Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  
FORM 8-K
 
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): June 8, 2018
 
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02. Results of Operations and Financial Condition

On June 8, 2018, VeriFone Systems, Inc. (the “Company”) announced its financial results for the fiscal quarter ended April 30, 2018. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Form 8-K provided under Item 2.02 and Exhibit 99.1 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.

Exhibit No.
 
Description of Exhibit
 
 
 
 
 






 SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
VERIFONE SYSTEMS, INC.
 
 
 
 
Date: June 8, 2018
 
By:
/s/ Vikram Varma
 
 
Name:
Vikram Varma
 
 
Title:
General Counsel and Secretary
 
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Exhibit 99.1
393828243_verifonelogoa03a83.jpg
June 8, 2018

Verifone Reports Results for the Second Quarter of Fiscal 2018
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 April 30, 2018.

Second Quarter 2018 Financial Highlights
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES)
 
 
 
 
 
 
 
Three Months Ended April 30,
 
Six Months Ended April 30,
 
2018
 
2017
 
Change (1)
 
2018
 
2017
 
Change (1)
GAAP:
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
438

 
$
474

 
(7.5)%
 
$
875

 
$
928

 
(5.6
)%
Gross margin as a % of net revenues
40.7
%
 
36.5
%
 
4.2
  pts
 
40.7
%
 
37.1
%
 
3.6
  pts
Net loss per diluted share
$
(0.15
)
 
$
(0.80
)
 
nm

 
$
(0.09
)
 
$
(0.95
)
 
nm

 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP, adjusted to exclude divested businesses (2):
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
438

 
$
445

 
(1.4)%
 
$
863

 
$
870

 
(0.8)%
Gross margin as a % of net revenues
41.2
%
 
42.2
%
 
(1.0
) pts
 
41.4
%
 
41.7
%
 
(0.3
) pts
Net income per diluted share
$
0.25

 
$
0.36

 
(30.6)%
 
$
0.47

 
$
0.60

 
(21.7
)%
(1) "nm" means not meaningful.
(2) Reconciliations for the Non-GAAP measures are provided at the end of this press release.

"We exceeded our revenue guidance for our second fiscal quarter due to continuing execution of our top three strategic priorities: scaling Verifone’s next-generation devices, connecting more of our 30+ million device footprint to Verifone’s cloud-based services, and leveraging our leadership position at the point-of-sale with value-added services that help merchants start, run, and grow their businesses," said Paul Galant, Chief Executive Officer of Verifone. "As we announced in April, we entered into a definitive agreement to be acquired by an investor group led by Francisco Partners, a leading technology focused private equity firm. We look forward to benefiting from the resources and expertise of Francisco Partners as we continue growing our business and better serving our clients."





Merger Agreement
As previously announced, on April 9, 2018, an investor group led by Francisco Partners, a leading technology-focused private equity firm, entered into a definitive agreement to acquire Verifone in an all-cash transaction for total consideration of approximately $3.4 billion, which includes Verifone’s net debt. Under the terms of the merger agreement, Verifone stockholders will receive $23.04 per share in cash upon closing of the transaction. For further information on the transaction and the related merger agreement, please refer to Verifone’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 9, 2018, and Verifone’s definitive proxy statement on Schedule 14A filed with the SEC on May 21, 2018.

Given the announcement regarding Verifone’s acquisition by an investor group led by Francisco Partners, Verifone will not host an earnings conference call, provide financial guidance or publish supplemental financial presentation slides. Verifone is also withdrawing its previously issued financial guidance for fiscal year 2018.



About Verifone
Verifone is transforming every day transactions into new and engaging opportunities for merchants and consumers at the last inch of payments and commerce. Powered by a growing footprint of more than 30 million devices in more than 150 countries, our people are trusted experts working with the world’s best-known retail brands, financial institutions, and payment providers. Verifone is connecting more products to an integrated solutions platform to better meet the evolving needs of our clients and partners. Built on a 35-year history of uncompromised security, we are committed to consistently solving the most complex payment challenges.Verifone.com | (NYSE: PAY) | @Verifone

Additional Resources: http://ir.verifone.com










CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This communication 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, including many factors beyond our control. These risks and uncertainties include, but are not limited to, those associated with: the parties’ ability to meet expectations regarding the timing and completion of the merger, the risk that Verifone stockholders do not approve the merger, the occurrence of any event, change or other circumstance that would give rise to the termination of the merger agreement, the response by stockholders to the merger, the failure to satisfy each of the conditions to the consummation of the merger, including but not limited to, the risk that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the merger on acceptable terms, or at all, the disruption of management’s attention from ongoing business operations due to the merger, the effect of the announcement of the merger on Verifone’s relationships with its customers, suppliers, operating results and business generally, the risk that any announcements relating to the merger could have adverse effects on the market price of Verifone’s common stock, the outcome of any legal proceedings related to the merger, employee retention as a result of the merger, and risks and uncertainties affecting the operations of our business, included in 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, except as required by law.






VERIFONE SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended April 30,
 
Six Months Ended April 30,
 
 
 
 
2018
 
2017
 
% Change (1)
 
2018
 
2017
 
% Change (1)
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
258.6

 
$
285.7

 
(9.5
)%
 
$
501.7

 
$
551.1

 
(9.0
)%
 
Services
 
179.8

 
188.0

 
(4.4
)%
 
373.5

 
376.5

 
(0.8
)%
 
 
Total net revenues
 
438.4

 
473.7

 
(7.5
)%
 
875.2

 
927.6

 
(5.6
)%
 
 
 
 
 
 
 
 


 
 
 
 
 
 
Cost of net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
163.6

 
176.2

 
(7.2
)%
 
317.9

 
342.6

 
(7.2
)%
 
Services
 
96.3

 
124.7

 
(22.8
)%
 
200.7

 
240.8

 
(16.7
)%
 
 
Total cost of net revenues
 
259.9

 
300.9

 
(13.6
)%
 
518.6

 
583.4

 
(11.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
178.5

 
172.8

 
3.3
 %
 
356.6

 
344.2

 
3.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
52.4

 
51.8

 
1.2
 %
 
100.9

 
107.7

 
(6.3
)%
 
Sales and marketing
 
46.3

 
50.9

 
(9.0
)%
 
92.7

 
100.1

 
(7.4
)%
 
General and administrative
 
49.6

 
46.8

 
6.0
 %
 
100.6

 
97.6

 
3.1
 %
 
Restructuring and related
 
(0.3
)
 
68.9

 
nm

 
0.1

 
70.0

 
(99.9
)%
 
Acquisition related
 
8.0

 

 
nm

 
8.0

 

 
nm

 
Goodwill impairment
 

 
17.4

 
nm

 

 
17.4

 
nm

 
Amortization of purchased intangible assets
 
15.6

 
18.4

 
(15.2
)%
 
30.7

 
37.2

 
(17.5
)%
 
 
Total operating expenses
 
171.6

 
254.2

 
(32.5
)%
 
333.0

 
430.0

 
(22.6
)%
Operating income (loss)
 
6.9

 
(81.4
)
 
nm

 
23.6

 
(85.8
)
 
nm

Interest expense, net
 
(10.2
)
 
(8.2
)
 
24.4
 %
 
(19.1
)
 
(16.4
)
 
16.5
 %
Other income (expense), net
 
(4.3
)
 
8.8

 
nm

 
(5.4
)
 
6.6

 
nm

Loss before income taxes
 
(7.6
)
 
(80.8
)
 
nm

 
(0.9
)
 
(95.6
)
 
nm

Income tax provision
 
9.1

 
8.9

 
2.2
 %
 
8.6

 
11.8

 
(27.1
)%
Consolidated net loss
 
(16.7
)
 
(89.7
)
 
nm

 
(9.5
)
 
(107.4
)
 
nm

Net income (loss) attributable to noncontrolling interests
 
0.3

 
(0.4
)
 
nm

 
0.2

 
(1.5
)
 
nm

Net loss attributable to VeriFone Systems, Inc. stockholders
 
$
(17.0
)
 
$
(89.3
)
 
nm

 
$
(9.7
)
 
$
(105.9
)
 
nm

 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss per share attributable to VeriFone Systems, Inc. stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.15
)
 
$
(0.80
)
 
 
 
$
(0.09
)
 
$
(0.95
)
 
 
 
Diluted
 
$
(0.15
)
 
$
(0.80
)
 
 
 
$
(0.09
)
 
$
(0.95
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares used in computing net loss per share attributable to VeriFone Systems, Inc. stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
110.5

 
111.7

 
 
 
111.0

 
111.5

 
 
 
Diluted
 
110.5

 
111.7

 
 
 
111.0

 
111.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) "nm" means not meaningful
 
 
 
 
 
 
 
 





VERIFONE SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN MILLIONS)
 
 
April 30, 2018

 
October 31, 2017

ASSETS
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
168.4

 
$
131.0

 
Accounts receivable, net
320.1

 
322.7

 
Inventories
124.0

 
126.6

 
Prepaid expenses and other current assets
136.9

 
138.4

Total current assets
749.4

 
718.7

Property and equipment, net
126.2

 
127.9

Purchased intangible assets, net
210.1

 
236.4

Goodwill
1,125.9

 
1,104.4

Deferred tax assets, net
30.2

 
33.1

Other long-term assets
101.6

 
101.7

Total assets
$
2,343.4

 
$
2,322.2

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
$
164.6

 
$
144.8

 
Accruals and other current liabilities
212.8

 
227.3

 
Deferred revenue, net
106.5

 
101.4

 
Short-term debt
30.4

 
68.8

Total current liabilities
514.3

 
542.3

Long-term deferred revenue, net
59.2

 
61.8

Deferred tax liabilities, net
91.5

 
97.5

Long-term debt
835.7

 
762.0

Other long-term liabilities
72.5

 
76.2

Total liabilities
1,573.2

 
1,539.8

 
 
 
 
Redeemable noncontrolling interest in subsidiary

 
0.3

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
1.1

 
1.1

Additional paid-in capital
1,832.4

 
1,812.2

Accumulated deficit
(851.2
)
 
(792.2
)
Accumulated other comprehensive loss
(237.1
)
 
(266.6
)
Total VeriFone Systems, Inc. stockholders’ equity
745.2

 
754.5

Noncontrolling interests in subsidiaries
25.0

 
27.6

Total equity
770.2

 
782.1

Total liabilities, redeemable noncontrolling interest in subsidiary and equity
$
2,343.4

 
$
2,322.2






VERIFONE SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN MILLIONS)
 
 
 
 
Six Months Ended April 30,
 
 
 
2018
 
2017
Cash flows from operating activities
 
 
 
Consolidated net loss
$
(9.6
)
 
$
(107.4
)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
65.4

 
76.2

 
Stock-based compensation expense
18.5

 
20.7

 
Deferred income taxes, net
(4.4
)
 
0.3

 
Non-cash restructuring and related charges
(2.3
)
 
39.6

 
Goodwill impairments

 
17.4

 
Other
15.0

 
5.6

 
Net cash provided by operating activities before changes in operating assets and liabilities
82.6

 
52.4

 
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable, net
2.8

 
(21.5
)
 
 
Inventories
2.0

 
23.8

 
 
Prepaid expenses and other assets
(30.6
)
 
(10.0
)
 
 
Accounts payable
20.3

 
(0.6
)
 
 
Deferred revenue, net
1.5

 
9.1

 
 
Other current and long-term liabilities
0.1

 
27.1

 
 
Net change in operating assets and liabilities
(3.9
)
 
27.9

Net cash provided by operating activities
78.7

 
80.3

 
 
 
 
 
 
Cash flows from investing activities
 
 
 
Capital expenditures
(27.5
)
 
(36.4
)
Divestiture of business
30.0

 
6.5

Other investing activities, net

 
(4.6
)
Net cash provided by (used in) investing activities
2.5

 
(34.5
)
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
Proceeds from debt, net of issuance costs
1,062.4

 
118.7

Repayments of debt
(1,039.6
)
 
(173.5
)
Stock repurchases
(50.0
)
 

Other financing activities, net
(2.4
)
 
(2.7
)
Net cash used in financing activities
(29.6
)
 
(57.5
)
 
 
 
 
 
 
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash
2.5

 
1.1

 
 
 
 
 
 
Net increase (decrease) in cash, cash equivalents and restricted cash
54.1

 
(10.6
)
Cash, cash equivalents and restricted cash, beginning of period
143.7

 
159.2

Cash, cash equivalents and restricted cash, end of period
$
197.8

 
$
148.6

 
 
 
 
 
 
Cash and cash equivalents, end of period
$
168.4

 
$
134.5

Restricted cash, end of period
29.4

 
14.1

Cash, cash equivalents and restricted cash, end of period
$
197.8

 
$
148.6







VERIFONE SYSTEMS, INC.
NET REVENUES INFORMATION
(UNAUDITED, IN MILLIONS, EXCEPT PERCENTAGES)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Month Ended
 
Note
 
April 30, 2018
 
January 31, 2018
 
April 30, 2017
 
% Change (1) SEQ
 
% Change (1) YoY
 
April 30, 2018
 
April 30, 2017
 
% Change (1)
GAAP net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
 
$
122.9

 
$
123.8

 
$
157.4

 
(0.7
)%
 
(21.9
)%
 
$
246.7

 
$
323.3

 
(23.7
)%
Latin America
 
 
84.5

 
88.3

 
62.5

 
(4.3
)%
 
35.2
 %
 
172.8

 
119.5

 
44.6
 %
EMEA
 
 
182.3

 
184.1

 
177.8

 
(1.0
)%
 
2.5
 %
 
366.4

 
345.8

 
6.0
 %
Asia-Pacific
 
 
48.7

 
40.6

 
76.0

 
20.0
 %
 
(35.9
)%
 
89.3

 
139.0

 
(35.8
)%
Total
 
 
$
438.4

 
$
436.8

 
$
473.7

 
0.4
 %
 
(7.5
)%
 
$
875.2

 
$
927.6

 
(5.6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
 
$
258.6

 
$
243.1

 
$
285.7

 
6.4
 %
 
(9.5
)%
 
$
501.7

 
$
551.1

 
(9.0
)%
Services
 
 
179.8

 
193.7

 
188.0

 
(7.2
)%
 
(4.4
)%
 
373.5

 
376.5

 
(0.8
)%
Total
 
 
$
438.4

 
$
436.8

 
$
473.7

 
0.4
 %
 
(7.5
)%
 
$
875.2

 
$
927.6

 
(5.6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net revenues, adjusted to exclude divested businesses: (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
A, B
 
$
122.9

 
$
112.7

 
$
133.4

 
9.1
 %
 
(7.9
)%
 
$
235.6

 
$
277.3

 
(15.0
)%
Latin America
A
 
84.5

 
88.3

 
62.5

 
(4.3
)%
 
35.2
 %
 
172.8

 
119.5

 
44.6
 %
EMEA
A, B
 
182.3

 
183.0

 
175.7

 
(0.4
)%
 
3.8
 %
 
365.3

 
341.4

 
7.0
 %
Asia-Pacific
A, B
 
48.7

 
40.6

 
72.9

 
20.0
 %
 
(33.2
)%
 
89.3

 
131.5

 
(32.1
)%
Total
 
 
$
438.4

 
$
424.6

 
$
444.5

 
3.3
 %
 
(1.4
)%
 
$
863.0

 
$
869.7

 
(0.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
A, B
 
$
258.6

 
$
243.1

 
$
282.7

 
6.4
 %
 
(8.5
)%
 
$
501.7

 
$
544.1

 
(7.8
)%
Services
A, B
 
179.8

 
181.5

 
161.8

 
(0.9
)%
 
11.1
 %
 
361.3

 
325.6

 
11.0
 %
Total
 
 
$
438.4

 
$
424.6

 
$
444.5

 
3.3
 %
 
(1.4
)%
 
$
863.0

 
$
869.7

 
(0.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net revenues
 
$
438.4

 
$
436.8

 
$
473.7

 
0.4
 %
 
(7.5
)%
 
$
875.2

 
$
927.6

 
(5.6
)%
Plus: Non-GAAP net revenues adjustments
A
 

 

 
0.2

 
nm

 
nm

 

 
2.9

 
nm

Non-GAAP net revenues (2)
 
$
438.4

 
$
436.8

 
$
473.9

 
0.4
 %
 
(7.5
)%
 
$
875.2

 
$
930.5

 
(5.9
)%
Net revenues from divested businesses
B
 

 
(12.2
)
 
(29.4
)
 
nm

 
nm

 
(12.2
)
 
(60.8
)
 
nm

Non-GAAP net revenues, adjusted to exclude divested businesses (2)
 
 
$
438.4

 
$
424.6

 
$
444.5

 
3.3
 %
 
(1.4
)%
 
$
863.0

 
$
869.7

 
(0.8
)%
(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 April 30, 2018 compared with three months ended April 30, 2017
 
For six months ended April 30, 2018 compared with six months ended April 30, 2017
 
Net revenues growth (decline)
 
Impact due to divested businesses (B)
 
Adjusted Non-GAAP net revenues growth (decline)
 
Impact due to foreign currency (C)
 
Adjusted Non-GAAP net revenues at constant currency growth (decline)
 
Net revenues growth (decline)
 
Impact due to divested businesses (B)
 
Adjusted Non-GAAP net revenues growth (decline)
 
Impact due to foreign currency (C)
 
Adjusted Non-GAAP net revenues at constant currency growth (decline)
North America
(21.9
)%
 
(14.0
)%
 
(7.9
)%
 
 %
 
(7.9
)%
 
(23.7
)%
 
(8.7
)%
 
(15.0
)%
 
0.1
 %
 
(15.1
)%
Latin America
35.2
 %
 
 %
 
35.2
 %
 
(3.6
)%
 
38.8
 %
 
44.6
 %
 
 %
 
44.6
 %
 
(1.8
)%
 
46.4
 %
EMEA
2.5
 %
 
(1.3
)%
 
3.8
 %
 
9.2
 %
 
(5.4
)%
 
6.0
 %
 
(1.0
)%
 
7.0
 %
 
8.1
 %
 
(1.1
)%
Asia-Pacific
(35.9
)%
 
(2.7
)%
 
(33.2
)%
 
2.0
 %
 
(35.2
)%
 
(35.8
)%
 
(3.7
)%
 
(32.1
)%
 
1.9
 %
 
(34.0
)%
Total
(7.5
)%
 
(6.1
)%
 
(1.4
)%
 
3.4
 %
 
(4.8
)%
 
(5.6
)%
 
(4.8
)%
 
(0.8
)%
 
3.2
 %
 
(4.0
)%
















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
 
Non-GAAP net revenues from divested businesses
 
Non-GAAP net revenues adjusted to exclude divested businesses
 
Constant currency adjustment
 
Adjusted Non-GAAP net revenues at constant currency
 
 
Note
 
 
 
(A)
 
(A)
 
(B)
 
(A),(B)
 
(C)
 
(C)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended April 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
122.9

 
$

 
$
122.9

 
$

 
$
122.9

 
$

 
$
122.9

Latin America
 
84.5

 

 
84.5

 

 
84.5

 
2.3

 
86.8

EMEA
 
182.3

 

 
182.3

 

 
182.3

 
(16.1
)
 
166.2

Asia-Pacific
 
48.7

 

 
48.7

 

 
48.7

 
(1.5
)
 
47.2

 
 
Total
 
$
438.4

 
$

 
$
438.4

 
$

 
$
438.4

 
$
(15.3
)
 
$
423.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
258.6

 
$

 
$
258.6

 
$

 
$
258.6

 
$
(5.4
)
 
$
253.2

Services
 
179.8

 

 
179.8

 

 
179.8

 
(9.9
)
 
169.9

 
 
Total
 
$
438.4

 
$

 
$
438.4

 
$

 
$
438.4

 
$
(15.3
)
 
$
423.1



Three Months ended January 31, 2018
 
 
 
 
 
 
 
 
North America
 
$
123.8

 
$

 
$
123.8

 
$
11.1

 
$
112.7

Latin America
 
88.3

 

 
88.3

 

 
88.3

EMEA
 
184.1

 

 
184.1

 
1.1

 
183.0

Asia-Pacific
 
40.6

 

 
40.6

 

 
40.6

 
 
Total
 
$
436.8

 
$

 
$
436.8

 
$
12.2

 
$
424.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
243.1

 
$

 
$
243.1

 
$

 
$
243.1

Services
 
193.7

 

 
193.7

 
12.2

 
181.5

 
 
Total
 
$
436.8

 
$

 
$
436.8

 
$
12.2

 
$
424.6



Three Months Ended April 30, 2017
 
 
 
 
 
 
 
 
North America
 
$
157.4

 
$
0.2

 
$
157.6

 
$
24.2

 
$
133.4

Latin America
 
62.5

 

 
62.5

 

 
62.5

EMEA
 
177.8

 

 
177.8

 
2.1

 
175.7

Asia-Pacific
 
76.0

 

 
76.0

 
3.1

 
72.9

 
 
Total
 
$
473.7

 
$
0.2

 
$
473.9

 
$
29.4

 
$
444.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
285.7

 
$

 
$
285.7

 
$
3.0

 
$
282.7

Services
 
188.0

 
0.2

 
188.2

 
26.4

 
161.8

 
 
Total
 
$
473.7

 
$
0.2

 
$
473.9

 
$
29.4

 
$
444.5








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
 
Non-GAAP net revenues from divested businesses
 
Non-GAAP net revenues adjusted to exclude divested businesses
 
Constant currency adjustment
 
Adjusted Non-GAAP net revenues at constant currency
 
 
Note
 
 
 
(A)
 
(A)
 
(B)
 
(A),(B)
 
(C)
 
(C)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended April 30, 2018
North America
 
$
246.7

 
$

 
$
246.7

 
$
11.1

 
$
235.6

 
$
(0.2
)
 
$
235.4

Latin America
 
172.8

 

 
172.8

 

 
172.8

 
2.2

 
175.0

EMEA
 
366.4

 

 
366.4

 
1.1

 
365.3

 
(27.7
)
 
337.6

Asia-Pacific
 
89.3

 

 
89.3

 

 
89.3

 
(2.6
)
 
86.7

 
 
Total
 
$
875.2

 
$

 
$
875.2

 
$
12.2

 
$
863.0

 
$
(28.3
)
 
$
834.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
501.7

 
$

 
$
501.7

 
$

 
$
501.7

 
$
(9.7
)
 
$
492.0

Services
 
373.5

 

 
373.5

 
12.2

 
361.3

 
(18.6
)
 
342.7

 
 
Total
 
$
875.2

 
$

 
$
875.2

 
$
12.2

 
$
863.0

 
$
(28.3
)
 
$
834.7


Six Months Ended April 30, 2017
North America
 
$
323.3

 
$
2.9

 
$
326.2

 
$
48.9

 
$
277.3

Latin America
 
119.5

 

 
119.5

 

 
119.5

EMEA
 
345.8

 

 
345.8

 
4.4

 
341.4

Asia-Pacific
 
139.0

 

 
139.0

 
7.5

 
131.5

 
 
Total
 
$
927.6

 
$
2.9

 
$
930.5

 
$
60.8

 
$
869.7

 
 
 
 
 
 
 
 
 
 
 
Systems
 
$
551.1

 
$

 
$
551.1

 
$
7.0

 
$
544.1

Services
 
376.5

 
2.9

 
379.4

 
53.8

 
325.6

 
 
Total
 
$
927.6

 
$
2.9

 
$
930.5

 
$
60.8

 
$
869.7







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. stockholders
Three Months Ended April 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
$
438.4

 
$
178.5

 
40.7
%
 
$
6.9

 
$
9.1

 
$
(17.0
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of purchased intangible assets
D

 
1.1

 
 
 
16.7

 

 
16.9

 
Merger and acquisition related
E

 

 
 
 
8.0

 

 
8.0

 
Stock-based compensation
F

 
1.4

 
 
 
8.6

 

 
8.6

 
Restructuring and related
G

 
(0.5
)
 
 
 
(0.8
)
 

 
(0.8
)
 
Other charges and income
G

 

 
 
 
6.8

 

 
9.7

 
Income tax effect of non-GAAP exclusions (2)
H

 

 
 
 

 
(2.1
)
 
2.1

Non-GAAP
 
$
438.4

 
$
180.5

 
41.2
%
 
$
46.2

 
$
7.0

 
$
27.5

 
Divested businesses
B, H

 

 


 

 

 

Non-GAAP, adjusted to exclude divested businesses
 
$
438.4

 
$
180.5

 
41.2
%
 
$
46.2

 
$
7.0

 
$
27.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
110.5

 
110.5

 
 
 
 
 
$
(0.15
)

$
(0.15
)
   Adjustment for diluted shares
I

 
0.6

 
 
 
 
 
 
 
 
Non-GAAP
 
110.5

 
111.1

 
 
 
 
 
$
0.25

 
$
0.25

Non-GAAP, adjusted to exclude divested businesses
 
110.5

 
111.1

 
 
 
 
 
$
0.25

 
$
0.25

 
Note
Net revenues
 
Gross margin
 
Gross margin percentage
 
Operating income
 
Income tax provision (benefit)
 
Net income attributable to VeriFone Systems, Inc. stockholders
Three Months Ended January 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
$
436.8

 
$
178.1

 
40.8
%
 
$
16.7

 
$
(0.5
)

$
7.3

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of purchased intangible assets
D


1.1

 
 
 
16.2




11.8

 
Stock-based compensation
F


1.2

 
 
 
9.9




9.9

 
Restructuring and related
G


(0.5
)
 
 
 
(0.7
)
 

 
(0.7
)
 
Other charges and income
G

 

 
 
 
4.3

 

 
4.8

 
Income tax effect of non-GAAP exclusions (2)
H

 

 
 
 

 
7.1

 
(7.1
)
Non-GAAP
 
$
436.8

 
$
179.9

 
41.2
%
 
$
46.4

 
$
6.6

 
$
26.0

 
Divested businesses
B, H
12.2

 
3.3

 


 
0.7

 
0.1

 
0.6

Non-GAAP, adjusted to exclude divested businesses
 
$
424.6

 
$
176.6

 
41.6
%
 
$
45.7

 
$
6.5

 
$
25.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
111.6

 
112.2

 
 
 
 
 
$
0.06

 
$
0.06

Non-GAAP
 
111.6

 
112.2

 
 
 
 
 
$
0.23

 
$
0.23

Non-GAAP, adjusted to exclude divested businesses
 
111.6

 
112.2

 
 
 
 
 
$
0.23

 
$
0.23


(1) Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders 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.
(2) For the purpose of computing the income tax effect of non-GAAP exclusions, we used a 20.0% rate.







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 April 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
$
473.7

 
$
172.8

 
36.5
%
 
$
(81.4
)
 
$
8.9

 
$
(89.3
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of step-down in deferred service net revenues at acquisition and associated cost of goods sold
A
0.2

 
0.2