[June 08, 2018] |
|
Verifone Reports Results for the Second Quarter of Fiscal 2018
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
|
%
|
|
|
4.2pts
|
|
|
40.7
|
%
|
|
|
37.1
|
%
|
|
|
3.6pts
|
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
|
|
|
|
|
|
|
0.2
|
|
|
-
|
|
|
0.2
|
Amortization of purchased intangible assets
|
|
|
D
|
|
|
-
|
|
|
|
1.6
|
|
|
|
|
|
|
20.0
|
|
|
-
|
|
|
18.8
|
Merger and acquisition related
|
|
|
E
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
0.7
|
|
|
-
|
|
|
0.7
|
Stock-based compensation
|
|
|
F
|
|
|
-
|
|
|
|
1.1
|
|
|
|
|
|
|
11.2
|
|
|
-
|
|
|
11.2
|
Goodwill impairment
|
|
|
G
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
17.4
|
|
|
-
|
|
|
17.4
|
Restructuring and related
|
|
|
G
|
|
|
-
|
|
|
|
11.6
|
|
|
|
|
|
|
80.8
|
|
|
-
|
|
|
80.4
|
Other charges and income
|
|
|
G
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
(9.2)
|
Income tax effect of non-GAAP exclusions (2)
|
|
|
H
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
(3.1)
|
|
|
3.1
|
Non-GAAP
|
|
|
|
|
|
$
|
473.9
|
|
|
|
$
|
187.3
|
|
|
|
39.5%
|
|
|
$
|
48.9
|
|
|
$
|
5.8
|
|
|
$
|
33.3
|
Divested businesses
|
|
|
B, H
|
|
|
29.4
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
(7.7)
|
|
|
(1.1)
|
|
|
(6.6)
|
Non-GAAP, adjusted to exclude divested businesses
|
|
|
|
|
|
$
|
444.5
|
|
|
|
$
|
187.5
|
|
|
|
42.2%
|
|
|
$
|
56.6
|
|
|
$
|
6.9
|
|
|
$
|
39.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
$
|
(0.80)
|
|
|
$
|
(0.80)
|
Adjustment for diluted shares
|
|
|
I
|
|
|
-
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
111.7
|
|
|
|
112.3
|
|
|
|
|
|
|
|
|
|
$
|
0.30
|
|
|
$
|
0.30
|
Non-GAAP, adjusted to exclude divested businesses
|
|
|
|
|
|
111.7
|
|
|
|
112.3
|
|
|
|
|
|
|
|
|
|
$
|
0.36
|
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 14.5% 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
|
|
|
Income tax provision
|
|
|
Net income (loss) attributable to VeriFone Systems,
Inc. stockholders
|
Six Months Ended April 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
|
$
|
875.2
|
|
|
|
$
|
356.6
|
|
|
|
40.7
|
%
|
|
|
$
|
23.6
|
|
|
|
$
|
8.6
|
|
|
|
$
|
(9.7
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of purchased intangible assets
|
|
|
D
|
|
|
-
|
|
|
|
2.2
|
|
|
|
|
|
|
32.9
|
|
|
|
-
|
|
|
|
28.7
|
|
Merger and acquisition related
|
|
|
E
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
8.0
|
|
|
|
-
|
|
|
|
8.0
|
|
Stock based compensation
|
|
|
F
|
|
|
-
|
|
|
|
2.6
|
|
|
|
|
|
|
18.5
|
|
|
|
-
|
|
|
|
18.5
|
|
Restructuring and related
|
|
|
G
|
|
|
-
|
|
|
|
(1.0
|
)
|
|
|
|
|
|
(1.5
|
)
|
|
|
-
|
|
|
|
(1.5
|
)
|
Other charges and income
|
|
|
G
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
11.1
|
|
|
|
-
|
|
|
|
14.5
|
|
Income tax effect of non-GAAP exclusions (2)
|
|
|
H
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
5.0
|
|
|
|
(5.0
|
)
|
Non-GAAP
|
|
|
|
|
|
$
|
875.2
|
|
|
|
$
|
360.4
|
|
|
|
41.2
|
%
|
|
|
$
|
92.6
|
|
|
|
$
|
13.6
|
|
|
|
$
|
53.5
|
|
Divested businesses
|
|
|
B, H
|
|
|
12.2
|
|
|
|
3.3
|
|
|
|
|
|
|
0.7
|
|
|
|
0.1
|
|
|
|
0.6
|
|
Non-GAAP, adjusted to exclude divested businesses
|
|
|
|
|
|
$
|
863.0
|
|
|
|
$
|
357.1
|
|
|
|
41.4
|
%
|
|
|
$
|
91.9
|
|
|
|
$
|
13.5
|
|
|
|
$
|
52.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing
net income (loss) per share:
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders
|
|
|
|
|
|
|
Basic
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
Basic
|
|
|
Diluted (1)
|
GAAP
|
|
|
|
|
|
111.0
|
|
|
|
111.0
|
|
|
|
|
|
|
|
|
|
$
|
(0.09
|
)
|
|
|
$
|
(0.09
|
)
|
Adjustment for diluted shares
|
|
|
I
|
|
|
-
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
111.0
|
|
|
|
111.8
|
|
|
|
|
|
|
|
|
|
$
|
0.48
|
|
|
|
$
|
0.48
|
|
Non-GAAP, adjusted to exclude divested businesses
|
|
|
|
|
|
111.0
|
|
|
|
111.8
|
|
|
|
|
|
|
|
|
|
$
|
0.48
|
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net income (loss) per share is calculated by dividing the Net income
(loss) attributable to VeriFone Systems, Inc. stockholders by the
weighted average number of shares used in computing net income
(loss) per share attributable to VeriFone Systems, Inc. stockholders.
|
(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
|
Six Months Ended April 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
|
$
|
927.6
|
|
|
|
$
|
344.2
|
|
|
|
37.1
|
%
|
|
|
$
|
(85.8
|
)
|
|
|
$
|
11.8
|
|
|
|
$
|
(105.9
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition and associated cost of goods sold
|
|
|
A
|
|
|
2.9
|
|
|
|
2.4
|
|
|
|
|
|
|
2.4
|
|
|
|
-
|
|
|
|
2.4
|
|
Amortization of purchased intangible assets
|
|
|
D
|
|
|
-
|
|
|
|
4.1
|
|
|
|
|
|
|
41.3
|
|
|
|
-
|
|
|
|
38.6
|
|
Merger and acquisition related
|
|
|
E
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
0.7
|
|
|
|
-
|
|
|
|
0.6
|
|
Stock based compensation
|
|
|
F
|
|
|
-
|
|
|
|
2.0
|
|
|
|
|
|
|
20.8
|
|
|
|
-
|
|
|
|
20.8
|
|
Goodwill impairment
|
|
|
G
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
17.4
|
|
|
|
-
|
|
|
|
17.4
|
|
Restructuring and related
|
|
|
G
|
|
|
-
|
|
|
|
12.4
|
|
|
|
|
|
|
90.2
|
|
|
|
-
|
|
|
|
82.3
|
|
Other charges and income
|
|
|
G
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.7
|
)
|
Income tax effect of non-GAAP exclusions (2)
|
|
|
H
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
(2.0
|
)
|
|
|
2.0
|
|
Non-GAAP
|
|
|
|
|
|
$
|
930.5
|
|
|
|
$
|
365.1
|
|
|
|
39.2
|
%
|
|
|
$
|
87.0
|
|
|
|
$
|
9.8
|
|
|
|
$
|
56.5
|
|
Divested businesses
|
|
|
B, H
|
|
|
60.8
|
|
|
|
2.6
|
|
|
|
|
|
|
(12.7
|
)
|
|
|
(1.8
|
)
|
|
|
(10.9
|
)
|
Non-GAAP, adjusted to exclude divested businesses
|
|
|
|
|
|
$
|
869.7
|
|
|
|
$
|
362.5
|
|
|
|
41.7
|
%
|
|
|
$
|
99.7
|
|
|
|
$
|
11.6
|
|
|
|
$
|
67.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
111.5
|
|
|
|
111.5
|
|
|
|
|
|
|
|
|
|
$
|
(0.95
|
)
|
|
|
$
|
(0.95
|
)
|
Adjustment for diluted shares
|
|
|
I
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
111.5
|
|
|
|
112.0
|
|
|
|
|
|
|
|
|
|
$
|
0.51
|
|
|
|
$
|
0.50
|
|
Non-GAAP, adjusted to exclude divested businesses
|
|
|
|
|
|
111.5
|
|
|
|
112.0
|
|
|
|
|
|
|
|
|
|
$
|
0.60
|
|
|
|
$
|
0.60
|
|
(1)
|
|
Net income (loss) per share is calculated by dividing the Net income
(loss) attributable to VeriFone Systems, Inc. stockholders by the
weighted average number of shares used in computing net income
(loss) per share attributable to VeriFone Systems, Inc. stockholders.
|
(2)
|
|
For the purpose of computing the income tax effect of non-GAAP
exclusions, we used a 14.5% rate.
|
|
|
|
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; non-GAAP net revenues from
divested businesses; non-GAAP net revenues adjusted to exclude divested
businesses; adjusted non-GAAP 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. stockholders;
non-GAAP weighted average diluted shares; and non-GAAP net income (loss)
per diluted share. 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 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 net revenues, gross margin, and operating income
from divested businesses. Verifone determines non-GAAP net revenues,
gross margin and operating income from divested businesses as the
amounts in the reporting period that are derived from significant
businesses that have been divested, such as our China business and taxi
solution business, which were sold in June 2017 and December 2017,
respectively.
Note C: Adjusted Non-GAAP net revenues at constant currency.
Verifone determines non-GAAP net revenues at constant currency by
recomputing non-GAAP net revenues adjusted to exclude divested
businesses 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: 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. In addition, Verifone's equity
method investee companies incur amortization of intangible assets.
Because these amounts have no direct correlation to those business'
underlying business operations, we also eliminate these amortization
charges, net of tax, from our non-GAAP other income and expense to
provide better comparability of operating results.
Note E: 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
transaction expenses associated with acquisitions, contingent
consideration fair market value adjustments and interest on contingent
consideration.
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.
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.
Note F: 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 G: 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 related charges: We have had gains and incurred
expenses, such as professional services, contract cancellation fees,
certain personnel costs and asset impairments 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, asset
impairments, write down of net assets and liabilities 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 incur costs of this nature
in the ordinary course of business. 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.
Costs associated with litigation and other loss contingencies: Our
non-GAAP operating results do not include costs associated with
litigation and other loss contingencies, penalties and settlements.
These costs and loss contingencies relate to events that occurred in
prior periods and their ultimate amount and resolution are uncorrelated
with our operating performance during the current period. Accordingly,
we believe that excluding such amounts provides a better indication of
our business performance in the current period and enhances the
comparability of our business performance across periods.
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 H: 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 best 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.
Note I: 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180608005748/en/
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