[December 17, 2013] |
|
VeriFone Reports Results for the Fourth Quarter and Full Year Fiscal 2013
SAN JOSE, Calif. --(Business Wire)--
VeriFone Systems, Inc. (NYSE:PAY):
Fourth Quarter Financial Highlights
-
Non-GAAP net revenues of $432 million and GAAP net revenues of $431
million
-
Non-GAAP net income per diluted share of $0.27 and GAAP net loss per
share of $2.26, including non-cash tax charge of $2.21 per share
-
Operating cash flow of $55 million and free cash flow of $38 million
Fiscal Year Financial Highlights
-
Non-GAAP net revenues of $1.71 billion and GAAP net revenues of $1.70
billion
-
Non-GAAP net income per diluted share of $1.44 and GAAP net loss per
share of $2.73, including non-cash tax charge of $2.24 per share
-
Operating cash flow of $237 million and free cash flow of $159 million
VeriFone Systems, Inc. (NYSE: PAY), the global leader in secure
electronic payment solutions, today announced financial results for the
three months ended October 31, 2013 ("Q4 FY13") and fiscal year ended
October 31, 2013 ("FY13").
Revenues - Non-GAAP net revenues for Q4 FY13 were $432 million,
compared to $489 million a year ago, a 12% decrease. Non-GAAP net
revenues for FY13 were $1.71 billion, a 9% decrease compared to the
$1.89 billion result for FY12. GAAP net revenues were $431 million for
the latest quarter, compared to $485 million a year ago, an 11%
decrease. For FY13, GAAP net revenues totaled $1.70 billion, a 9%
decrease compared to the $1.87 billion total for FY12.
Earnings per Share - Non-GAAP net income per diluted share for Q4
FY13 was $0.27, compared to $0.76 a year ago. Non-GAAP net income per
diluted share for FY13 was $1.44, compared to the $2.74 result for FY12.
GAAP net loss per share for the latest quarter and FY13 was $2.26 and
$2.73, respectively. In Q4 FY13, the company recorded a non-cash tax
charge of $242M or $2.21 per share to establish a valuation allowance
against a significant portion of its deferred tax assets. This
accounting treatment reflects the company's assessment of whether these
deferred tax assets will be realizable in the future, but has no effect
on the company's ability to utilize these deferred tax assets, such as
loss carry forwards and tax credits, to reduce future cash tax payments.
The table below provides additional summary non-GAAP and GAAP financial
information and comparisons.
|
(IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES)
|
|
|
|
|
Three Months Ended October 31, (Unaudited)
|
|
|
Years Ended October 31,
|
|
|
|
2013
|
|
2012
|
|
% Change (2)
|
|
|
2013
|
|
2012
|
|
% Change (2)
|
Non-GAAP (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
$
|
432
|
|
|
$
|
489
|
|
|
(11.7
|
)%
|
|
|
$
|
1,709
|
|
|
$
|
1,886
|
|
|
(9.4
|
)%
|
Gross margin as a % of net revenues
|
|
|
41.2
|
%
|
|
44.2
|
%
|
|
(3.0
|
) pts
|
|
|
41.9
|
%
|
|
44.4
|
%
|
|
(2.5
|
) pts
|
Net income per diluted share
|
|
|
$
|
0.27
|
|
|
$
|
0.76
|
|
|
(64.5
|
)%
|
|
|
$
|
1.44
|
|
|
$
|
2.74
|
|
|
(47.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
$
|
431
|
|
|
$
|
485
|
|
|
(11.2
|
)%
|
|
|
$
|
1,702
|
|
|
$
|
1,866
|
|
|
(8.8
|
)%
|
Gross margin as a % of net revenues
|
|
|
38.0
|
%
|
|
41.1
|
%
|
|
(3.1
|
) pts
|
|
|
37.9
|
%
|
|
40.5
|
%
|
|
(2.6
|
) pts
|
Net income (loss) per diluted share
|
|
|
$
|
(2.26
|
)
|
|
$
|
0.24
|
|
|
nm
|
|
|
|
$
|
(2.73
|
)
|
|
$
|
0.59
|
|
|
nm
|
|
|
(1) Reconciliations for the non-GAAP measures are provided at the
end of this press release.
|
(2) "nm" means not meaningful or relevant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"I am pleased with our fourth quarter results, which exceeded our
guidance," said Paul Galant, Chief Executive Officer of VeriFone. "We
are witnessing the scale convergence of electronic payments, mobility,
digital commerce and predictive analytics, and this is an exciting time
to lead VeriFone. The company has a global franchise, a growing services
business, and a leadership position in enabling commerce for our
clients. There is much work to do, and I am confident that the best for
VeriFone is yet to come."
Additional Q4 Financial and Business Highlights
-
Achieved record non-GAAP services net revenues of $173 million
-
Deleveraged balance sheet, paying down $83 million of debt
-
Partnered with American Express to enable passengers to use their
Membership Rewards points to pay fares in New York City taxicabs
-
Continued growth of payment as a service in the U.S., Latin America,
Europe, Australia, and New Zealand
-
Earned seven U.S. multi-lane retail wins, leveraging the company's MX
900 and VX series products
-
Completed rollout of VeriFone's next generation PAYware Mobile
products with two Top 100 U.S. retailers.
-
Selected to implement Egyptian Ministry of Finance-sponsored mobile
payment solutions in petroleum stations across the country
-
Won terminal and services contracts with two of India's largest
petroleum providers
Guidance
Guidance for the first fiscal quarter of 2014 is as follows:
-
Non-GAAP net revenues of $425 million to $430 million
-
Non-GAAP net income per diluted share of $0.26
Guidance for the full fiscal year 2014 is as follows:
-
Non-GAAP net revenues of $1.77 billion to $1.80 billion
-
Non-GAAP net income per diluted share of $1.35 to $1.40
Conference Call
VeriFone will hold its earnings conference call today at 1:30 pm (PT).
To listen to the call and view the slides, visit VeriFone's website http://ir.verifone.com.
To listen to the call over the phone, dial (866) 700-5192 within the
U.S., or (617) 213-8833 outside the U.S., and use conference passcode
6490 7466. The recorded audio webcast will be available on VeriFone's
website until December 24, 2013.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on management's current expectations or
beliefs and on currently available competitive, financial and economic
data and are subject to uncertainty and changes in circumstances. Actual
results may vary materially from those expressed or implied by the
forward-looking statements herein due to changes in economic, business,
competitive, technological, and/or regulatory factors, and other risks
and uncertainties affecting the operation of the business of VeriFone
Systems, Inc., including many factors beyond our control. These risks
and uncertainties include, but are not limited to, those associated
with: execution of our strategic plan and business initiatives and
whether the expected benefits of our plan and initiatives are achieved,
short product cycles and rapidly changing technologies, our ability to
maintain competitive leadership position with respect to our payment
solution offerings, our assumptions, judgments and estimates regarding
the impact on our business of the continued uncertainty in the global
economic environment and financial markets, our ability to successfully
integrate acquired businesses into our business and operations, our
ability to protect against fraud, the status of our relationship with
and condition of third parties such as our contract manufacturers,
distributors and key suppliers upon whom we rely in the conduct of our
business, our dependence on a limited number of customers, the conduct
of our business and operations internationally, our ability to
effectively hedge our exposure to foreign currency exchange rate
fluctuations, and our dependence on a limited number of key employees.
For a further list and description of the risks and uncertainties
affecting the operations of our business, see our filings with the
Securities and Exchange Commission, including our annual report on Form
10-K and our quarterly reports on Form 10-Q. The forward-looking
statements speak only as of the date such statements are made. VeriFone
is under no obligation to, and expressly disclaims any obligation to,
update or alter its forward-looking statements, whether as a result of
new information, future events, changes in assumptions or otherwise.
About VeriFone Systems, Inc. (www.verifone.com)
VeriFone Systems, Inc. ("VeriFone") (NYSE: PAY) is the global leader in
secure electronic payment solutions. VeriFone provides expertise,
solutions and services that add value to the point of sale with
merchant-operated, consumer-facing and self-service payment systems for
the financial, retail, hospitality, petroleum, government and healthcare
vertical markets. VeriFone solutions are designed to meet the needs of
merchants, processors and acquirers in developed and emerging economies
worldwide.
Additional Resources: http://ir.verifone.com
|
VERIFONE SYSTEMS, INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
(Unaudited)
|
|
|
Years Ended October 31,
|
|
|
|
2013
|
|
2012
|
|
% Change
(1)
|
|
|
2013
|
|
2012
|
|
% Change
(1)
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
$
|
259.4
|
|
$
|
335.7
|
|
(22.7)%
|
|
|
$
|
1,068.4
|
|
$
|
1,339.0
|
|
(20.2)%
|
Services
|
|
|
171.8
|
|
149.7
|
|
14.8%
|
|
|
633.8
|
|
527.0
|
|
20.3%
|
Total net revenues
|
|
|
431.2
|
|
485.4
|
|
(11.2)%
|
|
|
1,702.2
|
|
1,866.0
|
|
(8.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
171.2
|
|
204.4
|
|
(16.2)%
|
|
|
695.3
|
|
811.6
|
|
(14.3)%
|
Services
|
|
|
96.0
|
|
81.5
|
|
17.8%
|
|
|
361.7
|
|
298.6
|
|
21.1%
|
Total cost of net revenues
|
|
|
267.2
|
|
285.9
|
|
(6.5)%
|
|
|
1,057.0
|
|
1,110.2
|
|
(4.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
|
|
164.0
|
|
199.5
|
|
(17.8)%
|
|
|
645.2
|
|
755.8
|
|
(14.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
45.8
|
|
40.4
|
|
13.4%
|
|
|
173.3
|
|
152.0
|
|
14.0%
|
Sales and marketing
|
|
|
54.8
|
|
47.4
|
|
15.6%
|
|
|
196.6
|
|
179.7
|
|
9.4%
|
General and administrative
|
|
|
54.3
|
|
37.0
|
|
46.8%
|
|
|
181.1
|
|
175.2
|
|
3.4%
|
Litigation loss contingency expense
|
|
|
0.4
|
|
-
|
|
nm
|
|
|
64.4
|
|
17.6
|
|
nm
|
Amortization of purchased intangible assets
|
|
|
24.5
|
|
23.2
|
|
5.6%
|
|
|
96.2
|
|
83.8
|
|
14.8%
|
Total operating expenses
|
|
|
179.8
|
|
148.0
|
|
21.5%
|
|
|
711.6
|
|
608.3
|
|
17.0%
|
Operating income (loss)
|
|
|
(15.8)
|
|
51.5
|
|
nm
|
|
|
(66.4)
|
|
147.5
|
|
nm
|
Interest, net
|
|
|
(10.0)
|
|
(12.1)
|
|
(17.4)%
|
|
|
(44.3)
|
|
(58.4)
|
|
(24.1)%
|
Other income (expense), net
|
|
|
(2.1)
|
|
2.6
|
|
nm
|
|
|
3.7
|
|
(20.7)
|
|
nm
|
Income (loss) before income taxes
|
|
|
(27.9)
|
|
42.0
|
|
nm
|
|
|
(107.0)
|
|
68.4
|
|
nm
|
Income tax provision
|
|
|
219.9
|
|
14.1
|
|
nm
|
|
|
188.0
|
|
2.1
|
|
nm
|
Consolidated net income (loss)
|
|
|
(247.8)
|
|
27.9
|
|
nm
|
|
|
(295.0)
|
|
66.3
|
|
nm
|
Net income (loss) attributable to noncontrolling interests
|
|
|
0.1
|
|
(0.9)
|
|
nm
|
|
|
(1.1)
|
|
(1.3)
|
|
nm
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
|
|
$
|
(247.7)
|
|
$
|
27.0
|
|
nm
|
|
|
$
|
(296.1)
|
|
$
|
65.0
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(2.26)
|
|
$
|
0.25
|
|
|
|
|
$
|
(2.73)
|
|
$
|
0.61
|
|
|
Diluted
|
|
|
$
|
(2.26)
|
|
$
|
0.24
|
|
|
|
|
$
|
(2.73)
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net income
(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
109.5
|
|
107.7
|
|
|
|
|
108.6
|
|
107.0
|
|
|
Diluted
|
|
|
109.5
|
|
110.3
|
|
|
|
|
108.6
|
|
110.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) "nm" means not meaningful or relevant
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
NET REVENUE INFORMATION
|
(IN MILLIONS, EXCEPT PERCENTAGES, UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Note
|
|
|
October 31, 2013
|
|
July 31, 2013
|
|
October 31, 2012
|
|
% Change (1) SEQ
|
|
% Change (1) YoY
|
|
|
October 31, 2013
|
|
October 31, 2012
|
|
% Change (1)
|
GAAP net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
|
|
|
$
|
179.2
|
|
|
$
|
177.8
|
|
|
$
|
201.3
|
|
|
0.8%
|
|
(11.0)%
|
|
|
$
|
700.4
|
|
|
$
|
755.2
|
|
|
(7.3)%
|
LAC
|
|
|
|
|
|
70.8
|
|
|
69.9
|
|
|
80.0
|
|
|
1.3%
|
|
(11.5)%
|
|
|
296.6
|
|
|
370.8
|
|
|
(20.0)%
|
ASPAC
|
|
|
|
|
|
56.7
|
|
|
52.5
|
|
|
58.8
|
|
|
8.0%
|
|
(3.6)%
|
|
|
209.7
|
|
|
208.0
|
|
|
0.8%
|
Total International
|
|
|
306.7
|
|
|
300.2
|
|
|
340.1
|
|
|
2.2%
|
|
(9.8)%
|
|
|
1,206.7
|
|
|
1,334.0
|
|
|
(9.5)%
|
North America
|
|
|
|
|
|
124.5
|
|
|
115.8
|
|
|
145.3
|
|
|
7.5%
|
|
(14.3)%
|
|
|
495.5
|
|
|
532.0
|
|
|
(6.9)%
|
Total
|
|
|
|
|
|
$
|
431.2
|
|
|
$
|
416.0
|
|
|
$
|
485.4
|
|
|
3.7%
|
|
(11.2)%
|
|
|
$
|
1,702.2
|
|
|
$
|
1,866.0
|
|
|
(8.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net revenues: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
A
|
|
|
$
|
180.1
|
|
|
$
|
179.0
|
|
|
$
|
203.9
|
|
|
0.6%
|
|
(11.7)%
|
|
|
$
|
704.7
|
|
|
$
|
771.5
|
|
|
(8.7)%
|
LAC
|
|
|
A, F
|
|
|
70.8
|
|
|
69.9
|
|
|
80.0
|
|
|
1.3%
|
|
(11.5)%
|
|
|
299.1
|
|
|
370.8
|
|
|
(19.3)%
|
ASPAC
|
|
|
A
|
|
|
56.8
|
|
|
52.8
|
|
|
59.3
|
|
|
7.6%
|
|
(4.2)%
|
|
|
210.3
|
|
|
211.1
|
|
|
(0.4)%
|
Total International
|
|
|
307.7
|
|
|
301.7
|
|
|
343.2
|
|
|
2.0%
|
|
(10.3)%
|
|
|
1,214.1
|
|
|
1,353.4
|
|
|
(10.3)%
|
North America
|
|
|
A, D
|
|
|
124.6
|
|
|
115.8
|
|
|
145.4
|
|
|
7.6%
|
|
(14.3)%
|
|
|
495.2
|
|
|
532.9
|
|
|
(7.1)%
|
Total
|
|
|
|
|
|
$
|
432.3
|
|
|
$
|
417.5
|
|
|
$
|
488.6
|
|
|
3.5%
|
|
(11.5)%
|
|
|
$
|
1,709.3
|
|
|
$
|
1,886.3
|
|
|
(9.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net revenues
|
|
|
$
|
431.2
|
|
|
$
|
416.0
|
|
|
$
|
485.4
|
|
|
3.7%
|
|
(11.2)%
|
|
|
$
|
1,702.2
|
|
|
$
|
1,866.0
|
|
|
(8.8)%
|
Plus: Non-GAAP net revenues adjustments
|
|
|
A, D, F
|
|
|
1.1
|
|
|
1.5
|
|
|
3.2
|
|
|
nm
|
|
nm
|
|
|
7.1
|
|
|
20.3
|
|
|
nm
|
Non-GAAP net revenues (2)
|
|
|
432.3
|
|
|
417.5
|
|
|
488.6
|
|
|
3.5%
|
|
(11.5)%
|
|
|
1,709.3
|
|
|
1,886.3
|
|
|
(9.4)%
|
Less: net revenues from businesses acquired in the past 12 months
|
|
|
|
|
|
|
|
Point
|
|
|
B
|
|
|
-
|
|
|
nm
|
|
-
|
|
|
nm
|
|
nm
|
|
|
(38.3
|
)
|
|
(4.1
|
)
|
|
nm
|
Other
|
|
|
B
|
|
|
(14.4
|
)
|
|
nm
|
|
(2.6
|
)
|
|
nm
|
|
nm
|
|
|
(29.4
|
)
|
|
(9.5
|
)
|
|
nm
|
Total
|
|
|
|
|
|
(14.4
|
)
|
|
nm
|
|
(2.6
|
)
|
|
nm
|
|
nm
|
|
|
(67.7
|
)
|
|
(13.6
|
)
|
|
nm
|
Non-GAAP organic net revenues
|
|
|
$
|
417.9
|
|
|
nm
|
|
$
|
486.0
|
|
|
nm
|
|
(14.0)%
|
|
|
$
|
1,641.6
|
|
|
$
|
1,872.7
|
|
|
(12.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) "nm" means not meaningful or relevant
|
(2) Reconciliations for the non-GAAP measures are provided at the
end of this press release.
|
|
|
|
|
|
|
|
|
|
|
|
|
For three months ended October 31, 2013 compared with three
months ended October 31, 2012
|
|
|
For year ended October 31, 2013 compared with year ended October
31, 2012
|
|
|
|
Net revenues growth
|
|
|
Impact due to acquired businesses (A) (B)
|
|
|
Non-GAAP organic net revenues growth
|
|
|
Impact due to foreign currency (C)
|
|
|
Non-GAAP organic net revenues at constant currency growth
|
|
|
Net revenues growth
|
|
|
Impact due to acquired businesses (A) (B)
|
|
|
Non-GAAP organic net revenues growth
|
|
|
Impact due to foreign currency (C)
|
|
|
Non-GAAP organic net revenues at constant currency growth
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
(11.0
|
)%
|
|
|
2.6pts
|
|
|
(13.6
|
)%
|
|
|
1.4pts
|
|
|
(15.0
|
)%
|
|
|
(7.3
|
)%
|
|
|
6.8pts
|
|
|
(14.1
|
)%
|
|
|
0.0pts
|
|
|
(14.1
|
)%
|
LAC
|
|
|
(11.5
|
)%
|
|
|
(0.1)pts
|
|
|
(11.4
|
)%
|
|
|
(5.9)pts
|
|
|
(5.5
|
)%
|
|
|
(20.0
|
)%
|
|
|
(0.7)pts
|
|
|
(19.3
|
)%
|
|
|
(4.5)pts
|
|
|
(14.8
|
)%
|
ASPAC
|
|
|
(3.6
|
)%
|
|
|
14.6pts
|
|
|
(18.2
|
)%
|
|
|
(3.7)pts
|
|
|
(14.5
|
)%
|
|
|
0.8
|
%
|
|
|
7.5pts
|
|
|
(6.7
|
)%
|
|
|
(1.3)pts
|
|
|
(5.4
|
)%
|
Total International
|
|
|
(9.8
|
)%
|
|
|
4.1pts
|
|
|
(13.9
|
)%
|
|
|
(1.2)pts
|
|
|
(12.7
|
)%
|
|
|
(9.5
|
)%
|
|
|
4.9pts
|
|
|
(14.4
|
)%
|
|
|
(1.5)pts
|
|
|
(12.9
|
)%
|
North America
|
|
|
(14.3
|
)%
|
|
|
0.0pts
|
|
|
(14.3
|
)%
|
|
|
(0.1)pts
|
|
|
(14.2
|
)%
|
|
|
(6.9
|
)%
|
|
|
0.3pts
|
|
|
(7.2
|
)%
|
|
|
0.0pts
|
|
|
(7.2
|
)%
|
Total
|
|
|
(11.2
|
)%
|
|
|
2.8pts
|
|
|
(14.0
|
)%
|
|
|
(0.9)pts
|
|
|
(13.1
|
)%
|
|
|
(8.8
|
)%
|
|
|
3.5pts
|
|
|
(12.3
|
)%
|
|
|
(1.0)pts
|
|
|
(11.3
|
)%
|
|
VERIFONE SYSTEMS, INC.
|
CONSOLIDATED BALANCE SHEETS
|
(IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2013
|
|
|
October 31, 2012
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
268.2
|
|
|
|
$
|
454.1
|
|
|
Accounts receivable, net of allowances of $12.7 and $8.5
|
|
|
284.0
|
|
|
|
366.9
|
|
|
Inventories, net
|
|
|
138.7
|
|
|
|
178.3
|
|
|
Prepaid expenses and other current assets
|
|
|
134.1
|
|
|
|
136.2
|
|
Total current assets
|
|
|
825.0
|
|
|
|
1,135.5
|
|
Fixed assets, net
|
|
|
172.2
|
|
|
|
146.8
|
|
Purchased intangible assets, net
|
|
|
642.9
|
|
|
|
734.8
|
|
Goodwill
|
|
|
1,252.4
|
|
|
|
1,179.4
|
|
Deferred tax assets, net
|
|
|
23.9
|
|
|
|
215.1
|
|
Other long-term assets
|
|
|
77.3
|
|
|
|
79.0
|
|
Total assets
|
|
|
$
|
2,993.7
|
|
|
|
$
|
3,490.6
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
116.5
|
|
|
|
$
|
193.1
|
|
|
Accruals and other current liabilities
|
|
|
292.1
|
|
|
|
230.9
|
|
|
Deferred revenue, net
|
|
|
86.6
|
|
|
|
91.5
|
|
|
Short-term debt
|
|
|
92.5
|
|
|
|
54.9
|
|
Total current liabilities
|
|
|
587.7
|
|
|
|
570.4
|
|
Long-term deferred revenue, net
|
|
|
42.6
|
|
|
|
37.1
|
|
Long-term debt
|
|
|
943.3
|
|
|
|
1,252.7
|
|
Long-term deferred tax liabilities
|
|
|
176.0
|
|
|
|
214.5
|
|
Other long-term liabilities
|
|
|
92.5
|
|
|
|
70.4
|
|
Total liabilities
|
|
|
1,842.1
|
|
|
|
2,145.1
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest in subsidiary
|
|
|
0.6
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
1.1
|
|
|
|
1.1
|
|
Additional paid-in capital
|
|
|
1,598.7
|
|
|
|
1,543.1
|
|
Accumulated deficit
|
|
|
(500.1
|
)
|
|
|
(204.0
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
14.9
|
|
|
|
(32.4
|
)
|
Total stockholders' equity
|
|
|
1,114.6
|
|
|
|
1,307.8
|
|
Noncontrolling interest in subsidiaries
|
|
|
36.4
|
|
|
|
36.8
|
|
Total liabilities and equity
|
|
|
$
|
2,993.7
|
|
|
|
$
|
3,490.6
|
|
|
VERIFONE SYSTEMS, INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(IN MILLIONS)
|
|
|
|
|
Years Ended October 31,
|
|
|
|
2013
|
|
|
2012
|
Cash flows from operating activities
|
|
|
|
|
|
|
Consolidated net income (loss)
|
|
|
$
|
(295.0
|
)
|
|
|
$
|
66.3
|
|
Adjustments to reconcile consolidated net income (loss) to net cash
provided by operating activities:
|
|
|
|
|
|
|
Depreciation and amortization, net
|
|
|
207.8
|
|
|
|
177.8
|
|
Stock-based compensation expense
|
|
|
48.9
|
|
|
|
44.6
|
|
Non-cash interest expense
|
|
|
-
|
|
|
|
10.3
|
|
Deferred income taxes, net
|
|
|
142.9
|
|
|
|
(22.0
|
)
|
Other
|
|
|
5.1
|
|
|
|
(5.8
|
)
|
Net cash provided by operating activities before changes in
operating assets and liabilities
|
|
|
109.7
|
|
|
|
271.2
|
|
Changes in operating assets and liabilities, net of effects of
business acquisitions:
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
84.3
|
|
|
|
(53.9
|
)
|
Inventories, net
|
|
|
26.8
|
|
|
|
(19.3
|
)
|
Prepaid expenses and other assets
|
|
|
(8.5
|
)
|
|
|
(19.9
|
)
|
Accounts payable
|
|
|
(77.0
|
)
|
|
|
31.8
|
|
Deferred revenue, net
|
|
|
-
|
|
|
|
27.3
|
|
Other current and long-term liabilities
|
|
|
101.2
|
|
|
|
(19.2
|
)
|
Net change in operating assets and liabilities
|
|
|
126.8
|
|
|
|
(53.2
|
)
|
Net cash provided by operating activities
|
|
|
236.5
|
|
|
|
218.0
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(77.5
|
)
|
|
|
(63.2
|
)
|
Acquisition of businesses, net of cash and cash equivalents acquired
|
|
|
(75.9
|
)
|
|
|
(1,069.4
|
)
|
Other investing activities, net
|
|
|
8.7
|
|
|
|
14.6
|
|
Net cash used in investing activities
|
|
|
(144.7
|
)
|
|
|
(1,118.0
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Proceeds from debt, net of issuance costs
|
|
|
123.2
|
|
|
|
1,660.6
|
|
Repayments of debt
|
|
|
(399.1
|
)
|
|
|
(619.4
|
)
|
Repayments of senior convertible notes, including interest
|
|
|
-
|
|
|
|
(279.2
|
)
|
Proceeds from issuance of common stock through employee equity
incentive plans
|
|
|
11.1
|
|
|
|
30.3
|
|
Payments of acquisition-related contingent consideration
|
|
|
(11.0
|
)
|
|
|
(24.6
|
)
|
Other financing activities, net
|
|
|
(1.7
|
)
|
|
|
0.4
|
|
Net cash provided by (used in) financing activities
|
|
|
(277.5
|
)
|
|
|
768.1
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash and cash
equivalents
|
|
|
(0.2
|
)
|
|
|
(8.6
|
)
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(185.9
|
)
|
|
|
(140.5
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
454.1
|
|
|
|
594.6
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
268.2
|
|
|
|
$
|
454.1
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, 2013
|
|
|
|
|
|
GAAP
|
|
|
% of net revenues
|
|
|
Acquisition, divestiture & restructure related
|
|
|
Stock based compensation
|
|
|
Other charges and income
|
|
|
|
Non-GAAP
|
|
|
% of Non-GAAP net revenues
|
|
|
NOTE:
|
|
|
|
|
|
(1) (2)
|
|
|
(A) (D)
|
|
|
(E)
|
|
|
(F)
|
|
|
|
|
|
|
(1) (2)
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
$
|
259.4
|
|
|
|
60.2%
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
259.4
|
|
|
|
60.0%
|
|
Services
|
|
|
171.8
|
|
|
|
39.8%
|
|
|
1.1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
172.9
|
|
|
|
40.0%
|
|
|
|
|
|
431.2
|
|
|
|
100.0%
|
|
|
1.1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
432.3
|
|
|
|
100.0%
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
171.2
|
|
|
|
66.0%
|
|
|
(10.6
|
)
|
|
|
(0.5
|
)
|
|
|
-
|
|
|
|
160.1
|
|
|
|
61.7%
|
|
Services
|
|
|
96.0
|
|
|
|
55.9%
|
|
|
(1.5
|
)
|
|
|
(0.3
|
)
|
|
|
-
|
|
|
|
94.2
|
|
|
|
54.5%
|
|
|
|
|
|
267.2
|
|
|
|
62.0%
|
|
|
(12.1
|
)
|
|
|
(0.8
|
)
|
|
|
-
|
|
|
|
254.3
|
|
|
|
58.8%
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
88.2
|
|
|
|
34.0%
|
|
|
10.6
|
|
|
|
0.5
|
|
|
|
-
|
|
|
|
99.3
|
|
|
|
38.3%
|
|
Services
|
|
|
75.8
|
|
|
|
44.1%
|
|
|
2.6
|
|
|
|
0.3
|
|
|
|
-
|
|
|
|
78.7
|
|
|
|
45.5%
|
|
|
|
|
|
164.0
|
|
|
|
38.0%
|
|
|
13.2
|
|
|
|
0.8
|
|
|
|
-
|
|
|
|
178.0
|
|
|
|
41.2%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
45.8
|
|
|
|
10.6%
|
|
|
(0.4
|
)
|
|
|
(1.1
|
)
|
|
|
-
|
|
|
|
44.3
|
|
|
|
10.2%
|
|
Sales and marketing
|
|
|
54.8
|
|
|
|
12.7%
|
|
|
(0.1
|
)
|
|
|
(5.7
|
)
|
|
|
(0.5
|
)
|
|
|
48.5
|
|
|
|
11.2%
|
|
General and administrative
|
|
|
54.3
|
|
|
|
12.6%
|
|
|
(2.3
|
)
|
|
|
(9.3
|
)
|
|
|
(4.1
|
)
|
|
|
38.6
|
|
|
|
8.9%
|
|
Litigation loss contingency expense
|
|
|
0.4
|
|
|
|
0.1%
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.4
|
)
|
|
|
-
|
|
|
|
-
|
|
Amortization of purchased intangible assets
|
|
|
24.5
|
|
|
|
5.7%
|
|
|
(24.5
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total operating expenses
|
|
|
179.8
|
|
|
|
41.7%
|
|
|
(27.3
|
)
|
|
|
(16.1
|
)
|
|
|
(5.0
|
)
|
|
|
131.4
|
|
|
|
30.4%
|
Operating income (loss)
|
|
|
(15.8
|
)
|
|
|
(3.7)%
|
|
|
40.5
|
|
|
|
16.9
|
|
|
|
5.0
|
|
|
|
46.6
|
|
|
|
10.8%
|
Interest, net
|
|
|
(10.0
|
)
|
|
|
nm
|
|
|
(0.1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(10.1
|
)
|
|
|
nm
|
Other expense, net
|
|
|
(2.1
|
)
|
|
|
nm
|
|
|
1.4
|
|
|
|
-
|
|
|
|
(0.1
|
)
|
|
|
(0.8
|
)
|
|
|
nm
|
Income (loss) before income taxes
|
|
|
(27.9
|
)
|
|
|
(6.5)%
|
|
|
41.8
|
|
|
|
16.9
|
|
|
|
4.9
|
|
|
|
35.7
|
|
|
|
8.3%
|
Income tax provision
|
|
|
219.9
|
|
|
|
nm
|
|
|
-
|
|
|
|
-
|
|
|
|
(215.0
|
)
|
|
|
4.9
|
|
|
|
nm
|
Consolidated net income (loss)
|
|
|
(247.8
|
)
|
|
|
(57.5)%
|
|
|
41.8
|
|
|
|
16.9
|
|
|
|
219.9
|
|
|
|
30.8
|
|
|
|
7.1%
|
Net income (loss) attributable to noncontrolling interests
|
|
|
0.1
|
|
|
|
nm
|
|
|
(0.6
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.5
|
)
|
|
|
nm
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
|
|
$
|
(247.7
|
)
|
|
|
(57.4)%
|
|
|
$
|
41.2
|
|
|
|
$
|
16.9
|
|
|
|
$
|
219.9
|
|
|
|
$
|
30.3
|
|
|
|
7.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders:
|
|
Basic
|
|
|
$
|
(2.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.28
|
|
|
|
|
|
Diluted
|
|
|
$
|
(2.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net income
(loss) per share:
|
|
|
Non-GAAP adjustment for dilutive shares (G)
|
|
|
|
|
Basic
|
|
|
109.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109.5
|
|
|
|
|
|
Diluted
|
|
|
109.5
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
|
111.7
|
|
|
|
|
(1) "nm" means not meaningful or relevant.
|
|
(2) System solutions and Services cost of net revenues and gross
margin as a percentage of net revenues are computed as a
percentage of the corresponding System solutions and Services net
revenues.
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, 2013
|
|
|
|
|
|
GAAP
|
|
|
% of net revenues
|
|
|
Acquisition, divestiture & restructure related
|
|
|
Stock based compensation
|
|
|
Other charges and income
|
|
|
Non-GAAP
|
|
|
% of Non-GAAP net revenues
|
|
|
NOTE:
|
|
|
|
|
|
(1) (2)
|
|
|
(A) (D)
|
|
|
(E)
|
|
|
(F)
|
|
|
|
|
|
(1) (2)
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
$
|
250.8
|
|
|
|
60.3%
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
250.8
|
|
|
|
60.1%
|
|
Services
|
|
|
165.2
|
|
|
|
39.7%
|
|
|
1.5
|
|
|
|
-
|
|
|
|
-
|
|
|
|
166.7
|
|
|
|
39.9%
|
|
|
|
|
|
416.0
|
|
|
|
100.0%
|
|
|
1.5
|
|
|
|
-
|
|
|
|
-
|
|
|
|
417.5
|
|
|
|
100.0%
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
168.9
|
|
|
|
67.3%
|
|
|
(10.2
|
)
|
|
|
(0.6
|
)
|
|
|
-
|
|
|
|
158.1
|
|
|
|
63.0%
|
|
Services
|
|
|
92.1
|
|
|
|
55.8%
|
|
|
(1.6
|
)
|
|
|
(0.1
|
)
|
|
|
(1.3
|
)
|
|
|
89.1
|
|
|
|
53.4%
|
|
|
|
|
|
261.0
|
|
|
|
62.7%
|
|
|
(11.8
|
)
|
|
|
(0.7
|
)
|
|
|
(1.3
|
)
|
|
|
247.2
|
|
|
|
59.2%
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
81.9
|
|
|
|
32.7%
|
|
|
10.2
|
|
|
|
0.6
|
|
|
|
-
|
|
|
|
92.7
|
|
|
|
37.0%
|
|
Services
|
|
|
73.1
|
|
|
|
44.2%
|
|
|
3.1
|
|
|
|
0.1
|
|
|
|
1.3
|
|
|
|
77.6
|
|
|
|
46.6%
|
|
|
|
|
|
155.0
|
|
|
|
37.3%
|
|
|
13.3
|
|
|
|
0.7
|
|
|
|
1.3
|
|
|
|
170.3
|
|
|
|
40.8%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
46.1
|
|
|
|
11.1%
|
|
|
(0.2
|
)
|
|
|
(2.0
|
)
|
|
|
-
|
|
|
|
43.9
|
|
|
|
10.5%
|
|
Sales and marketing
|
|
|
49.5
|
|
|
|
11.9%
|
|
|
(0.9
|
)
|
|
|
(3.1
|
)
|
|
|
(0.4
|
)
|
|
|
45.1
|
|
|
|
10.8%
|
|
General and administrative
|
|
|
43.2
|
|
|
|
10.4%
|
|
|
(1.2
|
)
|
|
|
(3.8
|
)
|
|
|
(0.5
|
)
|
|
|
37.7
|
|
|
|
9.0%
|
|
Litigation loss contingency expense
|
|
|
(5.0
|
)
|
|
|
(1.2)%
|
|
|
-
|
|
|
|
-
|
|
|
|
5.0
|
|
|
|
-
|
|
|
|
-
|
|
Amortization of purchased intangible assets
|
|
|
23.9
|
|
|
|
5.7%
|
|
|
(23.9
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total operating expenses
|
|
|
157.7
|
|
|
|
37.9%
|
|
|
(26.2
|
)
|
|
|
(8.9
|
)
|
|
|
4.1
|
|
|
|
126.7
|
|
|
|
30.3%
|
Operating income (loss)
|
|
|
(2.7
|
)
|
|
|
(0.6)%
|
|
|
39.5
|
|
|
|
9.6
|
|
|
|
(2.8
|
)
|
|
|
43.6
|
|
|
|
10.4%
|
Interest, net
|
|
|
(11.6
|
)
|
|
|
nm
|
|
|
0.1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11.5
|
)
|
|
|
nm
|
Other expense, net
|
|
|
(0.5
|
)
|
|
|
nm
|
|
|
(0.9
|
)
|
|
|
-
|
|
|
|
0.5
|
|
|
|
(0.9
|
)
|
|
|
nm
|
Income (loss) before income taxes
|
|
|
(14.8
|
)
|
|
|
(3.6)%
|
|
|
38.7
|
|
|
|
9.6
|
|
|
|
(2.3
|
)
|
|
|
31.2
|
|
|
|
7.5%
|
Income tax provision (benefit)
|
|
|
(12.9
|
)
|
|
|
nm
|
|
|
-
|
|
|
|
-
|
|
|
|
17.2
|
|
|
|
4.3
|
|
|
|
nm
|
Consolidated net income (loss)
|
|
|
(1.9
|
)
|
|
|
(0.5)%
|
|
|
38.7
|
|
|
|
9.6
|
|
|
|
(19.5
|
)
|
|
|
26.9
|
|
|
|
6.4%
|
Net income attributable to noncontrolling interests
|
|
|
-
|
|
|
|
nm
|
|
|
(0.5
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.5
|
)
|
|
|
nm
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
|
|
$
|
(1.9
|
)
|
|
|
(0.5)%
|
|
|
$
|
38.2
|
|
|
|
$
|
9.6
|
|
|
|
$
|
(19.5
|
)
|
|
|
$
|
26.4
|
|
|
|
6.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders:
|
|
Basic
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.24
|
|
|
|
|
|
Diluted
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net income
(loss) per share:
|
|
|
Non-GAAP adjustment for dilutive shares (G)
|
|
|
|
|
|
|
Basic
|
|
|
108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108.6
|
|
|
|
|
|
Diluted
|
|
|
108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
|
|
110.7
|
|
|
|
|
(1) "nm" means not meaningful or relevant.
|
(2) System solutions and Services cost of net revenues and gross
margin as a percentage of net revenues are computed as a percentage
of the corresponding System solutions and Services net revenues.
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, 2012
|
|
|
|
|
|
|
GAAP
|
|
|
% of net revenues
|
|
|
Acquisition, divestiture & restructure related
|
|
|
Stock based compensation
|
|
|
Other charges and income
|
|
|
Non-GAAP
|
|
|
% of Non-GAAP net revenues
|
|
|
|
NOTE:
|
|
|
|
|
|
(1) (2)
|
|
|
(A) (D)
|
|
|
(E)
|
|
|
(F)
|
|
|
|
|
|
(1) (2)
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
$
|
335.7
|
|
|
|
69.2%
|
|
|
$
|
0.5
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
336.2
|
|
|
|
68.8
|
%
|
|
Services
|
|
|
149.7
|
|
|
|
30.8%
|
|
|
2.7
|
|
|
|
-
|
|
|
|
-
|
|
|
|
152.4
|
|
|
|
31.2
|
%
|
|
|
|
|
|
485.4
|
|
|
|
100.0%
|
|
|
3.2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
488.6
|
|
|
|
100.0
|
%
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
204.4
|
|
|
|
60.9%
|
|
|
(10.6
|
)
|
|
|
(0.3
|
)
|
|
|
-
|
|
|
|
193.5
|
|
|
|
57.6
|
%
|
|
Services
|
|
|
81.5
|
|
|
|
54.4%
|
|
|
(2.2
|
)
|
|
|
(0.3
|
)
|
|
|
-
|
|
|
|
79.0
|
|
|
|
51.8
|
%
|
|
|
|
|
|
285.9
|
|
|
|
58.9%
|
|
|
(12.8
|
)
|
|
|
(0.6
|
)
|
|
|
-
|
|
|
|
272.5
|
|
|
|
55.8
|
%
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
131.3
|
|
|
|
39.1%
|
|
|
11.1
|
|
|
|
0.3
|
|
|
|
-
|
|
|
|
142.7
|
|
|
|
42.4
|
%
|
|
Services
|
|
|
68.2
|
|
|
|
45.6%
|
|
|
4.9
|
|
|
|
0.3
|
|
|
|
-
|
|
|
|
73.4
|
|
|
|
48.2
|
%
|
|
|
|
|
|
199.5
|
|
|
|
41.1%
|
|
|
16.0
|
|
|
|
0.6
|
|
|
|
-
|
|
|
|
216.1
|
|
|
|
44.2
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
40.4
|
|
|
|
8.3%
|
|
|
(2.0
|
)
|
|
|
(2.2
|
)
|
|
|
(0.7
|
)
|
|
|
35.5
|
|
|
|
7.3
|
%
|
|
Sales and marketing
|
|
|
47.4
|
|
|
|
9.8%
|
|
|
(1.5
|
)
|
|
|
(1.9
|
)
|
|
|
(2.2
|
)
|
|
|
41.8
|
|
|
|
8.6
|
%
|
|
General and administrative
|
|
|
37.0
|
|
|
|
7.6%
|
|
|
(3.4
|
)
|
|
|
(5.7
|
)
|
|
|
-
|
|
|
|
27.9
|
|
|
|
5.7
|
%
|
|
Amortization of purchased intangible assets
|
|
|
23.2
|
|
|
|
4.8%
|
|
|
(23.2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Total operating expenses
|
|
|
148.0
|
|
|
|
30.5%
|
|
|
(30.1
|
)
|
|
|
(9.8
|
)
|
|
|
(2.9
|
)
|
|
|
105.2
|
|
|
|
21.5
|
%
|
Operating income
|
|
|
51.5
|
|
|
|
10.6%
|
|
|
46.1
|
|
|
|
10.4
|
|
|
|
2.9
|
|
|
|
110.9
|
|
|
|
22.7
|
%
|
Interest, net
|
|
|
(12.1
|
)
|
|
|
nm
|
|
|
(2.5
|
)
|
|
|
-
|
|
|
|
3.2
|
|
|
|
(11.4
|
)
|
|
|
nm
|
|
Other income (expense), net
|
|
|
2.6
|
|
|
|
nm
|
|
|
(5.5
|
)
|
|
|
-
|
|
|
|
2.0
|
|
|
|
(0.9
|
)
|
|
|
nm
|
|
Income before income taxes
|
|
|
42.0
|
|
|
|
8.7%
|
|
|
38.1
|
|
|
|
10.4
|
|
|
|
8.1
|
|
|
|
98.6
|
|
|
|
20.2
|
%
|
Income tax provision
|
|
|
14.1
|
|
|
|
nm
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.6
|
)
|
|
|
13.5
|
|
|
|
nm
|
|
Consolidated net income
|
|
|
27.9
|
|
|
|
5.7%
|
|
|
38.1
|
|
|
|
10.4
|
|
|
|
8.7
|
|
|
|
85.1
|
|
|
|
17.4
|
|
Net income attributable to noncontrolling interests
|
|
|
(0.9
|
)
|
|
|
nm
|
|
|
(0.7
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.6
|
)
|
|
|
nm
|
|
Net income attributable to VeriFone Systems, Inc. stockholders
|
|
|
$
|
27.0
|
|
|
|
5.6%
|
|
|
$
|
37.4
|
|
|
|
$
|
10.4
|
|
|
|
$
|
8.7
|
|
|
|
$
|
83.5
|
|
|
|
17.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to VeriFone Systems, Inc.
stockholders:
|
|
|
Basic
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.78
|
|
|
|
|
|
|
Diluted
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.76
|
|
|
|
|
|
Weighted average number of shares used in computing net income
per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
107.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107.7
|
|
|
|
|
|
|
Diluted
|
|
|
110.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110.3
|
|
|
|
|
|
(1) "nm" means not meaningful or relevant.
(2) System solutions and Services cost of net revenues and gross
margin as a percentage of net revenues are computed as a
percentage of the corresponding System solutions and Services net
revenues.
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 31, 2013
|
|
|
|
|
|
GAAP
|
|
|
% of net revenues
|
|
|
Acquisition, divestiture & restructure related
|
|
|
Stock based compensation
|
|
|
Other charges and income
|
|
|
Non-GAAP
|
|
|
% of Non-GAAP net revenues
|
|
|
NOTE:
|
|
|
|
|
|
(1) (2)
|
|
|
(A) (D)
|
|
|
(E)
|
|
|
(F)
|
|
|
|
|
|
(1) (2)
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
$
|
1,068.4
|
|
|
|
62.8%
|
|
|
$
|
0.4
|
|
|
|
$
|
-
|
|
|
|
$
|
2.5
|
|
|
|
$
|
1,071.3
|
|
|
|
62.7%
|
|
Services
|
|
|
633.8
|
|
|
|
37.2%
|
|
|
4.2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
638.0
|
|
|
|
37.3%
|
|
|
|
|
|
1,702.2
|
|
|
|
100.0%
|
|
|
4.6
|
|
|
|
-
|
|
|
|
2.5
|
|
|
|
1,709.3
|
|
|
|
100.0%
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
695.3
|
|
|
|
65.1%
|
|
|
(46.5
|
)
|
|
|
(1.8
|
)
|
|
|
(1.2
|
)
|
|
|
645.8
|
|
|
|
60.3%
|
|
Services
|
|
|
361.7
|
|
|
|
57.1%
|
|
|
(6.2
|
)
|
|
|
(0.7
|
)
|
|
|
(8.1
|
)
|
|
|
346.7
|
|
|
|
54.3%
|
|
|
|
|
|
1,057.0
|
|
|
|
62.1%
|
|
|
(52.7
|
)
|
|
|
(2.5
|
)
|
|
|
(9.3
|
)
|
|
|
992.5
|
|
|
|
58.1%
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
373.1
|
|
|
|
34.9%
|
|
|
46.9
|
|
|
|
1.8
|
|
|
|
3.7
|
|
|
|
425.5
|
|
|
|
39.7%
|
|
Services
|
|
|
272.1
|
|
|
|
42.9%
|
|
|
10.4
|
|
|
|
0.7
|
|
|
|
8.1
|
|
|
|
291.3
|
|
|
|
45.7%
|
|
|
|
|
|
645.2
|
|
|
|
37.9%
|
|
|
57.3
|
|
|
|
2.5
|
|
|
|
11.8
|
|
|
|
716.8
|
|
|
|
41.9%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
173.3
|
|
|
|
10.2%
|
|
|
(2.7
|
)
|
|
|
(6.1
|
)
|
|
|
-
|
|
|
|
164.5
|
|
|
|
9.6%
|
|
Sales and marketing
|
|
|
196.6
|
|
|
|
11.5%
|
|
|
(1.6
|
)
|
|
|
(16.7
|
)
|
|
|
(1.5
|
)
|
|
|
176.8
|
|
|
|
10.3%
|
|
General and administrative
|
|
|
181.1
|
|
|
|
10.6%
|
|
|
(8.2
|
)
|
|
|
(23.6
|
)
|
|
|
(8.9
|
)
|
|
|
140.4
|
|
|
|
8.2%
|
|
Litigation loss contingency expense
|
|
|
64.4
|
|
|
|
3.8%
|
|
|
-
|
|
|
|
-
|
|
|
|
(64.4
|
)
|
|
|
-
|
|
|
|
-
|
|
Amortization of purchased intangible assets
|
|
|
96.2
|
|
|
|
5.7%
|
|
|
(96.2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total operating expenses
|
|
|
711.6
|
|
|
|
41.8%
|
|
|
(108.7
|
)
|
|
|
(46.4
|
)
|
|
|
(74.8
|
)
|
|
|
481.7
|
|
|
|
28.2%
|
Operating income (loss)
|
|
|
(66.4
|
)
|
|
|
(3.9)%
|
|
|
166.0
|
|
|
|
48.9
|
|
|
|
86.6
|
|
|
|
235.1
|
|
|
|
13.8%
|
Interest, net
|
|
|
(44.3
|
)
|
|
|
nm
|
|
|
0.6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(43.7
|
)
|
|
|
nm
|
Other income (expense), net
|
|
|
3.7
|
|
|
|
nm
|
|
|
(5.2
|
)
|
|
|
-
|
|
|
|
(2.1
|
)
|
|
|
(3.6
|
)
|
|
|
nm
|
Income (loss) before income taxes
|
|
|
(107.0
|
)
|
|
|
(6.3)%
|
|
|
161.4
|
|
|
|
48.9
|
|
|
|
84.5
|
|
|
|
187.8
|
|
|
|
11.0%
|
Income tax provision
|
|
|
188.0
|
|
|
|
nm
|
|
|
-
|
|
|
|
-
|
|
|
|
(162.0
|
)
|
|
|
26.0
|
|
|
|
nm
|
Consolidated net income (loss)
|
|
|
(295.0
|
)
|
|
|
(17.3)%
|
|
|
161.4
|
|
|
|
48.9
|
|
|
|
246.5
|
|
|
|
161.8
|
|
|
|
9.5%
|
Net income attributable to noncontrolling interests
|
|
|
(1.1
|
)
|
|
|
nm
|
|
|
(1.0
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2.1
|
)
|
|
|
nm
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
|
|
$
|
(296.1
|
)
|
|
|
(17.4)%
|
|
|
$
|
160.4
|
|
|
|
$
|
48.9
|
|
|
|
$
|
246.5
|
|
|
|
$
|
159.7
|
|
|
|
9.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders:
|
|
Basic
|
|
|
$
|
(2.73
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.47
|
|
|
|
|
|
Diluted
|
|
|
$
|
(2.73
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net income
(loss) per share:
|
|
|
Non-GAAP adjustment for dilutive shares (G)
|
|
|
|
|
|
|
Basic
|
|
|
108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108.6
|
|
|
|
|
|
Diluted
|
|
|
108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
2.3
|
|
|
|
110.9
|
|
|
|
|
(1) "nm" means not meaningful or relevant.
(2) System solutions and Services cost of net revenues and gross
margin as a percentage of net revenues are computed as a
percentage of the corresponding System solutions and Services net
revenues.
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 31, 2012
|
|
|
|
|
|
GAAP
|
|
|
% of net revenues
|
|
|
Acquisition, divestiture & restructure related
|
|
|
Stock based compensation
|
|
|
Other charges and income
|
|
|
Non-GAAP
|
|
|
% of Non-GAAP net revenues
|
|
|
NOTE:
|
|
|
|
|
|
(1) (2)
|
|
|
(A) (D)
|
|
|
(E)
|
|
|
(F)
|
|
|
|
|
|
(1) (2)
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
$
|
1,339.0
|
|
|
|
71.8%
|
|
|
$
|
6.5
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
1,345.5
|
|
|
|
71.3%
|
|
Services
|
|
|
527.0
|
|
|
|
28.2%
|
|
|
13.8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
540.8
|
|
|
|
28.7%
|
|
|
|
|
|
1,866.0
|
|
|
|
100.0%
|
|
|
20.3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,886.3
|
|
|
|
100.0%
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
811.6
|
|
|
|
60.6%
|
|
|
(51.3
|
)
|
|
|
(1.6
|
)
|
|
|
-
|
|
|
|
758.7
|
|
|
|
56.4%
|
|
Services
|
|
|
298.6
|
|
|
|
56.7%
|
|
|
(7.0
|
)
|
|
|
(0.5
|
)
|
|
|
(0.1
|
)
|
|
|
291.0
|
|
|
|
53.8%
|
|
|
|
|
|
1,110.2
|
|
|
|
59.5%
|
|
|
(58.3
|
)
|
|
|
(2.1
|
)
|
|
|
(0.1
|
)
|
|
|
1,049.7
|
|
|
|
55.6%
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
|
527.4
|
|
|
|
39.4%
|
|
|
57.8
|
|
|
|
1.6
|
|
|
|
-
|
|
|
|
586.8
|
|
|
|
43.6%
|
|
Services
|
|
|
228.4
|
|
|
|
43.3%
|
|
|
20.8
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
249.8
|
|
|
|
46.2%
|
|
|
|
|
|
755.8
|
|
|
|
40.5%
|
|
|
78.6
|
|
|
|
2.1
|
|
|
|
0.1
|
|
|
|
836.6
|
|
|
|
44.4%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
152.0
|
|
|
|
8.1%
|
|
|
(6.1
|
)
|
|
|
(6.1
|
)
|
|
|
(0.7
|
)
|
|
|
139.1
|
|
|
|
7.4%
|
|
Sales and marketing
|
|
|
179.7
|
|
|
|
9.6%
|
|
|
(3.3
|
)
|
|
|
(15.8
|
)
|
|
|
(2.2
|
)
|
|
|
158.4
|
|
|
|
8.4%
|
|
General and administrative
|
|
|
175.2
|
|
|
|
9.4%
|
|
|
(28.1
|
)
|
|
|
(20.6
|
)
|
|
|
-
|
|
|
|
126.5
|
|
|
|
6.7%
|
|
Litigation loss contingency expense
|
|
|
17.6
|
|
|
|
0.9%
|
|
|
-
|
|
|
|
-
|
|
|
|
(17.6
|
)
|
|
|
-
|
|
|
|
-
|
|
Amortization of purchased intangible assets
|
|
|
83.8
|
|
|
|
4.5%
|
|
|
(83.8
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total operating expenses
|
|
|
608.3
|
|
|
|
32.6%
|
|
|
(121.3
|
)
|
|
|
(42.5
|
)
|
|
|
(20.5
|
)
|
|
|
424.0
|
|
|
|
22.5%
|
Operating income
|
|
|
147.5
|
|
|
|
7.9%
|
|
|
199.9
|
|
|
|
44.6
|
|
|
|
20.6
|
|
|
|
412.6
|
|
|
|
21.9%
|
Interest, net
|
|
|
(58.4
|
)
|
|
|
nm
|
|
|
(0.4
|
)
|
|
|
-
|
|
|
|
15.6
|
|
|
|
(43.2
|
)
|
|
|
nm
|
Other expense, net
|
|
|
(20.7
|
)
|
|
|
nm
|
|
|
11.8
|
|
|
|
-
|
|
|
|
2.5
|
|
|
|
(6.4
|
)
|
|
|
nm
|
Income before income taxes
|
|
|
68.4
|
|
|
|
3.7%
|
|
|
211.3
|
|
|
|
44.6
|
|
|
|
38.7
|
|
|
|
363.0
|
|
|
|
19.2%
|
Income tax provision
|
|
|
2.1
|
|
|
|
nm
|
|
|
-
|
|
|
|
-
|
|
|
|
55.4
|
|
|
|
57.5
|
|
|
|
nm
|
Consolidated net income
|
|
|
66.3
|
|
|
|
3.6%
|
|
|
211.3
|
|
|
|
44.6
|
|
|
|
(16.7
|
)
|
|
|
305.5
|
|
|
|
16.2%
|
Net income attributable to noncontrolling interests
|
|
|
(1.3
|
)
|
|
|
nm
|
|
|
(2.0
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3.3
|
)
|
|
|
nm
|
Net income attributable to VeriFone Systems, Inc. stockholders
|
|
|
$
|
65.0
|
|
|
|
3.5%
|
|
|
$
|
209.3
|
|
|
|
$
|
44.6
|
|
|
|
$
|
(16.7
|
)
|
|
|
$
|
302.2
|
|
|
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to VeriFone Systems, Inc.
stockholders:
|
|
Basic
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2.82
|
|
|
|
|
|
Diluted
|
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2.74
|
|
|
|
|
Weighted average number of shares used in computing net income
per share:
|
|
|
Non-GAAP adjustment for dilutive shares (G)
|
|
|
|
|
|
|
Basic
|
|
|
107.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107.0
|
|
|
|
|
|
Diluted
|
|
|
110.3
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
110.2
|
|
|
|
|
(1) "nm" means not meaningful or relevant.
|
(2) System solutions and Services cost of net revenues and gross
margin as a percentage of net revenues are computed as a percentage
of the corresponding System solutions and Services net revenues.
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net Revenues
|
|
|
Amortization of step-down in deferred revenue at acquisition
|
|
|
Other adjustments to net revenues
|
|
|
Non-GAAP net revenues
|
|
|
Net revenues from businesses acquired in the past 12 months
|
|
|
Non-GAAP organic net revenues
|
|
|
Constant currency adjustment
|
|
|
Non-GAAP organic net revenues at constant currency
|
|
|
NOTE:
|
|
|
|
|
|
(A)
|
|
|
(D) (F)
|
|
|
(A)
|
|
|
(B)
|
|
|
(B)
|
|
|
(C)
|
|
|
(C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, 2013
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
$
|
179.2
|
|
|
|
$
|
0.9
|
|
|
|
$
|
-
|
|
|
|
$
|
180.1
|
|
|
|
$
|
(5.3
|
)
|
|
|
$
|
174.8
|
|
|
|
$
|
(2.8
|
)
|
|
|
$
|
172.0
|
|
LAC
|
|
|
70.8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
70.8
|
|
|
|
-
|
|
|
|
70.8
|
|
|
|
4.8
|
|
|
|
75.6
|
|
ASPAC
|
|
|
56.7
|
|
|
|
0.1
|
|
|
|
-
|
|
|
|
56.8
|
|
|
|
(9.1
|
)
|
|
|
47.7
|
|
|
|
2.1
|
|
|
|
49.8
|
|
|
Total International
|
|
|
306.7
|
|
|
|
1.0
|
|
|
|
-
|
|
|
|
307.7
|
|
|
|
(14.4
|
)
|
|
|
293.3
|
|
|
|
4.1
|
|
|
|
297.4
|
North America
|
|
|
124.5
|
|
|
|
0.1
|
|
|
|
-
|
|
|
|
124.6
|
|
|
|
-
|
|
|
|
124.6
|
|
|
|
0.1
|
|
|
|
124.7
|
|
|
Total
|
|
|
$
|
431.2
|
|
|
|
$
|
1.1
|
|
|
|
$
|
-
|
|
|
|
$
|
432.3
|
|
|
|
$
|
(14.4
|
)
|
|
|
$
|
417.9
|
|
|
|
$
|
4.2
|
|
|
|
$
|
422.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, 2013
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
$
|
177.8
|
|
|
|
$
|
1.2
|
|
|
|
$
|
-
|
|
|
|
$
|
179.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAC
|
|
|
69.9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASPAC
|
|
|
52.5
|
|
|
|
0.3
|
|
|
|
-
|
|
|
|
52.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total International
|
|
|
300.2
|
|
|
|
1.5
|
|
|
|
-
|
|
|
|
301.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
115.8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
115.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
416.0
|
|
|
|
$
|
1.5
|
|
|
|
$
|
-
|
|
|
|
$
|
417.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, 2012
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
$
|
201.3
|
|
|
|
$
|
2.6
|
|
|
|
$
|
-
|
|
|
|
$
|
203.9
|
|
|
|
$
|
(1.5
|
)
|
|
|
$
|
202.4
|
|
|
|
|
|
|
|
|
LAC
|
|
|
80.0
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80.0
|
|
|
|
-
|
|
|
|
80.0
|
|
|
|
|
|
|
|
|
ASPAC
|
|
|
58.8
|
|
|
|
0.5
|
|
|
|
-
|
|
|
|
59.3
|
|
|
|
(1.0
|
)
|
|
|
58.3
|
|
|
|
|
|
|
|
|
|
Total International
|
|
|
340.1
|
|
|
|
3.1
|
|
|
|
-
|
|
|
|
343.2
|
|
|
|
(2.5
|
)
|
|
|
340.7
|
|
|
|
|
|
|
|
North America
|
|
|
145.3
|
|
|
|
0.2
|
|
|
|
(0.1
|
)
|
|
|
145.4
|
|
|
|
(0.1
|
)
|
|
|
145.3
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
485.4
|
|
|
|
$
|
3.3
|
|
|
|
$
|
(0.1
|
)
|
|
|
$
|
488.6
|
|
|
|
$
|
(2.6
|
)
|
|
|
$
|
486.0
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net Revenues
|
|
|
Amortization of step-down in deferred revenue at acquisition
|
|
|
Other adjustments to net revenues
|
|
|
Non-GAAP net revenues
|
|
|
Net revenues from businesses acquired in the past 12 months
|
|
|
Non-GAAP organic net revenues
|
|
|
Constant currency adjustment
|
|
|
Non-GAAP organic net revenues at constant currency
|
|
|
NOTE:
|
|
|
|
|
|
(A)
|
|
|
(D) (F)
|
|
|
(A)
|
|
|
(B)
|
|
|
(B)
|
|
|
(C)
|
|
|
(C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 31, 2013
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
$
|
700.4
|
|
|
|
$
|
4.3
|
|
|
|
$
|
-
|
|
|
|
$
|
704.7
|
|
|
|
$
|
(51.3
|
)
|
|
|
$
|
653.4
|
|
|
|
$
|
-
|
|
|
|
$
|
653.4
|
|
LAC
|
|
|
296.6
|
|
|
|
-
|
|
|
|
2.5
|
|
|
|
299.1
|
|
|
|
-
|
|
|
|
299.1
|
|
|
|
16.7
|
|
|
|
315.8
|
|
ASPAC
|
|
|
209.7
|
|
|
|
0.6
|
|
|
|
-
|
|
|
|
210.3
|
|
|
|
(15.7
|
)
|
|
|
194.6
|
|
|
|
2.7
|
|
|
|
197.3
|
|
|
Total International
|
|
|
1,206.7
|
|
|
|
4.9
|
|
|
|
2.5
|
|
|
|
1,214.1
|
|
|
|
(67.0
|
)
|
|
|
1,147.1
|
|
|
|
19.4
|
|
|
|
1,166.5
|
North America
|
|
|
495.5
|
|
|
|
0.2
|
|
|
|
(0.5
|
)
|
|
|
495.2
|
|
|
|
(0.7
|
)
|
|
|
494.5
|
|
|
|
0.2
|
|
|
|
494.7
|
|
|
Total
|
|
|
$
|
1,702.2
|
|
|
|
$
|
5.1
|
|
|
|
$
|
2.0
|
|
|
|
$
|
1,709.3
|
|
|
|
$
|
(67.7
|
)
|
|
|
$
|
1,641.6
|
|
|
|
$
|
19.6
|
|
|
|
$
|
1,661.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 31, 2012
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
$
|
755.2
|
|
|
|
$
|
16.3
|
|
|
|
$
|
-
|
|
|
|
$
|
771.5
|
|
|
|
$
|
(11.1
|
)
|
|
|
$
|
760.4
|
|
|
|
|
|
|
|
|
LAC
|
|
|
370.8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
370.8
|
|
|
|
-
|
|
|
|
370.8
|
|
|
|
|
|
|
|
|
ASPAC
|
|
|
208.0
|
|
|
|
3.1
|
|
|
|
-
|
|
|
|
211.1
|
|
|
|
(2.5
|
)
|
|
|
208.6
|
|
|
|
|
|
|
|
|
|
Total International
|
|
|
1,334.0
|
|
|
|
19.4
|
|
|
|
-
|
|
|
|
1,353.4
|
|
|
|
(13.6
|
)
|
|
|
1,339.8
|
|
|
|
|
|
|
|
North America
|
|
|
532.0
|
|
|
|
1.0
|
|
|
|
(0.1
|
)
|
|
|
532.9
|
|
|
|
-
|
|
|
|
532.9
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,866.0
|
|
|
|
$
|
20.4
|
|
|
|
$
|
(0.1
|
)
|
|
|
$
|
1,886.3
|
|
|
|
$
|
(13.6
|
)
|
|
|
$
|
1,872.7
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Years Ended
|
|
|
|
Note
|
|
October 31, 2013
|
|
July 31, 2013
|
|
October 31, 2012
|
|
% Change SEQ
|
|
% Change YoY
|
|
October 31, 2013
|
|
October 31, 2012
|
|
% Change
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net cash provided by operating activities
|
|
H
|
|
$
|
54.9
|
|
|
$
|
49.0
|
|
|
$
|
72.6
|
|
|
12.0
|
%
|
|
(24.4
|
)%
|
|
$
|
236.5
|
|
|
$
|
218.0
|
|
|
8.5
|
%
|
Less: GAAP capital expenditures
|
|
H
|
|
(17.2
|
)
|
|
(18.1
|
)
|
|
(18.6
|
)
|
|
(5.0
|
)%
|
|
(7.5
|
)%
|
|
(77.5
|
)
|
|
(63.2
|
)
|
|
22.6
|
%
|
Free cash flow
|
|
H
|
|
$
|
37.7
|
|
|
$
|
30.9
|
|
|
$
|
54.0
|
|
|
22.0
|
%
|
|
(30.2
|
)%
|
|
$
|
159.0
|
|
|
$
|
154.8
|
|
|
2.7
|
%
|
NON-GAAP FINANCIAL MEASURES
This press release and its attachments include several non-GAAP
financial measures, including non-GAAP net revenues; net revenues from
businesses acquired in the past 12 months; non-GAAP organic net
revenues; non-GAAP organic net revenues at constant currency; non-GAAP
cost of net revenues; non-GAAP gross margin; non-GAAP research and
development expenses; non-GAAP sales and marketing expenses; non-GAAP
general and administrative expenses; non-GAAP operating expenses;
non-GAAP operating income (loss); non-GAAP interest, net; non-GAAP other
income (expense), net; non-GAAP income (loss) before income taxes;
non-GAAP provision for (benefit from) income taxes; non-GAAP income tax
rate; non-GAAP consolidated net income (loss); non-GAAP net income
(loss) attributable to noncontrolling interests; non-GAAP net income
(loss) attributable to VeriFone Systems, Inc. stockholders; non-GAAP
diluted shares; non-GAAP net income (loss) per share attributable to
VeriFone Systems, Inc. stockholders; non-GAAP net income (loss) per
diluted share, and free cash flow, as well as many of these non-GAAP
financial measures as a percentage of non-GAAP net revenues. In order to
assist investors, this press release provides consolidated statement of
operations information on a non-GAAP basis, reflecting the adjustments
made in the non-GAAP measures listed above.
Management uses non-GAAP financial measures only in addition to and in
conjunction with results presented in accordance with GAAP. Management
believes that these non-GAAP financial measures help it to evaluate
VeriFone's performance and operations and to compare VeriFone's current
results with those for prior periods as well as with the results of peer
companies. VeriFone incurs, due to differences in debt, capital
structure and investment history, certain income and expense items, such
as stock based compensation, amortization of acquired intangibles and
other non-cash expenses, that differ significantly from VeriFone's
competitors. The non-GAAP financial measures reflect VeriFone's reported
operating performance without such items. Management also uses these
non-GAAP financial measures in VeriFone's budget and planning process.
Management believes that the presentation of these non-GAAP financial
measures is useful to investors in comparing VeriFone's operating
performance in any period with its performance in other periods and with
the performance of other companies that represent alternative investment
opportunities. These non-GAAP financial measures contain limitations and
should be considered as a supplement to, and not as a substitute for, or
superior to, disclosures made in accordance with GAAP.
These non-GAAP financial measures are not based on any comprehensive set
of accounting rules or principles and may therefore differ from non-GAAP
financial measures used by other companies. In addition, these non-GAAP
financial measures do not reflect all amounts and costs, such as
acquisition related costs, employee stock-based compensation costs, cash
that may be expended for future capital expenditures or contractual
commitments, working capital needs, cash used to service interest or
principal payments on VeriFone's debt, income taxes and the related cash
requirements, and restructuring charges, associated with VeriFone's
results of operations as determined in accordance with GAAP.
Furthermore, VeriFone expects to continue to incur income and expense
items that are similar to those that are excluded by the non-GAAP
adjustments described herein. Management compensates for these
limitations by also relying on the comparable GAAP financial measures.
Note A: Non-GAAP net revenues. Non-GAAP net revenues
exclude the fair value decrease (step-down) in deferred revenue at
acquisition. Although the step-down of deferred revenue fair value at
acquisition is reflected in our GAAP financial statements, it results in
net revenues immediately post-acquisition that are lower than net
revenues that would be recognized in accordance with GAAP on those same
services if they were sold under contracts entered into
post-acquisition. We adjust the step-down to achieve comparability to
net revenues of the acquired entity earned pre-acquisition and to our
GAAP net revenues to be earned on contracts sold in future periods.
These non-GAAP net revenues amounts are not intended to be a substitute
for our GAAP disclosures of net revenues, and should be read together
with our GAAP disclosures.
Note B: Non-GAAP organic net revenues. "Non-GAAP organic
net revenues" is a non-GAAP financial measure of net revenues excluding
"net revenues from businesses acquired in the past 12 months" (as
defined below). VeriFone determines non-GAAP organic net revenues by
deducting net revenues from businesses acquired in the past 12 months
from non-GAAP net revenues. Where non-GAAP organic net revenues is
presented for a period longer than one fiscal quarter, it is computed as
the sum of the non-GAAP organic net revenues for each quarter during
that period. This non-GAAP measure is used to evaluate VeriFone net
revenues without the impact of net revenues from acquired businesses, as
VeriFone analyzes performance both with and without the impact of our
recent acquisitions.
Net revenues from businesses acquired in the past 12 months consists
of net revenues derived from the sales channels of acquired resellers
and distributors, and net revenues from system solutions and services
attributable to businesses acquired in the 12 months preceding the
respective financial quarter(s). For acquisitions of small businesses
that are integrated within a relatively short time after the close of
the acquisition, we assume quarterly net revenues attributable to such
acquired businesses during the 12 months following acquisition remain at
the same level as in the first full quarter after the acquisition
closed. During periods prior to our acquisition of former customers, net
revenues from businesses acquired in the past 12 months consists of
sales by VeriFone to that former customer for that period.
Note C: Non-GAAP organic net revenues at constant currency.
VeriFone determines non-GAAP organic net revenues at constant currency
by recomputing non-GAAP organic net revenues denominated in currencies
other than U.S. Dollars in the current fiscal period using average
exchange rates for that particular currency during the corresponding
financial period of the prior year. VeriFone uses this non-GAAP measure
to evaluate performance on a comparable basis excluding the impact of
foreign currency fluctuations. Where non-GAAP organic net revenues at a
constant currency is presented for a period longer than one fiscal
quarter, it is computed as the sum of the non-GAAP organic net revenues
at constant currency for each quarter during that period.
Note D: Acquisition, Divestiture and Restructure Related.
VeriFone adjusts certain revenues and expenses for items that are the
result of acquisitions, divestitures and restructuring programs.
Acquisition related adjustments include the amortization of purchased
intangible assets and fixed asset fair value adjustments, incremental
costs associated with acquisitions (such as professional fees, legal
fees related to litigation assumed as part of acquisitions, and one-time
charges related to acquired balances), acquisition integration expenses
(such as costs of personnel required to assist with integration
transitions), loss on financial instruments entered into to fix the
acquisition purchase price in U.S. dollars when it is payable in foreign
currencies and fair value increase (step-up) of inventory on
acquisition. In addition, we adjust for changes in estimate, final
resolution of contingencies that existed at the time of acquisition or
collectability of associated notes receivable. Acquisition related
expenses also result from events which arise from unforeseen
circumstances which often occur outside the ordinary course of business.
These adjustments do not include the fair value adjustments relating to
certain contracts acquired as part of an acquisition whereby third
parties have yet to fulfill their contractual obligations.
In January 2013 we divested of certain assets and business operations
related to one of our product offerings. The estimated gain on the
divestiture, as well as the net revenues, cost of net revenues and
operating expenses for the three months ended January 31, 2013, that are
attributable to the divested assets and business operations have been
excluded from our non-GAAP financial measures.
Restructure related adjustments include all restructure charges as
defined in accordance with GAAP.
VeriFone analyzes the performance of its operations without regard to
these adjustments. In determining whether any acquisition, divestiture
or restructure related adjustment is appropriate, VeriFone takes into
consideration, among other things, how such adjustments would or would
not aid the understanding of the performance of its operations.
Note E: Stock-Based Compensation. Our non-GAAP financial
measures eliminate the effect of expense for stock-based compensation
because they are non-cash expenses that management believes are not
reflective of ongoing operating results. In particular, because of
varying available valuation methodologies, subjective assumptions and
the variety of award types which affect the calculations of stock-based
compensation, we believe that the exclusion of stock-based compensation
allows for more accurate comparisons of our operating results to our
peer companies. Stock-based compensation is very different from other
forms of compensation. A cash salary or bonus has a fixed and unvarying
cash cost. In contrast the expense associated with an award of an option
or other stock based award is unrelated to the amount of compensation
ultimately received by the employee; and the cost to the company is
based on valuation methodology and underlying assumptions that may vary
over time and does not reflect any cash expenditure by the company.
Furthermore, the expense associated with granting an employee an option
or other stock based award can be spread over multiple years and may be
reversed based on forfeitures which may differ from our original
assumptions unlike cash compensation expense which is typically recorded
contemporaneously with the time of award or payment.
Note F: Other Charges and Income. VeriFone excludes
certain revenue, expenses and other income (expense) that are the result
of unique or unplanned events that are noted below. It is difficult to
estimate the amount or timing of these items in advance. Although these
events are reflected in our GAAP financial statements, we exclude them
in our non-GAAP financial measures because we believe these items may
limit the comparability of our ongoing operations with prior and future
periods. These adjustments for other charges and income include:
-
Estimated penalties due to customers related to the July 2012 fire
that occurred in one of our repair and staging facilities in Brazil.
These potential customer penalties are associated with deliveries that
were delayed after the fire and are reflected as contra-revenue in
accordance with GAAP.
-
The $6.8 million charge to costs of net revenues during the three
months ended April 30, 2013 related to revenue generating assets of
our UK Taxi business for which the net book value of the assets
exceeded their fair value since the UK Taxi business has not met
expectations.
-
Litigation loss contingency expense.
-
Certain costs incurred in connection with senior executive management
changes, such as separation payments, legal fees and recruiter fees.
-
Certain personnel expenses that were incurred only for a fixed short
period of time in connection with scheduled operational changes as we
streamlined and centralized some of our global operations, including
international distribution and repair facilities.
-
Gains or losses on financial transactions, such as the accelerated
amortization of capitalized debt issuance costs due to the early
repayment of debt, or fees incurred to modify debt arrangements.
-
Non-cash interest expense recorded relating to the adoption of ASC
470-20 Debt with conversion and other options.
We assess our operating performance with these amounts included and
excluded, and by providing this information, we believe that users of
our financial statements are better able to understand the financial
results of what we consider to be our continuing operations.
Income taxes are adjusted for the tax effect of the adjusting items
related to our non-GAAP financial measures and to reflect our estimate
of cash taxes on a non-GAAP basis, in order to provide our management
and users of the financial statements with better clarity regarding the
on-going comparable performance and future liquidity of our business.
Our non-GAAP tax rates were 14% for the period May 1, 2012, through
October 31, 2013, 18% for the period December 31, 2011, through April
30, 2012, and 20% for the period November 1, 2011, through December 30,
2011.
Note G: Non-GAAP diluted shares. During the three and
twelve months ended October 31, 2013 and the three months ended July 31,
2013, the diluted non-GAAP weighted average shares include additional
shares that are dilutive, because we have a non-GAAP net income and GAAP
basis net loss.
During the twelve months ended October 31, 2012, the diluted non-GAAP
weighted average shares exclude shares that are dilutive for GAAP
purposes related to our Senior Convertible Notes that matured on June
15, 2012. In connection with our 1.375% Senior Convertible Notes we had
entered into certain note hedge transactions. We repaid these Notes in
cash upon maturity on June 15, 2012, and the then outstanding note hedge
transactions expired unused on June 15, 2012. Non-GAAP diluted shares
reflect the offset of shares that would have been deliverable in the
periods presented prior to the maturity of the Notes pursuant to note
hedge transactions. Under GAAP, shares delivered in hedge transactions
are not considered offsetting shares in the fully diluted share
calculation until they are actually delivered.
Note H: Free Cash Flow. Free cash flow is not defined under GAAP.
Therefore, it should not be considered a substitute for income or cash
flow data prepared in accordance with GAAP and may not be comparable to
similarly titled measures used by other companies. VeriFone determines
free cash flow as net cash provided by operating activities less capital
expenditures. We use this non-GAAP measure to evaluate our operating
cash spend including the impact of our investments in long-term
operating assets, such as property, equipment and capitalized software.
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