate floor was 2.50%, as of March 31, 2012. Interest rate changes therefore generally do not affect the market value of such debt but do impact the amount of our interest payments and, therefore, our future earnings and cash flows, assuming other factors are held constant. As of March 31, 2012, a one-eighth percent change in assumed interest rates on our Senior Credit Facility would have an annual impact of $1.3 million on our interest expense.

Foreign Currency Market Risk

Although the majority of our operations are conducted in United States dollars, our foreign operations are conducted in Euros and Great Britain Pounds. On a less significant basis, we conduct operations in the various currencies of the Asia-Pacific region, Canada and Latin America. Consequently, a portion of our revenues and expenses may be affected by fluctuations in foreign currency exchange rates. We are also affected by fluctuations in exchange rates on assets and liabilities related to our foreign operations. We have not hedged our translation risk on foreign currency exposure through the use of derivative instruments.

A 10% change in average foreign currency rates against the U.S. dollar during the three months ended March 31, 2012 compared to the average foreign currency exchange rates during the same period in 2011 would have increased or decreased our revenues and net income by approximately $2.4 million and $0.8 million, respectively.

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of March 31, 2012. Based on our evaluation, as of March 31, 2012, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

ITEM 1A: RISK FACTORS

Our business, financial condition, operating results and cash flows can be impacted by a number of factors, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. For a discussion identifying additional risk factors and important factors that could cause actual results to differ materially from those anticipated, see the discussion of risk factors disclosed under the caption “Risk Factors” in our 2011 Annual Report on Form 10-K, and disclosed elsewhere in this Quarterly Report on Form 10-Q. There have been no material changes in our risk factors from the filing date of our Annual Report on Form 10-K.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY DISCLOSURES

None.

ITEM 5: OTHER INFORMATION

None.

ITEM 6: EXHIBITS


Exhibit No.		Description

	3.1	Third Amended and Restated Certificate of Incorporation of Syniverse Holdings, Inc.(1)

	3.2	Amended and Restated Bylaws of Syniverse Holdings, Inc.(1)

	4.1	Indenture dated as of December 22, 2010, as supplemented on January 13, 2011 by the First Supplemental Indenture, among Buccaneer Merger Sub, Inc. (which merged into Syniverse Holdings, Inc.) and Wilmington Trust, National Association, as successor by merger to Wilmington Trust FSB, as trustee, governing the 9.125% Senior Notes due 2019 (1)

	4.2	Form of Senior Note due 2019(1)

	10.1	Credit Agreement, dated April 23, 2012, by and among Syniverse Holdings, Inc., Buccaneer Holdings, Inc., Barclays Bank PLC, as administrative agent, swing line lender and l/c issuer, and the other financial institutions and lenders from time to time party thereto (2)

	10.2	Subsidiary Guaranty, dated April 23, 2012, by the Subsidiary Guarantors party thereto (2)

	10.3	Security Agreement, dated April 23, 2012, by and among Syniverse Holdings, Inc., Buccaneer Holdings, Inc. and the Subsidiary Guarantors party thereto, and Barclays Bank PLC, as administrative agent (2)

	*31.1	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.

	*31.2	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.

	**32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.

	**32.2	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.

	***101	The following financial information from Syniverse Holdings, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2012, filed with the SEC on May 9, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements (tagged as blocks of text).

(1)	Incorporated by reference to the Registration Statement on Form S-4 (Registration No. 333-176382) filed by the Company and the co-registrants named therein on August 18, 2011.

(2)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on April 26, 2012.

*	Filed herewith

**	Furnished herewith

***

Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act and shall not be deemed part of a registration statement, prospectus or other document filed under Sections 11 or 12 of the Securities Act, except as shall be expressly set forth by specific reference in such filings, and otherwise is not subject to liability under these sections.

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.


						SYNIVERSE HOLDINGS, INC.
						(Registrant)

Date: May 9, 2012						/S/ DAVID W. HITCHCOCK
						David W. Hitchcock
						Chief Administrative and Financial Officer
						(Principal Financial Officer)

						/S/ MARTIN A. PICCIANO
						Martin A. Picciano
						Senior Vice President and Chief Accounting Officer
						(Principal Accounting Officer)

INDEX OF EXHIBITS


Exhibit No.		Description

	3.1	Third Amended and Restated Certificate of Incorporation of Syniverse Holdings, Inc.(1)

	3.2	Amended and Restated Bylaws of Syniverse Holdings, Inc.(1)

	4.1	Indenture dated as of December 22, 2010, as supplemented on January 13, 2011 by the First Supplemental Indenture, among Buccaneer Merger Sub, Inc. (which merged into Syniverse Holdings, Inc.) and Wilmington Trust, National Association, as successor by merger to Wilmington Trust FSB, as trustee, governing the 9.125% Senior Notes due 2019 (1)

	4.2	Form of Senior Note due 2019(1)

	10.1	Credit Agreement, dated April 23, 2012, by and among Syniverse Holdings, Inc., Buccaneer Holdings, Inc., Barclays Bank PLC, as administrative agent, swing line lender and l/c issuer, and the other financial institutions and lenders from time to time party thereto (2)

	10.2	Subsidiary Guaranty, dated April 23, 2012, by the Subsidiary Guarantors party thereto (2)

	10.3	Security Agreement, dated April 23, 2012, by and among Syniverse Holdings, Inc., Buccaneer Holdings, Inc. and the Subsidiary Guarantors party thereto, and Barclays Bank PLC, as administrative agent (2)

	*31.1	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.

	*31.2	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.

	**32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.

	**32.2	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer.

	***101	The following financial information from Syniverse Holdings, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2012, filed with the SEC on May 9, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements (tagged as blocks of text).

(1)	Incorporated by reference to the Registration Statement on Form S-4 (Registration No. 333-176382) filed by the Company and the co-registrants named therein on August 18, 2011.

(2)	Incorporated by reference to the Current Report on Form 8-K filed by the Company on April 26, 2012.

*	Filed herewith

**	Furnished herewith

***