According to the Company’s FORM 10-Q for the quarterly period ended October 31, 2002, an amended consolidated complaint was filed on March 4, 2002. The amended consolidated complaint generally alleges violations of federal securities laws on behalf of individuals who allege that they purchased CTI's common stock during a purported class period between April 30, 2001 and July 10, 2001. The amended consolidated complaint sought an unspecified amount in damages on behalf of persons who purchased CTI stock during the purported class period. On April 22, 2002, CTI filed a Motion to Dismiss the amended consolidated complaint in its entirety. On September 30, 2002, the Court granted CTI's Motion to Dismiss the amended consolidated complaint. On November 8, 2002, the Court entered a final judgment dismissing the amended consolidated complaint with prejudice. On November 26, 2002, plaintiffs agreed to waive their right to appeal the judgment in exchange for CTI's agreement that each side bear its own costs and legal fees.

The original complaint was filed alleging defendants violated 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that during the Class Period, defendants issued to the investing public false and misleading information that materially misstated the Company's condition and prospects. Moreover, the Company failed to disclose material information necessary to make its prior statements not misleading. Specifically, the complaint alleges that in 1998 Comverse issued $250,000,000 worth of Convertible Subordinated Debentures at 4.5% which were due 2005 and callable as early as July 2001. The Debentures were convertible, at the option of the holder, into shares of Comverse common stock or cash. However, by April 2001, the telecom industry had become severely depressed, the federal reserve continued to drop interest rates and the Company's stock price was steadily eroding. Repaying the Company's outstanding debt by converting it into shares rather than paying cash became a paramount concern for defendants. To effectuate this goal, defendants artificially inflated Comverse's stock price by issuing false and misleading statements regarding the Company's revenues and new customer wins. Days after announcing record results for the first quarter 2001, Comverse called for the redemption of its 4.5% Debentures giving bond holders until July 9, 2001 to convert their debt. A day after the redemption deadline, and in stark contrast to their prior representations, Comverse shocked the market by issuing earnings warnings on the next three quarters. The market reacted harshly to the news with shares of Comverse dropping 33% on heavy volume, reaching its lowest trading level since March 1999.