[September 07, 2017] |
|
Verifone Reports Financial Results for Third Quarter of Fiscal 2017
Verifone (NYSE: PAY), a world leader in payments and commerce solutions,
today announced financial results for the three months ended July 31,
2017.
Third Quarter Highlights
-
GAAP and Non-GAAP net revenues of $467 million, with 7% sequential
growth in Services
-
GAAP net loss per diluted share of $0.63, reflecting restructuring and
divestiture charges
-
Non-GAAP net income per diluted share of $0.36, up 20% sequentially
-
Operating cash flow of $60 million and free cash flow of $44 million
-
Completed divestiture of China operation into minority holding
-
Growing sales pipeline of next generation products across all regions
"In the third quarter, the Verifone team delivered solid financial
results, made progress on divesting non-core businesses, and achieved
our launch objectives for next generation products. We continue to grow
Verifone's annuity services business by partnering with our clients to
connect more of their device footprint to our payments and commerce
services platform," said Paul Galant, Chief Executive Officer of
Verifone, "We expect to return Verifone to annual growth in fiscal 2018."
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES)
|
|
|
|
|
Three Months Ended July 31,
|
|
|
Nine Months Ended July 31,
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
|
|
Change (1
|
)
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
Change (1
|
)
|
GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
$
|
467
|
|
|
|
$
|
488
|
|
|
|
(4.3
|
)%
|
|
|
$
|
1,395
|
|
|
|
$
|
1,528
|
|
|
|
(8.7
|
)%
|
Gross margin as a % of net revenues
|
|
|
|
37.4
|
%
|
|
|
|
39.2
|
%
|
|
|
(1.8) pts
|
|
|
|
37.2
|
%
|
|
|
40.4
|
%
|
|
|
(3.2) pts
|
Net loss per diluted share
|
|
|
$
|
(0.63
|
)
|
|
|
$
|
(0.28
|
)
|
|
|
nm
|
|
|
$
|
(1.58
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
$
|
467
|
|
|
|
$
|
493
|
|
|
|
(5.2
|
)%
|
|
|
$
|
1,398
|
|
|
|
$
|
1,539
|
|
|
|
(9.2
|
)%
|
Gross margin as a % of net revenues
|
|
|
|
40.7
|
%
|
|
|
|
42.2
|
%
|
|
|
(1.5) pts
|
|
|
|
39.7
|
%
|
|
|
42.5
|
%
|
|
|
(2.8) pts
|
Net income per diluted share
|
|
|
$
|
0.36
|
|
|
|
$
|
0.42
|
|
|
|
(14.3
|
)%
|
|
|
$
|
0.86
|
|
|
|
$
|
1.36
|
|
|
|
(36.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
"nm" means not meaningful.
|
(2)
|
Reconciliations for the Non-GAAP measures are provided at the end of
this press release.
|
|
|
Fourth Quarter 2017 and Fiscal 2017 Outlook
Guidance for the fourth fiscal quarter of 2017 is as follows:
-
GAAP and Non-GAAP net revenues of approximately $470 million to $473
million
-
GAAP net income per diluted share of approximately $0.22
-
Non-GAAP net income per diluted share of $0.43 (reflects a reduction
from prior guidance entirely attributable to the Taxi business, which
is in the process of being divested)
Guidance for the full fiscal year 2017 is as follows:
-
GAAP net revenues of approximately $1.864 billion to $1.867 billion
-
GAAP net loss per diluted share of approximately $1.36
-
Non-GAAP net revenues of approximately $1.867 billion to $1.870 billion
-
Non-GAAP net income per diluted share of $1.30
Conference Call
Verifone will hold its earnings conference call today, September 7,
2017, at 4.30 p.m. (ET) / 1:30 p.m. (PT). 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 for
the next 30 days.
About Verifone
Verifone is a global leader in payments and commerce solutions, powered
by a growing footprint of more than 30 million devices in over 150
countries at the last inch of consumer payments. We are connecting our
devices to our integrated solutions platform to better serve the
evolving needs of our clients. We are built on a 35-year history of
uncompromised security and our people are trusted experts who work with
our clients and partners, helping to solve their most complex payments
challenges.
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, timely
product introductions, 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,
downturns in the retail sector, 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 deliver new products
to the market on time and in sufficient quantities to meet demand, 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 and divestiture 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,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
% Change (1)
|
|
|
2017
|
|
|
2016
|
|
|
% Change (1)
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
|
$
|
266.0
|
|
|
|
$
|
292.1
|
|
|
|
(8.9
|
)%
|
|
|
$
|
817.1
|
|
|
|
$
|
972.1
|
|
|
|
(15.9
|
)%
|
|
Services
|
|
|
|
200.9
|
|
|
|
196.0
|
|
|
|
2.5
|
%
|
|
|
|
577.4
|
|
|
|
|
555.8
|
|
|
|
3.9
|
%
|
|
|
Total net revenues
|
|
|
|
466.9
|
|
|
|
488.1
|
|
|
|
(4.3
|
)%
|
|
|
|
1,394.5
|
|
|
|
|
1,527.9
|
|
|
|
(8.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
|
|
177.8
|
|
|
|
175.7
|
|
|
|
1.2
|
%
|
|
|
|
520.4
|
|
|
|
|
571.0
|
|
|
|
(8.9
|
)%
|
|
Services
|
|
|
|
114.6
|
|
|
|
121.3
|
|
|
|
(5.5
|
)%
|
|
|
|
355.4
|
|
|
|
|
340.1
|
|
|
|
4.5
|
%
|
|
|
Total cost of net revenues
|
|
|
|
292.4
|
|
|
|
297.0
|
|
|
|
(1.5
|
)%
|
|
|
|
875.8
|
|
|
|
|
911.1
|
|
|
|
(3.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
|
174.5
|
|
|
|
191.1
|
|
|
|
(8.7
|
)%
|
|
|
|
518.7
|
|
|
|
|
616.8
|
|
|
|
(15.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
50.7
|
|
|
|
52.4
|
|
|
|
(3.2
|
)%
|
|
|
|
158.5
|
|
|
|
|
158.1
|
|
|
|
0.3
|
%
|
|
Sales and marketing
|
|
|
|
46.7
|
|
|
|
52.8
|
|
|
|
(11.6
|
)%
|
|
|
|
146.8
|
|
|
|
|
167.3
|
|
|
|
(12.3
|
)%
|
|
General and administrative
|
|
|
|
44.9
|
|
|
|
49.7
|
|
|
|
(9.7
|
)%
|
|
|
|
142.4
|
|
|
|
|
157.0
|
|
|
|
(9.3
|
)%
|
|
Restructuring and related charges
|
|
|
|
65.7
|
|
|
|
33.6
|
|
|
|
95.5
|
%
|
|
|
|
135.7
|
|
|
|
|
34.2
|
|
|
|
296.8
|
%
|
|
Litigation settlement and loss contingency expense
|
|
|
|
-
|
|
|
|
0.6
|
|
|
|
|
nm
|
|
|
|
-
|
|
|
|
|
0.6
|
|
|
|
|
nm
|
|
Goodwill impairment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
nm
|
|
|
|
17.4
|
|
|
|
|
-
|
|
|
|
|
nm
|
|
Amortization of purchased intangible assets
|
|
|
|
16.7
|
|
|
|
24.3
|
|
|
|
(31.3
|
)%
|
|
|
|
53.9
|
|
|
|
|
65.9
|
|
|
|
(18.2
|
)%
|
|
|
Total operating expenses
|
|
|
|
224.7
|
|
|
|
213.4
|
|
|
|
5.3
|
%
|
|
|
|
654.7
|
|
|
|
|
583.1
|
|
|
|
12.3
|
%
|
Operating income (loss)
|
|
|
|
(50.2
|
)
|
|
|
(22.3
|
)
|
|
|
125.1
|
%
|
|
|
|
(136.0
|
)
|
|
|
|
33.7
|
|
|
|
(503.6
|
)%
|
Interest expense, net
|
|
|
|
(8.4
|
)
|
|
|
(9.0
|
)
|
|
|
(6.7
|
)%
|
|
|
|
(24.8
|
)
|
|
|
|
(25.9
|
)
|
|
|
(4.2
|
)%
|
Other income (expense), net
|
|
|
|
(1.9
|
)
|
|
|
0.1
|
|
|
|
|
nm
|
|
|
|
4.7
|
|
|
|
|
(6.8
|
)
|
|
|
(169.1
|
)%
|
Net income (loss) before income taxes
|
|
|
|
(60.5
|
)
|
|
|
(31.2
|
)
|
|
|
93.9
|
%
|
|
|
|
(156.1
|
)
|
|
|
|
1.0
|
|
|
|
|
nm
|
Income tax provision
|
|
|
|
10.3
|
|
|
|
0.3
|
|
|
|
|
nm
|
|
|
|
22.1
|
|
|
|
|
5.4
|
|
|
|
309.3
|
%
|
Consolidated net loss
|
|
|
|
(70.8
|
)
|
|
|
(31.5
|
)
|
|
|
124.8
|
%
|
|
|
|
(178.2
|
)
|
|
|
|
(4.4
|
)
|
|
|
|
nm
|
Net income (loss) attributable to noncontrolling interests
|
|
|
|
0.2
|
|
|
|
(0.4
|
)
|
|
|
(150.0
|
)%
|
|
|
|
(1.3
|
)
|
|
|
|
0.3
|
|
|
|
(533.3
|
)%
|
Net loss attributable to VeriFone Systems, Inc. stockholders
|
|
|
$
|
(71.0
|
)
|
|
|
$
|
(31.1
|
)
|
|
|
128.3
|
%
|
|
|
$
|
(176.9
|
)
|
|
|
$
|
(4.7
|
)
|
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to VeriFone Systems, Inc.
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.63
|
)
|
|
|
$
|
(0.28
|
)
|
|
|
|
|
|
|
$
|
(1.58
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
Diluted
|
|
|
$
|
(0.63
|
)
|
|
|
$
|
(0.28
|
)
|
|
|
|
|
|
|
$
|
(1.58
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net loss per
share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
112.0
|
|
|
|
110.7
|
|
|
|
|
|
|
|
|
111.7
|
|
|
|
|
110.8
|
|
|
|
|
|
|
Diluted
|
|
|
|
112.0
|
|
|
|
110.7
|
|
|
|
|
|
|
|
|
111.7
|
|
|
|
|
110.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) "nm" means not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
July 31, 2017
|
|
|
October 31, 2016
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
158.8
|
|
|
|
$
|
148.4
|
|
Accounts receivable, net of allowances of $14.3 and $14.1,
respectively
|
|
|
|
326.3
|
|
|
|
323.4
|
|
Inventories
|
|
|
|
127.5
|
|
|
|
175.2
|
|
Prepaid expenses and other current assets
|
|
|
|
165.9
|
|
|
|
110.4
|
|
Total current assets
|
|
|
|
778.5
|
|
|
|
757.4
|
|
Property and equipment, net
|
|
|
|
130.5
|
|
|
|
202.3
|
|
Purchased intangible assets, net
|
|
|
|
257.5
|
|
|
|
306.3
|
|
Goodwill
|
|
|
|
1,116.8
|
|
|
|
1,110.5
|
|
Deferred tax assets, net
|
|
|
|
36.1
|
|
|
|
37.0
|
|
Other long-term assets
|
|
|
|
99.8
|
|
|
|
81.3
|
|
Total assets
|
|
|
$
|
2,419.2
|
|
|
|
$
|
2,494.8
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
157.1
|
|
|
|
$
|
154.6
|
|
Accruals and other current liabilities
|
|
|
|
253.3
|
|
|
|
213.4
|
|
Deferred revenue, net
|
|
|
|
110.6
|
|
|
|
104.8
|
|
Short-term debt
|
|
|
|
68.2
|
|
|
|
66.0
|
|
Total current liabilities
|
|
|
|
589.2
|
|
|
|
538.8
|
|
Long-term deferred revenue, net
|
|
|
|
66.8
|
|
|
|
66.5
|
|
Deferred tax liabilities, net
|
|
|
|
102.4
|
|
|
|
99.4
|
|
Long-term debt
|
|
|
|
809.9
|
|
|
|
859.9
|
|
Other long-term liabilities
|
|
|
|
70.0
|
|
|
|
76.8
|
|
Total liabilities
|
|
|
|
1,638.3
|
|
|
|
1,641.4
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest in subsidiary
|
|
|
|
1.1
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
|
1.1
|
|
|
|
1.1
|
|
Additional paid-in capital
|
|
|
|
1,802.2
|
|
|
|
1,771.9
|
|
Accumulated deficit
|
|
|
|
(795.2
|
)
|
|
|
(618.3
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(256.0
|
)
|
|
|
(341.0
|
)
|
Total VeriFone Systems, Inc. stockholders' equity
|
|
|
|
752.1
|
|
|
|
813.7
|
|
Noncontrolling interests in subsidiaries
|
|
|
|
27.7
|
|
|
|
34.7
|
|
Total equity
|
|
|
|
779.8
|
|
|
|
848.4
|
|
Total liabilities, redeemable noncontrolling interest in
subsidiary and equity
|
|
|
$
|
2,419.2
|
|
|
|
$
|
2,494.8
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
Nine Months Ended July 31,
|
|
|
|
|
|
2017
|
|
|
2016
|
Cash flows from operating activities
|
|
|
|
|
|
|
Consolidated net loss
|
|
|
$
|
(178.2
|
)
|
|
|
$
|
(4.4
|
)
|
Adjustments to reconcile consolidated net loss to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization, net
|
|
|
|
116.8
|
|
|
|
|
133.8
|
|
|
Stock-based compensation expense
|
|
|
|
30.1
|
|
|
|
|
32.9
|
|
|
Deferred income taxes, net
|
|
|
|
(1.2
|
)
|
|
|
|
(7.2
|
)
|
|
Non-cash restructuring and related charges
|
|
|
|
107.5
|
|
|
|
|
29.1
|
|
|
Goodwill impairment
|
|
|
|
17.4
|
|
|
|
|
-
|
|
|
Other
|
|
|
|
11.5
|
|
|
|
|
5.0
|
|
|
Net cash provided by operating activities before changes in
operating assets and liabilities
|
|
|
|
103.9
|
|
|
|
|
189.2
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
(15.0
|
)
|
|
|
|
13.5
|
|
|
|
Inventories
|
|
|
|
30.9
|
|
|
|
|
(53.3
|
)
|
|
|
Prepaid expenses and other assets
|
|
|
|
(11.7
|
)
|
|
|
|
(23.2
|
)
|
|
|
Accounts payable
|
|
|
|
3.0
|
|
|
|
|
(2.3
|
)
|
|
|
Deferred revenue, net
|
|
|
|
5.8
|
|
|
|
|
28.4
|
|
|
|
Other current and long-term liabilities
|
|
|
|
23.2
|
|
|
|
|
(21.8
|
)
|
|
|
Net change in operating assets and liabilities
|
|
|
|
36.2
|
|
|
|
|
(58.7
|
)
|
Net cash provided by operating activities
|
|
|
|
140.1
|
|
|
|
|
130.5
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(52.8
|
)
|
|
|
|
(82.2
|
)
|
Acquisition of businesses, net of cash and cash equivalents acquired
|
|
|
|
(5.0
|
)
|
|
|
|
(172.2
|
)
|
Divestiture of businesses
|
|
|
|
1.5
|
|
|
|
|
-
|
|
Other investing activities, net
|
|
|
|
0.3
|
|
|
|
|
1.9
|
|
Net cash used in investing activities
|
|
|
|
(56.0
|
)
|
|
|
|
(252.5
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Proceeds from debt, net of issuance costs
|
|
|
|
215.4
|
|
|
|
|
490.4
|
|
Repayments of debt
|
|
|
|
(277.7
|
)
|
|
|
|
(333.9
|
)
|
Proceeds from issuance of common stock through employee equity
incentive plans
|
|
|
|
0.8
|
|
|
|
|
3.3
|
|
Stock repurchases
|
|
|
|
-
|
|
|
|
|
(79.9
|
)
|
Other financing activities, net
|
|
|
|
(3.7
|
)
|
|
|
|
(4.1
|
)
|
Net cash provided by (used in) financing activities
|
|
|
|
(65.2
|
)
|
|
|
|
75.8
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash, cash
equivalents and restricted cash
|
|
|
|
6.3
|
|
|
|
|
(2.1
|
)
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
|
|
25.2
|
|
|
|
|
(48.3
|
)
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
|
|
159.2
|
|
|
|
|
215.9
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
|
$
|
184.4
|
|
|
|
$
|
167.6
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
|
158.8
|
|
|
|
|
156.6
|
|
Restricted cash, end of period
|
|
|
|
25.6
|
|
|
|
|
11.0
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
|
$
|
184.4
|
|
|
|
$
|
167.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
NET REVENUES INFORMATION
|
(UNAUDITED, IN MILLIONS, EXCEPT PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
Note
|
|
July 31, 2017
|
|
April 30, 2017
|
|
July 31, 2016
|
|
% Change (1) SEQ
|
|
% Change (1) YoY
|
|
July 31, 2017
|
|
July 31, 2016
|
|
% Change (1)
|
GAAP net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
$
|
152.8
|
|
|
$
|
157.4
|
|
$
|
191.5
|
|
(2.9
|
)%
|
|
(20.2
|
)%
|
|
$
|
476.1
|
|
|
$
|
636.5
|
|
(25.2
|
)%
|
Latin America
|
|
|
|
|
71.3
|
|
|
|
62.5
|
|
|
55.1
|
|
14.1
|
%
|
|
29.4
|
%
|
|
|
190.8
|
|
|
|
179.6
|
|
6.2
|
%
|
EMEA
|
|
|
|
|
193.5
|
|
|
|
177.8
|
|
|
190.0
|
|
8.8
|
%
|
|
1.8
|
%
|
|
|
539.4
|
|
|
|
557.4
|
|
(3.2
|
)%
|
Asia-Pacific
|
|
|
|
|
49.3
|
|
|
|
76.0
|
|
|
51.5
|
|
(35.1
|
)%
|
|
(4.3
|
)%
|
|
|
188.2
|
|
|
|
154.4
|
|
21.9
|
%
|
Total
|
|
|
|
$
|
466.9
|
|
|
$
|
473.7
|
|
$
|
488.1
|
|
(1.4
|
)%
|
|
(4.3
|
)%
|
|
$
|
1,394.5
|
|
|
$
|
1,527.9
|
|
(8.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
|
|
$
|
266.0
|
|
|
$
|
285.7
|
|
$
|
292.1
|
|
(6.9
|
)%
|
|
(8.9
|
)%
|
|
$
|
817.1
|
|
|
$
|
972.1
|
|
(15.9
|
)%
|
Services
|
|
|
|
|
200.9
|
|
|
|
188.0
|
|
|
196.0
|
|
6.9
|
%
|
|
2.5
|
%
|
|
|
577.4
|
|
|
|
555.8
|
|
3.9
|
%
|
Total
|
|
|
|
$
|
466.9
|
|
|
$
|
473.7
|
|
$
|
488.1
|
|
(1.4
|
)%
|
|
(4.3
|
)%
|
|
$
|
1,394.5
|
|
|
$
|
1,527.9
|
|
(8.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net revenues: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
A
|
|
$
|
152.8
|
|
|
$
|
157.6
|
|
$
|
196.0
|
|
(3.0
|
)%
|
|
(22.0
|
)%
|
|
$
|
479.1
|
|
|
$
|
647.1
|
|
(26.0
|
)%
|
Latin America
|
|
A
|
|
|
71.3
|
|
|
|
62.5
|
|
|
55.1
|
|
14.1
|
%
|
|
29.4
|
%
|
|
|
190.8
|
|
|
|
179.6
|
|
6.2
|
%
|
EMEA
|
|
A
|
|
|
193.5
|
|
|
|
177.8
|
|
|
190.0
|
|
8.8
|
%
|
|
1.8
|
%
|
|
|
539.4
|
|
|
|
557.4
|
|
(3.2
|
)%
|
Asia-Pacific
|
|
A
|
|
|
49.3
|
|
|
|
76.0
|
|
|
51.5
|
|
(35.1
|
)%
|
|
(4.3
|
)%
|
|
|
188.2
|
|
|
|
154.4
|
|
21.9
|
%
|
Total
|
|
|
|
$
|
466.9
|
|
|
$
|
473.9
|
|
$
|
492.6
|
|
(1.5
|
)%
|
|
(5.2
|
)%
|
|
$
|
1,397.5
|
|
|
$
|
1,538.5
|
|
(9.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
A
|
|
$
|
266.0
|
|
|
$
|
285.7
|
|
$
|
292.1
|
|
(6.9
|
)%
|
|
(8.9
|
)%
|
|
$
|
817.1
|
|
|
$
|
972.1
|
|
(15.9
|
)%
|
Services
|
|
A
|
|
|
200.9
|
|
|
|
188.2
|
|
|
200.5
|
|
6.7
|
%
|
|
0.2
|
%
|
|
|
580.4
|
|
|
|
566.4
|
|
2.5
|
%
|
Total
|
|
|
|
$
|
466.9
|
|
|
$
|
473.9
|
|
$
|
492.6
|
|
(1.5
|
)%
|
|
(5.2
|
)%
|
|
$
|
1,397.5
|
|
|
$
|
1,538.5
|
|
(9.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net revenues
|
|
|
|
$
|
466.9
|
|
|
$
|
473.7
|
|
$
|
488.1
|
|
(1.4
|
)%
|
|
(4.3
|
)%
|
|
$
|
1,394.5
|
|
|
$
|
1,527.9
|
|
(8.7
|
)%
|
Plus: Non-GAAP net revenues adjustments
|
|
A
|
|
|
-
|
|
|
|
0.2
|
|
|
4.5
|
|
nm
|
|
nm
|
|
|
3.0
|
|
|
|
10.6
|
|
nm
|
Non-GAAP net revenues (2)
|
|
|
|
$
|
466.9
|
|
|
$
|
473.9
|
|
$
|
492.6
|
|
(1.5
|
)%
|
|
(5.2
|
)%
|
|
|
1,397.5
|
|
|
$
|
1,538.5
|
|
(9.2
|
)%
|
Net revenues from businesses acquired in the past 12 months
|
|
B
|
|
|
(0.5
|
)
|
|
|
|
|
-
|
|
nm
|
|
nm
|
|
|
(17.9
|
)
|
|
|
-
|
|
nm
|
Non-GAAP organic net revenues (2)
|
|
|
|
$
|
466.4
|
|
|
|
|
$
|
492.6
|
|
nm
|
|
(5.3
|
)%
|
|
$
|
1,379.6
|
|
|
$
|
1,538.5
|
|
(10.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017 compared with three
months ended July 31, 2016
|
|
For nine months ended July 31, 2017 compared with nine months
ended July 31, 2016
|
|
|
Net revenues growth (decline)
|
|
Impact due to acquired businesses (A)
(B)
|
|
Non- GAAP organic net revenues growth (decline)
|
|
Impact due to foreign currency (C)
|
|
Non- GAAP organic net revenues at constant currency growth (decline)
|
|
Net revenues growth (decline)
|
|
Impact due to acquired businesses (A)
(B)
|
|
Non- GAAP organic net revenues growth (decline)
|
|
Impact due to foreign currency (C)
|
|
Non- GAAP organic net revenues at constant currency growth (decline)
|
North America
|
|
(20.2
|
)%
|
|
1.8
|
%
|
|
(22.0
|
)%
|
|
-
|
%
|
|
(22.0
|
)%
|
|
(25.2
|
)%
|
|
1.6
|
%
|
|
(26.8
|
)%
|
|
-
|
%
|
|
(26.8
|
)%
|
Latin America
|
|
29.4
|
%
|
|
-
|
%
|
|
29.4
|
%
|
|
4.0
|
%
|
|
25.4
|
%
|
|
6.2
|
%
|
|
-
|
%
|
|
6.2
|
%
|
|
6.0
|
%
|
|
0.2
|
%
|
EMEA
|
|
1.8
|
%
|
|
0.3
|
%
|
|
1.5
|
%
|
|
(0.5
|
)%
|
|
2.0
|
%
|
|
(3.2
|
)%
|
|
2.3
|
%
|
|
(5.5
|
)%
|
|
(2.1
|
)%
|
|
(3.4
|
)%
|
Asia-Pacific
|
|
(4.3
|
)%
|
|
-
|
%
|
|
(4.3
|
)%
|
|
1.7
|
%
|
|
(6.0
|
)%
|
|
21.9
|
%
|
|
-
|
%
|
|
21.9
|
%
|
|
1.2
|
%
|
|
20.7
|
%
|
Total
|
|
(4.3
|
)%
|
|
1.0
|
%
|
|
(5.3
|
)%
|
|
0.5
|
%
|
|
(5.8
|
)%
|
|
(8.7
|
)%
|
|
1.6
|
%
|
|
(10.3
|
)%
|
|
0.1
|
%
|
|
(10.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017
|
|
|
North America
|
|
$
|
152.8
|
|
$
|
-
|
|
$
|
152.8
|
|
$
|
-
|
|
|
$
|
152.8
|
|
$
|
0.1
|
|
|
$
|
152.9
|
Latin America
|
|
|
71.3
|
|
|
-
|
|
|
71.3
|
|
|
-
|
|
|
|
71.3
|
|
|
(2.3
|
)
|
|
|
69.0
|
EMEA
|
|
|
193.5
|
|
|
-
|
|
|
193.5
|
|
|
(0.5
|
)
|
|
|
193.0
|
|
|
0.9
|
|
|
|
193.9
|
Asia-Pacific
|
|
|
49.3
|
|
|
-
|
|
|
49.3
|
|
|
-
|
|
|
|
49.3
|
|
|
(0.9
|
)
|
|
|
48.4
|
|
|
Total
|
|
$
|
466.9
|
|
$
|
-
|
|
$
|
466.9
|
|
$
|
(0.5
|
)
|
|
$
|
466.4
|
|
$
|
(2.2
|
)
|
|
$
|
464.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
$
|
266.0
|
|
$
|
-
|
|
$
|
266.0
|
|
$
|
-
|
|
|
$
|
266.0
|
|
$
|
(1.7
|
)
|
|
$
|
264.3
|
Services
|
|
|
200.9
|
|
|
-
|
|
|
200.9
|
|
|
(0.5
|
)
|
|
|
200.4
|
|
|
(0.5
|
)
|
|
|
199.9
|
|
|
Total
|
|
$
|
466.9
|
|
$
|
-
|
|
$
|
466.9
|
|
$
|
(0.5
|
)
|
|
$
|
466.4
|
|
$
|
(2.2
|
)
|
|
$
|
464.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended April 30, 2017
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
157.4
|
|
$
|
0.2
|
|
$
|
157.6
|
|
$
|
-
|
|
|
$
|
157.6
|
|
Latin America
|
|
|
62.5
|
|
|
-
|
|
|
62.5
|
|
|
-
|
|
|
|
62.5
|
|
EMEA
|
|
|
177.8
|
|
|
-
|
|
|
177.8
|
|
|
(0.2
|
)
|
|
|
177.6
|
|
Asia-Pacific
|
|
|
76.0
|
|
|
-
|
|
|
76.0
|
|
|
-
|
|
|
|
76.0
|
|
|
|
Total
|
|
$
|
473.7
|
|
$
|
0.2
|
|
$
|
473.9
|
|
$
|
(0.2
|
)
|
|
$
|
473.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
$
|
285.7
|
|
$
|
-
|
|
$
|
285.7
|
|
$
|
-
|
|
|
$
|
285.7
|
|
Services
|
|
|
188.0
|
|
|
0.2
|
|
|
188.2
|
|
|
(0.2
|
)
|
|
|
188.0
|
|
|
|
Total
|
|
$
|
473.7
|
|
$
|
0.2
|
|
$
|
473.9
|
|
$
|
(0.2
|
)
|
|
$
|
473.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, 2016
|
|
|
North America
|
|
$
|
191.5
|
|
$
|
4.5
|
|
$
|
196.0
|
|
$
|
-
|
|
|
$
|
196.0
|
|
Latin America
|
|
|
55.1
|
|
|
-
|
|
|
55.1
|
|
|
-
|
|
|
|
55.1
|
|
EMEA
|
|
|
190.0
|
|
|
-
|
|
|
190.0
|
|
|
-
|
|
|
|
190.0
|
|
Asia-Pacific
|
|
|
51.5
|
|
|
-
|
|
|
51.5
|
|
|
-
|
|
|
|
51.5
|
|
|
|
Total
|
|
$
|
488.1
|
|
$
|
4.5
|
|
$
|
492.6
|
|
$
|
-
|
|
|
$
|
492.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
$
|
292.1
|
|
$
|
-
|
|
$
|
292.1
|
|
$
|
-
|
|
|
$
|
292.1
|
|
Services
|
|
|
196.0
|
|
|
4.5
|
|
|
200.5
|
|
|
-
|
|
|
|
200.5
|
|
|
|
Total
|
|
$
|
488.1
|
|
$
|
4.5
|
|
$
|
492.6
|
|
$
|
-
|
|
|
$
|
492.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended July 31, 2017
|
|
|
North America
|
|
$
|
476.1
|
|
$
|
3.0
|
|
$
|
479.1
|
|
$
|
(5.4
|
)
|
|
$
|
473.7
|
|
$
|
-
|
|
|
$
|
473.7
|
Latin America
|
|
|
190.8
|
|
|
-
|
|
|
190.8
|
|
|
-
|
|
|
|
190.8
|
|
|
(10.7
|
)
|
|
|
180.1
|
EMEA
|
|
|
539.4
|
|
|
-
|
|
|
539.4
|
|
|
(12.5
|
)
|
|
|
526.9
|
|
|
11.6
|
|
|
|
538.5
|
Asia-Pacific
|
|
|
188.2
|
|
|
-
|
|
|
188.2
|
|
|
-
|
|
|
|
188.2
|
|
|
(2.0
|
)
|
|
|
186.2
|
|
|
Total
|
|
$
|
1,394.5
|
|
$
|
3.0
|
|
$
|
1,397.5
|
|
$
|
(17.9
|
)
|
|
$
|
1,379.6
|
|
$
|
(1.1
|
)
|
|
$
|
1,378.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
$
|
817.1
|
|
$
|
-
|
|
$
|
817.1
|
|
$
|
(1.3
|
)
|
|
$
|
815.8
|
|
$
|
(1.9
|
)
|
|
$
|
813.9
|
Services
|
|
|
577.4
|
|
|
3.0
|
|
|
580.4
|
|
|
(16.6
|
)
|
|
|
563.8
|
|
|
0.8
|
|
|
|
564.6
|
|
|
Total
|
|
$
|
1,394.5
|
|
$
|
3.0
|
|
$
|
1,397.5
|
|
$
|
(17.9
|
)
|
|
$
|
1,379.6
|
|
$
|
(1.1
|
)
|
|
$
|
1,378.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended July 31, 2016
|
|
|
North America
|
|
$
|
636.5
|
|
$
|
10.6
|
|
$
|
647.1
|
|
$
|
-
|
|
|
$
|
647.1
|
|
Latin America
|
|
|
179.6
|
|
|
-
|
|
|
179.6
|
|
|
-
|
|
|
|
179.6
|
|
EMEA
|
|
|
557.4
|
|
|
-
|
|
|
557.4
|
|
|
-
|
|
|
|
557.4
|
|
Asia-Pacific
|
|
|
154.4
|
|
|
-
|
|
|
154.4
|
|
|
-
|
|
|
|
154.4
|
|
|
|
Total
|
|
$
|
1,527.9
|
|
$
|
10.6
|
|
$
|
1,538.5
|
|
$
|
-
|
|
|
$
|
1,538.5
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
$
|
972.1
|
|
$
|
-
|
|
$
|
972.1
|
|
$
|
-
|
|
|
$
|
972.1
|
|
Services
|
|
|
555.8
|
|
|
10.6
|
|
|
566.4
|
|
|
-
|
|
|
|
566.4
|
|
|
|
Total
|
|
$
|
1,527.9
|
|
$
|
10.6
|
|
$
|
1,538.5
|
|
$
|
-
|
|
|
$
|
1,538.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
|
$
|
466.9
|
|
|
$
|
174.5
|
|
|
37.4
|
%
|
|
|
$
|
(50.2
|
)
|
|
|
$
|
10.3
|
|
|
|
$
|
(71.0
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchased intangible assets
|
|
|
D
|
|
|
|
-
|
|
|
|
1.4
|
|
|
|
|
|
|
18.1
|
|
|
|
|
-
|
|
|
|
|
19.4
|
|
|
Other merger and acquisition related expenses
|
|
|
D
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
0.4
|
|
|
|
|
-
|
|
|
|
|
0.4
|
|
|
Stock based compensation
|
|
|
E
|
|
|
|
-
|
|
|
|
1.2
|
|
|
|
|
|
|
9.3
|
|
|
|
|
-
|
|
|
|
|
9.3
|
|
|
Restructuring and related charges
|
|
|
F
|
|
|
|
-
|
|
|
|
12.9
|
|
|
|
|
|
|
78.6
|
|
|
|
|
-
|
|
|
|
|
78.6
|
|
|
Other charges and income
|
|
|
F
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
2.1
|
|
|
|
|
-
|
|
|
|
|
0.4
|
|
|
Income tax effect of non-GAAP exclusions
|
|
|
G
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
|
(3.3
|
)
|
|
|
|
3.3
|
|
Non-GAAP
|
|
|
|
|
|
$
|
466.9
|
|
|
$
|
190.0
|
|
|
40.7
|
%
|
|
|
$
|
58.3
|
|
|
|
$
|
7.0
|
|
|
|
$
|
40.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
112.0
|
|
|
|
112.0
|
|
|
|
|
|
|
|
|
$
|
(0.63
|
)
|
|
|
$
|
(0.63
|
)
|
|
Adjustment for diluted shares
|
|
|
H
|
|
|
|
-
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
|
112.0
|
|
|
|
112.6
|
|
|
|
|
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 (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 services net revenues at
acquisition and associated costs of goods sold
|
|
A
|
|
|
|
0.2
|
|
|
0.2
|
|
|
|
|
|
|
0.2
|
|
|
|
|
-
|
|
|
|
|
0.2
|
|
|
Amortization of purchased intangible assets
|
|
D
|
|
|
|
-
|
|
|
1.6
|
|
|
|
|
|
|
20.0
|
|
|
|
|
-
|
|
|
|
|
20.0
|
|
|
Other merger and acquisition related expenses
|
|
D
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
0.7
|
|
|
|
|
-
|
|
|
|
|
(0.5
|
)
|
|
Stock based compensation
|
|
E
|
|
|
|
-
|
|
|
1.1
|
|
|
|
|
|
|
11.2
|
|
|
|
|
-
|
|
|
|
|
11.2
|
|
|
Goodwill impairment
|
|
F
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
17.4
|
|
|
|
|
-
|
|
|
|
|
17.4
|
|
|
Restructuring and related charges
|
|
F
|
|
|
|
-
|
|
|
11.6
|
|
|
|
|
|
|
80.8
|
|
|
|
|
-
|
|
|
|
|
80.8
|
|
|
Other charges and income
|
|
F
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(9.6
|
)
|
|
Income tax effect of non-GAAP exclusions
|
|
G
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
|
(3.1
|
)
|
|
|
|
3.1
|
|
Non-GAAP
|
|
|
|
|
$
|
473.9
|
|
|
$187.3
|
|
|
39.5
|
%
|
|
|
$
|
48.9
|
|
|
|
$
|
5.8
|
|
|
|
$
|
33.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
111.7
|
|
|
111.7
|
|
|
|
|
|
|
|
|
$
|
(0.80
|
)
|
|
|
$
|
(0.80
|
)
|
|
Adjustment for diluted shares
|
|
H
|
|
|
|
-
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
111.7
|
|
|
112.3
|
|
|
|
|
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 in deferred services net revenues at
acquisition and associated cost of goods sold
|
|
A
|
|
|
|
4.5
|
|
|
|
3.1
|
|
|
|
|
|
|
|
3.1
|
|
|
|
|
-
|
|
|
|
|
3.1
|
|
|
Amortization of purchased intangible assets
|
|
D
|
|
|
|
-
|
|
|
|
3.9
|
|
|
|
|
|
|
|
28.2
|
|
|
|
|
-
|
|
|
|
|
28.2
|
|
|
Other merger and acquisition related
|
|
D
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
1.0
|
|
|
|
|
-
|
|
|
|
|
(1.1
|
)
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 (loss)
|
|
|
Income tax provision
|
|
|
Net income (loss) attributable to
VeriFone Systems, Inc. stockholders
|
Nine Months Ended July 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
$
|
1,394.5
|
|
|
$
|
518.7
|
|
|
37.2
|
%
|
|
|
$
|
(136.0
|
)
|
|
|
$
|
22.1
|
|
|
|
$
|
(176.9
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition and associated costs of goods sold
|
|
A
|
|
|
|
3.0
|
|
|
2.4
|
|
|
|
|
|
|
2.4
|
|
|
|
|
-
|
|
|
|
|
2.4
|
|
|
Amortization of purchased intangible assets
|
|
D
|
|
|
|
-
|
|
|
5.5
|
|
|
|
|
|
|
59.3
|
|
|
|
|
-
|
|
|
|
|
57.9
|
|
|
Other merger and acquisition related expenses
|
|
D
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
1.1
|
|
|
|
|
-
|
|
|
|
|
1.0
|
|
|
Stock based compensation
|
|
E
|
|
|
|
-
|
|
|
3.2
|
|
|
|
|
|
|
30.1
|
|
|
|
|
-
|
|
|
|
|
30.1
|
|
|
Goodwill impairment
|
|
F
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
17.4
|
|
|
|
|
-
|
|
|
|
|
17.4
|
|
|
Restructuring and related charges
|
|
F
|
|
|
|
-
|
|
|
25.3
|
|
|
|
|
|
|
161.4
|
|
|
|
|
-
|
|
|
|
|
161.4
|
|
|
Other charges and income
|
|
F
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
9.6
|
|
|
|
|
-
|
|
|
|
|
(1.7
|
)
|
|
Income tax effect of non-GAAP exclusions
|
|
G
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
|
(5.3
|
)
|
|
|
|
5.3
|
|
Non-GAAP
|
|
|
|
|
$
|
1,397.5
|
|
|
$
|
555.1
|
|
|
39.7
|
%
|
|
|
$
|
145.3
|
|
|
|
$
|
16.8
|
|
|
|
$
|
96.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
111.7
|
|
|
111.7
|
|
|
|
|
|
|
|
|
$
|
(1.58
|
)
|
|
|
$
|
(1.58
|
)
|
|
Adjustment for diluted shares
|
|
H
|
|
|
|
-
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
111.7
|
|
|
112.2
|
|
|
|
|
|
|
|
|
$
|
0.87
|
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
Net revenues
|
|
|
Gross margin
|
|
|
Gross margin percentage
|
|
|
Operating income
|
|
|
Income tax provision
|
|
|
Net income (loss) attributable to
VeriFone Systems, Inc. stockholders
|
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 at
acquisition and associated cost of goods sold
|
|
A
|
|
|
|
10.6
|
|
|
7.5
|
|
|
|
|
|
|
7.5
|
|
|
|
|
-
|
|
|
|
|
7.5
|
|
|
Amortization of purchased intangible assets
|
|
D
|
|
|
|
-
|
|
|
11.8
|
|
|
|
|
|
|
77.6
|
|
|
|
|
-
|
|
|
|
|
77.6
|
|
|
Other merger and acquisition related
|
|
D
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
4.6
|
|
|
|
|
-
|
|
|
|
|
2.7
|
|
|
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
|
%
|
|
|
$
|
209.2
|
|
|
|
$
|
26.2
|
|
|
|
$
|
151.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Diluted net loss per share is calculated by dividing the Net loss
attributable to VeriFone Systems, Inc. stockholders by the weighted
average number of shares used in computing net 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Note
|
|
|
July 31, 2017
|
|
July 31, 2016
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
GAAP net cash provided by operating activities
|
|
|
I
|
|
|
$
|
60.1
|
|
|
$
|
140.1
|
|
Less: GAAP capital expenditures
|
|
|
I
|
|
|
|
(16.3
|
)
|
|
|
(52.8
|
)
|
Free cash flow
|
|
|
I
|
|
|
$
|
43.8
|
|
|
$
|
87.3
|
|
|
|
|
|
|
|
|
|
|
Guidance
|
|
|
|
|
|
Three Months Ending October 31, 2017
|
|
Year Ending October 31, 2017
|
GAAP net revenues
|
|
|
|
|
|
$
|
470-473
|
|
|
$
|
1,864-1,867
|
|
Adjustments to net revenues:
|
|
|
A
|
|
|
|
-
|
|
|
|
3
|
|
Non-GAAP net revenues
|
|
|
|
|
|
$
|
470-473
|
|
|
$
|
1,867-1,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted GAAP earnings (loss) per share (1)
|
|
|
|
|
|
$
|
0.22
|
|
|
$
|
(1.36
|
)
|
Adjustments: (2)
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
|
|
A
|
|
|
$
|
-
|
|
|
$
|
0.03
|
|
Amortization of purchased intangible assets
|
|
|
D
|
|
|
|
0.16
|
|
|
|
0.67
|
|
Other merger and acquisition related expenses
|
|
|
D
|
|
|
|
-
|
|
|
|
0.01
|
|
Stock based compensation
|
|
|
E
|
|
|
|
0.09
|
|
|
|
0.36
|
|
Restructuring and related charges
|
|
|
F
|
|
|
|
-
|
|
|
|
1.44
|
|
Goodwill impairment
|
|
|
F
|
|
|
|
-
|
|
|
|
0.15
|
|
Other charges and income
|
|
|
F
|
|
|
|
-
|
|
|
|
(0.01
|
)
|
Income tax effect of non-GAAP exclusions (3)
|
|
|
G
|
|
|
|
(0.04
|
)
|
|
|
0.01
|
|
Diluted Non-GAAP earnings per share (1)
|
|
|
|
|
|
$
|
0.43
|
|
|
$
|
1.30
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Diluted GAAP and non-GAAP earnings (loss) per share are determined
using the most dilutive weighted average number of shares, which
includes outstanding RSU and RSA shares in the calculation of the
weighted average diluted shares outstanding for periods in which we
expect net income.
|
(2)
|
Except for the adjustments noted herein, this guidance does not
include the effects of any future acquisition or divestiture related
costs, restructuring activities, significant legal matters, and
non-recurring income tax adjustments, which are difficult to predict
and may or may not be significant.
|
(3)
|
Assuming a GAAP effective tax rate of 14.5% applied to the
forecasted non-GAAP exclusions.
|
|
|
NON-GAAP FINANCIAL MEASURES
This press release and its attachments include several non-GAAP
financial measures, including non-GAAP net revenues; non-GAAP Systems
net revenues; non-GAAP Services net revenues; net revenues from
businesses acquired in the past 12 months; non-GAAP organic net
revenues; non-GAAP organic net revenues at constant currency; non-GAAP
gross margin; non-GAAP gross margin as a percentage of non-GAAP net
revenues; non-GAAP operating income; non-GAAP income tax provision;
non-GAAP net income attributable to VeriFone Systems, Inc. shareholders;
non-GAAP weighted average diluted shares; and non-GAAP net income (loss)
per diluted share. 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 2017. 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 these non-GAAP financial measures 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, geographic presence and associated
currency impacts, 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. These
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,
income taxes 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 four main
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, costs of goods sold and gross margin.
Non-GAAP net revenues exclude the fair value decrease (step-down) in
deferred revenue at acquisition. Non-GAAP costs of goods sold exclude
the costs of goods associated with the fair value decrease (step-down)
in deferred revenue at acquisition. Although the step-down of deferred
revenue fair value at acquisition and associated costs of goods sold are
reflected in our GAAP financial statements, they result in net revenues
and gross margins immediately post-acquisition that are lower than net
revenues and gross margins that would be recognized in accordance with
GAAP on those same services if they were sold under contracts entered
into post-acquisition. Accordingly, we adjust the step-down to achieve
comparability to net revenues and gross margins of the acquired entity
earned pre-acquisition and to our GAAP net revenues and gross margins to
be earned on contracts sold in future periods. These adjustments, which
relate principally to our acquisition of AJB during February 2016,
enhance the ability of our management and our investors to assess our
financial performance and trends. These non-GAAP net revenues, costs of
goods sold and gross margin amounts are not intended to be a substitute
for our GAAP disclosures of net revenues, costs of goods sold and gross
margin, and should be read together with our GAAP disclosures.
Note B: Non-GAAP organic net revenues. Non-GAAP organic net
revenues is a financial measure of net revenues excluding "net revenues
from businesses acquired in the past 12 months" (as defined below).
Verifone determines non-GAAP organic net revenues by deducting net
revenues from businesses acquired in the past 12 months from non-GAAP
net revenues. This non-GAAP measure is used to evaluate Verifone net
revenues without the impact of net revenues from acquired businesses.
Because Verifone's business has grown through both organic growth and
strategic acquisitions, Verifone analyzes performance both with and
without the impact of our recent acquisitions. Accordingly, Verifone
believes that both non-GAAP net revenues and non-GAAP organic net
revenues provide useful information to investors.
Net revenues from businesses acquired in the past 12 months consists
of net revenues derived from the sales channels of acquired resellers
and distributors, and net revenues from Systems and Services
attributable to businesses acquired in the 12 months preceding the
respective financial quarter(s). During periods prior to our acquisition
of former customers, net revenues from businesses acquired in the past
12 months consists of sales by Verifone to that former customer for that
period.
Note C: Non-GAAP organic net revenues at constant currency.
Verifone determines non-GAAP organic net revenues at constant currency
by recomputing non-GAAP organic net revenues denominated in currencies
other than U.S. Dollars in the current fiscal period using average
exchange rates for that particular currency during the corresponding
financial period of the prior year. Verifone uses this non-GAAP measure
to evaluate business performance and trends on a comparable basis
excluding the impact of foreign currency fluctuations.
Note D: Merger and Acquisition Related. Verifone adjusts certain
revenues and expenses for items that are the result of mergers and
acquisitions. Merger and acquisition related adjustments include the
amortization of intangible assets, contingent consideration fair market
value adjustments, interest on contingent consideration, transaction
expenses associated with acquisitions, and acquisition integration
expenses.
Amortization of intangible assets: Verifone incurs amortization
of intangible assets in connection with its acquisitions, such as
amortization of finite lived customer relationships intangibles. We are
required to allocate a portion of the purchase price of each business
acquisition to the intangible assets acquired and to amortize this
amount over the estimated useful lives of those acquired intangible
assets. Because these amounts have no direct correlation to Verifone's
underlying business operations, we eliminate these amortization charges
and any associated minority interest impact from our non-GAAP operating
results to provide better comparability of pre-acquisition and
post-acquisition operating results.
Contingent consideration fair market value adjustments and interest
on contingent consideration: In connection with its acquisitions,
Verifone owes contingent consideration payments based upon the
post-acquisition performance of and other factors related to acquired
businesses. These contingent consideration liabilities are reported at
fair market value and incur non-cash imputed interest. Changes in the
fair market value of contingent consideration and imputed interest
expense vary independent of our ongoing operating results and have no
direct correlation to our underlying business operations. Accordingly,
Verifone excludes these amounts from our non-GAAP operating results to
provide better comparability of pre-acquisition and post-acquisition
operating results.
Transaction expenses associated with acquisitions: Verifone
incurs transaction expenses in connection with its acquisitions, which
include legal and other professional fees such as advisory, accounting,
valuation and consulting fees. These transaction expenses are related to
acquisitions and have no direct correlation with the ongoing operation
of Verifone's business. Accordingly, Verifone excludes these amounts
from our non-GAAP operating results to provide better comparability of
pre-acquisition and post-acquisition operating results.
Acquisition integration expenses: In connection with its
acquisitions, Verifone incurs costs relating to the integration of the
acquired business with Verifone's ongoing business, which includes
expenses relating to the integration of facilities and other
infrastructure, information technology systems and employee-related
costs such as costs of personnel required to assist with integration
transitions. These acquisition integration expenses are related to
acquisitions and have no direct correlation with the ongoing operation
of Verifone's business. Accordingly, Verifone excludes these amounts
from our non-GAAP operating results to provide better comparability of
pre-acquisition and post-acquisition operating results.
Note E: Stock-Based Compensation. Our non-GAAP financial measures
eliminate the effect of expense for stock-based compensation because
they are non-cash expenses and, 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 a 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 a
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. Accordingly, we
believe that excluding stock-based compensation expense from our
non-GAAP operating results facilitates better understanding of our
long-term business performance and enhances period-to-period
comparability.
Note F: Other Charges and Income. Verifone excludes certain
expenses, other income (expense) and gains (losses) that we have
determined are not reflective of ongoing operating results or that vary
independent of business performance. 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 limit the
comparability of our ongoing operations with prior and future periods.
These adjustments for other charges and income include:
Transformation and restructuring: Over the past several years, we
have had gains and incurred expenses, such as professional services,
contract cancellation fees and certain personnel costs related to
initiatives to transform, streamline, centralize and restructure our
global operations. The transformation gain relates to the contribution
of certain business assets and associated equity ownership in Gas Media.
Charges include involuntary termination costs, costs to cancel facility
leases, write down of assets held for sale, and associated legal and
other advisory fees. Each of these items has been incurred in connection
with discrete activities in furtherance of specific business objectives
in light of prevailing circumstances, and each item and the associated
activity or activities have had differing impacts on our business
operations. We do not recognize gains or incur costs of this nature in
the ordinary course of business. While certain of these items have
recurred in recent years and may continue to recur in the near future,
the amount of these items has varied significantly from period to
period. Accordingly, management assesses our operating performance with
these amounts included and excluded, and we believe that by providing
this information, users of our financial statements are better able to
understand the financial results of what we consider to be our
continuing operations and compare our current operating performance to
our past operating performance.
Foreign exchange losses related to obligations denominated in
currencies of highly inflationary economies: Our non-GAAP operating
results do not include foreign exchange losses related to obligations
denominated in highly inflationary economies, such as the devaluation of
the Argentina Peso during the first quarter of fiscal year 2016. We
believe that excluding such losses provides a better indication of our
business performance, as the existence of high inflation in these
economies varies independent of our business performance, and enhances
the comparability of our business performance during periods before and
after such inflation occurred.
Goodwill impairment: Our non-GAAP results exclude any goodwill
impairment. We believe that excluding goodwill impairments provides a
better indication of our business performance and enhances the
comparability of our business performance during periods before and
after we recorded the impairment.
Note G: Income Tax Effect of Non-GAAP exclusions. 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 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. For the purpose of
computing non-GAAP actual results, we used a 14.5% rate for all periods
presented.
Note H: Non-GAAP diluted shares. Diluted GAAP and non-GAAP
weighted-average shares outstanding are the same in all periods except
where there is a GAAP net loss. In accordance with GAAP, we do not
consider dilutive shares in periods that there is a net loss. However,
in periods when we have a non-GAAP net income and a GAAP basis net loss,
diluted non-GAAP weighted average shares include additional shares that
are dilutive for non-GAAP computations of earnings per share.
Note I: Free Cash Flow. Verifone determines free cash flow
as net cash provided by operating activities less capital expenditures.
The free cash flow conversion ratio is free cash flow divided by
non-GAAP Net income attributable to VeriFone Systems, Inc. stockholders.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170907006594/en/
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