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VeriFone Reports Results for the Fourth Quarter and Fiscal 2012

VeriFone Systems, Inc. (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months (“Q4 FY12”) and fiscal year ended October 31, 2012.

Non-GAAP net income per diluted share for Q4 FY12 was $0.76, compared to $0.75 in the prior quarter and $0.53 for the three months ended October 31, 2011 (“Q4 FY11”), a 43% year-over-year increase. Non-GAAP net income per diluted share for the full year ended October 31, 2012 (“FY12”) was $2.74, a 43% year-over-year increase over the $1.92 figure for the full year ended October 31, 2011 (“FY11”). GAAP net income per diluted share for the latest quarter was $0.24, compared to $0.34 in the prior quarter and $1.84 in Q4 FY11. GAAP net income per diluted share was $0.59 for FY12 and $2.92 for FY11.

Non-GAAP net revenues for Q4 FY12 were $489 million, compared to $493 million in the previous quarter and $416 million for Q4 FY11, an 18% year-over-year increase. Non-GAAP net revenues for FY12 were $1.886 billion, a 44% increase over the $1.310 billion result for FY11. GAAP net revenues were $485 million for the latest quarter, $489 million for the prior quarter and $411 million for Q4 FY11. For FY12, GAAP net revenues totaled $1.866 billion, a 43% increase over the $1.304 billion total for FY11.

In Q4 FY12, Organic non-GAAP net revenues, which exclude net revenues from businesses acquired in the past 12 months, increased 4% from the year-ago quarter and 8% at constant currency, which assumes currency exchange rates remained the same from a year ago. North America Organic non-GAAP net revenues grew 22% both unadjusted and at constant currency, while international Organic non-GAAP net revenues declined 3% from the year-ago quarter but increased 2% at constant currency. Organic non-GAAP net revenues increased 11% in FY12 compared to FY11 and 14% at constant currency. For FY12, North America Organic non-GAAP net revenues grew 4% from FY11 both unadjusted and at constant currency, while international Organic non-GAAP net revenues grew 15% from FY11 and 20% at constant currency.

Non-GAAP gross margins were 44% for Q4 FY12, compared to 45% in the prior quarter and 40% in Q4 FY11. Non-GAAP gross margins were 44% for FY12 and 42% for FY11. GAAP gross margins were 41% for the latest quarter, 42% for the prior quarter and 31% for Q4 FY11. GAAP gross margins were 41% for FY12, compared to 38% for FY11.

Net cash provided by operating activities was $73 million in Q4 FY12 as the total cash balance grew by $44 million in the quarter.

“We are very pleased with our earnings leverage in 2012, with non-GAAP earnings per share growing over 40% for the third consecutive year,” said Douglas G. Bergeron, Chief Executive Officer. “Our investments in the next generation of payment services and systems are paying off in North America, which grew organically by 22% in Q4. Our plans for 2013 are to replicate these investments in our international markets in order to enjoy accelerated international growth later in 2013 and into 2014.”

Highlights Since Last Earnings Release

VeriFone has announced several significant in-store mobility wins in recent months. On November 7, VeriFone announced that it has entered a partnership agreement to offer retailers sophisticated mobile retailing solutions powered by VeriFone GlobalBay and integrated with the Fujitsu GlobalSTORE® solution, or as a standalone mobile point of sale. The co-branded solutions provide Fujitsu retail customers with a sophisticated mobile POS, enabling them to serve consumers from anywhere in the store and include acceptance of digital wallets and alternative payments. On September 25, VeriFone announced that The Finish Line, Inc., is enhancing the consumer buying experience with the deployment of VeriFone’s latest mobile checkout and multimedia-driven countertop payment solutions. Following a successful trial, the premium retailer of athletic shoes, apparel and accessories is in the process of deploying VeriFone systems – including 1,600 countertop multimedia MX 915 systems and 3,200 PAYware Mobile Enterprise secure mobile card acceptance devices for the iPod touch® – chain-wide with the goal of equipping all 638 locations for the holiday buying season. On September 19, VeriFone announced that Oracle’s Retail Mobile Point-of-Service was developed using the PAYware Mobile Enterprise solution and software development kit. PAYware Mobile Enterprise provided Oracle with support for the most forms of payment acceptance – including regular magnetic stripe credit and debit cards, chip-and-PIN (EMV) and contactless/NFC-enabled cards and phones – and also includes a barcode scanner for product-scanning, couponing and inventory.

VeriFone is also moving forward with its gas station media business. VeriFone’s media-enabled payment systems and services provide a state-of-the-art solution for secure payments, targeted advertising, coupons and special offers, and delivering real-time, relevant information such as weather and safety warnings. PAYMEDIA content is managed by VeriFone Media and broadcast via the VeriFone Digital Network (VNET). On October 8, VeriFone announced an agreement with Valero Retail Holdings, Inc. to implement PAYMEDIA for Secure PumpPAY in an initial pilot at corporate-operated sites in the Austin, Texas area. Secure PumpPAY solutions enable gasoline retailers and distributors to retrofit gasoline dispensers with EMV-capable, PCI-compliant payment systems that meet the latest payment security standards. The VeriFone modules incorporate full-color digital display and audio that improves the fueling experience. On October 1, VNET unveiled the next evolution of media at gas stations, providing advertisers and marketers with new promotional capabilities including on-demand coupons at the pump and transaction-specific promotions at the convenience store checkout counter. After a successful 12-month pilot, where coupon redemption rates in excess of 10% far exceeded industry norms for freestanding inserts, VeriFone is rolling out couponing to its PAYMEDIA customers.

Guidance for First Quarter 2013 and Fiscal Year 2013

For the first fiscal quarter ending January 31, 2013, VeriFone expects to report total non-GAAP net revenues in the range of $490 million to $500 million and non-GAAP net income per diluted share in the range of $0.70 to $0.73.

For the full year of fiscal 2013, the company continues to expect to report total non-GAAP net revenues in the range of $2.05 billion to $2.10 billion and non-GAAP net income per diluted share in the range of $3.25 to $3.30. Free cash flow, defined as cash flow from operations as presented under GAAP less capital expenditures, is expected in the range of $285 million to $315 million.

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. These risks and uncertainties include, but are not limited to: our assumptions, judgments and estimates regarding the impact on our business of the continued uncertainty in the global economic environment and financial markets, our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, whether the expected benefits of our business initiatives are achieved, our ability to protect against fraud, the status of our relationship with and condition of third parties such as our contract manufacturers, distributors and key suppliers upon whom we rely in the conduct of our business, our dependence on a limited number of customers, risks and uncertainties related to the conduct of our business and operations internationally, our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations, our dependence on a limited number of key employees, short product cycles, rapidly changing technologies and maintaining competitive leadership position with respect to our payment solution offerings. The forward-looking statements in this press release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. 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. 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 Systems, Inc. (www.verifone.com)

VeriFone Systems, Inc. (“VeriFone”) (NYSE: PAY) is the global leader in secure electronic payment solutions. VeriFone provides expertise, solutions and services that add value to the point of sale with merchant-operated, consumer-facing and self-service payment systems for the financial, retail, hospitality, petroleum, government and healthcare vertical markets. VeriFone solutions are designed to meet the needs of merchants, processors and acquirers in developed and emerging economies worldwide.

Additional Resources:

http://ir.verifone.com

FINANCIAL MEASURES

This press release and its attachments include several non-GAAP financial measures, including non-GAAP net revenues; net revenues from businesses acquired in the past 12 months; organic non-GAAP net revenues; North America organic non-GAAP net revenues; international organic non-GAAP net revenues; organic non-GAAP net revenues at constant currency; non-GAAP cost of net revenues; non-GAAP gross margin; non-GAAP research and development expense; non-GAAP sales and marketing expense; non-GAAP general and administrative expense; non-GAAP operating expenses; non-GAAP operating income; non-GAAP interest expense; non-GAAP interest income; non-GAAP other income (expense); non-GAAP income before income taxes; non-GAAP provision for income taxes; non-GAAP income tax rate; non-GAAP consolidated net income; non-GAAP net income attributable to noncontrolling interests; non-GAAP net income attributable to VeriFone Systems, Inc. stockholders; non-GAAP diluted shares; non-GAAP net income per share; non-GAAP net income per diluted share, as well as some of these non-GAAP financial measures as a percentage of non-GAAP net revenues. In order to assist investors, this press release provides consolidated statement of operations information on a non-GAAP basis, reflecting the adjustments made in the non-GAAP measures listed above.

Reconciliations for the non-GAAP financial measures presented in this press release to the most directly comparable GAAP measures are provided at the end of 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.

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 and non-GAAP cost of net revenues amounts are not intended to be a substitute for our GAAP disclosures of net revenues and cost of net revenues, and should be read together with our GAAP disclosures.

Note B: Organic non-GAAP net revenues. "Organic non-GAAP 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 organic non-GAAP net revenues by deducting net revenues from businesses acquired in the past 12 months from non-GAAP net revenues. Where Organic non-GAAP net revenues is presented for a period longer than one fiscal quarter, it is computed as the sum of the Organic non-GAAP net revenues for each quarter during that period. 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 Point (a former distributor of our products), net revenues from businesses acquired in the past 12 months consists of sales by VeriFone to Point for that period.

Note C: Organic non-GAAP net revenues at constant currency. VeriFone determines organic non-GAAP net revenues at constant currency by recomputing organic non-GAAP 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. Where Organic non-GAAP net revenues at a constant currency is presented for a period longer than one fiscal quarter, it is computed as the sum of the Organic non-GAAP net revenues at constant currency for each quarter during that period.

Note D: Acquisition, Divestiture and Restructuring Related. VeriFone adjusts certain revenues and expenses that are the result of acquisitions, divestitures and restructurings.

Acquisition related adjustments include the amortization of purchased intangible assets and fixed asset fair value 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), loss on financial instruments entered into to fix the acquisition purchase price in U.S. dollars when it is payable in foreign currencies and fair value increase (step-up) of inventory on acquisition. 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 addition, we adjust for changes in estimate or final resolution of contingencies that existed at the time of acquisition. Acquisition related expenses also result from events which arise from unforeseen circumstances which often occur outside the ordinary course of business.

In the fourth fiscal quarter of 2012 we entered into a non-binding letter of intent to divest certain assets and business operations related to one of our product offerings. The net revenues, cost of net revenues and operating expenses for the fiscal quarter ended October 31, 2012 that are attributable to the business to be divested have been excluded from non-GAAP net revenues, non-GAAP cost of net revenues and non-GAAP operating expenses, respectively, for the fiscal quarter and year ended October 31, 2012.

Restructure related adjustments include all restructure charges as defined in accordance with US GAAP.

VeriFone analyzes the performance of its operations without regard to these adjusted revenues and expenses. In determining whether any acquisition, divestiture or restructure 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 is 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 expenses and income that are the result of unique or unplanned events that are noted below. 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 expenses may limit the comparability of our ongoing operations with prior and future periods. Examples of adjustments for other charges and income are:

  • Patent litigation loss contingency expense recorded upon a jury verdict related to periods prior to the jury verdict. These costs were not anticipated and were recorded when they became probable and estimable. They are excluded from non-GAAP operating expenses to enable comparability between periods.
  • Gains or losses on financial transactions, such as the accelerated amortization of capitalized debt issuance costs due to the early repayment of debt. These accelerated costs are excluded from non-GAAP Other income (expense), net to enable comparability between periods.
  • Certain personnel expenses that we have identified will continue to be incurred only for a fixed short period of time in connection with scheduled operational changes as we streamline and centralize some of our global operations, including international distribution and repair facilities. These expenses are referred to as "Costs of efficiency initiatives" and we excluded these expenses from non-GAAP operating expenses to enable comparability of our ongoing operations.
  • Accrued loss related to litigation initiated by several former contractors of one of our Brazilian subsidiaries following termination of their services. These costs were not anticipated and relate to certain claims for which we have determined loss is probable and estimable primarily because of a partially unfavorable court ruling in one of the underlying proceedings. The costs are excluded from non-GAAP operating expenses to enable comparability between periods.
  • Non-cash interest expense recorded relating to the adoption of ASC 470-20 Debt with conversion and other options. This expense is excluded from non-GAAP interest expense to promote comparability of our non-GAAP financial results with prior and future periods and best reflects our on-going operations.
  • Income taxes are adjusted for the tax effect of excluding items related to our non-GAAP financial measures, 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. Our non-GAAP tax rates were 14% for the period May 1, 2012 through October 31, 2012, 18% for the period December 31, 2011 through April 30, 2012, and 20% for the period November 1, 2010 through December 30, 2011.

Because of these factors, 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.

Note G: Non-GAAP diluted shares. In connection with our 1.375% Senior Convertible Notes we had entered into certain note hedge transactions. We repaid these Notes in cash upon maturity on June 15, 2012, and the then outstanding note hedge transactions expired unused on June 15, 2012. Non-GAAP diluted shares reflect the offset of shares that would have been deliverable in the periods presented prior to the maturity of the Notes pursuant to note hedge transactions. Under GAAP, shares delivered in hedge transactions are not considered offsetting shares in the fully diluted share calculation until they are actually delivered.

 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
(UNAUDITED)
                         
Three Months Ended October 31, Years Ended October 31,
2012 2011 % Change (1) 2012 2011 % Change (1)
Net revenues:
System solutions $ 335,710 $ 319,211 5.2 % $ 1,339,024 $ 1,033,911 29.5 %
Services 149,669   91,493   63.6 % 526,947   269,955   95.2 %
Total net revenues 485,379   410,704   18.2 % 1,865,971   1,303,866   43.1 %
 
Cost of net revenues:
System solutions 204,403 227,154 (10.0 )% 811,641 655,511 23.8 %
Services 81,439   57,488   41.7 % 298,489   156,605   90.6 %
Total cost of net revenues 285,842   284,642   0.4 % 1,110,130   812,116   36.7 %
 
Gross profit 199,537   126,062   58.3 % 755,841   491,750   53.7 %
 
Operating expenses:
Research and development 40,416 34,654 16.6 % 152,001 109,155 39.3 %
Sales and marketing 47,385 46,052 2.9 % 179,694 138,267 30.0 %
General and administrative 37,026 44,073 (16.0 )% 175,174 123,789 41.5 %
Patent litigation loss contingency expense nm 17,632 nm
Amortization of purchased intangible assets 23,246   8,871   162.0 % 83,795   14,829   nm
Total operating expenses 148,073   133,650   10.8 % 608,296   386,040   57.6 %
Operating income 51,464 (7,588 ) nm 147,545 105,710 39.6 %
Interest expense (13,186 ) (5,952 ) 121.5 % (62,830 ) (28,950 ) 117.0 %
Interest income 1,139 1,546 (26.3 )% 4,399 2,595 69.5 %
Other income (expense), net 2,589   5,777   (55.2 )% (20,761 ) 11,929   nm
Income (loss) before income taxes 42,006 (6,217 ) nm 68,353 91,284 (25.1 )%
Provision for (benefit from) income taxes 14,117   (205,114 ) (106.9 )% 2,050   (191,412 ) (101.1 )%
Consolidated net income 27,889 198,897 (86.0 )% 66,303 282,696 (76.5 )%
Net income attributable to noncontrolling interests (904 ) (71 ) nm (1,270 ) (292 ) nm
Net income attributable to VeriFone Systems, Inc. stockholders $ 26,985   $ 198,826   (86.4 )% $ 65,033   $ 282,404   (77.0 )%
 
Net income per share attributable to VeriFone Systems, Inc. stockholders:
Basic $ 0.25   $ 1.90   $ 0.61   $ 3.06  
Diluted $ 0.24   $ 1.84   $ 0.59   $ 2.92  
 

Weighted average shares used in computing earnings per share:

Basic 107,718 104,497 107,006 92,414
Diluted 110,342 108,339 110,315 96,616
 
(1) "nm" means not meaningful
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
NET REVENUE INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES, UNAUDITED)
      Three Months Ended     % Change (1)       Years Ended    

% YoY

Change

(1)

Note

October 31,

2012

   

July 31,

2012

   

October 31,

2011

% SEQ     % YoY

October 31,

2012

   

October 31,

2011

 
GAAP net revenues:
International
EMEA $ 201,347 $ 199,992 $ 148,613 0.7 % 35.5 % $ 755,187 $ 417,615 80.8 %
LAC 79,971 94,378 104,621 (15.3 )% (23.6 )% 370,843 275,930 34.4 %
ASPAC 58,802   56,518   41,815   4.0 % 40.6 % 207,983   123,821   68.0 %
Total International 340,120 350,888 295,049 (3.1 )% 15.3 % 1,334,013 817,366 63.2 %
North America 145,259   138,162   115,655   5.1 % 25.6 % 531,958   486,500   9.3 %
Total $ 485,379   $ 489,050   $ 410,704   (0.8 )% 18.2 % $ 1,865,971   $ 1,303,866   43.1 %
 
Non-GAAP net revenues: (Note A) (2)
International
EMEA A $ 203,980 $ 203,413 $ 149,977 0.3 % 36.0 % $ 771,469 $ 419,587 83.9 %
LAC A 79,971 94,378 104,965 (15.3 )% (23.8 )% 370,843 276,274 34.2 %
ASPAC A 59,288   56,995   44,937   4.0 % 31.9 % 211,107   126,946   66.3 %
Total International 343,239 354,786 299,879 (3.3 )% 14.5 % 1,353,419 822,807 64.5 %
North America A 145,318   138,433   115,761   5.0 % 25.5 % 532,921   486,703   9.5 %
Total $ 488,557   $ 493,219   $ 415,640   (0.9 )% 17.5 % $ 1,886,340   $ 1,309,510   44.0 %
 
GAAP net revenues: $ 485,379 $ 489,050 $ 410,704 (0.8 )% 18.2 % $ 1,865,971 $ 1,303,866 43.1 %
Plus: Non-GAAP net revenues adjustments A, D $ 3,178   $ 4,169   $ 4,936   nm nm $ 20,369   $ 5,644   nm
Non-GAAP net revenues: (Note A) 488,557 493,219 415,640 (0.9 )% 17.5 % 1,886,340   1,309,510   44.0 %
Less: net revenues from businesses acquired in the past 12 months
Hypercom B (68,510 ) nm nm (222,960 ) nm
Point B (58,232 ) (55,893 ) (6,942 ) nm nm (189,527 ) (21,632 ) nm
Other B (6,108 ) (9,343 )   nm nm (47,521 ) (1,425 ) nm
Total (64,340 ) (133,746 ) (6,942 ) nm nm (460,008 ) (23,057 ) nm
Organic non-GAAP net revenues: (Note B) 424,217   359,473   408,698   nm 3.8 % 1,426,332   1,286,453   10.9 %
 
(1) "nm" means not meaningful
(2) Reconciliations for the non-GAAP measures presented in this press release are provided at the end of this press release.
 
       
For the three months ended October 31, 2012

compared to October 31, 2011

  For the years ended October 31, 2012

compared to October 31, 2011

 

Net

revenues

growth

   

Impact due

to acquired

businesses

(A) (B)

   

Organic

non-GAAP net

revenues

growth

   

Impact

due to

foreign

currency

(C)

   

Organic

non-GAAP net

revenues at

constant

currency

growth

Net

revenues

growth

   

Impact

due to

acquired

businesses

(A) (B)

   

Organic

non-GAAP net

revenues

growth

   

Impact

due to

foreign

currency

(C)

   

Organic

non-GAAP net

revenues at

constant

currency

growth

International        
EMEA 35.5 % 35.1pts 0.4 % 5.2pts 5.6 % 80.8 % 70.9pts 9.9 % 5.0pts 14.9 %
LAC (23.6 )% 0.2pts (23.8 )% 6.8pts (17.0 )% 34.4 % 15.3pts 19.1 % 6.4pts 25.5 %
ASPAC 40.6 % 8.7pts 31.9 % 2.8pts 34.7 % 68.0 % 47.1pts 20.9 % 2.5pts 23.4 %
Total International 15.3 % 18.7pts (3.4 )% 5.4pts 2.0 % 63.2 % 48.3pts 14.9 % 5.0pts 19.9 %
North America 25.6 % 3.5pts 22.1 % 0.1pts 22.2 % 9.3 % 5.0pts 4.3 % 0.1pts 4.4 %
Total 18.2 % 14.4pts 3.8 % 3.9pts 7.7 % 43.1 % 32.2pts 10.9 % 3.1pts 14.0 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
         
October 31, 2012 October 31, 2011
(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents $ 454,072 $ 594,562
Accounts receivable, net of allowances of $8,491 and $5,658 366,887 294,440
Inventories 178,274 144,316
Prepaid expenses and other current assets 136,210   127,130  
Total current assets 1,135,443 1,160,448
Fixed assets, net 146,803 83,634
Purchased intangible assets, net 734,808 263,767
Goodwill 1,179,381 561,414
Deferred tax assets 215,139 205,496
Other assets 79,033   38,802  
Total assets $ 3,490,607   $ 2,313,561  
 
Liabilities and Equity
Current liabilities:
Accounts payable $ 193,062 $ 144,278
Accruals and other current liabilities 230,867 218,123
Deferred revenue, net 91,545 68,824
Senior convertible notes 266,981
Short-term debt 54,916   5,074  
Total current liabilities 570,390 703,280
Deferred revenue, net 37,062 31,467
Long term debt 1,252,701 211,756
Deferred tax liabilities 214,537 92,594
Other long-term liabilities 70,440   78,971  
Total liabilities 2,145,130 1,118,068
 
Redeemable noncontrolling interest in subsidiary 861 855
 
Stockholders' equity:
Common stock 1,081 1,058
Additional paid-in-capital 1,543,127 1,468,862
Accumulated deficit (204,023 ) (269,056 )
Accumulated other comprehensive loss (32,390 ) (6,671 )
Total stockholders' equity 1,307,795 1,194,193
Noncontrolling interest in subsidiaries 36,821   445  
Total liabilities and equity $ 3,490,607   $ 2,313,561  
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
    Years Ended October 31,
2012     2011
Cash flows from operating activities
Consolidated net income $ 66,303 $ 282,696
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization, net 177,832 48,318
Stock-based compensation expense 44,554 34,144
Non-cash interest expense 10,290 15,695
Deferred income taxes (22,030 ) (227,034 )
Write-off of debt issue costs upon debt extinguishment 5,268
Other (11,064 ) 4,869  
Net cash provided by operating activities before changes in operating assets and liabilities 271,153   158,688  
Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable, net (53,945 ) (72,386 )
Inventories, net (19,274 ) 23,224
Prepaid expenses and other assets (19,854 ) (1,824 )
Accounts payable 31,802 29,461
Deferred revenue, net 27,316 14,801
Other current and long term liabilities (19,235 ) 22,609  
Net change in operating assets and liabilities (53,190 ) 15,885  
Net cash provided by operating activities 217,963   174,573  
 
Cash flows from investing activities
Capital expenditures (63,181 ) (14,811 )
Acquisitions of businesses, net of cash and cash equivalents acquired (1,069,412 ) (49,231 )
Collection of other notes receivable 13,376
Other investing activities, net 1,183   873  
Net cash used in investing activities (1,118,034 ) (63,169 )
 
Cash flows from financing activities
Proceeds from debt, net of issue costs 1,660,577 73
Repayments of debt (619,336 ) (10,233 )
Repayment of senior convertible notes, including interest (279,159 )
Proceeds from issuance of common stock through employee equity incentive plans 30,308 48,534
Payments of acquisition related contingent consideration (24,605 )
Distribution to noncontrolling interest stockholders (1,673 ) (418 )
Tax benefit from stock-based compensation 2,034   718  
Net cash provided by financing activities 768,146   38,674  
 
Effect of foreign currency exchange rate changes on cash and cash equivalents (8,565 ) (653 )
 
Net increase (decrease) in cash and cash equivalents (140,490 ) 149,425
Cash and cash equivalents, beginning of period 594,562   445,137  
Cash and cash equivalents, end of period $ 454,072   $ 594,562  
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Net revenues - System solutions $ 335,710 $ 350,230 $ 319,211 $ 1,339,024 $ 1,033,911
Amortization of step-down in deferred revenue at acquisition A 514   729   2,780   6,581   2,780  
Non-GAAP Net revenues - System solutions $ 336,224   $ 350,959   $ 321,991   $ 1,345,605   $ 1,036,691  
 
GAAP Net revenues - Services $ 149,669 $ 138,820 $ 91,493 $ 526,947 $ 269,955
Amortization of step-down in deferred revenue at acquisition A 2,773 3,440 2,156 13,897 2,864
Divestiture related revenues D (109 )     (109 )  
Non-GAAP Net revenues - Services $ 152,333   $ 142,260   $ 93,649   $ 540,735   $ 272,819  
 
GAAP Net revenues $ 485,379 $ 489,050 $ 410,704 $ 1,865,971 $ 1,303,866
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Divestiture related revenues D (109 )     (109 )  
Non-GAAP Net revenues $ 488,557   $ 493,219   $ 415,640   $ 1,886,340   $ 1,309,510  
 
GAAP Cost of net revenues - System solutions $ 204,403 $ 206,213 $ 227,154 $ 811,641 $ 655,511
Stock-based compensation E (325 ) (442 ) (457 ) (1,598 ) (1,539 )
Acquisition, divestiture and restructuring related costs D (734 ) (1,403 ) (25,086 ) (14,225 ) (25,832 )
Amortization of purchased intangible assets D (9,815 ) (9,630 ) (8,112 ) (37,045 ) (18,167 )
Costs of efficiency initiatives F (10 )     (10 )  
Non-GAAP Cost of net revenues - System solutions $ 193,519   $ 194,738   $ 193,499   $ 758,763   $ 609,973  
 
GAAP Cost of net revenues - Services $ 81,439 $ 75,330 $ 57,488 $ 298,489 $ 156,605
Stock-based compensation E (276 ) (118 ) (44 ) (505 ) (185 )
Acquisition, divestiture and restructuring related costs D (1,222 ) 220 (881 ) (3,504 ) (976 )
Amortization of purchased intangible assets D (870 ) (952 ) (334 ) (3,423 ) (991 )
Costs of efficiency initiatives F (95 )     (95 )  
Non-GAAP Cost of net revenues - Services $ 78,976   $ 74,480   $ 56,229   $ 290,962   $ 154,453  
 
GAAP Gross margin - System solutions $ 131,307 $ 144,017 $ 92,057 $ 527,383 $ 378,400
Amortization of step-down in deferred revenue at acquisition A 514 729 2,780 6,581 2,780
Stock-based compensation E 325 442 457 1,598 1,539
Acquisition, divestiture and restructuring related costs D 734 1,403 25,086 14,225 25,832
Amortization of purchased intangible assets D 9,815 9,630 8,112 37,045 18,167
Costs of efficiency initiatives F 10       10    
Non-GAAP Gross margin - System solutions $ 142,705   $ 156,221   $ 128,492   $ 586,842   $ 426,718  
 
GAAP System solutions gross margin as a % of System solutions net revenues 39.1 % 41.1 % 28.8 % 39.4 % 36.6 %
Amortization of step-down in deferred revenue at acquisition as a % of System solutions net revenues 0.2 % 0.2 % 0.9 % 0.5 % 0.3 %
Stock-based compensation as a % of System solutions net revenues 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Acquisition, divestiture and restructure related costs as a % of System solutions net revenues 0.2 % 0.4 % 7.9 % 1.1 % 2.5 %
Amortization of purchased intangible assets as a % of System solutions net revenues 2.9 % 2.7 % 2.5 % 2.8 % 1.8 %
Costs of efficiency initiatives as a % of System solutions net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Non-GAAP System solutions gross margin as a % of System solutions non-GAAP net revenues 42.4 % 44.5 % 39.9 % 43.6 % 41.2 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Gross margin - Services $ 68,230 $ 63,490 $ 34,005 $ 228,458 $ 113,350
Amortization of step-down in deferred revenue at acquisition A 2,773 3,440 2,156 13,897 2,864
Stock-based compensation E 276 118 44 505 185
Acquisition, divestiture and restructure related adjustments D 1,113 (220 ) 881 3,395 976
Amortization of purchased intangible assets D 870 952 334 3,423 991
Costs of efficiency initiatives F 95       95    
Non-GAAP Gross margin - Services $

73,357

  $ 67,780   $ 37,420   $ 249,773   $ 118,366  
 
GAAP Services gross margin as a % of Services net revenues 45.6 % 45.7 % 37.2 % 43.4 % 42.0 %
Amortization of step-down in deferred revenue at acquisition as a % of Services net revenues 1.9 % 2.5 % 2.4 % 2.6 % 1.1 %
Stock-based compensation as a % of Services net revenues 0.2 % 0.1 % 0.0 % 0.1 % 0.1 %
Acquisition, divestiture and restructure related adjustments as a % of Services net revenues 0.7 % (0.2 )% 1.0 % 0.6 % 0.4 %
Amortization of purchased intangible assets as a % of Services net revenues 0.6 % 0.7 % 0.4 % 0.6 % 0.4 %
Costs of efficiency initiatives as a % of Services net revenues 0.1 % 0.0 % 0.0 % 0.0 % 0.0 %
Non-GAAP Services gross margin as a % of Services non-GAAP net revenues 48.2 % 47.6 % 40.0 % 46.2 % 43.4 %
 
GAAP Gross margin $ 199,537 $ 207,507 $ 126,062 $ 755,841 $ 491,750
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Stock-based compensation E 601 560 501 2,103 1,724
Acquisition, divestiture and restructure related adjustments D 1,847 1,183 25,967 17,620 26,808
Amortization of purchased intangible assets D 10,685 10,582 8,446 40,468 19,158
Costs of efficiency initiatives F 105       105    
Non-GAAP Gross margin $ 216,062   $ 224,001   $ 165,912   $ 836,615   $ 545,084  
 
GAAP Gross margin as a % of net revenues 41.1 % 42.4 % 30.7 % 40.5 % 37.7 %
Amortization of step-down in deferred revenue at acquisition as a % of net revenues 0.7 % 0.9 % 1.2 % 1.1 % 0.4 %
Stock-based compensation as a % of net revenues 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Acquisition, divestiture and restructure related adjustments as a % of net revenues 0.4 % 0.2 % 6.3 % 0.9 % 2.1 %
Amortization of purchased intangible assets as a % of net revenues 2.2 % 2.2 % 2.1 % 2.2 % 1.5 %
Costs of efficiency initiatives as a % of net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Non-GAAP Gross margin as a % of non-GAAP net revenues 44.2 % 45.4 % 39.9 % 44.4 % 41.6 %
 
GAAP Research and development expense $ 40,416 $ 38,657 $ 34,654 $ 152,001 $ 109,155
Stock-based compensation E (2,189 ) (1,497 ) (1,199 ) (6,140 ) (4,015 )
Acquisition, divestiture and restructure related costs D (2,018 ) (1,099 ) (959 ) (6,019 ) (982 )
Costs of efficiency initiatives F $ (701 ) $   $   $ (701 ) $  
Non-GAAP Research and development expense $ 35,508   $ 36,061   $ 32,496   $ 139,141   $ 104,158  
Non-GAAP Research and development expense as a % of non-GAAP net revenues 7.3 % 7.3 % 7.8 % 7.4 % 8.0 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Sales and marketing expense $ 47,385 $ 46,182 $ 46,052 $ 179,694 $ 138,267
Stock-based compensation E (1,937 ) (5,177 ) (3,090 ) (15,781 ) (13,000 )
Acquisition, divestiture and restructure related costs D (1,457 ) (707 ) (7,079 ) (3,262 ) (8,435 )
Non-operating gains (losses) F (1,606 ) (1,606 )
Costs of efficiency initiatives F (639 )     (639 )  
Non-GAAP Sales and marketing expense $ 41,746   $ 40,298   $ 35,883   $ 158,406   $ 116,832  
Non-GAAP Sales and marketing expense as a % of non-GAAP net revenues 8.5 % 8.2 % 8.6 % 8.4 % 8.9 %
 
GAAP General and administrative expense $ 37,026 $ 43,414 $ 44,073 $ 175,174 $ 123,789
Stock-based compensation E (5,655 ) (5,211 ) (4,246 ) (20,530 ) (15,405 )
Acquisition, divestiture and restructure related costs D (3,392 ) (2,844 ) (16,457 ) (28,035 ) (28,277 )
Costs of efficiency initiatives F (107 )     (107 )  
Non-GAAP General and administrative expense $ 27,872   $ 35,359   $ 23,370   $ 126,502   $ 80,107  
Non-GAAP General and administrative expense as a % of non-GAAP net revenues 5.7 % 7.2 % 5.6 % 6.7 % 6.1 %
GAAP Patent litigation loss contingency expense $ $ $ $ 17,632 $
Patent litigation loss contingency expense F       (17,632 )  
Non-GAAP Patent litigation loss contingency expense $   $   $   $   $  
Non-GAAP Patent litigation loss contingency expense as a % of non-GAAP net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
 
GAAP Amortization of purchased intangible assets 23,246 $ 23,177 $ 8,871 $ 83,795 $ 14,829
Amortization of purchased intangible assets D (23,246 ) (23,177 ) (8,871 ) (83,795 ) (14,829 )
Non-GAAP Amortization of purchased intangible assets $   $   $   $   $  
Non-GAAP Amortization of purchased intangible assets as a % of non-GAAP net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
 
GAAP Operating expenses $ 148,073 $ 151,430 $ 133,650 $ 608,296 $ 386,040
Stock-based compensation E (9,781 ) (11,885 ) (8,535 ) (42,451 ) (32,420 )
Acquisition, divestiture and restructure related costs D (6,867 ) (4,650 ) (24,495 ) (37,316 ) (37,694 )
Amortization of purchased intangible assets D (23,246 ) (23,177 ) (8,871 ) (83,795 ) (14,829 )
Non-operating gains (losses) F (1,606 ) (1,606 )
Costs of efficiency initiatives F (1,447 ) (1,447 )
Patent litigation loss contingency expense F       (17,632 )  
Non-GAAP Operating expenses $ 105,126   $ 111,718   $ 91,749   $ 424,049   $ 301,097  
Non-GAAP Operating expenses as a % of non-GAAP net revenues 21.5 % 22.7 % 22.1 % 22.5 % 23.0 %
 
GAAP Operating income $ 51,464 $ 56,077 $ (7,588 ) $ 147,545 $ 105,710
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Stock-based compensation E 10,382 12,445 9,036 44,554 34,144
Acquisition, divestiture and restructure related adjustments D 8,714 5,833 50,462 54,936 64,502
Amortization of purchased intangible assets D 33,931 33,759 17,317 124,263 33,987
Costs of efficiency initiatives F 1,552 1,552
Non-operating gains (losses) F 1,606 1,606
Patent litigation loss contingency expense F       17,632    
Non-GAAP Operating income $ 110,936   $ 112,283   $ 74,163   $ 412,566   $ 243,987  
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Operating income as a % of net revenues 10.6 % 11.5 % (1.8 )% 7.9 % 8.1 %
Amortization of step-down in deferred revenue at acquisition as a % of net revenues 0.7 % 0.9 % 1.2 % 1.1 % 0.4 %
Stock-based compensation as a % of net revenues 2.1 % 2.5 % 2.2 % 2.4 % 2.6 %
Acquisition, divestiture and restructure related adjustments as a % of net revenues 1.8 % 1.2 % 12.3 % 2.9 % 4.9 %
Amortization of purchased intangible assets as a % of net revenues 7.0 % 6.9 % 4.2 % 6.7 % 2.6 %
Costs of efficiency initiatives as a % of net revenues 0.3 % 0.0 % 0.0 % 0.1 % 0.0 %
Non-operating gains (losses) as a % of net revenues 0.3 % 0.0 % 0.0 % 0.1 % 0.0 %
Patent litigation loss contingency expense as a % of net revenues 0.0 % 0.0 % 0.0 % 0.9 % 0.0 %
Non-GAAP Operating income as a % of non-GAAP net revenues 22.7 % 22.8 % 17.8 % 21.9 % 18.6 %
 
GAAP Interest expense $ (13,186 ) $ (16,374 ) $ (5,952 ) $ (62,830 ) $ (28,950 )
Acquisition, divestiture and restructure related costs D (2,627 ) 467 (1,571 ) (1,255 ) 40
Non-cash interest expense F 3,151   2,087   4,034   15,559   15,576  
Non-GAAP Interest expense $ (12,662 ) $ (13,820 ) $ (3,489 ) $ (48,526 ) $ (13,334 )
 
GAAP Interest income $ 1,139 $ 1,110 $ 1,546 $ 4,399 $ 2,595
Acquisition, divestiture and restructure related adjustments D 102   128     949    
Non-GAAP Interest income $ 1,241 $ 1,238 $ 1,546 $ 5,348 $ 2,595
 
GAAP Other income (expense), net $ 2,589 $ (721 ) $ 5,777 $ (20,761 ) $ 11,929
Acquisition, divestiture and restructure related costs D (5,452 ) (1,966 ) (6,735 ) 11,800 (7,868 )
Non-operating (gains) losses F 1,996   393     2,535   (5,196 )
Non-GAAP Other income (expense), net $ (867 ) $ (2,294 ) $ (958 ) $ (6,426 ) $ (1,135 )
 
Non-GAAP Income before income taxes $ 98,648   $ 97,407   $ 71,262   $ 362,962   $ 232,113  
 
GAAP Provision for (benefit from) income taxes $ 14,117 $ 2,313 $ (205,114 ) $ 2,050 $ (191,412 )
Income tax effect of non-GAAP exclusions F (525 ) 11,233   219,352   55,458   237,776  
Non-GAAP Provision for income taxes $ 13,592   $ 13,546   $ 14,238   $ 57,508   $ 46,364  
Non-GAAP Income tax rate 13.8 % 13.9 % 20.0 % 15.8 % 20.0 %
 
GAAP Net (income) loss attributable to noncontrolling interests $ (904 ) $ (84 ) $ (71 ) $ (1,270 ) $ (292 )
Acquisition, divestiture and restructure related costs D (666 ) (563 )   (2,003 )  
Non-GAAP Net income attributable to noncontrolling interests $ (1,570 ) $ (647 ) $ (71 ) $ (3,273 ) $ (292 )
 
GAAP Net income attributable to VeriFone Systems, Inc. stockholders $ 26,985 $ 37,695 $ 198,826 $ 65,033 $ 282,404
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Stock-based compensation E 10,382 12,445 9,036 44,554 34,144
Acquisition, divestiture and restructure related adjustments D 71 3,899 42,156 64,427 56,674
Amortization of purchased intangible assets D 33,931 33,759 17,317 124,263 33,987
Costs of efficiency initiatives F 1,552 1,552
Patent litigation loss contingency expense F 17,632
Non-cash interest expense F 3,151 2,087 4,034 15,559 15,576
Non-operating (gains) losses F 3,602 393 4,141 (5,196 )
Income tax effect of non-GAAP exclusions F 525   (11,233 ) (219,352 ) (55,458 ) (237,776 )
Non-GAAP Net income attributable to VeriFone Systems, Inc. stockholders $ 83,486 $ 83,214 $ 56,953 $ 302,181 $ 185,457
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
Non-GAAP Net income per share attributable to VeriFone Systems, Inc. stockholders:
Basic $ 0.78   $ 0.77   $ 0.55   $ 2.82   $ 2.01  
Diluted G $ 0.76   $ 0.75   $ 0.53   $ 2.74   $ 1.92  
 
Weighted average shares used in computing earnings per share:
GAAP Basic shares 107,718 107,568 104,497 107,006 92,414
GAAP Diluted shares 110,342 110,384 108,339 110,315 96,616
Additional shares dilutive for non-GAAP G       (93 ) (104 )
Non-GAAP Diluted shares G 110,342 110,384 108,339 110,222 96,512
 
Net income attributable to VeriFone Systems, Inc. stockholders as a % of net revenues 5.6 % 7.7 % 48.4 % 3.5 % 21.7 %
Amortization of step-down in deferred revenue at acquisition as a % of net revenues 0.7 % 0.9 % 1.2 % 1.1 % 0.4 %
Stock-based compensation as a % of net revenues 2.1 % 2.5 % 2.2 % 2.4 % 2.6 %
Acquisition, divestiture and restructure related adjustments as a % of net revenues 0.0 % 0.8 % 10.3 % 3.5 % 4.3 %
Amortization of purchased intangible assets as a % of net revenues 7.0 % 6.9 % 4.2 % 6.7 % 2.6 %
Costs of efficiency initiatives as a % of net revenues 0.3 % 0.0 % 0.0 % 0.1 % 0.0 %
Patent litigation loss contingency expense as a % of net revenues 0.0 % 0.0 % 0.0 % 0.9 % 0.0 %
Non-cash interest expense as a % of net revenues 0.6 % 0.4 % 1.0 % 0.8 % 1.2 %
Non-operating (gains) losses as a % of net revenues 0.7 % 0.1 % 0.0 % 0.2 % (0.4 )%
Income tax effect of non-GAAP exclusions as a % of net revenues 0.1 % (2.3 )% (53.4 )% (3.0 )% (18.2 )%
Non-GAAP Net income attributable to VeriFone Systems, Inc. stockholders as a % of non-GAAP net revenues 17.1 % 16.9 % 13.7 % 16.0 % 14.2 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
                       
Three Months Ended Years Ended
Note October 31, 2012 July 31, 2012 October 31, 2011 October 31, 2012 October 31, 2011
GAAP net revenues:
International
EMEA $ 201,347 $ 199,992 $ 148,613 $ 755,187 $ 417,615
LAC 79,971 94,378 104,621 370,843 275,930
ASPAC 58,802   56,518   41,815   207,983   123,821  
Total International 340,120 350,888 295,049 1,334,013 817,366
North America 145,259   138,162   115,655   531,958   486,500  
Total $ 485,379   $ 489,050   $ 410,704   $ 1,865,971   $ 1,303,866  
 

Plus: non-GAAP net revenues adjustments

International
EMEA A $ 2,633 $ 3,421 $ 1,364 $ 16,282 $ 1,972
LAC A 344 344
ASPAC A 486   477   3,122   3,124   3,125  
Total International 3,119 3,898 4,830 19,406 5,441
North America A, D 59   271   106   963   203  
Total $ 3,178   $ 4,169   $ 4,936   $ 20,369   $ 5,644  
 
Non-GAAP net revenues:
International
EMEA A $ 203,980 $ 203,413 $ 149,977 $ 771,469 $ 419,587
LAC A 79,971 94,378 104,965 370,843 276,274
ASPAC A 59,288   56,995   44,937   211,107   126,946  
Total International 343,239 354,786 299,879 1,353,419 822,807
North America A 145,318   138,433   115,761   532,921   486,703  
Total $ 488,557   $ 493,219   $ 415,640   $ 1,886,340   $ 1,309,510  
 

Less: net revenues from businesses acquired in the past 12 months

International
EMEA B $ (60,381 ) $ (98,360 ) $ (6,942 ) $ (335,521 ) $ (23,057 )
LAC B (9,923 ) (41,761 )
ASPAC B   (19,476 )   (57,589 )  
Total International (60,381 ) (127,759 ) (6,942 ) (434,871 ) (23,057 )
North America B (3,959 ) (5,987 )   (25,137 )  
Total $ (64,340 ) $ (133,746 ) $ (6,942 ) $ (460,008 ) $ (23,057 )
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
                       
Three Months Ended Years Ended
Note October 31, 2012 July 31, 2012 October 31, 2011 October 31, 2012 October 31, 2011
Organic non-GAAP net revenues:
International
EMEA B $ 143,599 $ 105,053 $ 143,035 $ 435,948 $ 396,530
LAC B 79,971 84,455 104,965 329,082 276,274
ASPAC B 59,288   37,519   44,937   153,518   126,946
Total International 282,858 227,027 292,937 918,548 799,750
North America B 141,359   132,446   115,761   507,784   486,703
Total $ 424,217   $ 359,473   $ 408,698   $ 1,426,332   $ 1,286,453
 
Plus: constant currency adjustment
International
EMEA C $ 7,425 $ 6,893 $ 19,685
LAC C 7,119 6,433 17,666
ASPAC C 1,254   906   3,155  
Total International 15,798 14,232 40,506
North America C 74   195   298  
Total $ 15,872   $ 14,427   $ 40,804  
 
Organic non-GAAP net revenues at constant currency:
International
EMEA C $ 151,024 $ 111,946 $ 143,035 $ 455,633 $ 396,530
LAC C 87,090 90,888 104,965 346,748 276,274
ASPAC C 60,542   38,425   44,937   156,673   126,946
Total International 298,656 241,259 292,937 959,054 799,750
North America C 141,433   132,641   115,761   508,082   486,703
Total $ 440,089   $ 373,900   $ 408,698   $ 1,467,136   $ 1,286,453

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SYS-CON Events announced today that Liaison Technologies, a leading provider of data management and integration cloud services and solutions, has been named "Silver Sponsor" of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York, NY. Liaison Technologies is a recognized market leader in providing cloud-enabled data integration and data management solutions to break down complex information barriers, enabling enterprises to make smarter decisions, faster.
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, phone and digital TV services to consumers primarily in rural areas.
SYS-CON Events announced today that Ciqada will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Ciqada™ makes it easy to connect your products to the Internet. By integrating key components - hardware, servers, dashboards, and mobile apps - into an easy-to-use, configurable system, your products can quickly and securely join the internet of things. With remote monitoring, control, and alert messaging capability, you will meet your customers' needs of tomorrow - today! Ciqada. Let your products take flight. For more inform...
SYS-CON Events announced today that GENBAND, a leading developer of real time communications software solutions, has been named “Silver Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. The GENBAND team will be on hand to demonstrate their newest product, Kandy. Kandy is a communications Platform-as-a-Service (PaaS) that enables companies to seamlessly integrate more human communications into their Web and mobile applications - creating more engaging experiences for their customers and boosting collaboration and productiv...
SYS-CON Events announced today that Dyn, the worldwide leader in Internet Performance, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Dyn is a cloud-based Internet Performance company. Dyn helps companies monitor, control, and optimize online infrastructure for an exceptional end-user experience. Through a world-class network and unrivaled, objective intelligence into Internet conditions, Dyn ensures traffic gets delivered faster, safer, and more reliably than ever.
SYS-CON Events announced today that Open Data Centers (ODC), a carrier-neutral colocation provider, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Open Data Centers is a carrier-neutral data center operator in New Jersey and New York City offering alternative connectivity options for carriers, service providers and enterprise customers.
SYS-CON Events announced today that On the Avenue Marketing Group, a sales and marketing firm that utilizes events to market and sell products to consumers, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. On the Avenue Marketing Group (OTA) is a sales and marketing firm that utilizes events to market and sell products to consumers. On behalf of our clients, we attend thousands of fairs, festivals, expos, concerts, conferences, and sporting events annually, helping them reach millions of individuals ...
SYS-CON Events announced today that BroadSoft, the leading global provider of Unified Communications and Collaboration (UCC) services to operators worldwide, has been named “Gold Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BroadSoft is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over their Internet Protocol networks. The Company’s core communications platform enables the delivery of a range of enterprise and consumer calling...
SYS-CON Events announced today that ActiveState, the leading independent Cloud Foundry and Docker-based PaaS provider, has been named “Silver Sponsor” of SYS-CON's DevOps Summit New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. ActiveState believes that enterprises gain a competitive advantage when they are able to quickly create, deploy and efficiently manage software solutions that immediately create business value, but they face many challenges that prevent them from doing so. The Company is uniquely positioned to help address these challenges thro...
SYS-CON Events announced today that Vitria Technology, Inc. will exhibit at SYS-CON’s @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Vitria will showcase the company’s new IoT Analytics Platform through live demonstrations at booth #330. Vitria’s IoT Analytics Platform, fully integrated and powered by an operational intelligence engine, enables customers to rapidly build and operationalize advanced analytics to deliver timely business outcomes for use cases across the industrial, enterprise, and consumer segments.
SYS-CON Events announced today that Alert Logic, the leading provider of Security-as-a-Service solutions for the cloud, has been named “Bronze Sponsor” of SYS-CON's 16th International Cloud Expo® and DevOps Summit 2015 New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY, and the 17th International Cloud Expo® and DevOps Summit 2015 Silicon Valley, which will take place November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Akana, formerly SOA Software, has been named “Bronze Sponsor” of SYS-CON's 16th International Cloud Expo® New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Akana’s comprehensive suite of API Management, API Security, Integrated SOA Governance, and Cloud Integration solutions helps businesses accelerate digital transformation by securely extending their reach across multiple channels – mobile, cloud and Internet of Things. Akana enables enterprises to share data as APIs, connect and integrate applications, drive part...
SYS-CON Events announced today that CommVault has been named “Bronze Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY, and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. A singular vision – a belief in a better way to address current and future data management needs – guides CommVault in the development of Singular Information Management® solutions for high-performance data protection, universal availability and sim...
SYS-CON Events announced today that SafeLogic has been named “Bag Sponsor” of SYS-CON's 16th International Cloud Expo® New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. SafeLogic provides security products for applications in mobile and server/appliance environments. SafeLogic’s flagship product CryptoComply is a FIPS 140-2 validated cryptographic engine designed to secure data on servers, workstations, appliances, mobile devices, and in the Cloud.
SYS-CON Events announced today that StorPool Storage will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. StorPool is distributed storage software that allows service providers, enterprises and other cloud builders to run data storage on standard x86 servers, instead of using expensive and inefficient storage arrays (SAN).
SYS-CON Events announced today that Site24x7, the cloud infrastructure monitoring service, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Site24x7 is a cloud infrastructure monitoring service that helps monitor the uptime and performance of websites, online applications, servers, mobile websites and custom APIs. The monitoring is done from 50+ locations across the world and from various wireless carriers, thus providing a global perspective of the end-user experience. Site24x7 supports monitoring H...
SYS-CON Events announced today that Intelligent Systems Services will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Established in 1994, Intelligent Systems Services Inc. is located near Washington, DC, with representatives and partners nationwide. ISS’s well-established track record is based on the continuous pursuit of excellence in designing, implementing and supporting nationwide clients’ mission-critical systems. ISS has completed many successful projects in Healthcare, Commercial, Manufacturing, ...
SYS-CON Events announced today that B2Cloud, a provider of enterprise resource planning software, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. B2cloud develops the software you need. They have the ideal tools to help you work with your clients. B2Cloud’s main solutions include AGIS – ERP, CLOHC, AGIS – Invoice, and IZUM
The IoT Bootcamp is coming to Cloud Expo | @ThingsExpo on June 9-10 at the Javits Center in New York. Instructor. Registration is now available at http://iotbootcamp.sys-con.com/ Instructor Janakiram MSV previously taught the famously successful Multi-Cloud Bootcamp at Cloud Expo | @ThingsExpo in November in Santa Clara. Now he is expanding the focus to Janakiram is the founder and CTO of Get Cloud Ready Consulting, a niche Cloud Migration and Cloud Operations firm that recently got acquired by Aditi Technologies. He is a Microsoft Regional Director for Hyderabad, India, and one of the f...