<PAGE>
 
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A

                               AMENDMENT NO. 1 TO

                 Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  for the Fiscal Year ended December 31, 1996

                         Commission File Number 0-15502

                           COMVERSE TECHNOLOGY, INC.
             (Exact name of registrant as specified in its charter)

        NEW YORK                                     13-3238402
  (State or other jurisdiction of                  (I.R.S. Employer
  incorporation or organization)                   Identification No.)

                            170 CROSSWAYS PARK DRIVE
                              WOODBURY, NY  11797
                    (Address of principal executive offices)

        Registrant's telephone number, including area code: 516-677-7200

          Securities registered pursuant to Section 12(b) of the Act:

                                              Name of each exchange
         Title of each class                  on which registered
         -------------------                  -------------------

            Not applicable                       Not applicable


          Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, $.10 PAR VALUE PER SHARE
                                (Title of Class)

    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:  [ ]

================================================================================
<PAGE>
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

                                      [X]



    The aggregate market value of the voting stock held by non-affiliates of the
registrant on April 1, 1997 was approximately $962,157,462.50.  The closing
price of the registrant's common stock on the NASDAQ National Market System on
April 1, 1997 was $38.75 per share.

   There were 24,829,870 shares of the registrant's common stock outstanding on
April 1, 1997.


                      DOCUMENTS INCORPORATED BY REFERENCE

    None.



                          ____________________________


 



                      TRILOGUE is a registered trademark and
 AUDIODISK, FaxNet, GenLogue, Mentor, SafeNet, Trade Shield, TRILOGUE INfinity,
           ULTRA, UltraNet, and Verify are trademarks of the Company.

                                      ii
<PAGE>
 
                                   PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

       The following table sets forth certain information regarding the
directors and executive officers of the Company.  Each director has been elected
to serve until the next annual meeting of shareholders and each executive
officer serves at the discretion of the Board of Directors.

<TABLE>
<CAPTION>
 
NAME                                AGE         POSITION WITH THE COMPANY
----                                ---         -------------------------
<S>                                 <C>         <C>
   Kobi Alexander/(1)(2)/           44          President, Chairman of
                                                the Board of Directors, Chief
                                                Executive Officer and Director
    
   Carmel Vernia                    44          Chief Operating Officer; 
                                                Managing Director of
                                                Efrat Future Technology Ltd.

   Igal Nissim                      41          Chief Financial Officer

   Zvi Alexander                    74          Director

   John H. Friedman/(2)(3)(4)/      43          Director

   Sam Oolie/(1)(2)(3)(4)/          60          Director

   William F. Sorin/(1)(4)/         48          Secretary and Director

   Yechiam Yemini/(1)(3)/           49          Director
</TABLE>
----------
   (1) Member of Executive Committee of the Board of Directors.
   (2) Member of Audit Committee of the Board of Directors.
   (3) Member of Remuneration and Stock Option Committee of the Board of
       Directors.
   (4) Member of Corporate Planning and Structure Committee of the Board of
       Directors.



BACKGROUND OF DIRECTORS AND EXECUTIVE OFFICERS

     Kobi Alexander.  Mr. Alexander has served as Chairman of the Board of
     --------------                                                       
Directors of the Corporation since September 1986, as President and Chief
Executive Officer since April 1987 and as a director of the Corporation since
its formation.  Mr. Alexander also served as Co-Managing Director of the
Corporation's wholly-owned Israeli subsidiary, Efrat Future Technology Ltd.
("Efrat") from its formation in 1982 until October 1986, and currently serves as
Chairman of the Board of Directors of Efrat.  From October 1984 to September
1986, Mr. Alexander served as Co-Chairman and Co-Chief Executive Officer of the
Corporation.  Prior to the formation of Efrat, in 1980 and 1981, Mr. Alexander
served as an independent financial and business consultant to a number of
multinational corporations. Between 1978 and 1980, Mr. Alexander worked in the
Corporate Finance Department of Shearson Loeb Rhoades (currently Smith Barney,
Inc.).  Mr. Alexander received a B.A., magna cum laude, in Economics from the
Hebrew University of Jerusalem in 1977, and an M.B.A. in Finance from New York
University in 1980.  He has served as the Chairman of the High-Tech Research and
Development Section of the Israeli Association of Industrialists.

     Carmel Vernia.  Mr. Vernia serves as Chief Operating Officer of the
     -------------                                                      
Corporation and as Managing Director of Efrat, where he has been employed since
1984 in various capacities, including Vice President, Manager of the Government
Systems Division and Manager of the Research and Development Division. Prior to
joining Efrat, he was employed by Elco Ltd. in Israel, where he headed the
development of advanced perimeter intrusion detection systems. Between 1980 and
1982, Mr. Vernia was employed by Intel
<PAGE>
 
Corporation in Santa Clara, California, where he served as applications engineer
for digital signal processing, digital telephony and data communications
products. He received a B.Sc. in Electrical Engineering from the Technion,
Israel Institute of Technology, in 1974 and a M.Sc. in Electrical and Computer
Engineering from the University of California at Davis in 1980.

     Igal Nissim.  Mr. Nissim has been employed by the Corporation since May
     -----------                                                            
1986 and has served as Chief Financial Officer of the Corporation since January
1993.  He previously served as Chief Financial Officer of Efrat.  Prior to
joining the Corporation, he was employed by Gadot Industrial Enterprises Ltd.
for a period of two years as deputy controller, responsible for financial and
cost accounting.  Mr. Nissim is a Certified Public Accountant in Israel and was
employed for four years with Kesselman & Kesselman, one of the largest
accounting firms in Israel.  He received a B.A. in Economics and Accounting from
Tel Aviv University in 1981.

     Zvi Alexander.  Mr. Alexander has been a director of the Corporation since
     -------------                                                             
August 1989.  Mr. Alexander has been actively engaged in the energy industry for
more than 30 years.  He served as Chief Executive Officer of the Israeli
National Oil Company and its successor from 1966 through 1976, and subsequently
engaged in activities in the energy industry as a consultant and independent
entrepreneur.  He is currently Chairman of A&T Exploration Company Ltd.  Zvi
Alexander is the father of Kobi Alexander and the father-in-law of Yechiam
Yemini.

     John H. Friedman.  Mr. Friedman has been a director of the Corporation
     ----------------                                                      
since June  1994.  He is the Managing Director of Easton Capital Corporation, a
private investment firm founded by Mr. Friedman in 1991.  From 1989 to 1991, Mr.
Friedman was a Managing Director of Security Pacific Capital Investors.  Prior
to joining that firm, he was a Managing Director of E. M. Warburg, Pincus & Co.,
Inc., where he was employed from 1981 to 1989.  From 1978 to 1980, Mr. Friedman
practiced law with the firm of Sullivan & Cromwell in New York City.  Mr.
Friedman received a B.A., magna cum laude, from Yale University and a J.D. from
Yale Law School.

     Sam Oolie.  Mr. Oolie has been a director of the Corporation since May
     ---------                                                             
1986.  He has been Chairman and Chief Executive Officer of NoFire Technologies,
Inc. since August 1996.  He has also been Chairman of Oolie Enterprises, an
investment company, since July 1985.  He also has served as a director of CFC
Associates, a venture capital firm, since January 1984.  He was Chairman of The
Nostalgia Network, a cable television network, from April 1987 to January 1990
and was Vice Chairman and director of American Mobile Communications, Inc., a
cellular telephone company, from February 1987 to July 1989.  From February 1962
to July 1985, Mr. Oolie was Chairman, Chief Executive Officer and a director of
Food Concepts, Inc., a provider of food services to institutions and hospitals.
Mr. Oolie also serves as a director of Avesis, Inc. and Noise Cancellation
Technologies, Inc. Mr. Oolie received a B.S. from Massachusetts Institute of
Technology in 1958 and an M.B.A. from Harvard Business School in 1961.

     William F. Sorin.  Mr. Sorin, who has served as a director and the
     ----------------                                                  
Corporate Secretary of the Corporation since its formation, is an attorney
engaged in private practice and is general counsel to the Corporation.  Mr.
Sorin received a B.A. from Trinity College in 1970 and a J.D., cum laude, from
Harvard Law School in 1973.

     Yechiam Yemini.  Professor Yemini, a director of the Corporation from
     --------------                                                       
October 1984 to May 1986 and since May 1987, has been Chief Scientific Advisor
to the Corporation since its formation.  He has been a professor in the computer
science department of Columbia University since 1980, where he is leading
research projects in the areas of distributed computing and communications and
network management systems.  Professor Yemini received a Ph.D. in Computer
Science from UCLA in 1978 in the area of computer networking.  Professor Yemini
is the brother-in-law of Kobi Alexander and the son-in-law of Zvi Alexander.

                                      -2-
<PAGE>
 
COMMITTEES OF THE BOARD OF DIRECTORS

       The Board of Directors has four standing committees.  The Executive
Committee is empowered to exercise the full authority of the Board of Directors
in circumstances when convening the full board is not practicable. The Audit
Committee is responsible for reviewing audit procedures and supervising the
relationship between the Company and its independent auditors. The Remuneration
and Stock Option Committee is responsible for approving compensation
arrangements for senior management of the Company and administering the
Company's stock option plans.  The Corporate Planning and Structure Committee
reviews and makes recommendations to the board concerning issues of corporate
structure and planning, including the formation and capitalization of
subsidiaries of the Company, the structure of acquisition transactions, the
terms of any stock options and other compensation arrangements in respect of
subsidiaries of the Company, situations that might involve conflicts of interest
relative to the Company and its subsidiaries and the terms of significant
transactions between the Company and its subsidiaries.



ITEM 11.  EXECUTIVE COMPENSATION.

          The following table presents summary information regarding the
compensation paid or accrued by the Company for services rendered during the
years 1994, 1995 and 1996 by those of its executive officers whose salary and
bonus compensation during 1996 exceeded $100,000:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                LONG-TERM  
                                                               COMPENSATION
                                   ANNUAL COMPENSATION            STOCK                      
    NAME AND                  ------------------------------      OPTION        ALL OTHER 
PRINCIPAL POSITION            YEAR     SALARY/(1)/  BONUS/(2)/    GRANTS/(3)/  COMPENSATION/(4)/
------------------            ----     ------       -----         ------       ------------         
<S>                           <C>      <C>          <C>           <C>          <C> 
Kobi Alexander                1996     $379,944     $864,829      100,000        $235,906
President, Chief Executive    1995     $342,950     $526,845         -           $324,454
Officer and Chairman of       1994     $348,643     $364,020      500,000        $102,877
the Board of Directors                                                         
                                                                               
Carmel Vernia                 1996     $129,889     $150,000       25,000        $ 31,763
Chief Operating Officer       1995     $130,394     $100,000         -           $ 29,921
Managing Director, Efrat      1994     $121,436     $100,000      200,000        $ 30,973
                                                                               
                                                                               
Igal Nissim                   1996     $115,342     $ 23,070        5,000        $ 19,699    
Chief Financial Officer       1995     $ 98,988     $ 15,000       10,000            -   
                              1994     $101,480     $ 17,500       10,000            -   
</TABLE> 
-------------------
(1) Includes salary and payments in lieu of earned vacation.
(2) Includes bonuses accrued for services performed in the year indicated,
    regardless of the year of payment.
(3) See also "Security Ownership of Certain Beneficial Owners and Management -
    Options to Purchase Subsidiary Shares."
(4) Consists of miscellaneous items not exceeding $25,000 in the aggregate for
    any individual, including premium payments and contributions under executive
    insurance and training plans and, in the case of Mr. Alexander, $184,800,
    $281,000 and $60,000 accrued in 1996, 1995 and 1994, respectively, for
    payments due on termination of employment pursuant to the terms of his
    employment agreements with the Company.

                                      -3-
<PAGE>
 
       The following table sets forth information concerning options granted
during 1996 to the executive officers of the Company under its employee stock
option plans:


                    STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
 
                                                                         POTENTIAL REALIZABLE VALUE
                                                                           ASSUMED ANNUAL RATES OF  
                                                                          STOCK PRICE APPRECIATION  
                           INDIVIDUAL GRANTS                                  FOR OPTION TERM*
---------------------------------------------------------------------    --------------------------
                              PERCENT OF
                                TOTAL
                               OPTIONS
                  NUMBER OF   GRANTED TO   EXERCISE
                   SHARES      EMPLOYEES    PRICE
                  SUBJECT TO  IN FISCAL      PER       EXPIRATION
NAME               OPTION        YEAR       SHARE         DATE              5%             10%
----------------   ------     ----------   --------  ----------------    --------        -------
<S>               <C>         <C>          <C>       <C>               <C>            <C> 
Kobi Alexander    100,000        9.2%       $23.75    July 15, 2006     $ 1,493,625    $3,785,138                     
Carmel Vernia      25,000        2.3%       $23.75    July 15, 2006     $   373,406    $  946,285 
Igal Nissim         5,000        0.5%       $23.75    July 15, 2006     $    74,681    $  189,257
</TABLE>
________________________

       * Represents the gain that would be realized if the options were held for
     their entire ten-year term and the value of the underlying shares increased
     at compounded annual rates of 5% and 10% from the fair market value at the
     date of option grants.



       The options have a term of ten years and become exercisable and vest in
annual increments over the period of four years from the year of grant.  The
exercise price of the options is equal to the fair market value of the
underlying shares at the date of grant.



       The following table sets forth certain information concerning options
granted during the past three fiscal years to the executive officers of the
Company under its employee stock option plans:

                                      -4-
<PAGE>
 
                 STOCK OPTION GRANTS IN LAST THREE FISCAL YEARS

<TABLE>
<CAPTION>
                                               PERCENT OF
                                                 TOTAL
                                                OPTIONS
                                   NUMBER OF   GRANTED TO  EXERCISE
                                    SHARES     EMPLOYEES    PRICE
YEAR OF                           SUBJECT TO   IN FISCAL     PER         EXPIRATION
GRANT              NAME             OPTION       YEAR       SHARE           DATE
-----------------  --------------  ---------   --------   ----------  ------------------
<S>                <C>             <C>        <C>         <C>         <C>  
1996:              Kobi Alexander    100,000        9.2%      $23.75  July 15, 2006
                   Carmel Vernia      25,000        2.3%      $23.75  July 15, 2006
                   Igal Nissim         5,000        0.5%      $23.75  July 15, 2006
 
1995:              Kobi Alexander       -            -           -           -     
                   Carmel Vernia        -            -           -           -     
                   Igal Nissim        10,000        1.5%      $13.50  May 25, 2005
 
1994:              Kobi Alexander    500,000       42.5%      $10.00  September 22, 2004
                   Carmel Vernia     200,000       17.0%      $10.00  September 22, 2004
                   Igal Nissim        10,000        0.9%      $10.00  September 22, 2004
</TABLE>



       The following table sets forth, as to each executive officer identified
above, the shares acquired on exercise of options, value realized, number of
unexercised options held at December 31, 1996, currently exercisable and subject
to future vesting, and the value of such options based on the closing price of
the underlying shares on the NASDAQ National Market System at that date, net of
the associated exercise price.



                   OPTION EXERCISES AND YEAR-END VALUE TABLE

                     AGGREGATE OPTION EXERCISES IN 1996 AND
               VALUE OF UNEXERCISED OPTIONS AT DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                                        VALUE OF UNEXERCISED
                      SHARES                NUMBER OF UNEXERCISED       IN-THE-MONEY OPTIONS
                     ACQUIRED                   OPTIONS HELD          HELD AT DECEMBER 31, 1996  
                        ON       VALUE      AT DECEMBER 31, 1996      -------------------------
NAME                 EXERCISE   REALIZED  EXERCISABLE  UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE
-------------------  --------   --------  -----------  -------------  -----------  -------------        
<S>                  <C>        <C>       <C>          <C>            <C>          <C>
Kobi Alexander           -           -      769,250        350,000    $25,314,326  $ 8,359,375
Carmel Vernia        40,000    $859,400     218,750         31,250    $ 6,020,710  $   504,297
Igal Nissim           2,000    $ 45,620      12,500         22,500    $   322,344  $   513,594
</TABLE>


       See "Security Ownership of Certain Beneficial Owners and Management -
Options to Purchase Subsidiary Shares" for information regarding the grant to
certain executive officers of options to purchase shares of subsidiaries of the
Company.

                                      -5-
<PAGE>
 
EMPLOYMENT AGREEMENTS

     Mr. Alexander serves as Chairman of the Board, President and Chief
Executive Officer of the Company under an agreement extending through June 30,
2000 at a current base annual salary of $308,300.  Pursuant to the agreement,
Mr. Alexander received bonus compensation of $864,829 for services rendered
during 1996 and is entitled to receive bonus compensation in 1997 and succeeding
years in an amount to be negotiated annually, but not less than 3% of the
Company's consolidated after tax net income in each year.  Mr. Alexander also
receives various supplemental medical, insurance and other personal benefits
from the Company under the terms of his employment, including the use of an
automobile leased by the Company.

     Upon the termination of his employment with the Company for any reason, Mr.
Alexander is entitled to receive a severance payment in an amount equal to
$84,700 times the number of years (plus any partial years) of his employment by
the Company commencing with 1983, increased by 10% per annum starting in
December 1997, plus continued employment-related benefits for the period of 36
months following termination.  In the event that Mr. Alexander's employment is
terminated by the Company without cause, by Mr. Alexander as a result of a
material breach by the Company of its obligations under the agreement or by his
resignation within the period of six months following a change in control of the
Company, Mr. Alexander is entitled to an additional severance payment equal to
299% of the average annual cash compensation (including salary and any bonus
payments) received by him from the Company during the most recent three fiscal
years plus an amount equal to the income tax liability to Mr. Alexander
resulting from such payment.  The agreement also requires the Company to grant
to Mr. Alexander an option to purchase up to 7.5% of the shares of each
subsidiary of the Company, other than Efrat, for a price equal to the greater of
the fair market value or the book value of such shares at the date of option
grant.

     Mr. Alexander serves as Chairman of the Board of Efrat under an agreement
that extends through July 31, 1997 at a current basic salary (the "Basic
Salary") of $3,500 per month.  Efrat has also agreed to reimburse Mr. Alexander
for certain business-related expenses, to provide him with the use of a company-
owned automobile and to pay certain amounts for his account into defined
contribution insurance and training funds in Israel.  In addition, if Mr.
Alexander conducts business activities abroad, including in the United States,
Efrat is required to bear his reasonable lodging and living expenses, which
shall in any event be not less than the per diem allowance customarily provided
to senior executive managers of Israeli companies, and if the period of his stay
abroad is in excess of eight weeks, his Basic Salary during such period shall be
increased to an amount which will support a standard of living comparable to
that provided in Israel by the Basic Salary and other benefits afforded under
the agreement.  Efrat is also required to pay any taxes incurred by Mr.
Alexander in respect of benefits provided to him under the agreement and certain
professional fees incurred for the benefit of Mr. Alexander.  In the event that
Efrat unilaterally terminates or fundamentally breaches the agreement, it must
pay, as liquidated damages, an amount equal to the Basic Salary due for the
remainder of the term of the agreement plus an amount equal to the present value
of all non-monetary benefits under the agreement.  The present value of the non-
monetary benefits under the agreement is not readily determinable but is
estimated at approximately 25% of such salary.

     Mr. Vernia is employed as Managing Director of Efrat and Chief Operating
Officer of the Company under an agreement providing for a base monthly salary at
a current rate of 43,258 Israeli shekels, subject to Israeli statutory cost of
living adjustment (resulting in a current annual salary equal to approximately
$153,000) and an annual bonus in an amount to be determined.  The agreement may
be terminated by either party only with prior notice of at least one year.  Mr.
Vernia is entitled under the agreement to receive various insurance and
supplemental benefits and the use of an automobile owned or leased by Efrat. Mr.
Vernia has also been granted options to purchase between 2.5% and 3.5% of the
shares of certain subsidiaries of the Company for a price equal to the greater
of the fair market value or the book value of such shares at the date of option
grant. Mr. Nissim receives a base monthly salary from the Company of 29,174
Israeli shekels, subject to Israeli statutory cost of living adjustment
(resulting in a current annual salary equal to approximately $103,000) and
various insurance and supplemental benefits, including the use of an automobile
owned or leased by the Company.

                                      -6-
<PAGE>
 
COMPENSATION OF DIRECTORS

     Each director who is not an employee of the Company or otherwise
compensated by the Company for services rendered in another capacity, and whose
position on the Board of Directors is not attributable to any contract between
the Company and such director or any other entity with which such director is
affiliated, receives compensation in the amount of $2,250 for each meeting of
the Board of Directors and of certain committees of the Board of Directors
attended by him during the year.  Each of such eligible directors is also
entitled to receive an annual stock option grant under the Company's Stock
Option Plans entitling him to purchase 6,000 shares of common stock at a price
per share equal to the fair market value of the common stock as reported on the
NASDAQ System on the date two business days after the publication of the audited
year-end financial statements of the Company. Such options are subject to
forfeiture to the extent of 1,200 shares per meeting in the event that the
option holder, during the year of grant, fails to attend at least five meetings
of the Board of Directors and any of its committees of which the option holder
is a member.  Each director who resides outside of the United States and is not
an officer or employee of the Company is entitled to reimbursement of expenses
incurred for attendance at meetings of the Board, up to the amount of $2,000 for
each meeting attended.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT.

       The following table sets forth certain information concerning the
beneficial ownership of shares of common stock on the part of the executive
officers and directors of the Company and all persons known by the Company to be
beneficial owners of more than five percent of the outstanding common stock as
at April 1, 1997.

<TABLE>
<CAPTION>
                                                                                NUMBER OF            PERCENT 
                                                                                  SHARES             OF TOTAL 
                                                                               BENEFICIALLY         OUTSTANDING 
BENEFICIAL OWNER                          RELATIONSHIP WITH THE COMPANY           OWNED               SHARES/(1)/      
----------------                          -----------------------------         ---------             ------           
<S>                                       <C>                                   <C>                   <C>           
Pilgrim Baxter & Associates Ltd.          Shareholder                           2,309,300/(2)/        9.3%
 1255 Drummers Lane                                                                               
 Wayne, PA  19087                                                                                 
                                                                                                  
American Century Companies, Inc.          Shareholder                           1,791,600/(2)/        7.2%
 4500 Main Street                                                                                 
 Kansas City, MO  64141                                                                           
                                                                                                  
Kobi Alexander                            President, Chairman of the Board,                       
                                          Chief Executive Officer and Director    863,750/(3)/        3.4%
Carmel Vernia                             Chief Operating Officer                 218,750/(4)(5)/      *
Igal Nissim                               Chief Financial Officer                  17,500/(4)(6)/      *
Zvi Alexander                             Director                                 31,000/(7)(8)/      *
John H. Friedman                          Director                                  7,000/(4)(8)/      *
Sam Oolie                                 Director                                 11,000/(4)(8)/      *
William F. Sorin                          Secretary and Director                   25,000/(4)(9)/      *
Yechiam Yemini                            Director                                 30,000/(7)(8)/      *
All directors and executive
 officers as a group (8 persons)                                                1,204,000/(10)/       4.6%
</TABLE> 
_________________
*    Less than 1%.
                                                   /footnotes on following page/

                                      -7-
<PAGE>
 
(1)  Based on 24,829,870 shares of common stock issued and outstanding on April
     1, 1997, excluding, except as otherwise noted, shares of common stock
     issuable upon the exercise of outstanding stock options.
(2)  Based on Schedule 13G filings with the Securities and Exchange Commission
     reflecting data as of December 1996.
(3)  Includes 769,250 shares issuable upon the exercise of stock options that
     were exercisable at or within 60 days after April 1, 1997. Does not include
     350,000 shares issuable upon the exercise of options that were not
     exercisable at or within 60 days after April 1, 1997.
(4)  Consists solely of shares issuable upon the exercise of stock options that
     were exercisable at or within 60 days after April 1, 1997.
(5)  Does not include 31,250 shares issuable upon the exercise of options that
     were not exercisable at or within 60 days after April 1, 1997.
(6)  Does not include 17,500 shares issuable upon the exercise of stock options
     that were not exercisable at or within 60 days after April 1, 1997.
(7)  Includes 23,000 shares issuable upon the exercise of stock options that
     were exercisable at or within 60 days after April 1, 1997.
(8)  Does not include 6,000 shares issuable upon the exercise of stock options
     that were not exercisable at or within 60 days after April 1, 1997.
(9)  Does not include 10,000 shares issuable upon the exercise of stock options
     that were not exercisable at or within 60 days after April 1, 1997.
(10) Includes 1,094,500 shares issuable upon the exercise of stock options that
     were exercisable at or within 60 days after April 1, 1997. Does not include
     432,750 shares issuable upon the exercise of stock options that were not
     exercisable at or within 60 days after April 1, 1997.

OPTIONS TO PURCHASE SUBSIDIARY SHARES

       The Company has granted to certain key executives options to acquire
shares of certain subsidiaries, other than Efrat, as a means of providing
incentives directly tied to the performance of those subsidiaries for which
different executives have direct responsibility. Such options have been granted
to executive officers of the Company as set forth under "Employment Agreements".
Options have been granted to other key employees which, upon exercise, would
represent in the aggregate between approximately 2.4% and approximately 23.6% of
the outstanding shares of the relevant subsidiaries. In general, these options
have terms of up to ten years, become exercisable and vest in equal ratable
annual increments over periods ranging from three to five years from the first
anniversary of the date of initial grant, and have exercise prices equal to the
higher of the book value of the underlying shares at the date of grant or the
fair market value of such shares at that date determined on the basis of an
arms'-length transaction with a third party or, if no such transactions have
occurred, on a reasonable basis as determined by the Board of Directors. Upon
the exercise, in whole or in part, of any option, Comverse will receive an
irrevocable proxy to vote the underlying shares and a right of first refusal to
purchase the shares upon any proposed sale, transfer or other disposition, until
such time as the shares shall have been sold in a bona fide open market
transaction.

       These options (and any shares received by the holders upon exercise)
provide the option holders with a potentially larger equity interest in the
respective subsidiaries than in the Company, which, under certain circumstances,
could cause the option holders' interests to conflict with those of the
Company's shareholders generally.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

       The Company paid William F. Sorin, a director of the Company, an
aggregate of approximately $254,000 for legal services rendered to the Company
during the year ended December 31, 1996.

                                      -8-
<PAGE>
 
                                   SIGNATURE

     Pursuant to the requirements of Section 13 or 15(d) 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.

                              COMVERSE TECHNOLOGY, INC.
                                         (Registrant)


                              By: S/ Kobi Alexander
                                  ----------------------------------------
                                  Kobi Alexander
                                  President, Chairman of the Board
                                  and Chief Executive Officer

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