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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 1, 2016
VERIFONE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Commission File Number: 001-32465

Delaware
(State or Other Jurisdiction of Incorporation or Organization)

04-3692546
(IRS Employer Identification No.)


88 West Plumeria Drive
San Jose, CA 95134
(Address of principal executive offices, including zip code)

408-232-7800
(Registrant's telephone number, including area code)

N/A
(Former name or former address, if changed since last report)







Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On September 1, 2016, VeriFone Systems, Inc. (the "Company") announced its financial results for the fiscal quarter ended July 31, 2016 and updated its financial outlook for the full 2016 fiscal year. A copy of the Company's press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

During the Company's conference call and webcast to report these financial results on September 1, 2016, the Company will present certain supplemental financial information regarding its financial results for the fiscal quarter ended July 31, 2016 and its updated financial outlook for the full 2016 fiscal year. A copy of this supplemental financial information is attached hereto as Exhibit 99.2 and is incorporated herein by reference. This information is also available on the Company's investor relations website at http://ir.verifone.com.

The information in this Form 8-K provided under Item 2.02 and Exhibits 99.1 and 99.2 attached hereto are furnished to, but shall not be deemed filed with, the Securities and Exchange Commission or incorporated by reference into the Company's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 9.01. Financial Statements and Exhibits
(d) Exhibits.

99.1 Press release, dated September 1, 2016, titled "Verifone Reports Results for the Third Quarter of Fiscal 2016 and Updates Outlook for Full Year"

99.2 Financial Results for the Third Quarter Ended July 31, 2016 - Supplemental Financial Information








SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
VERIFONE SYSTEMS, INC.
 
 
Date: September 1, 2016
                              By: _/s/ Albert Liu______________________
                              Name: Albert Liu
Title: Executive Vice President, Corporate Development and General Counsel
 
 


                            



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
35715236_verifonelogoa03a10.jpg
Verifone Reports Results for the Third Quarter of Fiscal 2016 and Updates Outlook for Full Year



SAN JOSE, Calif. - (BUSINESS WIRE) - Verifone (NYSE: PAY), a world leader in payments and commerce solutions, today announced financial results for the three months ended July 31, 2016.

Third Quarter Financial Highlights
GAAP net revenues of $488 million and Non-GAAP net revenues of $493 million
GAAP net loss per diluted share of $0.28
Non-GAAP net income per diluted share of $0.42
Operating cash flow of $13 million

"We made real progress during the third quarter in further repositioning Verifone, building our services business and bringing our new devices to market. Despite this progress, Q3 was a challenging quarter for Verifone on revenues. We moved decisively to reduce our cost structure, and those initial efforts helped us exceed our revised EPS target,” said Paul Galant, Chief Executive Officer of Verifone.  "We are managing through what we believe are difficult but temporary local market and lingering EMV adoption issues. Our outlook for Q4 now assumes a significantly slower EMV rollout, and we are projecting fiscal year 2017 consolidated revenues to be approximately 3% below fiscal year 2016 levels. That said, we are relentlessly executing the long-term vision for Verifone to transform from a box shipper to a services provider.”

(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES)
 
 
 
Three Months Ended July 31,
 
Nine Months Ended July 31,
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
GAAP:
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
488

 
$
510

 
(4.3)%
 
$
1,528

 
$
1,486

 
2.8%
Gross margin as a % of net revenues
39.2
%
 
40.5
%
 
(1.3) pts

 
40.4
%
 
41.0
%
 
(0.6) pts

Net income (loss) per diluted share
$
(0.28
)
 
$
0.08

 
nm

 
$
(0.04
)
 
$
0.35

 
nm

 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP (1):
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
493

 
$
510

 
(3.4)%
 
$
1,539

 
$
1,487

 
3.4%
Gross margin as a % of net revenues
42.2
%
 
41.7
%
 
0.5 pts

 
42.5
%
 
42.3
%
 
0.2 pts

Net income per diluted share
$
0.42

 
$
0.47

 
(10.6)%
 
$
1.36

 
$
1.34

 
1.5%
(1) Reconciliations for the Non-GAAP measures are provided at the end of this press release.








Fourth Quarter and Fiscal Year 2016 Outlook

Guidance for the fourth fiscal quarter of 2016 is as follows:
Non-GAAP net revenues of $460 million
Non-GAAP net income per diluted share of $0.28-0.29

Guidance for the full fiscal year 2016 is as follows:
Non-GAAP net revenues of $2.0 billion
Non-GAAP net income per diluted share of $1.64 - $1.65





Conference Call
Verifone will hold its earnings conference call today, September 1st, 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 30, 2016.


About Verifone
Verifone is transforming everyday transactions into opportunities for connected commerce. We’re connecting 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 with approximately 29 million devices and terminals deployed worldwide. 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










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, our ability to maintain competitive leadership position with respect to our payment solution offerings, our dependence on a limited number of customers, the pace of EMV adoption in the United States, the conduct of our business and operations internationally, including the complexity of compliance with international laws and regulations and risks related to adverse regulatory actions, including tax-related audits and assessments, 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 upon whom we rely in the conduct of our business, our ability to effectively integrate the businesses we acquire and to achieve the expected benefits of such acquisitions, our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations, successful execution of our restructuring plans, including whether the expected benefits of restructuring plans are achieved within expected timeframes or at all, 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.






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,
 
 
 
 
2016
 
2015
 
% Change (1)
 
2016
 
2015
 
% Change (1)
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
292.1

 
$
333.0

 
(12.3
)%
 
$
972.1

 
$
970.7

 
0.1
 %
 
Services
 
196.0

 
176.9

 
10.8
 %
 
555.8

 
515.6

 
7.8
 %
 
 
Total net revenues
 
488.1

 
509.9

 
(4.3
)%
 
1,527.9

 
1,486.3

 
2.8
 %
 
 
 
 
 
 
 
 


 
 
 
 
 
 
Cost of net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
175.7

 
201.2

 
(12.7
)%
 
571.0

 
575.9

 
(0.9
)%
 
Services
 
121.3

 
102.2

 
18.7
 %
 
340.1

 
300.8

 
13.1
 %
 
 
Total cost of net revenues
297.0

 
303.4

 
(2.1
)%
 
911.1

 
876.7

 
3.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross margin
 
191.1

 
206.5

 
(7.5
)%
 
616.8

 
609.6

 
1.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
52.4

 
50.8

 
3.1
 %
 
158.1

 
147.2

 
7.4
 %
 
Sales and marketing
 
52.8

 
55.5

 
(4.9
)%
 
167.3

 
167.5

 
(0.1
)%
 
General and administrative
 
49.7

 
54.1

 
(8.1
)%
 
157.0

 
150.4

 
4.4
 %
 
Restructuring and related charges
 
33.6

 
5.8

 
nm

 
34.2

 
7.2

 
nm

 
Litigation settlement and loss contingency expense
 
0.6

 

 
nm

 
0.6

 
1.2

 
nm

 
Amortization of purchased intangible assets
 
24.3

 
20.0

 
21.5
 %
 
65.9

 
62.9

 
4.8
 %
 
 
Total operating expenses
 
213.4

 
186.2

 
14.6
 %
 
583.1

 
536.4

 
8.7
 %
Operating income (loss)
 
(22.3
)
 
20.3

 
nm

 
33.7

 
73.2

 
nm

Interest expense, net
 
(9.0
)
 
(8.2
)
 
9.8
 %
 
(25.9
)
 
(23.5
)
 
10.2
 %
Other income (expense), net
 
0.1

 
(0.6
)
 
nm

 
(6.8
)
 
(3.5
)
 
nm

Income (loss) before income taxes
 
(31.2
)
 
11.5

 
nm

 
1.0

 
46.2

 
nm

Income tax provision
 
0.3

 
1.4

 
nm

 
5.4

 
4.3

 
nm

Consolidated net income (loss)
 
(31.5
)
 
10.1

 
nm

 
(4.4
)
 
41.9

 
nm

Net (income) loss attributable to noncontrolling interests
 
0.4

 
(0.6
)
 
nm

 
(0.3
)
 
(1.0
)
 
nm

Net income (loss) attributable to VeriFone Systems, Inc. stockholders
 
$
(31.1
)
 
$
9.5

 
nm

 
$
(4.7
)
 
$
40.9

 
nm

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.28
)
 
$
0.08

 
 
 
$
(0.04
)
 
$
0.36

 
 
 
Diluted
 
$
(0.28
)
 
$
0.08

 
 
 
$
(0.04
)
 
$
0.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares used in computing net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
110.7

 
114.4

 
 
 
110.8

 
113.9

 
 
 
Diluted
 
110.7

 
116.4

 
 
 
110.8

 
116.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) "nm" means not meaningful
 
 
 
 
 
 
 
 





VERIFONE SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN MILLIONS)
 
 
July 31, 2016
 
October 31, 2015
ASSETS
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
156.6

 
$
208.9

 
Accounts receivable, net of allowances of $13.5 and $8.8
370.1

 
362.0

 
Inventories
183.1

 
129.7

 
Prepaid expenses and other current assets
136.5

 
81.7

Total current assets
846.3

 
782.3

Property and equipment, net
195.5

 
191.0

Purchased intangible assets, net
340.2

 
317.5

Goodwill
1,134.5

 
1,084.0

Deferred tax assets, net
39.0

 
35.9

Other long-term assets
80.0

 
62.4

Total assets
$
2,635.5

 
$
2,473.1

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
$
191.8

 
$
189.4

 
Accruals and other current liabilities
226.8

 
229.9

 
Deferred revenue, net
108.6

 
82.9

 
Short-term debt
65.7

 
39.1

Total current liabilities
592.9

 
541.3

Long-term deferred revenue, net
62.5

 
55.3

Long-term debt
907.8

 
760.2

Deferred tax liabilities, net
110.9

 
102.9

Other long-term liabilities
90.1

 
78.9

Total liabilities
1,764.2

 
1,538.6

 
 
 
 
Redeemable noncontrolling interest in subsidiary
6.3

 

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
1.1

 
1.1

Additional paid-in capital
1,760.8

 
1,726.5

Accumulated deficit
(613.8
)
 
(535.7
)
Accumulated other comprehensive loss
(317.2
)
 
(292.3
)
Total VeriFone Systems, Inc. stockholders’ equity
830.9

 
899.6

Noncontrolling interests in subsidiaries
34.1

 
34.9

Total equity
865.0

 
934.5

Total liabilities, redeemable noncontrolling interest in subsidiary and equity
$
2,635.5

 
$
2,473.1






VERIFONE SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN MILLIONS)
 
 
 
 
Nine Months Ended July 31,
 
 
 
2016
 
2015
Cash flows from operating activities
 
 
 
Consolidated net income (loss)
$
(4.4
)
 
$
41.9

Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization, net
133.8

 
127.7

 
Stock-based compensation expense
32.9

 
32.2

 
Deferred income taxes, net
(7.2
)
 
(8.7
)
 
Non-cash restructuring and related charges
29.1

 

 
Other
5.0

 
14.5

 
Net cash provided by operating activities before changes in operating assets and liabilities
189.2

 
207.6

 
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable, net
13.5

 
(33.4
)
 
 
Inventories
(53.3
)
 
(6.7
)
 
 
Prepaid expenses and other assets
(27.0
)
 
(20.8
)
 
 
Accounts payable
(2.3
)
 
(0.2
)
 
 
Deferred revenue, net
28.4

 
10.1

 
 
Other current and long-term liabilities
(21.8
)
 
12.2

 
 
Net change in operating assets and liabilities
(62.5
)
 
(38.8
)
Net cash provided by operating activities
126.7

 
168.8

 
 
 
 
 
 
Cash flows from investing activities
 
 
 
Capital expenditures
(82.2
)
 
(78.5
)
Acquisition of businesses, net of cash acquired
(172.2
)
 
(13.6
)
Other investing activities, net
1.9

 
0.1

Net cash used in investing activities
(252.5
)
 
(92.0
)
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
Proceeds from debt, net of issuance costs
490.4

 
60.0

Repayments of debt
(333.9
)
 
(130.3
)
Proceeds from issuance of common stock through employee equity incentive plans
3.3

 
12.7

Stock repurchases
(79.9
)
 

Other financing activities, net
(4.1
)
 
(2.5
)
Net cash provided by (used in) financing activities
75.8

 
(60.1
)
 
 
 
 
 
 
Effect of foreign currency exchange rate changes on cash and cash equivalents
(2.3
)
 
(24.8
)
 
 
 
 
 
 
Net decrease in cash and cash equivalents
(52.3
)
 
(8.1
)
Cash and cash equivalents, beginning of period
208.9

 
250.2

Cash and cash equivalents, end of period
$
156.6

 
$
242.1







VERIFONE SYSTEMS, INC.
NET REVENUES INFORMATION
(UNAUDITED, IN MILLIONS, EXCEPT PERCENTAGES)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
Note
 
July 31, 2016
 
April 30, 2016
 
July 31, 2015
 
% Change (1) SEQ
 
% Change (1) YoY
 
July 31, 2016
 
July 31, 2015
 
% Change (1)
GAAP net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
 
$
191.5

 
$
209.3

 
$
208.6

 
(8.5
)%
 
(8.2
)%
 
$
636.5

 
$
561.8

 
13.3
 %
Latin America
 
 
55.1

 
69.8

 
73.7

 
(21.1
)%
 
(25.2
)%
 
179.6

 
212.9

 
(15.6
)%
EMEA
 
 
190.0

 
197.0

 
172.6

 
(3.6
)%
 
10.1
 %
 
557.4

 
532.2

 
4.7
 %
Asia-Pacific
 
 
51.5

 
50.2

 
55.0

 
2.6
 %
 
(6.4
)%
 
154.4

 
179.4

 
(13.9
)%
Total
 
 
$
488.1

 
$
526.3

 
$
509.9

 
(7.3
)%
 
(4.3
)%
 
$
1,527.9

 
$
1,486.3

 
2.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net revenues: (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
A
 
$
196.0

 
$
215.4

 
$
208.6

 
(9.0
)%
 
(6.0
)%
 
$
647.1

 
$
561.9

 
15.2
 %
Latin America
A
 
55.1

 
69.8

 
73.7

 
(21.1
)%
 
(25.2
)%
 
179.6

 
212.9

 
(15.6
)%
EMEA
A
 
190.0

 
197.0

 
172.7

 
(3.6
)%
 
10.0
 %
 
557.4

 
532.9

 
4.6
 %
Asia-Pacific
A
 
51.5

 
50.2

 
55.0

 
2.6
 %
 
(6.4
)%
 
154.4

 
179.5

 
(14.0
)%
Total
 
 
$
492.6

 
$
532.4

 
$
510.0

 
(7.5
)%
 
(3.4
)%
 
$
1,538.5

 
$
1,487.2

 
3.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net revenues
 
$
488.1

 
$
526.3

 
$
509.9

 
(7.3
)%
 
(4.3
)%
 
$
1,527.9

 
$
1,486.3

 
2.8
 %
Plus: Non-GAAP net revenues adjustments
A
 
4.5

 
6.1

 
0.1

 
nm

 
nm

 
10.6

 
0.9

 
nm

Non-GAAP net revenues (2)
 
492.6

 
532.4

 
$
510.0

 
(7.5
)%
 
(3.4
)%
 
1,538.5

 
$
1,487.2

 
3.4
 %
Net revenues from businesses acquired in the past 12 months
B
 
(22.8
)
 
(24.6
)
 
(0.1
)
 
nm

 
nm

 
(52.6
)
 
(0.3
)
 
nm

Non-GAAP organic net revenues (2)
 
 
$
469.8

 
$
507.8

 
$
509.9

 
(7.5
)%
 
(7.9
)%
 
$
1,485.9

 
$
1,486.9

 
(0.1
)%
(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, 2016 compared with three months ended July 31, 2015
 
For nine months ended July 31, 2016 compared with nine months ended July 31, 2015
 
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
North America
(8.2
)%
 
1.3pts
 
(9.5
)%
 
(0.2)pts

 
(9.3
)%
 
13.3
 %
 
0.9pts
 
12.4
 %
 
(0.1)pts

 
12.5
 %
Latin America
(25.2
)%
 
0.1pts
 
(25.3
)%
 
(8.4)pts

 
(16.9
)%
 
(15.6
)%
 
0.0pts
 
(15.6
)%
 
(16.7)pts

 
1.1
 %
EMEA
10.1
 %
 
9.1pts
 
1.0
 %
 
(2.6)pts

 
3.6
 %
 
4.7
 %
 
7.0pts
 
(2.3
)%
 
(5.3)pts

 
3.0
 %
Asia-Pacific
(6.4
)%
 
0.0pts
 
(6.4
)%
 
(3.9)pts

 
(2.5
)%
 
(13.9
)%
 
0.1pts
 
(14.0
)%
 
(6.4)pts

 
(7.6
)%
Total
(4.3
)%
 
3.6pts
 
(7.9
)%
 
(2.6)pts

 
(5.3
)%
 
2.8
 %
 
2.9pts
 
(0.1
)%
 
(5.1)pts

 
5.0
 %














Non-GAAP Reconciliations





VERIFONE SYSTEMS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net revenues
 
Amortization of step-down in deferred revenue at acquisition
 
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)
 
(A)
 
(B)
 
(B)
 
(C)
 
(C)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended July 31, 2016
North America
 
$
191.5

 
$
4.5

 
$
196.0

 
$
(7.1
)
 
$
188.9

 
$
0.3

 
$
189.2

Latin America
 
55.1

 

 
55.1

 

 
55.1

 
6.1

 
61.2

EMEA
 
190.0

 

 
190.0

 
(15.7
)
 
174.3

 
4.6

 
178.9

Asia-Pacific
 
51.5

 

 
51.5

 

 
51.5

 
2.2

 
53.7

 
 
Total
 
$
488.1

 
$
4.5

 
$
492.6

 
$
(22.8
)
 
$
469.8

 
$
13.2

 
$
483.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
292.1

 
$

 
$
292.1

 
$
(2.3
)
 
$
289.8

 
$
8.7

 
$
298.5

Services
 
196.0

 
4.5

 
200.5

 
(20.5
)
 
180.0

 
4.5

 
184.5

 
 
Total
 
$
488.1

 
$
4.5

 
$
492.6

 
$
(22.8
)
 
$
469.8

 
$
13.2

 
$
483.0

Three Months Ended April 30, 2016
North America
 
$
209.3

 
$
6.1

 
$
215.4

 
$
(7.7
)
 
$
207.7

Latin America
 
69.8

 

 
69.8

 

 
69.8

EMEA
 
197.0

 

 
197.0

 
(16.9
)
 
180.1

Asia-Pacific
 
50.2

 

 
50.2

 

 
50.2

 
 
Total
 
$
526.3

 
$
6.1

 
$
532.4

 
$
(24.6
)
 
$
507.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
342.5

 
$

 
$
342.5

 
$

 
$
342.5

Services
 
183.8

 
6.1

 
189.9

 
(24.6
)
 
165.3

 
 
Total
 
$
526.3

 
$
6.1

 
$
532.4

 
$
(24.6
)
 
$
507.8

Three Months Ended July 31, 2015
North America
 
$
208.6

 
$

 
$
208.6

 
$

 
$
208.6

Latin America
 
73.7

 

 
73.7

 

 
73.7

EMEA
 
172.6

 
0.1

 
172.7

 
(0.1
)
 
172.6

Asia-Pacific
 
55.0

 

 
55.0

 

 
55.0

 
 
Total
 
$
509.9

 
$
0.1

 
$
510.0

 
$
(0.1
)
 
$
509.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
333.0

 
$

 
$
333.0

 
$

 
$
333.0

Services
 
176.9

 
0.1

 
177.0

 
(0.1
)
 
176.9

 
 
Total
 
$
509.9

 
$
0.1

 
$
510.0

 
$
(0.1
)
 
$
509.9








VERIFONE SYSTEMS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net revenues
 
Amortization of step-down in deferred revenue at acquisition
 
Non-GAAP net revenues
 
Net revenues from businesses acquired in the past 12 months
 
Non-GAAP organic net revenues
 
Constant currency adjustment
 
Non-GAAP net revenues at constant currency
 
 
Note
 
 
 
(A)
 
(A)
 
(B)
 
(B)
 
(C)
 
(C)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended July 31, 2016
North America
 
$
636.5

 
$
10.6

 
$
647.1

 
$
(15.7
)
 
$
631.4

 
$
1.0

 
$
632.4

Latin America
 
179.6

 

 
179.6

 

 
179.6

 
35.6

 
215.2

EMEA
 
557.4

 

 
557.4

 
(36.9
)
 
520.5

 
27.9

 
548.4

Asia-Pacific
 
154.4

 

 
154.4

 

 
154.4

 
11.4

 
165.8

 
 
Total
 
$
1,527.9

 
$
10.6

 
$
1,538.5

 
$
(52.6
)
 
$
1,485.9

 
$
75.9

 
$
1,561.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
972.1

 
$

 
$
972.1

 
$
(7.1
)
 
$
965.0

 
$
45.0

 
$
1,010.0

Services
 
555.8

 
10.6

 
566.4

 
(45.5
)
 
520.9

 
30.9

 
551.8

 
 
Total
 
$
1,527.9

 
$
10.6

 
$
1,538.5

 
$
(52.6
)
 
$
1,485.9

 
$
75.9

 
$
1,561.8


Nine Months Ended July 31, 2015
North America
 
$
561.8

 
$
0.1

 
$
561.9

 
$

 
$
561.9

Latin America
 
212.9

 

 
212.9

 

 
212.9

EMEA
 
532.2

 
0.7

 
532.9

 
(0.3
)
 
532.6

Asia-Pacific
 
179.4

 
0.1

 
179.5

 

 
179.5

 
 
Total
 
$
1,486.3

 
$
0.9

 
$
1,487.2

 
$
(0.3
)
 
$
1,486.9

 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
970.7

 
$

 
$
970.7

 
$

 
$
970.7

Services
 
515.6

 
0.9

 
516.5

 
(0.3
)
 
516.2

 
 
Total
 
$
1,486.3

 
$
0.9

 
$
1,487.2

 
$
(0.3
)
 
$
1,486.9








VERIFONE SYSTEMS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
 
Note
Net revenues
 
Gross margin
 
Gross margin percentage
 
Operating income (loss)
 
Income tax provision
 
Net income (loss) attributable to VeriFone Systems, Inc. stockholders
Three Months Ended July 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
$
488.1

 
$
191.1

 
39.2
%
 
$
(22.3
)
 
$
0.3

 
$
(31.1
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of step-down deferred services net revenues and associated costs of goods sold at acquisition
A
4.5

 
3.1

 
 
 
3.1

 
 
 
3.1

 
Merger and acquisition related
D

 
3.9

 
 
 
29.2

 

 
27.1

 
Stock based compensation
E

 
0.9

 
 
 
10.8

 

 
10.8

 
Restructuring and related charges
F

 
5.2

 
 
 
38.9

 

 
38.9

 
Other charges and income
F

 
3.8

 
 
 
5.2

 

 
5.2

 
Income tax effect of non-GAAP exclusions
G

 

 
 
 

 
7.7

 
(7.7
)
Non-GAAP
 
$
492.6

 
$
208.0

 
42.2
%
 
$
64.9

 
$
8.0

 
$
46.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares used in computing net income (loss) per share:
 
 
 
 
 
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders (1)
 
 
 
Basic
 
Diluted
 
 
 
 
 
Basic
 
Diluted
GAAP
 
110.7

 
110.7

 
 
 
 
 
$
(0.28
)
 
$
(0.28
)
 
Adjustment for diluted shares
H

 
0.7

 
 
 
 
 
 
 
 
Non-GAAP
 
110.7

 
111.4

 
 
 
 
 
$
0.42

 
$
0.42

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

 
Merger and acquisition related
D

 
5.0

 
 
 
26.2

 

 
27.7

 
Stock based compensation
E

 
0.4

 
 
 
11.2

 

 
11.2

 
Restructuring and related charges
F

 
0.2

 
 
 
6.0

 

 
6.0

 
Other charges and income
F

 
0.5

 
 
 
7.7

 

 
7.7

 
Income tax effect of non-GAAP exclusions
G

 

 
 
 

 
7.9

 
(7.9
)
Non-GAAP
 
$
510.0

 
$
212.7

 
41.7
%
 
$
71.5

 
$
9.3

 
$
54.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares used in computing net income per share:
 
 
 
 
 
Net income per share attributable to VeriFone Systems, Inc. stockholders (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) Diluted 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 used in computing net income (loss) per share attributable to VeriFone Systems, Inc. stockholders.






VERIFONE SYSTEMS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
 
Note
Net revenues
 
Gross margin
 
Gross margin percentage
 
Operating income
 
Income tax provision
 
Net income (loss) attributable to VeriFone Systems, Inc. stockholder
Nine Months Ended July 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
$
1,527.9

 
$
616.8

 
40.4
%
 
$
33.7

 
$
5.4

 
$
(4.7
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of step-down in deferred services net revenues and associated costs of goods sold at acquisition
A
10.6

 
7.5

 
 
 
7.5

 

 
7.5

 
Merger and acquisition related
D

 
11.8

 
 
 
82.3

 

 
80.3

 
Stock based compensation
E

 
2.5

 
 
 
32.9

 

 
32.9

 
Restructuring and related charges
F

 
5.1

 
 
 
39.3

 

 
39.3

 
Other charges and income
F

 
10.4

 
 
 
13.6

 

 
17.3

 
Income tax effect of non-GAAP exclusions
G

 

 
 
 

 
20.8

 
(20.8
)
Non-GAAP
 
$
1,538.5

 
$
654.0

 
42.5
%
 
$
209.4

 
$
26.2

 
$
151.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares used in computing net income per share:
 
 
 
 
 
Net income per share attributable to VeriFone Systems, Inc. stockholders (1)
 
 
 
Basic
 
Diluted
 
 
 
 
 
Basic
 
Diluted
GAAP
 
110.8

 
110.8

 
 
 
 
 
$
(0.04
)
 
$
(0.04
)
 
Adjustment for diluted shares
H

 
0.9

 
 
 
 
 
 
 
 
Non-GAAP
 
110.8

 
111.7

 
 
 
 
 
$
1.37

 
$
1.36

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

 
Merger and acquisition related
D

 
14.9

 
 
 
79.9

 

 
79.6

 
Stock based compensation
E

 
1.6

 
 
 
32.2

 

 
32.2

 
Restructuring and related charges
F

 
0.3

 
 
 
7.5

 

 
7.5

 
Other charges and income
F

 
1.4

 
 
 
17.3

 

 
17.3

 
Income tax effect of non-GAAP exclusions
G

 

 
 
 

 
22.5

 
(22.5
)
Non-GAAP
 
$
1,487.2

 
$
628.7

 
42.3
%
 
$
211.0

 
$
26.8

 
$
155.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares used in computing net income (loss) per share:
 
 
 
 
 
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders (1)
 
 
 
Basic
 
Diluted
 
 
 
 
 
Basic
 
Diluted
GAAP
 
113.9

 
116.0

 
 
 
 
 
$
0.36

 
$
0.35

Non-GAAP
 
113.9

 
116.0