Revenues and Earnings per Share Exceed Guidance
VeriFone Systems, Inc. (NYSE: PAY):
Third Quarter Financial Highlights
-
GAAP and non-GAAP net revenues of $510 million
-
GAAP net income per diluted share of $0.08
-
Non-GAAP net income per diluted share of $0.47
-
Operating cash flow of $71 million
VeriFone Systems, Inc., the global leader in secure electronic payment
solutions, today announced financial results for the three months ended
July 31, 2015. GAAP and non-GAAP net revenues for the quarter were $510
million, compared to $476 million a year ago, a 7% increase, and an 18%
increase on a constant currency basis. GAAP net income per diluted share
for the quarter was $0.08, compared to a net loss of $0.26 a year ago.
Non-GAAP net income per diluted share was $0.47, compared to $0.40 a
year ago, a 18% increase.
“Q3 was a record quarter for Verifone,” said Paul Galant, Chief
Executive Officer of Verifone. “We saw the first half-billion-dollar
revenue quarter in the company’s history; grew our non-GAAP earnings per
share by 18 percent over last year; and outpaced both market
expectations and the industry. In addition, we will begin to launch our
next generation solutions at the end of this year. As we continue to
make the turn from mostly shipping terminals to delivering fully
integrated solutions, our next-generation of connected devices,
services, and digital commerce applications will drive unprecedented
value for our clients, and long-term growth for Verifone.”
The table below provides additional summary GAAP and non-GAAP financial
information and comparisons.
|
|
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES)
|
|
|
|
Three Months Ended July 31,
|
|
|
|
2015
|
|
2014
|
|
Change (2)
|
|
|
GAAP:
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
510
|
|
|
$
|
476
|
|
|
7
|
%
|
|
Gross margin as a % of net revenues
|
|
40.5
|
%
|
|
38.4
|
%
|
|
2.1pts
|
|
|
Net income (loss) per diluted share
|
|
$
|
0.08
|
|
|
$
|
(0.26
|
)
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (1):
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
510
|
|
|
$
|
476
|
|
|
7
|
%
|
|
Gross margin as a % of net revenues
|
|
41.7
|
%
|
|
41.6
|
%
|
|
0.1pts
|
|
|
Net income per diluted share
|
|
$
|
0.47
|
|
|
$
|
0.40
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Reconciliations for the non-GAAP measures are provided at the
end of this press release
|
|
(2) "nm" means not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and Business Highlights
-
Achieved record North America net revenues for the third consecutive
quarter driven by security needs and EMV migration, and increased
demand for Petroleum, Media, and our Payment as a Service offerings
-
Grew share in Europe, with six European markets achieving double-digit
revenue gains on a year-over-year constant currency basis
-
Grew Asia Pacific business by 11 percent sequentially; appointed
accomplished leaders for the Asia Pacific region; and achieved
important NCCA certification for our China subsidiary
-
Improved net revenues in Latin America 8 percent sequentially and
launched next-generation global gateway offering in Mexico
-
Expanded footprint of connected devices to build an integrated network
for delivering payment services and digital commerce applications,
including targeted media, loyalty, and offers
-
Awarded mobile POS business of a top four U.S. wireless carrier to
deploy the O/S agnostic e355 in all of its retail stores
-
Signed more than 25 U.S. merchants for Secure Commerce Architecture,
expanding EMV compliance and device connectivity
-
Increased media revenues and grew global installed base of our taxi
and fuel dispenser consumer-facing media screens
Guidance
Fourth fiscal quarter of 2015:
-
Non-GAAP net revenues of $510 million to $513 million
-
Non-GAAP net income per diluted share of $0.47 to $0.48
Full fiscal year 2015:
-
Non-GAAP net revenues of $1.997 billion to $2.0 billion
-
Non-GAAP net income per diluted share of $1.82 to $1.83
Conference Call
Verifone will hold its earnings conference call today, September 3rd,
at 1:30 pm (PT) / 4.30pm (ET). To listen to the call and view the
slides, visit Verifone’s website http://ir.verifone.com.
The recorded audio webcast will be available on Verifone's website until
September 10, 2015.
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 and operational
initiatives, including whether the expected benefits of our plan and
initiatives are achieved within expected timeframes or at all, short
product cycles and rapidly changing technologies and customer
preferences, our ability to maintain competitive leadership position
with respect to our payment solution offerings, our dependence on a
limited number of customers, the conduct of our business and operations
internationally, our ability to protect our computer systems and
networks from fraud, cyber-attacks or security breaches, our
assumptions, judgments and estimates regarding the impact on our
business of political instability in markets where we conduct business,
uncertainty in the global economic environment and financial markets,
the status of our relationships with and condition of third parties such
as our contract manufacturers, key customers, distributors and key
suppliers and service providers upon whom we rely in the conduct of our
business, the impact of foreign currency exchange rate fluctuations on
our business and results and 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
Verifone is transforming everyday transactions into opportunities for
connected commerce. We’re connecting more than 27 million payment
devices to the cloud—merging the online and in-store shopping experience
and creating the next generation of digital engagement between merchants
and consumers. We are built on a 30-year history of uncompromised
security. Our people are known as trusted experts that work with our
clients and partners, helping to solve their most complex payments
challenges. We have clients and partners in more than 150 countries,
including the world’s best-known retail brands, financial institutions
and payment providers.
Verifone.com | (NYSE: PAY) | @verifone
Additional Resources:
http://ir.verifone.com
|
|
|
VERIFONE SYSTEMS, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
|
|
|
|
|
2015
|
|
2014
|
|
% Change (1)
|
|
2015
|
|
2014
|
|
% Change (1)
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
$
|
333.0
|
|
|
$
|
299.4
|
|
|
11.2
|
%
|
|
$
|
970.7
|
|
|
$
|
851.3
|
|
|
14.0
|
%
|
|
|
Services
|
|
176.9
|
|
|
176.5
|
|
|
0.2
|
%
|
|
515.6
|
|
|
527.1
|
|
|
(2.2
|
)%
|
|
|
|
Total net revenues
|
|
509.9
|
|
|
475.9
|
|
|
7.1
|
%
|
|
1,486.3
|
|
|
1,378.4
|
|
|
7.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System solutions
|
|
201.2
|
|
|
186.8
|
|
|
7.7
|
%
|
|
575.9
|
|
|
541.9
|
|
|
6.3
|
%
|
|
|
Services
|
|
102.2
|
|
|
106.3
|
|
|
(3.9
|
)%
|
|
300.8
|
|
|
308.2
|
|
|
(2.4
|
)%
|
|
|
|
Total cost of net revenues
|
303.4
|
|
|
293.1
|
|
|
3.5
|
%
|
|
876.7
|
|
|
850.1
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
|
206.5
|
|
|
182.8
|
|
|
13.0
|
%
|
|
609.6
|
|
|
528.3
|
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
54.2
|
|
|
53.2
|
|
|
1.9
|
%
|
|
150.7
|
|
|
153.7
|
|
|
(2.0
|
)%
|
|
|
Sales and marketing
|
|
56.6
|
|
|
54.1
|
|
|
4.6
|
%
|
|
169.4
|
|
|
161.2
|
|
|
5.1
|
%
|
|
|
General and administrative
|
|
55.4
|
|
|
58.5
|
|
|
(5.3
|
)%
|
|
152.2
|
|
|
158.1
|
|
|
(3.7
|
)%
|
|
|
Litigation settlement and loss contingency expense
|
|
—
|
|
|
—
|
|
|
|
nm
|
|
1.2
|
|
|
9.0
|
|
|
(86.7
|
)%
|
|
|
Amortization of purchased intangible assets
|
|
20.0
|
|
|
24.5
|
|
|
(18.4
|
)%
|
|
62.9
|
|
|
73.9
|
|
|
(14.9
|
)%
|
|
|
|
Total operating expenses
|
|
186.2
|
|
|
190.3
|
|
|
(2.2
|
)%
|
|
536.4
|
|
|
555.9
|
|
|
(3.5
|
)%
|
|
Operating income (loss)
|
|
20.3
|
|
|
(7.5
|
)
|
|
|
nm
|
|
73.2
|
|
|
(27.6
|
)
|
|
|
nm
|
|
Interest expense, net
|
|
(8.2
|
)
|
|
(14.4
|
)
|
|
(43.1
|
)%
|
|
(23.5
|
)
|
|
(35.3
|
)
|
|
(33.4
|
)%
|
|
Other income (expense), net
|
|
(0.6
|
)
|
|
(0.4
|
)
|
|
|
nm
|
|
(3.5
|
)
|
|
(6.7
|
)
|
|
|
nm
|
|
Income (loss) before income taxes
|
|
11.5
|
|
|
(22.3
|
)
|
|
|
nm
|
|
46.2
|
|
|
(69.6
|
)
|
|
|
nm
|
|
Income tax provision (benefit)
|
|
1.4
|
|
|
5.8
|
|
|
|
nm
|
|
4.3
|
|
|
(1.8
|
)
|
|
|
nm
|
|
Consolidated net income (loss)
|
|
10.1
|
|
|
(28.1
|
)
|
|
|
nm
|
|
41.9
|
|
|
(67.8
|
)
|
|
|
nm
|
|
Net income attributable to noncontrolling interests
|
|
(0.6
|
)
|
|
(0.9
|
)
|
|
|
nm
|
|
(1.0
|
)
|
|
(1.4
|
)
|
|
|
nm
|
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
|
$
|
9.5
|
|
|
$
|
(29.0
|
)
|
|
|
nm
|
|
$
|
40.9
|
|
|
$
|
(69.2
|
)
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
$
|
0.36
|
|
|
$
|
(0.62
|
)
|
|
|
|
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
$
|
0.35
|
|
|
$
|
(0.62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net income
(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
114.4
|
|
|
112.0
|
|
|
|
|
|
113.9
|
|
|
111.2
|
|
|
|
|
|
|
Diluted
|
|
116.4
|
|
|
112.0
|
|
|
|
|
|
116.0
|
|
|
111.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) "nm" means not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
NET REVENUES INFORMATION
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
July 31,
|
|
April 30,
|
|
July 31,
|
|
% Change
|
|
% Change
|
|
July 31,
|
|
July 31,
|
|
|
|
|
|
|
Note
|
|
2015
|
|
2015
|
|
2014
|
|
(1) SEQ
|
|
(1) YoY
|
|
2015
|
|
2014
|
|
% Change (1)
|
|
GAAP net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
$
|
208.6
|
|
|
$
|
193.0
|
|
|
$
|
129.8
|
|
|
8.1
|
%
|
|
60.7
|
%
|
|
$
|
561.8
|
|
|
$
|
377.1
|
|
|
49.0
|
%
|
|
Latin America
|
|
|
|
73.7
|
|
|
68.1
|
|
|
89.2
|
|
|
8.2
|
%
|
|
(17.4
|
)%
|
|
212.9
|
|
|
241.0
|
|
|
(11.7
|
)%
|
|
EMEA
|
|
|
|
172.6
|
|
|
179.4
|
|
|
190.0
|
|
|
(3.8
|
)%
|
|
(9.2
|
)%
|
|
532.2
|
|
|
565.4
|
|
|
(5.9
|
)%
|
|
Asia-Pacific
|
|
|
|
55.0
|
|
|
49.6
|
|
|
66.9
|
|
|
10.9
|
%
|
|
(17.8
|
)%
|
|
179.4
|
|
|
194.9
|
|
|
(8.0
|
)%
|
|
Total
|
|
|
|
$
|
509.9
|
|
|
$
|
490.1
|
|
|
$
|
475.9
|
|
|
4.0
|
%
|
|
7.1
|
%
|
|
$
|
1,486.3
|
|
|
$
|
1,378.4
|
|
|
7.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net revenues: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
A
|
|
$
|
208.6
|
|
|
$
|
193.0
|
|
|
$
|
129.8
|
|
|
8.1
|
%
|
|
60.7
|
%
|
|
$
|
561.9
|
|
|
$
|
377.1
|
|
|
49.0
|
%
|
|
Latin America
|
|
|
|
73.7
|
|
|
68.1
|
|
|
89.2
|
|
|
8.2
|
%
|
|
(17.4
|
)%
|
|
212.9
|
|
|
241.0
|
|
|
(11.7
|
)%
|
|
EMEA
|
|
A
|
|
172.7
|
|
|
179.6
|
|
|
190.2
|
|
|
(3.8
|
)%
|
|
(9.2
|
)%
|
|
532.9
|
|
|
567.0
|
|
|
(6.0
|
)%
|
|
Asia-Pacific
|
|
A
|
|
55.0
|
|
|
49.6
|
|
|
67.2
|
|
|
10.9
|
%
|
|
(18.2
|
)%
|
|
179.5
|
|
|
195.2
|
|
|
(8.0
|
)%
|
|
Total
|
|
|
|
$
|
510.0
|
|
|
$
|
490.3
|
|
|
$
|
476.4
|
|
|
4.0
|
%
|
|
7.1
|
%
|
|
$
|
1,487.2
|
|
|
$
|
1,380.3
|
|
|
7.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net revenues
|
|
$
|
509.9
|
|
|
$
|
490.1
|
|
|
$
|
475.9
|
|
|
4.0
|
%
|
|
7.1
|
%
|
|
$
|
1,486.3
|
|
|
$
|
1,378.4
|
|
|
7.8
|
%
|
|
Plus: Non-GAAP net revenues adjustments
|
|
A
|
|
0.1
|
|
|
0.2
|
|
|
0.5
|
|
|
|
nm
|
|
|
nm
|
|
0.9
|
|
|
1.9
|
|
|
|
nm
|
|
Non-GAAP net revenues (2)
|
|
$
|
510.0
|
|
|
$
|
490.3
|
|
|
$
|
476.4
|
|
|
4.0
|
%
|
|
7.1
|
%
|
|
$
|
1,487.2
|
|
|
$
|
1,380.3
|
|
|
7.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) "nm" means not meaningful.
|
|
(2) Reconciliations for the non-GAAP measures are provided at the
end of this press release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For three months ended July 31, 2015 compared with three
|
|
For nine months ended July 31, 2015 compared with nine
|
|
|
|
months ended July 31, 2014
|
|
months ended July 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact due
|
|
|
|
|
|
Non-GAAP
|
|
|
|
Impact due
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
to Non-GAAP
|
|
|
|
|
|
net
|
|
|
|
to Non-GAAP
|
|
|
|
|
|
net
|
|
|
|
|
|
net
|
|
Non-GAAP
|
|
Impact due
|
|
revenues
|
|
|
|
net
|
|
Non-GAAP
|
|
Impact due
|
|
revenues
|
|
|
|
Net
|
|
revenues
|
|
net
|
|
to foreign
|
|
at constant
|
|
Net
|
|
revenues
|
|
net
|
|
to foreign
|
|
at constant
|
|
|
|
revenues
|
|
adjustments
|
|
revenues
|
|
currency
|
|
currency
|
|
revenues
|
|
adjustments
|
|
revenues
|
|
currency
|
|
currency
|
|
|
|
growth
|
|
(A)
|
|
growth
|
|
(B)
|
|
growth
|
|
growth
|
|
(A)
|
|
growth
|
|
(B)
|
|
growth
|
|
North America
|
|
60.7
|
%
|
|
0.0
|
pts
|
|
60.7
|
%
|
|
(0.4
|
)pts
|
|
61.1
|
%
|
|
49.0
|
%
|
|
0.0
|
pts
|
|
49.0
|
pts
|
|
(0.3
|
)pts
|
|
49.3
|
%
|
|
Latin America
|
|
(17.4
|
)%
|
|
0.0
|
pts
|
|
(17.4
|
)%
|
|
(17.0
|
)pts
|
|
(0.4
|
)%
|
|
(11.7
|
)%
|
|
0.0
|
pts
|
|
(11.7
|
)pts
|
|
(13.7
|
)pts
|
|
2.0
|
%
|
|
EMEA
|
|
(9.2
|
)%
|
|
0.0
|
pts
|
|
(9.2
|
)%
|
|
(14.3
|
)pts
|
|
5.1
|
%
|
|
(5.9
|
)%
|
|
0.1
|
pts
|
|
(6.0
|
)pts
|
|
(11.6
|
)pts
|
|
5.6
|
%
|
|
Asia-Pacific
|
|
(17.8
|
)%
|
|
0.4
|
pts
|
|
(18.2
|
)%
|
|
(10.7
|
)pts
|
|
(7.5
|
)%
|
|
(8.0
|
)%
|
|
0.0
|
pts
|
|
(8.0
|
)pts
|
|
(6.6
|
)pts
|
|
(1.4
|
)%
|
|
Total
|
|
7.1
|
%
|
|
0.0
|
pts
|
|
7.1
|
%
|
|
(10.5
|
)pts
|
|
17.6
|
%
|
|
7.8
|
%
|
|
0.1
|
pts
|
|
7.7
|
pts
|
|
(8.2
|
)pts
|
|
15.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
July 31, 2015
|
|
October 31, 2014
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
242.1
|
|
|
$
|
250.2
|
|
|
|
Accounts receivable, net of allowances of $9.4 and $9.9
|
|
322.4
|
|
|
305.5
|
|
|
|
Inventories
|
|
121.8
|
|
|
124.3
|
|
|
|
Prepaid expenses and other current assets
|
|
111.7
|
|
|
105.6
|
|
|
Total current assets
|
|
798.0
|
|
|
785.6
|
|
|
Fixed assets, net
|
|
183.1
|
|
|
177.7
|
|
|
Purchased intangible assets, net
|
|
335.9
|
|
|
457.6
|
|
|
Goodwill
|
|
1,083.8
|
|
|
1,185.9
|
|
|
Deferred tax assets, net
|
|
12.0
|
|
|
30.4
|
|
|
Other long-term assets
|
|
74.2
|
|
|
65.0
|
|
|
Total assets
|
|
$
|
2,487.0
|
|
|
$
|
2,702.2
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
150.1
|
|
|
$
|
161.2
|
|
|
|
Accruals and other current liabilities
|
|
213.9
|
|
|
207.0
|
|
|
|
Deferred revenue, net
|
|
85.8
|
|
|
92.1
|
|
|
|
Short-term debt
|
|
32.0
|
|
|
32.1
|
|
|
Total current liabilities
|
|
481.8
|
|
|
492.4
|
|
|
Long-term deferred revenue, net
|
|
53.6
|
|
|
51.0
|
|
|
Long-term debt
|
|
781.6
|
|
|
851.0
|
|
|
Long-term deferred tax liabilities, net
|
|
121.4
|
|
|
136.1
|
|
|
Other long-term liabilities
|
|
73.8
|
|
|
101.0
|
|
|
Total liabilities
|
|
1,512.2
|
|
|
1,631.5
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest in subsidiary
|
|
—
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
Common stock
|
|
1.1
|
|
|
1.1
|
|
|
Additional paid-in capital
|
|
1,718.4
|
|
|
1,675.7
|
|
|
Accumulated deficit
|
|
(497.3
|
)
|
|
(538.2
|
)
|
|
Accumulated other comprehensive loss
|
|
(282.3
|
)
|
|
(104.8
|
)
|
|
Total VeriFone Systems, Inc. stockholders’ equity
|
|
939.9
|
|
|
1,033.8
|
|
|
Noncontrolling interest in subsidiaries
|
|
34.9
|
|
|
36.1
|
|
|
Total equity
|
|
974.8
|
|
|
1069.9
|
|
|
Total liabilities and equity
|
|
$
|
2,487.0
|
|
|
$
|
2,702.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
Nine Months Ended July 31,
|
|
|
|
|
2015
|
|
2014
|
|
Cash flows from operating activities
|
|
|
|
|
Consolidated net income (loss)
|
$
|
41.9
|
|
|
$
|
(67.8
|
)
|
|
Adjustments to reconcile consolidated net income (loss) to net cash
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization, net
|
127.7
|
|
|
161.0
|
|
|
|
Stock-based compensation expense
|
32.2
|
|
|
40.9
|
|
|
|
Deferred income taxes, net
|
(8.7
|
)
|
|
(20.6
|
)
|
|
|
Write-off of debt issuance cost upon extinguishment
|
—
|
|
|
7.2
|
|
|
|
Other
|
14.5
|
|
|
11.0
|
|
|
|
Net cash provided by operating activities before changes in
operating assets and liabilities
|
207.6
|
|
|
131.7
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable, net
|
(33.4
|
)
|
|
(17.2
|
)
|
|
|
|
Inventories
|
(6.7
|
)
|
|
24.6
|
|
|
|
|
Prepaid expenses and other assets
|
(20.8
|
)
|
|
12.5
|
|
|
|
|
Accounts payable
|
(0.2
|
)
|
|
24.3
|
|
|
|
|
Deferred revenue, net
|
10.1
|
|
|
20.7
|
|
|
|
|
Other current and long-term liabilities
|
12.2
|
|
|
(49.2
|
)
|
|
|
|
Net change in operating assets and liabilities
|
(38.8
|
)
|
|
15.7
|
|
|
Net cash provided by operating activities
|
168.8
|
|
|
147.4
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Capital expenditures
|
(78.5
|
)
|
|
(62.8
|
)
|
|
Acquisition of businesses, net of cash and cash equivalents acquired
|
(13.6
|
)
|
|
—
|
|
|
Other investing activities, net
|
0.1
|
|
|
2.4
|
|
|
Net cash used in investing activities
|
(92.0
|
)
|
|
(60.4
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds from debt, net of issuance costs
|
60.0
|
|
|
1,081.1
|
|
|
Repayments of debt
|
(130.3
|
)
|
|
(1,199.7
|
)
|
|
Proceeds from issuance of common stock through employee equity
incentive plans
|
12.7
|
|
|
31.6
|
|
|
Other financing activities, net
|
(2.5
|
)
|
|
(2.1
|
)
|
|
Net cash used in financing activities
|
(60.1
|
)
|
|
(89.1
|
)
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash and cash
equivalents
|
(24.8
|
)
|
|
(2.3
|
)
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
(8.1
|
)
|
|
(4.4
|
)
|
|
Cash and cash equivalents, beginning of period
|
250.2
|
|
|
268.2
|
|
|
Cash and cash equivalents, end of period
|
$
|
242.1
|
|
|
$
|
263.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
to VeriFone
|
|
|
|
|
|
|
Net
|
|
Gross
|
|
margin
|
|
Operating
|
|
Income tax
|
|
Systems, Inc.
|
|
|
|
|
Note
|
|
revenues
|
|
margin
|
|
percentage
|
|
income
|
|
provision
|
|
stockholders
|
|
Three Months Ended July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
$
|
509.9
|
|
|
$
|
206.5
|
|
|
40.5
|
%
|
|
$
|
20.3
|
|
|
$
|
1.4
|
|
|
$
|
9.5
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
|
A
|
|
0.1
|
|
|
0.1
|
|
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
|
Amortization of purchased intangible assets
|
|
C
|
|
—
|
|
|
4.5
|
|
|
|
|
24.5
|
|
|
—
|
|
|
24.5
|
|
|
|
Other merger and acquisition related expenses
|
|
C
|
|
—
|
|
|
0.5
|
|
|
|
|
1.7
|
|
|
—
|
|
|
3.2
|
|
|
|
Stock based compensation
|
|
D
|
|
—
|
|
|
0.4
|
|
|
|
|
11.2
|
|
|
—
|
|
|
11.2
|
|
|
|
Restructuring charges
|
|
E
|
|
—
|
|
|
0.2
|
|
|
|
|
6.0
|
|
|
—
|
|
|
6.0
|
|
|
|
Other charges and income
|
|
E
|
|
—
|
|
|
0.5
|
|
|
|
|
7.7
|
|
|
—
|
|
|
7.7
|
|
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
7.9
|
|
|
(7.9
|
)
|
|
Non-GAAP
|
|
|
|
$
|
510.0
|
|
|
$
|
212.7
|
|
|
41.7
|
%
|
|
$
|
71.5
|
|
|
$
|
9.3
|
|
|
$
|
54.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
number of shares
|
|
|
|
|
|
Net income per share
|
|
|
|
|
|
|
used in computing
|
|
|
|
|
|
attributable to VeriFone
|
|
|
|
|
|
|
net income per
|
|
|
|
|
|
Systems, Inc. stockholders
|
|
|
|
|
|
|
share:
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
GAAP
|
|
|
|
114.4
|
|
|
116.4
|
|
|
|
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
Non-GAAP
|
|
|
|
114.4
|
|
|
116.4
|
|
|
|
|
|
|
$
|
0.47
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income per share is calculated by dividing the Net income
attributable to VeriFone Systems, Inc. stockholders by the
Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
Income
|
|
to VeriFone
|
|
|
|
|
|
|
Net
|
|
Gross
|
|
margin
|
|
Operating
|
|
tax
|
|
Systems, Inc.
|
|
|
|
|
Note
|
|
revenues
|
|
margin
|
|
percentage
|
|
income
|
|
provision
|
|
stockholders
|
|
Three Months Ended April 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
$
|
490.1
|
|
|
$
|
203.9
|
|
|
41.6
|
%
|
|
$
|
29.7
|
|
|
$
|
1.4
|
|
|
$
|
17.6
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
|
A
|
|
0.2
|
|
|
0.2
|
|
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
|
Amortization of purchased intangible assets
|
|
C
|
|
—
|
|
|
4.6
|
|
|
|
|
25.2
|
|
|
—
|
|
|
25.2
|
|
|
|
Other merger and acquisition related expenses
|
|
C
|
|
—
|
|
|
0.4
|
|
|
|
|
0.5
|
|
|
—
|
|
|
1.5
|
|
|
|
Stock based compensation
|
|
D
|
|
—
|
|
|
0.4
|
|
|
|
|
8.9
|
|
|
—
|
|
|
8.9
|
|
|
|
Restructuring charges
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
|
Other charges and income
|
|
E
|
|
—
|
|
|
0.2
|
|
|
|
|
4.6
|
|
|
—
|
|
|
4.6
|
|
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
7.3
|
|
|
(7.3
|
)
|
|
Non-GAAP
|
|
|
|
$
|
490.3
|
|
|
$
|
209.7
|
|
|
42.8
|
%
|
|
$
|
69.3
|
|
|
$
|
8.7
|
|
|
$
|
50.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
number of shares
|
|
|
|
|
|
Net income per share
|
|
|
|
|
|
|
used in computing
|
|
|
|
|
|
attributable to VeriFone
|
|
|
|
|
|
|
net income per
|
|
|
|
|
|
Systems, Inc. stockholders
|
|
|
|
|
|
|
share:
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
GAAP
|
|
|
|
113.9
|
|
|
115.9
|
|
|
|
|
|
|
$
|
0.15
|
|
|
$
|
0.15
|
|
|
Non-GAAP
|
|
|
|
113.9
|
|
|
115.9
|
|
|
|
|
|
|
$
|
0.45
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income per share is calculated by dividing the Net income
attributable to VeriFone Systems, Inc. stockholders by the
Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Operating
|
|
|
|
VeriFone
|
|
|
|
|
|
|
Net
|
|
Gross
|
|
margin
|
|
income
|
|
Income tax
|
|
Systems, Inc.
|
|
|
|
|
Note
|
|
revenues
|
|
margin
|
|
percentage
|
|
(loss)
|
|
provision
|
|
stockholders
|
|
Three Months Ended July 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
$
|
475.9
|
|
|
$
|
182.8
|
|
|
38.4
|
%
|
|
$
|
(7.5
|
)
|
|
$
|
5.8
|
|
|
$
|
(29.0
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
|
A
|
|
0.5
|
|
|
0.5
|
|
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|
|
Amortization of purchased intangible assets
|
|
C
|
|
—
|
|
|
10.1
|
|
|
|
|
34.6
|
|
|
—
|
|
|
34.6
|
|
|
|
Other merger, acquisition and divestiture related expenses
|
|
C
|
|
—
|
|
|
0.6
|
|
|
|
|
1.2
|
|
|
—
|
|
|
1.9
|
|
|
|
Stock based compensation
|
|
D
|
|
—
|
|
|
0.5
|
|
|
|
|
13.2
|
|
|
—
|
|
|
13.2
|
|
|
|
Restructuring charges
|
|
E
|
|
—
|
|
|
1.8
|
|
|
|
|
10.9
|
|
|
—
|
|
|
10.9
|
|
|
|
Cost of debt refinancing
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
4.1
|
|
|
—
|
|
|
9.3
|
|
|
|
Other charges and income
|
|
E
|
|
—
|
|
|
1.9
|
|
|
|
|
5.9
|
|
|
—
|
|
|
5.9
|
|
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
2.0
|
|
|
(2.0
|
)
|
|
Non-GAAP
|
|
|
|
$
|
476.4
|
|
|
$
|
198.2
|
|
|
41.6
|
%
|
|
$
|
62.9
|
|
|
$
|
7.8
|
|
|
$
|
45.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
used in
|
|
|
|
|
|
Net income (loss) per share
|
|
|
|
|
|
|
computing net
|
|
|
|
|
|
attributable to VeriFone
|
|
|
|
|
|
|
income (loss)
|
|
|
|
|
|
Systems, Inc. stockholders
|
|
|
|
|
|
|
per share:
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
GAAP
|
|
|
|
112.0
|
|
|
112.0
|
|
|
|
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.26
|
)
|
|
|
Adjustment for diluted shares
|
|
F
|
|
—
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
112.0
|
|
|
114.3
|
|
|
|
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income (loss) per share is calculated by dividing the Net
income (loss) attributable to VeriFone Systems, Inc. stockholders
by the Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
to VeriFone
|
|
|
|
|
|
|
Net
|
|
Gross
|
|
margin
|
|
Operating
|
|
Income tax
|
|
Systems, Inc.
|
|
|
|
|
Note
|
|
revenues
|
|
margin
|
|
percentage
|
|
income
|
|
provision
|
|
stockholders
|
|
Nine Months Ended July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
$
|
1,486.3
|
|
|
$
|
609.6
|
|
|
41.0
|
%
|
|
$
|
73.2
|
|
|
$
|
4.3
|
|
|
$
|
40.9
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
|
A
|
|
0.9
|
|
|
0.9
|
|
|
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
|
Amortization of purchased intangible assets
|
|
C
|
|
—
|
|
|
13.8
|
|
|
|
|
76.7
|
|
|
—
|
|
|
76.7
|
|
|
|
Other merger and acquisition related expenses
|
|
C
|
|
—
|
|
|
1.1
|
|
|
|
|
3.2
|
|
|
—
|
|
|
2.9
|
|
|
|
Stock based compensation
|
|
D
|
|
—
|
|
|
1.6
|
|
|
|
|
32.2
|
|
|
—
|
|
|
32.2
|
|
|
|
Restructure charges
|
|
E
|
|
—
|
|
|
0.3
|
|
|
|
|
7.5
|
|
|
—
|
|
|
7.5
|
|
|
|
Other charges and income
|
|
E
|
|
—
|
|
|
1.4
|
|
|
|
|
17.3
|
|
|
—
|
|
|
17.3
|
|
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
22.5
|
|
|
(22.5
|
)
|
|
Non-GAAP
|
|
|
|
$
|
1,487.2
|
|
|
$
|
628.7
|
|
|
42.3
|
%
|
|
$
|
211.0
|
|
|
$
|
26.8
|
|
|
$
|
155.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
number of shares
|
|
|
|
|
|
Net income per share
|
|
|
|
|
|
|
used in computing
|
|
|
|
|
|
attributable to VeriFone
|
|
|
|
|
|
|
net income per
|
|
|
|
|
|
Systems, Inc. stockholders
|
|
|
|
|
|
|
share:
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
GAAP
|
|
|
|
113.9
|
|
|
116.0
|
|
|
|
|
|
|
$
|
0.36
|
|
|
$
|
0.35
|
|
|
Non-GAAP
|
|
|
|
113.9
|
|
|
116.0
|
|
|
|
|
|
|
$
|
1.37
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income per share is calculated by dividing the Net income
attributable to VeriFone Systems, Inc. stockholders by the
Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Operating
|
|
Income tax
|
|
to VeriFone
|
|
|
|
|
|
|
Net
|
|
Gross
|
|
margin
|
|
income
|
|
provision
|
|
Systems, Inc.
|
|
|
|
|
Note
|
|
revenues
|
|
margin
|
|
percentage
|
|
(loss)
|
|
(benefit)
|
|
stockholders
|
|
Nine Months Ended July 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
$
|
1,378.4
|
|
|
$
|
528.3
|
|
|
38.3
|
%
|
|
$
|
(27.6
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(69.2
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred net revenues at acquisition
|
|
A
|
|
1.9
|
|
|
1.9
|
|
|
|
|
1.9
|
|
|
—
|
|
|
1.9
|
|
|
|
Amortization of purchased intangible assets
|
|
C
|
|
—
|
|
|
32.7
|
|
|
|
|
106.5
|
|
|
—
|
|
|
106.5
|
|
|
|
Other merger and acquisition related expenses
|
|
C
|
|
—
|
|
|
4.3
|
|
|
|
|
7.3
|
|
|
—
|
|
|
10.1
|
|
|
|
Stock based compensation
|
|
D
|
|
—
|
|
|
1.3
|
|
|
|
|
40.9
|
|
|
—
|
|
|
40.9
|
|
|
|
Restructuring charges
|
|
E
|
|
—
|
|
|
2.7
|
|
|
|
|
16.6
|
|
|
—
|
|
|
16.6
|
|
|
|
Cost of debt refinancing
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
4.1
|
|
|
—
|
|
|
11.2
|
|
|
|
Other charges and income
|
|
E
|
|
—
|
|
|
5.6
|
|
|
|
|
26.4
|
|
|
—
|
|
|
26.2
|
|
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
|
E
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
22.5
|
|
|
(22.5
|
)
|
|
Non-GAAP
|
|
|
|
$
|
1,380.3
|
|
|
$
|
576.8
|
|
|
41.8
|
%
|
|
$
|
176.1
|
|
|
$
|
20.7
|
|
|
$
|
121.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
number of shares
|
|
|
|
|
|
Net income (loss) per
|
|
|
|
|
|
|
used in
|
|
|
|
|
|
share attributable to
|
|
|
|
|
|
|
computing net
|
|
|
|
|
|
VeriFone Systems, Inc.
|
|
|
|
|
|
|
income (loss)
|
|
|
|
|
|
stockholders
|
|
|
|
|
|
|
per share:
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
|
|
|
|
Basic
|
|
Diluted
|
|
GAAP
|
|
|
|
111.2
|
|
|
111.2
|
|
|
|
|
|
|
$
|
(0.62
|
)
|
|
$
|
(0.62
|
)
|
|
|
Adjustment for diluted shares
|
|
F
|
|
—
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
111.2
|
|
|
113.4
|
|
|
|
|
|
|
$
|
1.09
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income (loss) per share is calculated by dividing the Net
income (loss) attributable to VeriFone Systems, Inc. stockholders
by the Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
|
|
|
|
|
|
|
|
|
Non-GAAP net
|
|
|
|
|
|
|
|
|
|
step-down in
|
|
|
|
|
|
Constant
|
|
|
revenues at
|
|
|
|
|
|
|
GAAP net
|
|
|
deferred revenue
|
|
|
Non-GAAP net
|
|
|
currency
|
|
|
constant
|
|
|
|
|
|
|
revenues
|
|
|
at acquisition
|
|
|
revenues
|
|
|
adjustment
|
|
|
currency
|
|
|
|
Note
|
|
|
|
|
|
(A)
|
|
|
(A)
|
|
|
(B)
|
|
|
(B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, 2015
|
|
North America
|
|
|
$
|
208.6
|
|
|
|
$
|
—
|
|
|
|
$
|
208.6
|
|
|
|
$
|
0.5
|
|
|
|
$
|
209.1
|
|
Latin America
|
|
|
73.7
|
|
|
|
—
|
|
|
|
73.7
|
|
|
|
15.1
|
|
|
|
88.8
|
|
EMEA
|
|
|
172.6
|
|
|
|
0.1
|
|
|
|
172.7
|
|
|
|
27.2
|
|
|
|
199.9
|
|
Asia-Pacific
|
|
|
55.0
|
|
|
|
—
|
|
|
|
55.0
|
|
|
|
7.2
|
|
|
|
62.2
|
|
|
|
Total
|
|
|
$
|
509.9
|
|
|
|
$
|
0.1
|
|
|
|
$
|
510.0
|
|
|
|
$
|
50.0
|
|
|
|
$
|
560.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
|
$
|
333.0
|
|
|
|
$
|
—
|
|
|
|
$
|
333.0
|
|
|
|
|
|
|
|
|
Services
|
|
|
176.9
|
|
|
|
0.1
|
|
|
|
177.0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
509.9
|
|
|
|
$
|
0.1
|
|
|
|
$
|
510.0
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2015
|
|
North America
|
|
|
$
|
193.0
|
|
|
|
$
|
—
|
|
|
|
$
|
193.0
|
|
|
|
|
|
|
|
|
Latin America
|
|
|
68.1
|
|
|
|
—
|
|
|
|
68.1
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
179.4
|
|
|
|
0.2
|
|
|
|
179.6
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
|
|
49.6
|
|
|
|
—
|
|
|
|
49.6
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
490.1
|
|
|
|
$
|
0.2
|
|
|
|
$
|
490.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
|
$
|
324.3
|
|
|
|
$
|
—
|
|
|
|
$
|
324.3
|
|
|
|
|
|
|
|
|
Services
|
|
|
165.8
|
|
|
|
0.2
|
|
|
|
166.0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
490.1
|
|
|
|
$
|
0.2
|
|
|
|
$
|
490.3
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, 2014
|
|
North America
|
|
|
$
|
129.8
|
|
|
|
$
|
—
|
|
|
|
$
|
129.8
|
|
|
|
|
|
|
|
|
Latin America
|
|
|
89.2
|
|
|
|
—
|
|
|
|
89.2
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
190.0
|
|
|
|
0.2
|
|
|
|
190.2
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
|
|
66.9
|
|
|
|
0.3
|
|
|
|
67.2
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
475.9
|
|
|
|
$
|
0.5
|
|
|
|
$
|
476.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
|
$
|
299.4
|
|
|
|
$
|
—
|
|
|
|
$
|
299.4
|
|
|
|
|
|
|
|
|
Services
|
|
|
176.5
|
|
|
|
0.5
|
|
|
|
177.0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
475.9
|
|
|
|
$
|
0.5
|
|
|
|
$
|
476.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
|
|
|
|
|
|
|
|
|
|
step-down in
|
|
|
|
|
|
|
Constant
|
|
|
revenues at
|
|
|
|
|
|
|
GAAP net
|
|
|
deferred revenue
|
|
|
Non-GAAP net
|
|
|
currency
|
|
|
constant
|
|
|
|
|
|
|
revenues
|
|
|
at acquisition
|
|
|
revenues
|
|
|
adjustment
|
|
|
currency
|
|
|
|
Note
|
|
|
|
|
|
(A)
|
|
|
(A)
|
|
|
(B)
|
|
|
(B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended July 31, 2015
|
|
|
North America
|
|
|
$
|
561.8
|
|
|
|
$
|
0.1
|
|
|
|
$
|
561.9
|
|
|
|
$
|
1.3
|
|
|
|
$
|
563.2
|
|
Latin America
|
|
|
212.9
|
|
|
|
—
|
|
|
|
212.9
|
|
|
|
32.9
|
|
|
|
245.8
|
|
EMEA
|
|
|
532.2
|
|
|
|
0.7
|
|
|
|
532.9
|
|
|
|
65.9
|
|
|
|
598.8
|
|
Asia-Pacific
|
|
|
179.4
|
|
|
|
0.1
|
|
|
|
179.5
|
|
|
|
12.8
|
|
|
|
192.3
|
|
|
|
Total
|
|
|
$
|
1,486.3
|
|
|
|
$
|
0.9
|
|
|
|
$
|
1,487.2
|
|
|
|
$
|
112.9
|
|
|
|
$
|
1,600.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
|
$
|
970.7
|
|
|
|
$
|
—
|
|
|
|
$
|
970.7
|
|
|
|
|
|
|
|
|
Services
|
|
|
515.6
|
|
|
|
0.9
|
|
|
|
516.5
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,486.3
|
|
|
|
$
|
0.9
|
|
|
|
$
|
1,487.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended July 31, 2014
|
|
|
North America
|
|
|
$
|
377.1
|
|
|
|
$
|
—
|
|
|
|
$
|
377.1
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
|
241.0
|
|
|
|
—
|
|
|
|
|
241.0
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
565.4
|
|
|
|
1.6
|
|
|
|
|
567.0
|
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
|
|
194.9
|
|
|
|
0.3
|
|
|
|
|
195.2
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,378.4
|
|
|
|
$
|
1.9
|
|
|
|
$
|
1,380.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
|
$
|
851.3
|
|
|
|
$
|
—
|
|
|
|
$
|
851.3
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
527.1
|
|
|
|
1.9
|
|
|
|
|
529.0
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,378.4
|
|
|
|
$
|
1.9
|
|
|
|
$
|
1,380.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
|
|
|
|
|
|
|
|
|
%
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
|
|
April 30,
|
|
July 31,
|
|
Change
|
|
Change
|
|
July 31,
|
|
July 31,
|
|
%
|
|
|
|
Note
|
|
2015
|
|
2015
|
|
2014
|
|
SEQ
|
|
YoY
|
|
2015
|
|
2014
|
|
Change
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net cash provided by operating activities
|
|
G
|
|
$
|
71.4
|
|
|
$
|
56.3
|
|
|
$
|
58.9
|
|
|
26.8
|
%
|
|
21.2
|
%
|
|
$
|
168.8
|
|
|
$
|
147.4
|
|
|
14.5
|
%
|
|
Less: GAAP capital expenditures
|
|
G
|
|
(29.6
|
)
|
|
(29.3
|
)
|
|
(20.9
|
)
|
|
1.0
|
%
|
|
41.6
|
%
|
|
(78.5
|
)
|
|
(62.8
|
)
|
|
25.0
|
%
|
|
Free cash flow
|
|
G
|
|
$
|
41.8
|
|
|
$
|
27.0
|
|
|
$
|
38.0
|
|
|
54.8
|
%
|
|
10.0
|
%
|
|
$
|
90.3
|
|
|
$
|
84.6
|
|
|
6.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending October 31,
|
|
Year Ending
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
October 31, 2015
|
|
|
|
|
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|
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|
Guidance
|
|
|
|
Range of Guidance
|
|
Range of Guidance
|
|
|
|
|
|
|
|
|
|
GAAP net revenues
|
|
|
|
$
|
510
|
|
|
$
|
513
|
|
|
$
|
1,996
|
|
|
$
|
1,999
|
|
|
|
|
|
|
|
|
|
|
Adjustments to net revenues
|
|
A
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net revenues
|
|
|
|
$
|
510
|
|
|
$
|
513
|
|
|
$
|
1,997
|
|
|
$
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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NON-GAAP FINANCIAL MEASURES
This press release and its attachments include several non-GAAP
financial measures, including non-GAAP net revenues; non-GAAP Services
net revenues; non-GAAP net revenues at constant currency; non-GAAP gross
margin as a percentage of non-GAAP net revenues; non-GAAP net income
(loss) per diluted share, and free cash flow. This press release also
includes certain forward-looking non-GAAP financial measures,
specifically projected non-GAAP net revenues and non-GAAP net income per
diluted share for the fourth fiscal quarter and full fiscal year 2015.
The corresponding reconciliations of these non-GAAP financial measures
to the most comparable GAAP financial measures, to the extent available
without unreasonable effort, are included in this press release.
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.
Our GAAP and non-GAAP net revenues are presented for our geographic
regions: North America, Latin America, EMEA and Asia-Pacific. North
America includes the US and Canada. Latin America includes South
America, Central America, Mexico and the Caribbean. EMEA includes
Europe, Russia, the Middle East, and Africa. Asia-Pacific includes
Australia, New Zealand, China, India and throughout the rest of Greater
Asia, including other Asia-Pacific Rim countries.
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 net revenues at constant currency.
Verifone determines non-GAAP net revenues at constant currency by
recomputing non-GAAP 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.
Note C: Merger and Acquisition Related. Verifone adjusts
certain revenues and expenses for items that are the result of merger
and acquisitions.
Acquisition related adjustments include the amortization of intangible
assets, fixed asset fair value adjustments, contingent consideration
adjustments, incremental costs associated with acquisitions (such as
legal fees related to litigation assumed as part of acquisitions) and
acquisition integration expenses (such as costs of personnel required to
assist with integration transitions). In addition, we adjust for changes
in estimate and final resolution of contingencies that existed at the
time of acquisition. Acquisition related expenses also result from
events which arise from unforeseen circumstances which often occur
outside the ordinary course of business.
Verifone analyzes the performance of its operations without regard to
these adjustments. In determining whether any merger or acquisition
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 D: 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 E: Other Charges and Income. Verifone excludes
certain revenue, expenses and other income (expense) that we have
determined is not reflective of ongoing operating results. 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:
-
Litigation settlement and loss contingency expense.
-
Certain costs incurred in connection with senior executive management
changes, such as separation payments, non-compete arrangement fees,
legal fees, recruiter fees and sign on bonuses.
-
Certain expenses, such as professional services and certain personnel
costs, incurred on initiatives to transform, streamline and centralize
our global operations.
-
Restructure and impairment charges related to certain exit activities
initiated as part of our global transformation initiatives.
-
Gain or loss on financial transactions, such as the accelerated
amortization of capitalized debt issuance costs due to the early
repayment of debt and costs incurred to refinance our debt.
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 medium to
long term 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. Under GAAP our Income tax provision (benefit)
as a percentage of Income (loss) before income taxes was 12.6% for the
fiscal quarter ended July 31, 2015, 7.6% for the fiscal quarter ended
April 30, 2015, (25.5)% for the fiscal quarter ended July 31, 2014, 9.3%
for the nine months ended July 31, 2015 and 2.7% for the nine months
ended July 31, 2014. For non-GAAP purposes, we used a 14.5% rate for the
fiscal quarters ended July 31, 2015, April 30, 2015 and July 31, 2014
and the nine months ended July 31, 2015 and 2014.
Note F: Non-GAAP diluted shares. Diluted non-GAAP weighted
average shares include additional shares that are dilutive for non-GAAP
computations of earnings per share in periods when we have a non-GAAP
net income and a GAAP basis net loss.
Note G: 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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