[December 15, 2014] |
|
Verifone Reports Results for the Fourth Quarter and Full Year Fiscal 2014
VeriFone Systems, Inc. (NYSE:PAY):
Fourth Quarter Financial Highlights
-
GAAP and Non-GAAP net revenues of $491 million
-
GAAP net income per share of $0.27 and Non-GAAP net income per diluted
share of $0.44
-
Operating cash flow of $52 million
Fiscal Year Financial Highlights
-
GAAP and Non-GAAP net revenues of $1.87 billion
-
GAAP net loss per share of $0.34 and Non-GAAP net income per diluted
share of $1.51
-
Operating cash flow of $199 million
VeriFone Systems, Inc. (NYSE:PAY), the global leader in secure
electronic payment solutions, today announced financial results for the
three months ended October 31, 2014 ("Q4 FY14"), and fiscal year ended
October 31, 2014 ("FY14").
Revenues - GAAP net revenues were $491 million for Q4 FY14,
compared to $431 million a year ago, a 14% increase. For FY14, GAAP net
revenues totaled $1.87 billion, a 10% increase compared to the $1.70
billion result for FY13. Non-GAAP net revenues for the latest quarter
were $491 million, compared to $432 million a year ago, a 13% increase.
Non-GAAP net revenues for FY14 were $1.87 billion, a 9% increase
compared to the $1.71 billion result for FY13.
Earnings per Share - GAAP net income per share for Q4 FY14 was
$0.27 compared to a net loss of $2.26 a year ago. For FY14, GAAP net
loss was $0.34 compared to a loss of $2.73 a year ago. Non-GAAP net
income per diluted share for Q4 FY14 was $0.44, compared to $0.27 a year
ago, a 63% increase. Non-GAAP net income per diluted share for FY14 was
$1.51, a 5% increase compared to the $1.44 result for FY13.
The table below provides additional summary GAAP and non-GAAP financial
information and comparisons.
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES)
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Three Months Ended October 31,
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Years Ended October 31,
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2014
|
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2013
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% Change (2)
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2014
|
|
2013
|
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% Change (2)
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GAAP:
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Net revenues
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$
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491
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$
|
431
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|
14
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%
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|
$
|
1,869
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$
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1,702
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10
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%
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Gross margin as a % of net revenues
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40.1
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%
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38.0
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%
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2.1
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pts
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38.8
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%
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37.9
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%
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0.9
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pts
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Net loss per diluted share
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$
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0.27
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$
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(2.26
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)
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nm
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$
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(0.34
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)
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$
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(2.73
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)
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nm
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Non-GAAP (1):
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Net revenues
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$
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491
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$
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432
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13
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%
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|
$
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1,871
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$
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1,709
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9
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%
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Gross margin as a % of net revenues
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42.3
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%
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41.2
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%
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1.1
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pts
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41.9
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%
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41.9
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%
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-
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pts
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Net income per diluted share
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$
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0.44
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$
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0.27
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63
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%
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$
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1.51
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$
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1.44
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5
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%
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(1) Reconciliations for the non-GAAP measures are provided at the
end of this press release.
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(2) "nm" means not meaningful
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"I'm proud of the team at Verifone and pleased with our performance in
Q4 and FY14. We again exceeded our guidance," said Paul Galant, Chief
Executive Officer of Verifone. "We are executing and winning back share
by helping our clients to improve their security, upgrade to EMV in the
U.S., and take advantage of advances in mobility and digital commerce.
We are halfway through our transformation initiative and are now a more
nimble and focused company. 2015 is the Year of Product at Verifone as
we leverage our growing Terminal Solutions business to become a platform
company providing Payment-as-a-Service and Commerce Enablement."
Additional Financial and Business Highlights
-
Achieved record North America net revenues
-
Secured 33 U.S. client wins, including eight competitive takeaways
-
Announced global availability of secure commerce architecture and
signed agreements to connect more than 20,000 devices through this
architecture
-
Continued to grow petroleum business as next generation in-store POS
and site controller offerings gained momentum
-
Announced a key Pan-European certification to begin offering MX900
series terminals to clients across Europe
-
Generated record Service net revenues
-
Extended Payment-as-a-Service business in the U.S., Mexico, Australia,
New Zealand, and Turkey
-
Expanded network of taxis with payment and media systems and increased
fleets carrying digital taxi-top displays
-
Won bid to become the preferred wireless terminal platform for
Mexico's largest bank
Guidance
Guidance for the full fiscal year 2015 is as follows:
-
Non-GAAP net revenues of $2,020 million to $2,040 million
-
Non-GAAP net income per diluted share of $1.85 to $1.90
Guidance for the first fiscal quarter of 2015 is as follows:
-
Non-GAAP net revenues of $480 million to $485 million
-
Non-GAAP net income per diluted share of $0.40
Conference Call
Verifone will hold its earnings conference call today, December 15th,
at 1:30 pm (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 until
December 22, 2014.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on management's current expectations or
beliefs and on currently available competitive, financial and economic
data and are subject to uncertainty and changes in circumstances. Actual
results may vary materially from those expressed or implied by the
forward-looking statements herein due to changes in economic, business,
competitive, technological, and/or regulatory factors, and other risks
and uncertainties affecting the operation of the business of VeriFone
Systems, Inc., including many factors beyond our control. These risks
and uncertainties include, but are not limited to, those associated
with: execution of our strategic plan and business and operational
initiatives, including whether the expected benefits of our plan and
initiatives are achieved within expected timeframes or at all, short
product cycles and rapidly changing technologies, our ability to
maintain competitive leadership position with respect to our payment
solution offerings, our dependence on a limited number of customers, the
conduct of our business and operations internationally, our ability to
protect our computer systems and networks from fraud, cyber-attacks or
security breaches, our assumptions, judgments and estimates regarding
the impact on our business of political instability in markets where we
conduct business, uncertainty in the global economic environment and
financial markets, the status of our relationships with and condition of
third parties such as our contract manufacturers, key customers,
distributors and key suppliers upon whom we rely in the conduct of our
business, our ability to effectively hedge our exposure to foreign
currency exchange rate fluctuations, and our dependence on a limited
number of key employees. For a further list and description of the risks
and uncertainties affecting the operations of our business, see our
filings with the Securities and Exchange Commission, including our
annual report on Form 10-K and our quarterly reports on Form 10-Q. The
forward-looking statements speak only as of the date such statements are
made. VeriFone is under no obligation to, and expressly disclaims any
obligation to, update or alter its forward-looking statements, whether
as a result of new information, future events, changes in assumptions or
otherwise.
About Verifone
Verifone is transforming everyday transactions into opportunities for
connected commerce. We're connecting more than 27 million payment
devices to the cloud-merging the online and in-store shopping experience
and creating the next generation of digital engagement between merchants
and consumers. We are built on a 30-year history of uncompromised
security. Our people are known as trusted experts that work with our
clients and partners, helping to solve their most complex payments
challenges. We have clients and partners in more than 150 countries,
including the world's best-known retail brands, financial institutions
and payment providers.
Verifone.com | (NYSE:PAY) | @verifone
Additional Resources: http://ir.verifone.com
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VERIFONE SYSTEMS, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES)
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Three Months Ended October 31,
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Years Ended October 31,
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2014
|
|
2013
|
|
% Change (1)
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|
2014
|
|
2013
|
|
% Change (1)
|
Net revenues:
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System solutions
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$
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310.9
|
|
|
$
|
259.4
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|
19.9
|
%
|
|
$
|
1,162.2
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|
$
|
1,068.4
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|
|
8.8
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%
|
Services
|
|
|
179.6
|
|
|
|
171.8
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|
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4.5
|
%
|
|
|
706.7
|
|
|
|
633.8
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|
|
11.5
|
%
|
Total net revenues
|
|
|
490.5
|
|
|
|
431.2
|
|
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13.8
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%
|
|
|
1,868.9
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|
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|
1,702.2
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9.8
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%
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Cost of net revenues:
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System solutions
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191.1
|
|
|
|
171.2
|
|
|
11.6
|
%
|
|
|
733.0
|
|
|
|
695.3
|
|
|
5.4
|
%
|
Services
|
|
|
102.9
|
|
|
|
96.0
|
|
|
7.2
|
%
|
|
|
411.2
|
|
|
|
361.7
|
|
|
13.7
|
%
|
Total cost of net revenues
|
|
|
294.0
|
|
|
|
267.2
|
|
|
10.0
|
%
|
|
|
1,144.2
|
|
|
|
1,057.0
|
|
|
8.2
|
%
|
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Total gross margin
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|
196.5
|
|
|
|
164.0
|
|
|
19.8
|
%
|
|
|
724.7
|
|
|
|
645.2
|
|
|
12.3
|
%
|
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Operating expenses:
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Research and development
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50.0
|
|
|
|
45.8
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|
|
9.2
|
%
|
|
|
203.7
|
|
|
|
173.3
|
|
|
17.5
|
%
|
Sales and marketing
|
|
|
56.3
|
|
|
|
54.8
|
|
|
2.7
|
%
|
|
|
217.4
|
|
|
|
196.6
|
|
|
10.6
|
%
|
General and administrative
|
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|
50.6
|
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|
54.3
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(6.8
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)%
|
|
|
208.7
|
|
|
|
181.1
|
|
|
15.2
|
%
|
Litigation settlement and loss contingency expense (benefit)
|
|
|
(17.6
|
)
|
|
|
0.4
|
|
|
nm
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|
|
|
(8.6
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)
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|
64.4
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|
|
nm
|
|
Amortization of purchased intangible assets
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23.7
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|
|
|
24.5
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|
(3.3
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)%
|
|
|
97.6
|
|
|
|
96.2
|
|
|
1.5
|
%
|
Total operating expenses
|
|
|
163.0
|
|
|
|
179.8
|
|
|
(9.3
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)%
|
|
|
718.8
|
|
|
|
711.6
|
|
|
1.0
|
%
|
Operating income (loss)
|
|
|
33.5
|
|
|
|
(15.8
|
)
|
|
nm
|
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|
5.9
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|
|
|
(66.4
|
)
|
|
nm
|
|
Interest, net
|
|
|
(7.2
|
)
|
|
|
(10.0
|
)
|
|
(28.0
|
)%
|
|
|
(42.5
|
)
|
|
|
(44.3
|
)
|
|
(4.1
|
)%
|
Other income (expense), net
|
|
|
3.4
|
|
|
|
(2.1
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)
|
|
nm
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|
|
|
(3.3
|
)
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|
|
3.7
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|
|
nm
|
|
Income (loss) before income taxes
|
|
|
29.7
|
|
|
|
(27.9
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)
|
|
nm
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|
|
|
(39.9
|
)
|
|
|
(107.0
|
)
|
|
nm
|
|
Income tax provision (benefit)
|
|
|
(1.6
|
)
|
|
|
219.9
|
|
|
nm
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|
|
|
(3.5
|
)
|
|
|
188.0
|
|
|
nm
|
|
Consolidated net income (loss)
|
|
|
31.3
|
|
|
|
(247.8
|
)
|
|
nm
|
|
|
|
(36.4
|
)
|
|
|
(295.0
|
)
|
|
nm
|
|
Net income (loss) attributable to noncontrolling interests
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|
|
(0.2
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)
|
|
|
0.1
|
|
|
nm
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|
(1.7
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)
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|
|
(1.1
|
)
|
|
nm
|
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
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|
$
|
31.1
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|
|
$
|
(247.7
|
)
|
|
nm
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|
|
$
|
(38.1
|
)
|
|
$
|
(296.1
|
)
|
|
nm
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders:
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|
|
|
|
|
|
|
|
|
|
|
|
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|
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Basic
|
|
$
|
0.27
|
|
|
$
|
(2.26
|
)
|
|
|
|
|
$
|
(0.34
|
)
|
|
$
|
(2.73
|
)
|
|
|
|
Diluted
|
|
$
|
0.27
|
|
|
$
|
(2.26
|
)
|
|
|
|
|
$
|
(0.34
|
)
|
|
$
|
(2.73
|
)
|
|
|
|
|
|
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|
Weighted average number of shares used in computing net income
(loss) per share:
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Basic
|
|
|
113.1
|
|
|
|
109.5
|
|
|
|
|
|
|
111.6
|
|
|
|
108.6
|
|
|
|
|
Diluted
|
|
|
115.1
|
|
|
|
109.5
|
|
|
|
|
|
|
111.6
|
|
|
|
108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) "nm" means not meaningful
|
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|
|
|
|
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VERIFONE SYSTEMS, INC.
|
NET REVENUES INFORMATION
|
(UNAUDITED, IN MILLIONS, EXCEPT PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
|
October 31,
|
|
July 31,
|
|
October 31,
|
|
% Change
|
|
% Change
|
|
October 31,
|
|
October 31,
|
|
% Change
|
|
Note
|
|
2014
|
|
2014 (1)
|
|
2013
|
|
(1) SEQ
|
|
(1) YoY
|
|
2014
|
|
2013
|
|
(1)
|
GAAP net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
149.1
|
|
|
$
|
129.8
|
|
|
$
|
124.5
|
|
|
14.9
|
%
|
|
19.8
|
%
|
|
$
|
526.3
|
|
|
$
|
495.5
|
|
|
6.2
|
%
|
LAC
|
|
|
|
82.1
|
|
|
|
89.2
|
|
|
|
70.8
|
|
|
(8.0
|
)%
|
|
16.0
|
%
|
|
|
323.0
|
|
|
|
296.6
|
|
|
8.9
|
%
|
EMEA
|
|
|
|
189.2
|
|
|
|
190.0
|
|
|
|
179.2
|
|
|
(0.4
|
)%
|
|
5.6
|
%
|
|
|
754.6
|
|
|
|
700.4
|
|
|
7.7
|
%
|
Asia-Pacific
|
|
|
|
70.1
|
|
|
|
66.9
|
|
|
|
56.7
|
|
|
4.8
|
%
|
|
23.6
|
%
|
|
|
265.0
|
|
|
|
209.7
|
|
|
26.4
|
%
|
Total
|
|
|
$
|
490.5
|
|
|
$
|
475.9
|
|
|
$
|
431.2
|
|
|
3.1
|
%
|
|
13.8
|
%
|
|
$
|
1,868.9
|
|
|
$
|
1,702.2
|
|
|
9.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net revenues: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
A, D
|
|
$
|
149.0
|
|
|
$
|
129.8
|
|
|
$
|
124.6
|
|
|
14.8
|
%
|
|
19.6
|
%
|
|
$
|
526.2
|
|
|
$
|
495.2
|
|
|
6.3
|
%
|
LAC
|
F
|
|
|
82.1
|
|
|
|
89.2
|
|
|
|
70.8
|
|
|
(8.0
|
)%
|
|
16.0
|
%
|
|
|
323.0
|
|
|
|
299.1
|
|
|
8.0
|
%
|
EMEA
|
A
|
|
|
189.4
|
|
|
|
190.2
|
|
|
|
180.1
|
|
|
(0.4
|
)%
|
|
5.2
|
%
|
|
|
756.5
|
|
|
|
704.7
|
|
|
7.4
|
%
|
Asia-Pacific
|
A
|
|
|
70.2
|
|
|
|
67.2
|
|
|
|
56.8
|
|
|
4.5
|
%
|
|
23.6
|
%
|
|
|
265.3
|
|
|
|
210.3
|
|
|
26.2
|
%
|
Total
|
|
|
$
|
490.7
|
|
|
$
|
476.4
|
|
|
$
|
432.3
|
|
|
3.0
|
%
|
|
13.4
|
%
|
|
$
|
1,871.0
|
|
|
$
|
1,709.3
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net revenues
|
|
|
$
|
490.5
|
|
|
$
|
475.9
|
|
|
$
|
431.2
|
|
|
3.1
|
%
|
|
13.8
|
%
|
|
$
|
1,868.9
|
|
|
$
|
1,702.2
|
|
|
9.8
|
%
|
Plus: Non-GAAP net revenues adjustments
|
A, D, F
|
|
|
0.2
|
|
|
|
0.5
|
|
|
|
1.1
|
|
|
nm
|
|
|
nm
|
|
|
|
2.1
|
|
|
|
7.1
|
|
|
nm
|
|
Non-GAAP net revenues (2)
|
|
|
|
490.7
|
|
|
|
476.4
|
|
|
|
432.3
|
|
|
3.0
|
%
|
|
13.4
|
%
|
|
|
1,871.0
|
|
|
|
1,709.3
|
|
|
9.5
|
%
|
Net revenues from businesses acquired in the past 12 months
|
B
|
|
|
-
|
|
|
nm
|
|
|
|
|
-
|
|
|
nm
|
|
|
nm
|
|
|
|
(33.4
|
)
|
|
|
(4.6
|
)
|
|
nm
|
|
Non-GAAP organic net revenues (2)
|
|
|
$
|
490.7
|
|
|
nm
|
|
|
|
$
|
432.3
|
|
|
nm
|
|
|
13.4
|
%
|
|
$
|
1,837.6
|
|
|
$
|
1,704.7
|
|
|
7.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 October 31, 2014, compared with three
months ended October 31, 2013
|
|
For year ended October 31, 2014, compared with year ended
October 31, 2013
|
|
|
Net revenues growth
|
|
Impact due to Non-GAAP net revenues adjustments and acquired
businesses (A) (B) (D)
|
|
Non-GAAP organic net revenues growth
|
|
Impact due to foreign currency (C)
|
|
Non-GAAP organic net revenues at constant currency growth
|
|
Net revenues growth
|
|
Impact due to Non-GAAP net revenues adjustments and acquired
businesses (A) (B) (D) (F)
|
|
Non-GAAP organic net revenues growth
|
|
Impact due to foreign currency (C)
|
|
Non-GAAP organic net revenues at constant currency growth
|
North America
|
|
19.8
|
%
|
|
0.3
|
pts
|
|
19.5
|
%
|
|
(0.2
|
)pts
|
|
19.7
|
%
|
|
6.2
|
%
|
|
(0.1
|
)pts
|
|
6.3
|
%
|
|
(0.1
|
)pts
|
|
6.4
|
%
|
LAC
|
|
16.0
|
%
|
|
0.2
|
pts
|
|
15.8
|
%
|
|
(4.0
|
)pts
|
|
19.8
|
%
|
|
8.9
|
%
|
|
0.9
|
pts
|
|
8.0
|
%
|
|
(8.6
|
)pts
|
|
16.6
|
%
|
EMEA
|
|
5.6
|
%
|
|
0.4
|
pts
|
|
5.2
|
%
|
|
(1.5
|
)pts
|
|
6.7
|
%
|
|
7.7
|
%
|
|
1.4
|
pts
|
|
6.3
|
%
|
|
1.1
|
pts
|
|
5.2
|
%
|
Asia-Pacific
|
|
23.6
|
%
|
|
0.1
|
pts
|
|
23.5
|
%
|
|
0.1
|
pts
|
|
23.4
|
%
|
|
26.4
|
%
|
|
10.3
|
pts
|
|
16.1
|
%
|
|
(3.1
|
)pts
|
|
19.2
|
%
|
Total
|
|
13.8
|
%
|
|
0.4
|
pts
|
|
13.4
|
%
|
|
(1.4
|
)pts
|
|
14.8
|
%
|
|
9.8
|
%
|
|
2.0
|
pts
|
|
7.8
|
%
|
|
(1.5
|
)pts
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2014
|
|
October 31, 2013
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
250.2
|
|
|
$
|
268.2
|
|
Accounts receivable, net of allowances of $9.9 and $12.7
|
|
|
305.5
|
|
|
|
284.0
|
|
Inventories, net
|
|
|
124.3
|
|
|
|
138.7
|
|
Prepaid expenses and other current assets
|
|
|
105.6
|
|
|
|
134.1
|
|
Total current assets
|
|
|
785.6
|
|
|
|
825.0
|
|
Fixed assets, net
|
|
|
177.7
|
|
|
|
172.2
|
|
Purchased intangible assets, net
|
|
|
457.6
|
|
|
|
642.9
|
|
Goodwill
|
|
|
1,185.9
|
|
|
|
1,252.4
|
|
Deferred tax assets, net
|
|
|
30.4
|
|
|
|
23.9
|
|
Other long-term assets
|
|
|
65.0
|
|
|
|
77.3
|
|
Total assets
|
|
$
|
2,702.2
|
|
|
$
|
2,993.7
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
161.2
|
|
|
$
|
116.5
|
|
Accruals and other current liabilities
|
|
|
207.0
|
|
|
|
292.1
|
|
Deferred revenue, net
|
|
|
92.1
|
|
|
|
86.6
|
|
Short-term debt
|
|
|
32.1
|
|
|
|
92.5
|
|
Total current liabilities
|
|
|
492.4
|
|
|
|
587.7
|
|
Long-term deferred revenue, net
|
|
|
51.0
|
|
|
|
42.6
|
|
Long-term debt
|
|
|
851.0
|
|
|
|
943.3
|
|
Long-term deferred tax liabilities
|
|
|
136.1
|
|
|
|
176.0
|
|
Other long-term liabilities
|
|
|
101.0
|
|
|
|
92.5
|
|
Total liabilities
|
|
|
1,631.5
|
|
|
|
1,842.1
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest in subsidiary
|
|
|
0.8
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
1.1
|
|
|
|
1.1
|
|
Additional paid-in capital
|
|
|
1,675.7
|
|
|
|
1,598.7
|
|
Accumulated deficit
|
|
|
(538.2
|
)
|
|
|
(500.1
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
(104.8
|
)
|
|
|
14.9
|
|
Total stockholders' equity
|
|
|
1,033.8
|
|
|
|
1,114.6
|
|
Noncontrolling interest in subsidiaries
|
|
|
36.1
|
|
|
|
36.4
|
|
Total liabilities and equity
|
|
$
|
2,702.2
|
|
|
$
|
2,993.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended October 31,
|
|
|
2014
|
|
2013
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Consolidated net loss
|
|
$
|
(36.4
|
)
|
|
$
|
(295.0
|
)
|
Adjustments to reconcile consolidated net income (loss) to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization, net
|
|
|
213.6
|
|
|
|
207.8
|
|
Stock-based compensation expense
|
|
|
53.9
|
|
|
|
48.9
|
|
Deferred income taxes, net
|
|
|
(38.0
|
)
|
|
|
142.9
|
|
Write-off of debt issuance cost upon extinguishment
|
|
|
7.2
|
|
|
|
-
|
|
Other
|
|
|
16.8
|
|
|
|
5.1
|
|
Net cash provided by operating activities before changes in
operating assets and liabilities
|
|
|
217.1
|
|
|
|
109.7
|
|
Changes in operating assets and liabilities, net of effects of
business acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(29.5
|
)
|
|
|
84.3
|
|
Inventories, net
|
|
|
9.5
|
|
|
|
26.8
|
|
Prepaid expenses and other assets
|
|
|
10.2
|
|
|
|
(8.5
|
)
|
Accounts payable
|
|
|
47.4
|
|
|
|
(77.0
|
)
|
Deferred revenue, net
|
|
|
20.0
|
|
|
|
-
|
|
Other current and long-term liabilities
|
|
|
(75.6
|
)
|
|
|
101.2
|
|
Net change in operating assets and liabilities
|
|
|
(18.0
|
)
|
|
|
126.8
|
|
Net cash provided by operating activities
|
|
|
199.1
|
|
|
|
236.5
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(85.0
|
)
|
|
|
(77.5
|
)
|
Acquisition of businesses, net of cash and cash equivalents acquired
|
|
|
-
|
|
|
|
(75.9
|
)
|
Other investing activities, net
|
|
|
7.1
|
|
|
|
8.7
|
|
Net cash used in investing activities
|
|
|
(77.9
|
)
|
|
|
(144.7
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from debt, net of issuance costs
|
|
|
1,099.4
|
|
|
|
123.2
|
|
Repayments of debt
|
|
|
(1,260.8
|
)
|
|
|
(399.1
|
)
|
Proceeds from issuance of common stock through employee equity
incentive plans
|
|
|
35.4
|
|
|
|
11.1
|
|
Payments of acquisition-related contingent consideration
|
|
|
(0.5
|
)
|
|
|
(11.0
|
)
|
Other financing activities, net
|
|
|
(1.6
|
)
|
|
|
(1.7
|
)
|
Net cash used in financing activities
|
|
|
(128.1
|
)
|
|
|
(277.5
|
)
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash and cash
equivalents
|
|
|
(11.1
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(18.0
|
)
|
|
|
(185.9
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
268.2
|
|
|
|
454.1
|
|
Cash and cash equivalents, end of period
|
|
$
|
250.2
|
|
|
$
|
268.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
Three Months Ended October 31, 2014
|
GAAP
|
|
|
$
|
490.5
|
|
|
$
|
196.5
|
|
|
40.1
|
%
|
|
$
|
33.5
|
|
|
$
|
31.1
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
A
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
|
|
|
0.2
|
|
|
|
0.2
|
|
Amortization of purchased intangible assets
|
D
|
|
|
-
|
|
|
|
10.0
|
|
|
|
|
|
|
33.8
|
|
|
|
33.8
|
|
Other merger, acquisition and divestiture related expenses
|
D
|
|
|
-
|
|
|
|
0.6
|
|
|
|
|
|
|
1.0
|
|
|
|
(3.5
|
)
|
Stock based compensation
|
E
|
|
|
-
|
|
|
|
0.7
|
|
|
|
|
|
|
13.0
|
|
|
|
13.0
|
|
Restructuring charges
|
F
|
|
|
-
|
|
|
|
0.2
|
|
|
|
|
|
|
1.5
|
|
|
|
1.5
|
|
Other charges and income
|
F
|
|
|
-
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
(14.9
|
)
|
|
|
(15.9
|
)
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
(10.1
|
)
|
Non-GAAP
|
|
|
$
|
490.7
|
|
|
$
|
207.4
|
|
|
42.3
|
%
|
|
$
|
68.1
|
|
|
$
|
50.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net income
(loss) per share:
|
|
|
|
|
Net income (loss) per share attributable to VeriFone Systems,
Inc. stockholders (1)
|
|
|
|
Basic
|
|
Diluted
|
|
|
|
|
Basic
|
|
Diluted
|
GAAP
|
|
|
|
113.1
|
|
|
|
115.1
|
|
|
|
|
|
$
|
0.27
|
|
|
$
|
0.27
|
|
Adjustment for diluted shares
|
G
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
113.1
|
|
|
|
115.1
|
|
|
|
|
|
$
|
0.44
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income (loss) per share is calculated by dividing the Net
income (loss) attributable to VeriFone Systems, Inc. stockholders
by the Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Net revenues
|
|
Gross margin
|
|
Gross margin percentage
|
|
Operating income (loss)
|
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
Three Months Ended July 31, 2014
|
GAAP
|
|
|
$
|
475.9
|
|
|
$
|
182.8
|
|
|
38.4
|
%
|
|
$
|
(7.5
|
)
|
|
$
|
(29.0
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
A
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
|
|
|
0.5
|
|
|
|
0.5
|
|
Amortization of purchased intangible assets
|
D
|
|
|
-
|
|
|
|
10.1
|
|
|
|
|
|
|
34.6
|
|
|
|
34.6
|
|
Other merger, acquisition and divestiture related expenses
|
D
|
|
|
-
|
|
|
|
0.6
|
|
|
|
|
|
|
1.2
|
|
|
|
1.9
|
|
Stock based compensation
|
E
|
|
|
-
|
|
|
|
0.5
|
|
|
|
|
|
|
13.2
|
|
|
|
13.2
|
|
Restructuring charges
|
F
|
|
|
-
|
|
|
|
1.8
|
|
|
|
|
|
|
10.9
|
|
|
|
10.9
|
|
Cost of debt refinancing
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
4.1
|
|
|
|
9.3
|
|
Other charges and income
|
F
|
|
|
-
|
|
|
|
1.9
|
|
|
|
|
|
|
5.9
|
|
|
|
5.9
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
(2.0
|
)
|
Non-GAAP
|
|
|
$
|
476.4
|
|
|
$
|
198.2
|
|
|
41.6
|
%
|
|
$
|
62.9
|
|
|
$
|
45.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
112.0
|
|
|
|
112.0
|
|
|
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.26
|
)
|
Adjustment for diluted shares
|
G
|
|
|
-
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
112.0
|
|
|
|
114.3
|
|
|
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income (loss) per share is calculated by dividing the Net
income (loss) attributable to VeriFone Systems, Inc. stockholders
by the Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Net revenues
|
|
Gross margin
|
|
Gross margin percentage
|
|
Operating income (loss)
|
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
Three Months Ended October 31, 2013
|
GAAP
|
|
|
$
|
431.2
|
|
|
$
|
164.0
|
|
|
38.0
|
%
|
|
$
|
(15.8
|
)
|
|
$
|
(247.7
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
A
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
|
|
|
1.1
|
|
|
|
1.1
|
|
Amortization of purchased intangible assets
|
D
|
|
|
-
|
|
|
|
11.4
|
|
|
|
|
|
|
35.9
|
|
|
|
35.9
|
|
Other merger and acquisition related expenses
|
D
|
|
|
-
|
|
|
|
0.7
|
|
|
|
|
|
|
3.5
|
|
|
|
4.2
|
|
Stock based compensation
|
E
|
|
|
-
|
|
|
|
0.8
|
|
|
|
|
|
|
16.9
|
|
|
|
16.9
|
|
Other charges and income
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
5.0
|
|
|
|
4.9
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
215.0
|
|
Non-GAAP
|
|
|
$
|
432.3
|
|
|
$
|
178.0
|
|
|
41.2
|
%
|
|
$
|
46.6
|
|
|
$
|
30.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
109.5
|
|
|
|
109.5
|
|
|
|
|
|
$
|
(2.26
|
)
|
|
$
|
(2.26
|
)
|
Adjustment for diluted shares
|
G
|
|
|
-
|
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
109.5
|
|
|
|
111.7
|
|
|
|
|
|
$
|
0.28
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income (loss) per share is calculated by dividing the Net
income (loss) attributable to VeriFone Systems, Inc. stockholders
by the Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Net revenues
|
|
Gross margin
|
|
Gross margin percentage
|
|
Operating income (loss)
|
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
Year Ended October 31, 2014
|
GAAP
|
|
|
$
|
1,868.9
|
|
|
$
|
724.7
|
|
|
38.8
|
%
|
|
$
|
5.9
|
|
|
$
|
(38.1
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred services net revenues at
acquisition
|
A
|
|
|
2.1
|
|
|
|
2.1
|
|
|
|
|
|
|
2.1
|
|
|
|
2.1
|
|
Amortization of purchased intangible assets
|
D
|
|
|
-
|
|
|
|
42.7
|
|
|
|
|
|
|
140.3
|
|
|
|
140.3
|
|
Other merger, acquisition and divestiture related expenses
|
D
|
|
|
-
|
|
|
|
4.9
|
|
|
|
|
|
|
8.2
|
|
|
|
6.6
|
|
Stock based compensation
|
E
|
|
|
-
|
|
|
|
2.0
|
|
|
|
|
|
|
53.9
|
|
|
|
53.9
|
|
Restructure charges
|
F
|
|
|
-
|
|
|
|
2.9
|
|
|
|
|
|
|
18.1
|
|
|
|
18.1
|
|
Cost of debt refinancing
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
4.1
|
|
|
|
11.2
|
|
Other charges and income
|
F
|
|
|
-
|
|
|
|
4.9
|
|
|
|
|
|
|
11.7
|
|
|
|
10.3
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
(32.6
|
)
|
Non-GAAP
|
|
|
$
|
1,871.0
|
|
|
$
|
784.2
|
|
|
41.9
|
%
|
|
$
|
244.3
|
|
|
$
|
171.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
111.6
|
|
|
|
111.6
|
|
|
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.34
|
)
|
Adjustment for diluted shares
|
G
|
|
|
-
|
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
111.6
|
|
|
|
113.8
|
|
|
|
|
|
$
|
1.54
|
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income (loss) per share is calculated by dividing the Net
income (loss) attributable to VeriFone Systems, Inc. stockholders
by the Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Net revenues
|
|
Gross margin
|
|
Gross margin percentage
|
|
Operating income (loss)
|
|
Net income (loss) attributable to VeriFone Systems, Inc.
stockholders
|
Year Ended October 31, 2013
|
GAAP
|
|
|
$
|
1,702.2
|
|
|
$
|
645.2
|
|
|
37.9
|
%
|
|
$
|
(66.4
|
)
|
|
$
|
(296.1
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of step-down in deferred net revenues at acquisition
|
A
|
|
|
5.1
|
|
|
|
5.1
|
|
|
|
|
|
|
5.1
|
|
|
|
5.1
|
|
Amortization of purchased intangible assets
|
D
|
|
|
-
|
|
|
|
44.7
|
|
|
|
|
|
|
140.9
|
|
|
|
140.9
|
|
Other merger, acquisition and divestiture related revenue and
expenses, net
|
D
|
|
|
(0.5
|
)
|
|
|
7.5
|
|
|
|
|
|
|
20.0
|
|
|
|
14.4
|
|
Stock based compensation
|
E
|
|
|
-
|
|
|
|
2.5
|
|
|
|
|
|
|
48.9
|
|
|
|
48.9
|
|
Other charges and income
|
F
|
|
|
2.5
|
|
|
|
11.8
|
|
|
|
|
|
|
86.6
|
|
|
|
84.5
|
|
Income tax effect of non-GAAP exclusions and adjustment to cash
basis tax rate
|
F
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
162.0
|
|
Non-GAAP
|
|
|
$
|
1,709.3
|
|
|
$
|
716.8
|
|
|
41.9
|
%
|
|
$
|
235.1
|
|
|
$
|
159.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
108.6
|
|
|
|
108.6
|
|
|
|
|
|
$
|
(2.73
|
)
|
|
$
|
(2.73
|
)
|
Adjustment for diluted shares
|
G
|
|
|
-
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
108.6
|
|
|
|
110.9
|
|
|
|
|
|
$
|
1.47
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income (loss) per share is calculated by dividing the Net
income (loss) attributable to VeriFone Systems, Inc. stockholders
by the Weighted average number of shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 October 31, 2014
|
|
North America
|
|
$
|
149.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
149.0
|
|
|
$
|
-
|
|
|
$
|
149.0
|
|
|
$
|
0.2
|
|
|
$
|
149.2
|
|
LAC
|
|
|
82.1
|
|
|
|
-
|
|
|
|
82.1
|
|
|
|
-
|
|
|
|
82.1
|
|
|
|
2.8
|
|
|
|
84.9
|
|
EMEA
|
|
|
189.2
|
|
|
|
0.2
|
|
|
|
189.4
|
|
|
|
-
|
|
|
|
189.4
|
|
|
|
2.7
|
|
|
|
192.1
|
|
Asia-Pacific
|
|
|
70.1
|
|
|
|
0.1
|
|
|
|
70.2
|
|
|
|
-
|
|
|
|
70.2
|
|
|
|
(0.1
|
)
|
|
|
70.1
|
|
Total
|
|
$
|
490.5
|
|
|
$
|
0.2
|
|
|
$
|
490.7
|
|
|
$
|
-
|
|
|
$
|
490.7
|
|
|
$
|
5.6
|
|
|
$
|
496.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
$
|
310.9
|
|
|
$
|
-
|
|
|
$
|
310.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
179.6
|
|
|
|
0.2
|
|
|
|
179.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
490.5
|
|
|
$
|
0.2
|
|
|
$
|
490.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, 2014
|
|
North America
|
|
$
|
129.8
|
|
|
$
|
-
|
|
|
$
|
129.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAC
|
|
|
89.2
|
|
|
|
-
|
|
|
|
89.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
190.0
|
|
|
|
0.2
|
|
|
|
190.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
|
|
66.9
|
|
|
|
0.3
|
|
|
|
67.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
475.9
|
|
|
$
|
0.5
|
|
|
$
|
476.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
$
|
299.4
|
|
|
$
|
-
|
|
|
$
|
299.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
176.5
|
|
|
|
0.5
|
|
|
|
177.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
475.9
|
|
|
$
|
0.5
|
|
|
$
|
476.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, 2013
|
|
North America
|
|
$
|
124.5
|
|
|
$
|
0.1
|
|
|
$
|
124.6
|
|
|
$
|
-
|
|
|
$
|
124.6
|
|
|
|
|
|
|
|
|
|
LAC
|
|
|
70.8
|
|
|
|
-
|
|
|
|
70.8
|
|
|
|
-
|
|
|
|
70.8
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
179.2
|
|
|
|
0.9
|
|
|
|
180.1
|
|
|
|
-
|
|
|
|
180.1
|
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
|
|
56.7
|
|
|
|
0.1
|
|
|
|
56.8
|
|
|
|
-
|
|
|
|
56.8
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
431.2
|
|
|
$
|
1.1
|
|
|
$
|
432.3
|
|
|
$
|
-
|
|
|
$
|
432.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
$
|
259.4
|
|
|
$
|
-
|
|
|
$
|
259.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
171.8
|
|
|
|
1.1
|
|
|
|
172.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
431.2
|
|
|
$
|
1.1
|
|
|
$
|
432.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net revenues
|
|
Amortization of step-down in deferred revenue at acquisition
|
|
Other adjustments to net revenues
|
|
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)
|
|
(D) (F)
|
|
(A)
|
|
(B)
|
|
(B)
|
|
(C)
|
|
(C)
|
Year Ended October 31, 2014
|
North America
|
|
$
|
526.3
|
|
|
$
|
(0.1
|
)
|
|
$
|
-
|
|
|
$
|
526.2
|
|
|
$
|
(0.1)
|
|
|
$
|
526.1
|
|
|
$
|
0.8
|
|
|
$
|
526.9
|
|
LAC
|
|
|
323.0
|
|
|
|
-
|
|
|
|
-
|
|
|
|
323.0
|
|
|
|
-
|
|
|
|
323.0
|
|
|
|
25.6
|
|
|
|
348.6
|
|
EMEA
|
|
|
754.6
|
|
|
|
1.9
|
|
|
|
-
|
|
|
|
756.5
|
|
|
|
(11.0)
|
|
|
|
745.5
|
|
|
|
(8.2
|
)
|
|
|
737.3
|
|
Asia-Pacific
|
|
|
265.0
|
|
|
|
0.3
|
|
|
|
-
|
|
|
|
265.3
|
|
|
|
(22.3)
|
|
|
|
243.0
|
|
|
|
6.7
|
|
|
|
249.7
|
|
Total
|
|
$
|
1,868.9
|
|
|
$
|
2.1
|
|
|
$
|
-
|
|
|
$
|
1,871.0
|
|
|
$
|
(33.4)
|
|
|
$
|
1,837.6
|
|
|
$
|
24.9
|
|
|
$
|
1,862.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
$
|
1,162.2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,162.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
706.7
|
|
|
|
2.1
|
|
|
|
-
|
|
|
|
708.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,868.9
|
|
|
$
|
2.1
|
|
|
$
|
-
|
|
|
$
|
1,871.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 31, 2013
|
North America
|
|
$
|
495.5
|
|
|
$
|
0.2
|
|
|
$
|
(0.5
|
)
|
|
$
|
495.2
|
|
|
$
|
(0.2
|
)
|
|
$
|
495.0
|
|
|
|
|
|
|
|
|
|
LAC
|
|
|
296.6
|
|
|
|
-
|
|
|
|
2.5
|
|
|
|
299.1
|
|
|
|
-
|
|
|
|
299.1
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
700.4
|
|
|
|
4.3
|
|
|
|
-
|
|
|
|
704.7
|
|
|
|
(3.5
|
)
|
|
|
701.2
|
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
|
|
209.7
|
|
|
|
0.6
|
|
|
|
-
|
|
|
|
210.3
|
|
|
|
(0.9
|
)
|
|
|
209.4
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,702.2
|
|
|
$
|
5.1
|
|
|
$
|
2.0
|
|
|
$
|
1,709.3
|
|
|
$
|
(4.6
|
)
|
|
$
|
1,704.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Solutions
|
|
$
|
1,068.4
|
|
|
$
|
0.4
|
|
|
$
|
2.5
|
|
|
$
|
1,071.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
633.8
|
|
|
|
4.7
|
|
|
|
(0.5
|
)
|
|
|
638.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,702.2
|
|
|
$
|
5.1
|
|
|
$
|
2.0
|
|
|
$
|
1,709.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VERIFONE SYSTEMS, INC.
|
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED, IN MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
|
October 31,
|
|
July 31,
|
|
October 31,
|
|
% Change
|
|
% Change
|
|
October 31,
|
|
October 31,
|
|
|
|
Note
|
|
2014
|
|
2014
|
|
2013
|
|
SEQ
|
|
YoY
|
|
2014
|
|
2013
|
|
% Change
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net cash provided by operating activities
|
H
|
|
$
|
51.6
|
|
|
$
|
58.9
|
|
|
$
|
54.9
|
|
|
(12.4
|
)%
|
|
(6.0
|
)%
|
|
$
|
199.1
|
|
|
$
|
236.5
|
|
|
(15.8
|
)%
|
Less: GAAP capital expenditures
|
H
|
|
|
(22.2
|
)
|
|
|
(20.9
|
)
|
|
|
(17.2
|
)
|
|
6.2
|
%
|
|
29.1
|
%
|
|
|
(85.0
|
)
|
|
|
(77.5
|
)
|
|
9.7
|
%
|
Free cash flow
|
H
|
|
$
|
29.4
|
|
|
$
|
38.0
|
|
|
$
|
37.7
|
|
|
(22.6
|
)%
|
|
(22.0
|
)%
|
|
$
|
114.1
|
|
|
$
|
159.0
|
|
|
(28.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ending
|
|
Year Ending
|
|
|
|
January 31, 2015
|
|
October 31, 2015
|
Guidance
|
|
|
Range of Guidance
|
|
Range of Guidance
|
GAAP net revenues
|
|
|
$
|
480
|
|
|
$
|
485
|
|
|
$
|
2,019
|
|
|
$
|
2,039
|
|
Adjustments to net revenues
|
A
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
Non-GAAP net revenues
|
|
|
$
|
480
|
|
|
$
|
485
|
|
|
$
|
2,020
|
|
|
$
|
2,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES
This press release and its attachments include several non-GAAP
financial measures, including non-GAAP net revenues; non-GAAP Services
net revenues, 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 as a percentage of non-GAAP net
revenues; non-GAAP net income (loss) per diluted share, and free cash
flow. This press release also includes certain forward-looking non-GAAP
financial measures, specifically projected Non-GAAP net revenues and
Non-GAAP net income per diluted share for the first fiscal quarter and
full fiscal year 2015. The corresponding reconciliations of these
non-GAAP financial measures to the most comparable GAAP financial
measures, to the extent available without unreasonable effort, are
included in this press release.
Management uses non-GAAP financial measures only in addition to and in
conjunction with results presented in accordance with GAAP. Management
believes that these non-GAAP financial measures help it to evaluate
VeriFone's performance and operations and to compare VeriFone's current
results with those for prior periods as well as with the results of peer
companies. VeriFone incurs, due to differences in debt, capital
structure and investment history, certain income and expense items, such
as stock based compensation, amortization of acquired intangibles and
other non-cash expenses, that differ significantly from VeriFone's
competitors. The non-GAAP financial measures reflect VeriFone's reported
operating performance without such items. Management also uses these
non-GAAP financial measures in VeriFone's budget and planning process.
Management believes that the presentation of these non-GAAP financial
measures is useful to investors in comparing VeriFone's operating
performance in any period with its performance in other periods and with
the performance of other companies that represent alternative investment
opportunities. These non-GAAP financial measures contain limitations and
should be considered as a supplement to, and not as a substitute for, or
superior to, disclosures made in accordance with GAAP.
These non-GAAP financial measures are not based on any comprehensive set
of accounting rules or principles and may therefore differ from non-GAAP
financial measures used by other companies. In addition, these non-GAAP
financial measures do not reflect all amounts and costs, such as
acquisition related costs, employee stock-based compensation costs, cash
that may be expended for future capital expenditures or contractual
commitments, working capital needs, cash used to service interest or
principal payments on VeriFone's debt, income taxes and the related cash
requirements, and restructuring charges, associated with VeriFone's
results of operations as determined in accordance with GAAP.
Furthermore, VeriFone expects to continue to incur income and expense
items that are similar to those that are excluded by the non-GAAP
adjustments described herein. Management compensates for these
limitations by also relying on the comparable GAAP financial measures.
Our GAAP and non-GAAP net revenues are presented for our geographic
regions: North America, LAC, EMEA and Asia-Pacific. North America
includes the US and Canada. LAC includes South America, Central America,
and the Caribbean. EMEA includes Europe, the Middle East, and Africa.
Asia-Pacific includes Asia, Australia, New Zealand, and other Asia
Pacific Rim countries.
Note A: Non-GAAP net revenues. Non-GAAP net revenues
exclude the fair value decrease (step-down) in deferred revenue at
acquisition. Although the step-down of deferred revenue fair value at
acquisition is reflected in our GAAP financial statements, it results in
net revenues immediately post-acquisition that are lower than net
revenues that would be recognized in accordance with GAAP on those same
services if they were sold under contracts entered into
post-acquisition. We adjust the step-down to achieve comparability to
net revenues of the acquired entity earned pre-acquisition and to our
GAAP net revenues to be earned on contracts sold in future periods.
These non-GAAP net revenues amounts are not intended to be a substitute
for our GAAP disclosures of net revenues, and should be read together
with our GAAP disclosures.
Note B: Non-GAAP organic net revenues. "Non-GAAP organic
net revenues" is a non-GAAP 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, as VeriFone analyzes performance both with and without the
impact of our recent acquisitions.
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 System solutions and Services
attributable to businesses acquired in the 12 months preceding the
respective financial quarter(s). For acquisitions of small businesses
that are integrated within a relatively short time after the close of
the acquisition, we assume quarterly net revenues attributable to such
acquired businesses during the 12 months following acquisition remain at
the same level as in the first full quarter after the acquisition
closed. 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 performance on a comparable basis excluding the impact of
foreign currency fluctuations.
Note D: Merger, Acquisition and Divestiture Related.
VeriFone adjusts certain revenues and expenses for items that are the
result of merger, acquisitions and divestitures.
Acquisition related adjustments include the amortization of purchased
intangible assets, fixed asset fair value adjustments, contingent
consideration adjustments, incremental costs associated with
acquisitions (such as professional fees, legal fees related to
litigation assumed as part of acquisitions, and one-time charges related
to acquired balances), acquisition integration expenses (such as costs
of personnel required to assist with integration transitions), and fair
value increase (step-up) of inventory on acquisition. In addition, we
adjust for changes in estimate, final resolution of contingencies that
existed at the time of acquisition or collectability of associated notes
receivable. Acquisition related expenses also result from events which
arise from unforeseen circumstances which often occur outside the
ordinary course of business. These adjustments do not include the fair
value adjustments relating to certain contracts acquired as part of an
acquisition whereby third parties have yet to fulfill their contractual
obligations.
In January 2013 we divested of certain assets and business operations
related to one of our product offerings. The estimated gain on the
divestiture, as well as the net revenues, cost of net revenues and
operating expenses for the three months January 31, 2013, that are
attributable to the divested assets and business operations have been
excluded from our non-GAAP financial measures.
VeriFone analyzes the performance of its operations without regard to
these adjustments. In determining whether any merger, acquisition or
divestiture related adjustment is appropriate, VeriFone takes into
consideration, among other things, how such adjustments would or would
not aid the understanding of the performance of its operations.
Note E: Stock-Based Compensation. Our non-GAAP financial
measures eliminate the effect of expense for stock-based compensation
because they are non-cash expenses that management believes are not
reflective of ongoing operating results. In particular, because of
varying available valuation methodologies, subjective assumptions and
the variety of award types which affect the calculations of stock-based
compensation, we believe that the exclusion of stock-based compensation
allows for more accurate comparisons of our operating results to our
peer companies. Stock-based compensation is very different from other
forms of compensation. A cash salary or bonus has a fixed and unvarying
cash cost. In contrast the expense associated with an award of an option
or other stock based award is unrelated to the amount of compensation
ultimately received by the employee; and the cost to the company is
based on valuation methodology and underlying assumptions that may vary
over time and does not reflect any cash expenditure by the company.
Furthermore, the expense associated with granting an employee an option
or other stock based award can be spread over multiple years and may be
reversed based on forfeitures which may differ from our original
assumptions unlike cash compensation expense which is typically recorded
contemporaneously with the time of award or payment.
Note F: Other Charges and Income. VeriFone excludes
certain revenue, expenses and other income (expense) that we have
determined is not reflective of ongoing operating results. It is
difficult to estimate the amount or timing of these items in advance.
Although these events are reflected in our GAAP financial statements, we
exclude them in our non-GAAP financial measures because we believe these
items may limit the comparability of our ongoing operations with prior
and future periods. These adjustments for other charges and income
include:
-
Litigation settlement and loss contingency expense.
-
Certain costs incurred in connection with senior executive management
changes, such as separation payments, non compete arrangement fees,
legal fees and recruiter fees.
-
Certain expenses, such as professional services and certain personnel
costs, incurred on initiatives to transform, streamline and centralize
our global operations.
-
Restructure and impairment charges related to certain exit activities
initiated as part of our global transformation initiatives.
-
Gain or loss on financial transactions, such as the accelerated
amortization of capitalized debt issuance costs due to the early
repayment of debt and costs incurred to refinance our debt.
-
Penalties due to customers related to the July 2012 fire that occurred
in one of our repair and staging facilities in Brazil. These customer
penalties are associated with deliveries that were delayed after the
fire and are reflected as contra-revenue in accordance with GAAP.
We assess our operating performance with these amounts included and
excluded, and by providing this information, we believe that users of
our financial statements are better able to understand the financial
results of what we consider to be our continuing operations.
Income taxes are adjusted for the tax effect of the adjusting items
related to our non-GAAP financial measures and to reflect our estimate
of cash taxes on a non-GAAP basis, in order to provide our management
and users of the financial statements with better clarity regarding the
on-going comparable performance and future liquidity of our business.
Under GAAP our Income tax provision (benefit) as a percentage of Income
(loss) before income taxes was (5.3)% for the fiscal quarter ended
October 31, 2014, (25.5)% for the fiscal quarter ended July 31, 2014,
(790.2)% for the fiscal quarter ended October 31, 2013, 8.6% for the
year ended October 31, 2014 and 175.8% for the year ended October 31,
2013. For non-GAAP purposes, we used a 14.5% rate for the fiscal
quarters ended October 31, 2014 and July 31, 2014, as well as the year
period ended October 31, 2014, and we used a 14.0% rate for the fiscal
quarter and year ended October 31, 2013. These non-GAAP tax rates
reflect our estimate of cash tax payments as a percentage of non-GAAP
income (loss) before income taxes for the corresponding periods.
Note G: Non-GAAP diluted shares. Diluted non-GAAP weighted
average shares include additional shares that are dilutive for non-GAAP
computations of earnings per share in periods when we have a non-GAAP
net income and a GAAP basis net loss.
Note H: Free Cash Flow. Free cash flow is not defined
under GAAP. Therefore, it should not be considered a substitute for
income or cash flow data prepared in accordance with GAAP and may not be
comparable to similarly titled measures used by other companies.
VeriFone determines free cash flow as net cash provided by operating
activities less capital expenditures. We use this non-GAAP measure to
evaluate our operating cash spend including the impact of our
investments in long-term operating assets, such as property, equipment
and capitalized software.
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