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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Paymentus Holdings Inc | NYSE:PAY | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.14 | -0.68% | 20.44 | 20.5845 | 20.325 | 20.58 | 36,362 | 16:48:32 |
þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended October 31, 2016
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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DELAWARE
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04-3692546
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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88 West Plumeria Drive,
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95134
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San Jose, CA
(Address of Principal Executive Offices)
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(Zip Code)
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(408) 232-7800
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(Registrant’s Telephone Number, Including Area Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
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New York Stock Exchange
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Class
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Number of shares
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Common Stock, $0.01 par value per share
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111,309,630
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PART I
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||
Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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ITEM 1.
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BUSINESS
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Years Ended October 31
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|||||||
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2016
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2015
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2014
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Percentage of net revenues from our ten largest clients
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19.9
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%
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20.2
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%
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22.7
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%
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•
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PCI Data Security Standard (“PCI DSS”) provides a specifications framework for the payment card data security process, including prevention, detection, and appropriate reaction to security incidents.
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•
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PIN Transaction Security (“PTS”) provides vendors and manufacturers with the requirements for all personal identification number ("PIN") terminals, including POS devices, encrypting PIN pads, and unattended payment terminals.
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•
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Payment Application Data Security Standard (“PA-DSS”) provides a set of standards to help software vendors and others develop secure payment applications.
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•
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Point-to-Point Encryption (“P2PE”) provides a set of requirements for vendors, assessors, and point-to-point encryption solution providers to validate their solutions. P2PE certified solutions may help a merchant reduce the scope of their PCI DSS assessments when using a validated P2PE solution for account data acceptance and processing.
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Name
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Age
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Position
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Paul Galant
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48
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Chief Executive Officer
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Vin D'Agostino
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53
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Executive Vice President and Chief Strategy Officer
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Albert Liu
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44
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Executive Vice President, Corporate Development and General Counsel
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Glen Robson
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48
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Executive Vice President, Global Head of Solutions
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Marc Rothman
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52
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Executive Vice President and Chief Financial Officer
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ITEM 1A.
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RISK FACTORS
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•
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rapid technological advancements;
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•
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frequent product introductions and enhancements;
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•
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local certification requirements and product customizations;
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•
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evolving industry and government performance and security standards and regulatory requirements;
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•
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introductions of competitive products, including products that customers may perceive as having better functions and features, and alternative payment solutions, such as mobile payments and processing, at the POS; and
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•
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rapidly changing customer and end user preferences or requirements.
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the type, timing, and size of orders and shipments;
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•
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delays in the implementation, including obtaining certifications, delivery and customer acceptance of our products and services, which may impact the timing of our recognition, and amount, of net revenues;
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•
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delays in customer purchases in anticipation of product or service enhancements or due to uncertainty in economic conditions;
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•
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demand for and acceptance of our new offerings;
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•
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changes in competitive conditions, including from traditional payment solution providers and from alternative payment solution providers;
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•
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the rate at which we transition customers to our services model;
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•
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timing of or completion of divestitures;
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•
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decisions by our distributors and other customers relating to the overall channel inventories of our products held in a particular quarter;
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•
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excess inventory;
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•
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concentration in certain of our customer bases;
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•
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changes in economic or market conditions, such as fluctuations in foreign currency exchange rates;
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•
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variations in product and service mix and cost during any period;
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•
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development of new customer and distributor relationships or new types of customers, penetration of new markets and maintenance and enhancement of existing relationships with customers, distributors and strategic partners, as well as the mix of customers in a particular quarter;
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•
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component supply, manufacturing, or distribution difficulties;
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•
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timing of commencement, execution, or completion of major product or service implementation projects;
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•
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timing of governmental, statutory and industry association requirements, such as PCI compliance deadlines or the pace of EMV adoption in the U.S. or elsewhere;
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•
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the relative geographic mix of net revenues;
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•
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the fixed nature of many of our expenses;
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•
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changes in credit card interchange and assessment fees, which are set by the credit card networks and are a component of the cost of providing some of our product offerings, including transaction services and in-taxi payments solutions;
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•
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the introduction of new or stricter laws and regulations in jurisdictions where we operate, such as data protection and privacy laws and regulations, laws and regulations covering hazardous substances, or employment laws and regulations, that may cause us to incur additional compliance or implementation costs and/or costs to alter our business operations;
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•
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the introduction of new laws and regulations, or changes in implementation of existing laws and regulations, in jurisdictions where we operate that may create uncertainty regarding the business operations of our customers or distributors, which may in turn lead to deferred or reduced orders from our customers or distributors; and
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•
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business and operational disruptions or delays caused by political, social or economic instability and unrest, such as the ongoing significant civil, political and economic disturbances in Russia, Turkey, Ukraine and their spillover effect on surrounding areas as well as the political and military conditions in Israel and the Palestinian territories.
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•
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securing commercial relationships to help establish or increase our presence in new and existing international markets;
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hiring and training personnel capable of marketing, installing and integrating our solutions, supporting customers, and effectively managing operations in foreign countries;
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adapting our solutions to meet local requirements and regulations, and to target the specific needs and preferences of foreign customers, which may differ from our traditional customer base in the markets we currently serve;
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building our brand name and awareness of our services in new and existing international markets;
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enhancing our business infrastructure to enable us to efficiently manage the higher costs of operating across a larger span of geographic regions and international jurisdictions; and
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implementing effective systems, procedures, and controls to monitor and manage our operations across our international markets.
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•
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multiple, changing, and often inconsistent enforcement of laws and regulations;
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local regulatory or industry imposed requirements, including security or other certification requirements;
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competition from existing market participants, including strong global or local competitors that may have a longer history in and greater familiarity with the international markets we enter;
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tariffs and trade barriers, including the imposition of new or enforcement of existing import restrictions in jurisdictions in which we do business;
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higher costs and complexities of compliance with international and U.S. laws and regulations such as import and trade regulations and embargoes, boycotts, trade agreements, trade sanctions, export requirements and local tax laws;
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•
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laws and business practices that may favor local competitors;
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changes in trade policies and trade relations (including as a result of the 2016 U.S. presidential election);
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restrictions on the repatriation of funds, including remittance of dividends by foreign subsidiaries, foreign currency exchange restrictions, and currency exchange rate fluctuations;
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pricing sensitivities, less favorable payment terms and increased difficulty in collecting accounts receivable and developing payment histories that support collectability of accounts receivable and revenue recognition;
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•
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different and/or more stringent labor laws and practices, such as the mandated use of workers' councils and labor unions, or laws that provide for broader definitions of employer/employee relationships;
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different and/or more stringent data protection, privacy and other laws;
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•
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antitrust and competition regulations;
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•
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infrastructure challenges;
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•
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changes or instability in a specific country's or region's political or economic conditions; and
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•
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greater difficulty in safeguarding intellectual property, including in areas such as China, India, Russia, and Latin America.
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•
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the need to integrate the operations, business systems, and personnel of the acquired business, technology or product, including coordinating the efforts of the sales operations, in a cost-effective manner;
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the challenge of managing acquired lines of business, particularly those lines of business with which we have limited operational experience;
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the occurrence of multiple product lines or services offerings as a result of acquisitions, that are offered, priced or supported differently, potentially leading to integration delays and customer impact;
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the need to integrate or migrate the information technology infrastructures of acquired operations into our information technology systems and resources in an effective and timely manner;
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the need to migrate our acquired businesses to our common enterprise resource planning information system and integrating all operations, sales, accounting, human resources and administrative activities for the combined company, all in a scalable, cost-effective and timely manner;
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the need to coordinate research and development and support activities across our existing and newly acquired products and services in a cost-effective manner;
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the challenges of incorporating acquired technologies, products and service offerings into our next generation of products and solutions in an effective and timely manner;
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the potential disruption of our ongoing business, including the diversion of management attention to issues related to integration and administration;
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entering markets in which we have limited prior experience;
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in the case of international acquisitions, the need to integrate operations across different jurisdictions, cultures and languages and to address the particular economic, foreign currency, political, legal, compliance and regulatory risks, including with respect to countries where we previously had limited operations;
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the possible inability to realize the desired financial and strategic benefits from any or all of our acquisitions or investments in the time frame expected, or at all;
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•
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the loss of all or part of our investment;
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•
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the loss of customers and partners of acquired businesses;
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•
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the failure to retain employees from acquired businesses;
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•
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the need to integrate each company's accounting, legal, management, information, human resource and other administrative systems to enable effective management, and the lack of control if such integration is delayed or unsuccessful;
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•
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the need to implement controls, procedures and policies appropriate for a larger public company at companies that prior to acquisition had lacked such controls, procedures and policies and the potential stress on our existing controls, particularly in integrating multiple acquired companies;
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•
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the risk that increasing complexity inherent in operating a larger global business and managing a broader range of solutions and service offerings may impact the effectiveness of our internal controls and adversely affect our financial reporting processes;
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•
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the failure to adequately identify or assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring a company, which could result in unexpected litigation, unanticipated liabilities, additional costs, unfavorable accounting treatment or other adverse effects; and
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•
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the dependency on the retention and performance of key management and employees of acquired businesses for the day-to-day management and future operating results of these businesses.
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•
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the manufacturing processes at our third-party contract manufacturers could become concentrated in a shorter time period. This concentration of manufacturing could increase manufacturing costs, such as costs associated with the expediting of orders, and negatively impact our gross margins. The risk of higher levels of obsolete or excess inventory write-offs would also increase if we were to hold higher inventory levels to counteract this effect;
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•
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the higher concentration of orders may make it difficult to accurately forecast component requirements and, as a result, we could experience a shortage of the components needed for production, possibly delaying shipments and causing lost orders;
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•
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if we are unable to fill orders at the end of a quarter, shipments may be delayed. This could cause us to fail to meet our revenue and operating profit expectations for a particular quarter and could increase the fluctuation of quarterly results if shipments are delayed from one fiscal quarter to the next or orders are canceled by customers; and
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•
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in order to fulfill orders at the end of a quarter, we may be forced to deliver our products using air freight which would result in increased distribution costs.
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•
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maintaining significant inventory of components that are in limited supply;
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•
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buying components in bulk for better pricing;
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•
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entering into purchase commitments based on early estimates of quantities for longer lead time components;
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•
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responding to the unpredictable demand for products;
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•
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cancellation of customer orders;
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•
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responding to customer requests for quick delivery schedules; and
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•
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timing of end-of-life decisions regarding products.
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•
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increasing our vulnerability to general adverse economic conditions;
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•
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limiting our ability to obtain additional financing on acceptable terms; and
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•
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placing us at a possible competitive disadvantage to less-leveraged competitors and competitors that have better access to capital resources.
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•
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authorization of the issuance of “blank check” preferred stock without the need for action by stockholders;
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•
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the amendment of our organizational documents only by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote at an election of directors;
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•
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provision that any vacancy on the board of directors, however occurring, including a vacancy resulting from an enlargement of the board, may only be filled by vote of the directors then in office;
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•
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inability of stockholders to call special meetings of stockholders; and
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•
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advance notice requirements for board nominations and proposing matters to be acted on by stockholders at annual stockholder meetings.
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•
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actual or anticipated variations in quarterly operating results;
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•
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changes in our financial guidance or financial estimates by any securities analysts who might cover our stock, or our failure to meet our financial guidance or the estimates made by securities analysts;
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•
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uncertainty about current global or regional economic conditions;
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•
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changes in the market valuations of other companies operating in our industry or in the technology sector;
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•
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the rate at which we return capital to our shareholders;
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•
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announcements by us or our competitors related to acquisitions, strategic partnerships, or divestitures;
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•
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business disruptions, costs and future events related to shareholder activism;
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•
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additions or departures of key personnel;
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•
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sales or purchases of our stock, including sales or purchases of our stock by our directors and officers or by significant stockholders; and
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•
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repurchases of our stock by us pursuant to our share repurchase program.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
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Fiscal Year 2016 Quarter Ended
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Fiscal Year 2015 Quarter Ended
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||||||||||||||||||||||||||||
|
Oct. 31
2016 |
|
Jul. 31
2016 |
|
Apr. 30
2016 |
|
Jan. 31
2016 |
|
Oct. 31
2015 |
|
Jul. 31
2015 |
|
Apr. 30
2015 |
|
Jan. 31
2015 |
||||||||||||||||
High
|
$
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20.10
|
|
|
$
|
28.38
|
|
|
$
|
29.60
|
|
|
$
|
31.11
|
|
|
$
|
33.34
|
|
|
$
|
38.93
|
|
|
$
|
36.51
|
|
|
$
|
38.38
|
|
Low
|
$
|
15.04
|
|
|
$
|
17.06
|
|
|
$
|
20.65
|
|
|
$
|
22.32
|
|
|
$
|
26.20
|
|
|
$
|
31.80
|
|
|
$
|
31.38
|
|
|
$
|
31.13
|
|
|
October 31, 2011
|
|
October 31, 2012
|
|
October 31, 2013
|
|
October 31, 2014
|
|
October 31, 2015
|
|
October 31, 2016
|
||||||||||||
VeriFone Systems, Inc.
|
$
|
100.00
|
|
|
$
|
70.22
|
|
|
$
|
53.68
|
|
|
$
|
88.27
|
|
|
$
|
71.40
|
|
|
$
|
36.67
|
|
S&P 500 Index
|
$
|
100.00
|
|
|
$
|
112.68
|
|
|
$
|
140.15
|
|
|
$
|
161.02
|
|
|
$
|
165.91
|
|
|
$
|
167.39
|
|
S&P North American Technology Index
|
$
|
100.00
|
|
|
$
|
105.60
|
|
|
$
|
134.16
|
|
|
$
|
159.95
|
|
|
$
|
180.34
|
|
|
$
|
199.03
|
|
ITEM 6.
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SELECTED FINANCIAL DATA
|
|
Years Ended October 31,
|
||||||||||||||||||
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2016
(1)(2)
|
|
2015
(1)(2)(3)
|
|
2014
(1)(2)(4)(5)
|
|
2013
(1)(2)(6)(7)
|
|
2012
(1)(2)(8)
|
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
1,992,149
|
|
|
$
|
2,000,457
|
|
|
$
|
1,868,874
|
|
|
$
|
1,702,221
|
|
|
$
|
1,865,971
|
|
Operating income (loss)
|
$
|
32,779
|
|
|
$
|
106,991
|
|
|
$
|
5,885
|
|
|
$
|
(66,354
|
)
|
|
$
|
147,545
|
|
Net income (loss) attributable to VeriFone Systems, Inc. stockholders
|
$
|
(9,281
|
)
|
|
$
|
79,097
|
|
|
$
|
(38,130
|
)
|
|
$
|
(296,055
|
)
|
|
$
|
65,033
|
|
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.08
|
)
|
|
$
|
0.69
|
|
|
$
|
(0.34
|
)
|
|
$
|
(2.73
|
)
|
|
$
|
0.61
|
|
Diluted
|
$
|
(0.08
|
)
|
|
$
|
0.68
|
|
|
$
|
(0.34
|
)
|
|
$
|
(2.73
|
)
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of October 31,
|
||||||||||||||||||
|
2016
|
|
2015
(3)
|
|
2014
(5)(6)
|
|
2013
(7)
|
|
2012
(8)
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
148,352
|
|
|
$
|
208,870
|
|
|
$
|
250,187
|
|
|
$
|
268,220
|
|
|
$
|
454,072
|
|
Total assets
|
$
|
2,494,807
|
|
|
$
|
2,473,062
|
|
|
$
|
2,681,514
|
|
|
$
|
2,965,295
|
|
|
$
|
3,444,638
|
|
Current and long-term debt and capital leases
|
$
|
925,913
|
|
|
$
|
799,329
|
|
|
$
|
868,415
|
|
|
$
|
1,011,756
|
|
|
$
|
1,275,720
|
|
(1)
|
In fiscal year 2016, 2015, 2014, 2013 and 2012 we recorded restructuring and related charges totaling
$46.4 million
, $8.8 million, $18.1 million, $0.3 million and $1.3 million, respectively, as part of cost optimization and corporate transformation initiatives. For further information, see Note 11,
Restructurings and related charges
, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
|
(2)
|
In fiscal year 2016, 2015, 2014, 2013 and 2012 we recorded
$12.0 million
, $2.5 million, $0.1 million, $4.6 million and ($0.4 million), respectively, in Other income (expense), for fair market value adjustments associated with contingent consideration. For further information, see Note 8,
Financial Instruments
, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
|
(3)
|
In fiscal year 2015 we recorded a $16.1 million tax benefit as a result of releasing a portion of our valuation allowance against certain non-U.S. foreign deferred tax assets. For further information, see Note 6,
Income Taxes,
in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
|
(4)
|
In fiscal year 2014 we released a $19.9 million litigation loss contingency expense, plus estimated potential ongoing royalties and interest, related to a favorable ruling in a patent infringement litigation matter.
|
(5)
|
In fiscal year 2014 we made early payments against, and then amended and restated the 2011 Credit Agreement. As part of the amendment and restatement, amounts borrowed, together with cash on hand, were used to repay the $938.6 million outstanding balance on the credit agreement as well as the costs associated with the amendment and restatement. In connection with these transactions we expensed $4.1 million of debt amendment costs and accelerated $5.2 million of interest expense on previously capitalized debt issuance costs associated with extinguished debt. For further information, see Note 10,
Financings
, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
|
(6)
|
In fiscal year 2013 we recorded a $64.4 million litigation loss contingency expense primarily related to a securities class action and in fiscal year 2014 we paid $61.2 million into an escrow account to fund the uninsured portion of the settlement in this matter.
|
(7)
|
In fiscal year 2013 we recorded a $245.0 million valuation allowance against a significant portion of our deferred tax assets.
|
(8)
|
In fiscal year 2012 we entered into the 2011 Credit Agreement and borrowed $1.45 billion.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Consolidated net revenues for the fiscal year ended
October 31, 2016
remained relatively flat compared to the fiscal year ended
October 31, 2015
, despite a
$77.8 million
negative foreign currency impact.
|
•
|
Services net revenues for the fiscal year ended
October 31, 2016
increased by
$64.9 million
, and our systems net revenues for the fiscal year ended
October 31, 2016
decreased by
$73.3 million
.
|
•
|
Net cash provided by operating activities for the fiscal year ended October 31, 2016 totaled
$193.7 million
.
|
|
Years Ended October 31,
|
||||||||||||||||
|
2016
|
|
% of Net revenues
(1)
|
|
2015
|
|
% of Net revenues
(1)
|
|
2014
|
|
% of Net revenues
(1)
|
||||||
|
(in thousands, except percentages)
|
||||||||||||||||
Net revenues:
|
|
|
|
|
|
||||||||||||
Systems
|
$
|
1,236,361
|
|
|
62.1%
|
|
$
|
1,309,628
|
|
|
65.5%
|
|
$
|
1,162,226
|
|
|
62.2%
|
Services
|
755,788
|
|
|
37.9%
|
|
690,829
|
|
|
34.5%
|
|
706,648
|
|
|
37.8%
|
|||
Total net revenues
|
1,992,149
|
|
|
100.0%
|
|
2,000,457
|
|
|
100.0%
|
|
1,868,874
|
|
|
100.0%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Systems
|
492,050
|
|
|
39.8%
|
|
535,812
|
|
|
40.9%
|
|
429,183
|
|
|
36.9%
|
|||
Services
|
302,261
|
|
|
40.0%
|
|
290,171
|
|
|
42.0%
|
|
295,534
|
|
|
41.8%
|
|||
Total gross margin
|
794,311
|
|
|
39.9%
|
|
825,983
|
|
|
41.3%
|
|
724,717
|
|
|
38.8%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development
|
207,503
|
|
|
10.4%
|
|
198,135
|
|
|
9.9%
|
|
197,813
|
|
|
10.6%
|
|||
Sales and marketing
|
217,039
|
|
|
10.9%
|
|
224,745
|
|
|
11.2%
|
|
212,766
|
|
|
11.4%
|
|||
General and administrative
|
204,552
|
|
|
10.3%
|
|
203,978
|
|
|
10.2%
|
|
204,005
|
|
|
10.9%
|
|||
Restructuring and related charges
|
41,254
|
|
|
2.1%
|
|
8,429
|
|
|
0.4%
|
|
15,300
|
|
|
0.8%
|
|||
Litigation settlement and loss contingency expense (benefit)
|
650
|
|
|
—%
|
|
1,213
|
|
|
0.1%
|
|
(8,632
|
)
|
|
(0.5)%
|
|||
Amortization of purchased intangible assets
|
90,534
|
|
|
4.5%
|
|
82,492
|
|
|
4.1%
|
|
97,580
|
|
|
5.2%
|
|||
Total operating expenses
|
761,532
|
|
|
38.2%
|
|
718,992
|
|
|
35.9%
|
|
718,832
|
|
|
38.5%
|
|||
Operating income
|
32,779
|
|
|
1.6%
|
|
106,991
|
|
|
5.3%
|
|
5,885
|
|
|
0.3%
|
|||
Interest expense, net
|
(34,564
|
)
|
|
(1.7)%
|
|
(31,455
|
)
|
|
(1.6)%
|
|
(42,472
|
)
|
|
(2.3)%
|
|||
Other income (expense), net
|
3,612
|
|
|
0.2%
|
|
(2,588
|
)
|
|
(0.1)%
|
|
(3,297
|
)
|
|
(0.2)%
|
|||
Income (loss) before income taxes
|
1,827
|
|
|
0.1%
|
|
72,948
|
|
|
3.6%
|
|
(39,884
|
)
|
|
(2.1)%
|
|||
Income tax provision (benefit)
|
11,527
|
|
|
0.6%
|
|
(7,409
|
)
|
|
(0.4)%
|
|
(3,442
|
)
|
|
(0.2)%
|
|||
Consolidated net income (loss)
|
$
|
(9,700
|
)
|
|
(0.5)%
|
|
$
|
80,357
|
|
|
4.0%
|
|
$
|
(36,442
|
)
|
|
(1.9)%
|
|
|
|
|
Years Ended October 31,
|
||||||||||
|
|
|
|
2016
|
|
% of Net revenues
|
|
2015
|
|
% of Net revenues
|
||||
|
|
|
|
(in thousands, except percentages)
|
||||||||||
Net Revenues
|
||||||||||||||
North America
|
|
$
|
803,616
|
|
|
40.3%
|
|
$
|
791,655
|
|
|
39.6%
|
||
Latin America
|
|
247,949
|
|
|
12.4%
|
|
275,706
|
|
|
13.8%
|
||||
EMEA
|
|
738,261
|
|
|
37.1%
|
|
696,346
|
|
|
34.8%
|
||||
Asia-Pacific
|
|
202,321
|
|
|
10.2%
|
|
236,750
|
|
|
11.8%
|
||||
|
|
Total
|
|
$
|
1,992,147
|
|
|
100.0%
|
|
$
|
2,000,457
|
|
|
100.0%
|
•
|
North America net revenues
increased
$12.0 million
, due primarily to a $121.9 million increase as a result of increased demand for our EMV capable devices by petroleum customers and a $35.9 million increase in Services net revenues due primarily to growth in payment-related services as a result of our continued efforts to grow our recurring services offerings. The increases were substantially offset by a $146.7 million decrease due primarily to reduced demand for our EMV capable devices by Tier 1 retailers that had upgraded to products that support EMV requirements in the prior fiscal year.
|
•
|
Latin America net revenues
decreased
$27.8 million
, due primarily to a
$34.8 million
negative impact as a result of unfavorable foreign currency fluctuations, partially offset by an increase in net revenues due to growth in our Services offerings.
|
•
|
EMEA net revenues
increased
$41.9 million
, due primarily to $45.5 million in net revenues from InterCard in Germany, which was acquired in December 2015. Net revenues in the rest of EMEA increased due primarily to timing of purchase decisions by our large customers, but those increases were offset by a
$31.8 million
negative impact due to unfavorable foreign currency fluctuations.
|
•
|
Asia-Pacific net revenues
decreased
$34.4 million
, due to a $23.7 million decrease in China where we have not yet released a lower cost suite of products to meet customer preferences in that market, and an $18.1 million decrease in Australia due to reduced demand from some of our large banking customers who upgraded the terminal base at their merchant customers in the prior fiscal year. These decreases were partially offset by an increase in demand from some of our large customers in the rest of Asia-Pacific. The decrease in net revenues also reflects a
$10.2 million
negative impact due to the unfavorable foreign currency fluctuations.
|
|
|
|
|
Years Ended October 31,
|
||||||||||
|
|
|
|
2015
|
|
% of Net revenues
|
|
2014
|
|
% of Net revenues
|
||||
|
|
|
|
(in thousands, except percentages)
|
||||||||||
Net Revenues
|
||||||||||||||
North America
|
|
$
|
791,655
|
|
|
39.6%
|
|
$
|
526,284
|
|
|
28.1%
|
||
Latin America
|
|
275,706
|
|
|
13.8%
|
|
322,988
|
|
|
17.3%
|
||||
EMEA
|
|
696,346
|
|
|
34.8%
|
|
754,644
|
|
|
40.4%
|
||||
Asia-Pacific
|
|
236,750
|
|
|
11.8%
|
|
264,958
|
|
|
14.2%
|
||||
|
|
Total
|
|
$
|
2,000,457
|
|
|
100.0%
|
|
$
|
1,868,874
|
|
|
100.0%
|
•
|
North America net revenues
increased
$265.4 million
, due primarily to more purchases by several of our large customers as they rolled out new terminals with EMV capabilities, as well as increasing adoption of these products by small and medium businesses, existing customers upgrading to other new products, and increased share in the petroleum market.
|
•
|
Latin America net revenues
decreased
$47.3 million
, due primarily to decreases in demand in Brazil as a result of continuing competition and pricing pressures, economic weakness, as well as the timing of purchase decisions by large customers, which were influenced by the timing of ongoing tender processes and the availability of our products having the functionality required for those tenders. This decrease was partially offset by an increase in the rest of Latin America due primarily to the timing of purchase decisions by some of our customers. The decrease in net revenues also reflects a $48.1 million negative impact due to unfavorable foreign currency fluctuations.
|
•
|
EMEA net revenues
decreased
$58.3 million
, due primarily to a significant decrease in demand in Russia as a result of ongoing economic weakness and the devaluation of the Russian ruble against the U.S. dollar. The decrease was partially offset by an increase in the rest of EMEA despite the foreign currency headwinds. This increase in the rest of EMEA was due primarily to more purchases by retail customers, banking customers, and some of our large distributors mainly as a result of increased demand by their customers who were upgrading to new products or expanding their terminal base. The decrease in net revenues also reflects an $87.4 million negative impact due to unfavorable foreign currency fluctuations.
|
•
|
Asia-Pacific net revenues
decreased
$28.2 million
due primarily to a $24.9 million decrease in Systems net revenues in China that was due primarily to lower demand as increased competitive forces were driving customers to base their purchase decisions primarily on price, and we had not yet released a lower cost suite of products that provide a choice of offerings to meet customer preferences in that market. Systems net revenues also decreased $27.9 million in the rest of Greater Asia due to timing of purchase decisions by some of our large customers and increased competitive pressure. These decreases were partially offset by a $20.0 million increase in Systems net revenues due to increased demand in Australia and India as some of our large banking customers upgraded and expanded the terminal base at their merchant customers. The decrease in net revenues also reflects a $23.4 million negative impact due to unfavorable foreign currency fluctuations.
|
|
Years Ended October 31,
|
||||||||||||
|
2016
|
|
% of Net revenues
|
|
2015
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
1,236,361
|
|
|
61.6
|
%
|
|
$
|
1,309,629
|
|
|
65.5
|
%
|
Operating income
|
$
|
252,326
|
|
|
20.4
|
%
|
|
$
|
294,857
|
|
|
22.5
|
%
|
•
|
Net revenues from the sale of countertop and pinpad devices decreased $42.8 million, due primarily to reduced customer demand in Asia-Pacific, as well as decreases in customer demand due to economic weakness and competitive pricing pressures in Latin America.
|
•
|
Net revenues from the sale of multimedia products decreased $111.6 million due primarily to reduced demand for our EMV capable devices by certain Tier 1 retailers that had upgraded to products that support EMV requirements in the prior year.
|
•
|
Net revenues from the sale of petroleum products increased $108.9 million due primarily to increasing adoption of EMV capable devices.
|
•
|
Net revenues from the sale of portable and mobile devices decreased $25.0 million due primarily to decrease in demand by large customers as they rolled out new terminals with EMV capabilities in fiscal year 2015 that did not recur.
|
•
|
Operating income in dollars decreased due primarily to reduced revenue, partially offset by decreased spend associated with cost savings initiatives.
|
•
|
Operating income as a percentage of net revenues decreased due primarily to changes in geographic and product mix. For example, in North America net revenues have shifted from higher margin large customers who completed substantial EMV roll outs in the prior year to more purchases in the current year by our distributors and petroleum customers of products with lower margins. In addition, we experienced competitive pricing pressures in Latin America that have resulted in lower margins year over year.
|
|
Years Ended October 31,
|
||||||||||||
|
2015
|
|
% of Net revenues
|
|
2014
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
1,309,629
|
|
|
65.5
|
%
|
|
$
|
1,162,226
|
|
|
62.2
|
%
|
Operating income
|
$
|
294,857
|
|
|
22.5
|
%
|
|
$
|
239,593
|
|
|
20.6
|
%
|
•
|
Net revenues from the sale of desktop and pinpad devices in North America increased $176.9 million primarily as a result of more purchases by several of our large customers as they rolled out new terminals with EMV capabilities, as well as increasing adoption of these products by small and medium businesses. In addition, net revenues increased by $34.0 million in Latin America and EMEA territories other than Brazil and Russia, due primarily to more purchases by retail customers, banking customers, and some of our large distributors mainly as a result of increased demand by their customers who were upgrading to new products or expanding terminal base. These increases were partially offset by decreases totaling $116.5 million due to a significant decrease in demand as a result of ongoing economic uncertainties and currency devaluation in Brazil and Russia, as well as lower demand in China as increased competitive forces are driving customers to base their purchase decisions primarily on price, and we have not yet released a lower cost suite of products that provides a choice of offerings to meet customer preferences in that market.
|
•
|
Net revenues from the sale of devices from our petroleum products increased $57.8 million, due primarily to increased demand for EMV compatible devices and increased share in the petroleum market in North America.
|
•
|
Operating income in dollars increased due primarily to the increase in total net revenues, with operating expenses remaining relatively comparable year over year.
|
•
|
Operating income as a percentage of net revenues increased due primarily to changes in customer mix and growth in sales of higher margin newer products, as well as the benefit of relatively comparable operating expenses.
|
|
Years Ended October 31,
|
||||||||||||
|
2016
|
|
% of Net revenues
|
|
2015
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
769,715
|
|
|
38.4
|
%
|
|
$
|
691,822
|
|
|
34.6
|
%
|
Operating income
|
$
|
198,426
|
|
|
25.8
|
%
|
|
$
|
178,754
|
|
|
25.8
|
%
|
•
|
Net revenues increased $45.5 million from the acquisition of InterCard in December 2015 and $18.6 million from the acquisition of AJB in February 2016.
|
•
|
Net revenues increased $11.5 million due primarily to growing demand for payment-related services in North America as a result of our increased focus on expanding our services offerings.
|
•
|
Operating income in dollars increased due primarily to increases in net revenues.
|
•
|
Operating income as a percentage of net revenues remained flat as higher margins from our recently acquired businesses, InterCard and AJB were fully offset by changes in geographic mix.
|
|
Years Ended October 31,
|
||||||||||||
|
2015
|
|
% of Net revenues
|
|
2014
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
691,822
|
|
|
34.6
|
%
|
|
$
|
708,762
|
|
|
37.9
|
%
|
Operating income
|
$
|
178,754
|
|
|
25.8
|
%
|
|
$
|
184,334
|
|
|
26.0
|
%
|
•
|
Operating income in dollars decreased due primarily to decreases in net revenues.
|
•
|
Operating income as a percentage of net revenues decreased due primarily to changes in customer mix.
|
|
Years Ended October 31,
|
||||||||||||||||||
|
2016
|
|
Change
|
|
2015
|
|
Change
|
|
2014
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
193,740
|
|
|
$
|
(55,547
|
)
|
|
$
|
249,287
|
|
|
$
|
50,220
|
|
|
$
|
199,067
|
|
Investing activities
|
(275,189
|
)
|
|
(146,740
|
)
|
|
(128,449
|
)
|
|
(50,556
|
)
|
|
(77,893
|
)
|
|||||
Financing activities
|
24,359
|
|
|
157,917
|
|
|
(133,558
|
)
|
|
(5,487
|
)
|
|
(128,071
|
)
|
|||||
Effect of foreign currency exchange rate changes on cash and cash equivalents
|
(3,428
|
)
|
|
25,169
|
|
|
(28,597
|
)
|
|
(17,461
|
)
|
|
(11,136
|
)
|
|||||
Net decrease in cash and cash equivalents
|
$
|
(60,518
|
)
|
|
$
|
(19,201
|
)
|
|
$
|
(41,317
|
)
|
|
$
|
(23,284
|
)
|
|
$
|
(18,033
|
)
|
|
Years Ended October 31,
|
|
|
|
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Amended and restated Credit Agreement
(1)
|
$
|
87,253
|
|
|
$
|
85,833
|
|
|
$
|
629,079
|
|
|
$
|
8,615
|
|
|
$
|
191,874
|
|
|
$
|
—
|
|
|
$
|
1,002,654
|
|
Capital lease obligations and other loans
|
4,932
|
|
|
2,685
|
|
|
2,655
|
|
|
1,809
|
|
|
86
|
|
|
264
|
|
|
12,431
|
|
|||||||
Operating leases
(2)
|
48,065
|
|
|
28,782
|
|
|
24,210
|
|
|
18,166
|
|
|
13,575
|
|
|
14,926
|
|
|
147,724
|
|
|||||||
Minimum purchase obligations
|
110,900
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110,900
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
—
|
|
|
113
|
|
|||||||
Total
|
$
|
251,150
|
|
|
$
|
117,300
|
|
|
$
|
655,944
|
|
|
$
|
28,590
|
|
|
$
|
205,648
|
|
|
$
|
15,190
|
|
|
$
|
1,273,822
|
|
(1)
|
Contractual obligations for the amended and restated Credit Agreement include interest calculated using the rate in effect as of October 31, 2016 applied to the expected outstanding debt balance considering the minimum principal payments due each year.
|
(2)
|
Operating leases include
$74.4 million
of minimum contractual obligations on leases for our taxi solutions business where payments are based upon the number of operational taxicabs with our advertising displays as of
October 31, 2016
.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
Currency
|
|
Local
Currency Contract Amount |
|
Currency
|
|
Contracted
Amount |
|
Fair
Market Value at October 31, 2016 |
||||
Contracts to (buy) sell non-USD currencies:
|
|
|
|
|
|
|
|
|
|
||||
Argentine peso
|
ARS
|
|
(130,000
|
)
|
|
USD
|
|
8,373
|
|
|
$
|
(29
|
)
|
Australian dollar
|
AUD
|
|
(9,000
|
)
|
|
USD
|
|
6,834
|
|
|
(1
|
)
|
|
Brazilian real
|
BRL
|
|
25,000
|
|
|
USD
|
|
(7,955
|
)
|
|
(90
|
)
|
|
British Pound
|
GBP
|
|
(5,200
|
)
|
|
USD
|
|
6,326
|
|
|
(6
|
)
|
|
Canadian dollar
|
CAD
|
|
(18,000
|
)
|
|
USD
|
|
13,449
|
|
|
3
|
|
|
Chinese renminbi
|
CNY
|
|
40,000
|
|
|
USD
|
|
(5,885
|
)
|
|
4
|
|
|
Danish krone
|
DKK
|
|
(45,000
|
)
|
|
USD
|
|
6,613
|
|
|
8
|
|
|
Euro
|
EUR
|
|
27,000
|
|
|
USD
|
|
(29,479
|
)
|
|
(3
|
)
|
|
Indian rupee
|
INR
|
|
200,000
|
|
|
USD
|
|
(2,979
|
)
|
|
8
|
|
|
Israeli shekel
|
ILS
|
|
13,000
|
|
|
USD
|
|
(3,375
|
)
|
|
4
|
|
|
Mexican peso
|
MXN
|
|
(80,000
|
)
|
|
USD
|
|
4,230
|
|
|
(3
|
)
|
|
New Zealand dollar
|
NZD
|
|
(38,000
|
)
|
|
USD
|
|
27,032
|
|
|
3
|
|
|
Norwegian Kroner
|
NOK
|
|
(40,000
|
)
|
|
USD
|
|
4,840
|
|
|
(4
|
)
|
|
South African rand
|
ZAR
|
|
(45,000
|
)
|
|
USD
|
|
3,229
|
|
|
2
|
|
|
South Korean won
|
KRW
|
|
(3,500,000
|
)
|
|
USD
|
|
3,082
|
|
|
18
|
|
|
Swedish Krona
|
SEK
|
|
290,000
|
|
|
USD
|
|
(32,041
|
)
|
|
5
|
|
|
Thai Baht
|
THB
|
|
(170,000
|
)
|
|
USD
|
|
4,836
|
|
|
(3
|
)
|
|
Turkish Lira
|
TRY
|
|
(14,000
|
)
|
|
USD
|
|
4,471
|
|
|
1
|
|
|
Total fair market value
|
|
|
|
|
|
|
|
|
$
|
(83
|
)
|
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In thousands, except per share data)
|
||||||||||
Net revenues:
|
|
|
|
|
|
||||||
Systems
|
$
|
1,236,361
|
|
|
$
|
1,309,628
|
|
|
$
|
1,162,226
|
|
Services
|
755,788
|
|
|
690,829
|
|
|
706,648
|
|
|||
Total net revenues
|
1,992,149
|
|
|
2,000,457
|
|
|
1,868,874
|
|
|||
Cost of net revenues:
|
|
|
|
|
|
||||||
Systems
|
744,311
|
|
|
773,816
|
|
|
733,043
|
|
|||
Services
|
453,527
|
|
|
400,658
|
|
|
411,114
|
|
|||
Total cost of net revenues
|
1,197,838
|
|
|
1,174,474
|
|
|
1,144,157
|
|
|||
Total gross margin
|
794,311
|
|
|
825,983
|
|
|
724,717
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
207,503
|
|
|
198,135
|
|
|
197,813
|
|
|||
Sales and marketing
|
217,039
|
|
|
224,745
|
|
|
212,766
|
|
|||
General and administrative
|
204,552
|
|
|
203,978
|
|
|
204,005
|
|
|||
Restructuring and related charges
|
41,254
|
|
|
8,429
|
|
|
15,300
|
|
|||
Litigation settlement and loss contingency expense (benefit)
|
650
|
|
|
1,213
|
|
|
(8,632
|
)
|
|||
Amortization of purchased intangible assets
|
90,534
|
|
|
82,492
|
|
|
97,580
|
|
|||
Total operating expenses
|
761,532
|
|
|
718,992
|
|
|
718,832
|
|
|||
Operating income
|
32,779
|
|
|
106,991
|
|
|
5,885
|
|
|||
Interest expense, net
|
(34,564
|
)
|
|
(31,455
|
)
|
|
(42,472
|
)
|
|||
Other income (expense), net
|
3,612
|
|
|
(2,588
|
)
|
|
(3,297
|
)
|
|||
Income (loss) before income taxes
|
1,827
|
|
|
72,948
|
|
|
(39,884
|
)
|
|||
Income tax provision (benefit)
|
11,527
|
|
|
(7,409
|
)
|
|
(3,442
|
)
|
|||
Consolidated net income (loss)
|
(9,700
|
)
|
|
80,357
|
|
|
(36,442
|
)
|
|||
Net income (loss) attributable to noncontrolling interests
|
419
|
|
|
(1,260
|
)
|
|
(1,688
|
)
|
|||
Net income (loss) attributable to VeriFone Systems, Inc. stockholders
|
$
|
(9,281
|
)
|
|
$
|
79,097
|
|
|
$
|
(38,130
|
)
|
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.08
|
)
|
|
$
|
0.69
|
|
|
$
|
(0.34
|
)
|
Diluted
|
$
|
(0.08
|
)
|
|
$
|
0.68
|
|
|
$
|
(0.34
|
)
|
Weighted average number of shares used in computing net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
||||||
Basic
|
110,829
|
|
|
114,044
|
|
|
111,586
|
|
|||
Diluted
|
110,829
|
|
|
115,934
|
|
|
111,586
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In thousands)
|
||||||||||
Consolidated net income (loss)
|
$
|
(9,700
|
)
|
|
$
|
80,357
|
|
|
$
|
(36,442
|
)
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(46,618
|
)
|
|
(183,895
|
)
|
|
(121,068
|
)
|
|||
Unrealized gain (loss) on derivatives designated as cash flow hedges
|
|
|
|
|
|
||||||
Change in unrealized gain (loss) on derivatives designated as cash flow hedges, net of tax
|
(1,971
|
)
|
|
(7,830
|
)
|
|
4,088
|
|
|||
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax
|
3,961
|
|
|
4,141
|
|
|
(2,794
|
)
|
|||
Net change in unrealized gain (loss) on derivatives designated as cash flow hedges
|
1,990
|
|
|
(3,689
|
)
|
|
1,294
|
|
|||
Net change in pension plan obligations
|
(4,045
|
)
|
|
93
|
|
|
97
|
|
|||
Other comprehensive loss
|
(48,673
|
)
|
|
(187,491
|
)
|
|
(119,677
|
)
|
|||
Total comprehensive loss
|
(58,373
|
)
|
|
(107,134
|
)
|
|
(156,119
|
)
|
|||
Less: net income (loss) attributable to noncontrolling interests
|
419
|
|
|
(1,260
|
)
|
|
(1,688
|
)
|
|||
Comprehensive loss attributable to VeriFone Systems, Inc. stockholders
|
$
|
(57,954
|
)
|
|
$
|
(108,394
|
)
|
|
$
|
(157,807
|
)
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(In thousands, except par value)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
148,352
|
|
|
$
|
208,870
|
|
Accounts receivable, net of allowances of $14,063 and $8,752, respectively
|
323,447
|
|
|
361,988
|
|
||
Inventories
|
175,231
|
|
|
129,716
|
|
||
Prepaid expenses and other current assets
|
110,397
|
|
|
81,690
|
|
||
Total current assets
|
757,427
|
|
|
782,264
|
|
||
Property and equipment, net
|
202,277
|
|
|
190,965
|
|
||
Purchased intangible assets, net
|
306,298
|
|
|
317,517
|
|
||
Goodwill
|
1,110,493
|
|
|
1,084,031
|
|
||
Deferred tax assets, net
|
36,989
|
|
|
35,896
|
|
||
Other long-term assets
|
81,323
|
|
|
62,389
|
|
||
Total assets
|
$
|
2,494,807
|
|
|
$
|
2,473,062
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
154,574
|
|
|
$
|
189,354
|
|
Accruals and other current liabilities
|
213,411
|
|
|
229,900
|
|
||
Deferred revenue, net
|
104,797
|
|
|
82,899
|
|
||
Short-term debt
|
66,017
|
|
|
39,088
|
|
||
Total current liabilities
|
538,799
|
|
|
541,241
|
|
||
Long-term deferred revenue, net
|
66,516
|
|
|
55,322
|
|
||
Deferred tax liabilities, net
|
99,371
|
|
|
102,921
|
|
||
Long-term debt
|
859,896
|
|
|
760,241
|
|
||
Other long-term liabilities
|
76,840
|
|
|
78,896
|
|
||
Total liabilities
|
1,641,422
|
|
|
1,538,621
|
|
||
Commitments and contingencies
|
|
|
|
||||
Redeemable noncontrolling interest in subsidiary
|
4,980
|
|
|
—
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock: $0.01 par value, 10,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock: $0.01 par value, 200,000 shares authorized, 111,261 and 112,684 shares issued and outstanding as of October 31, 2016 and 2015, respectively
|
1,113
|
|
|
1,125
|
|
||
Additional paid-in capital
|
1,771,951
|
|
|
1,726,416
|
|
||
Accumulated deficit
|
(618,339
|
)
|
|
(535,716
|
)
|
||
Accumulated other comprehensive loss
|
(340,994
|
)
|
|
(292,321
|
)
|
||
Total VeriFone Systems, Inc. stockholders’ equity
|
813,731
|
|
|
899,504
|
|
||
Noncontrolling interests in subsidiaries
|
34,674
|
|
|
34,937
|
|
||
Total equity
|
848,405
|
|
|
934,441
|
|
||
Total liabilities, redeemable noncontrolling interest in subsidiary and equity
|
$
|
2,494,807
|
|
|
$
|
2,473,062
|
|
|
Common Stock
Voting
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Total
Stockholders'
Equity
|
|
Non-controlling interest in subsidiaries
|
|
Total
Equity
|
|||||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||
|
|
|
(In thousands)
|
|||||||||||||||||||||||||||
Balance as of October 31, 2013
|
110,160
|
|
|
$
|
1,102
|
|
|
$
|
1,598,735
|
|
|
$
|
(500,078
|
)
|
|
$
|
14,847
|
|
|
$
|
1,114,606
|
|
|
$
|
36,455
|
|
|
$
|
1,151,061
|
|
Issuance of common stock, net of issuance costs
|
3,154
|
|
|
31
|
|
|
35,722
|
|
|
—
|
|
|
—
|
|
|
35,753
|
|
|
—
|
|
|
35,753
|
|
|||||||
Tax payments related to restricted stock units
|
—
|
|
|
—
|
|
|
(12,907
|
)
|
|
—
|
|
|
—
|
|
|
(12,907
|
)
|
|
—
|
|
|
(12,907
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
53,897
|
|
|
—
|
|
|
—
|
|
|
53,897
|
|
|
—
|
|
|
53,897
|
|
|||||||
Tax effects of stock-based compensation
|
—
|
|
|
—
|
|
|
248
|
|
|
—
|
|
|
—
|
|
|
248
|
|
|
—
|
|
|
248
|
|
|||||||
Dividends paid to noncontrolling interests shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,854
|
)
|
|
(1,854
|
)
|
|||||||
Total comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,130
|
)
|
|
(119,677
|
)
|
|
(157,807
|
)
|
|
1,507
|
|
|
(156,300
|
)
|
|||||||
Balance as of October 31, 2014
|
113,314
|
|
|
1,133
|
|
|
1,675,695
|
|
|
(538,208
|
)
|
|
(104,830
|
)
|
|
1,033,790
|
|
|
36,108
|
|
|
1,069,898
|
|
|||||||
Issuance of common stock, net of issuance costs
|
1,828
|
|
|
19
|
|
|
12,885
|
|
|
—
|
|
|
—
|
|
|
12,904
|
|
|
—
|
|
|
12,904
|
|
|||||||
Tax payments related to restricted stock units
|
—
|
|
|
—
|
|
|
(4,571
|
)
|
|
—
|
|
|
—
|
|
|
(4,571
|
)
|
|
—
|
|
|
(4,571
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
42,253
|
|
|
—
|
|
|
—
|
|
|
42,253
|
|
|
—
|
|
|
42,253
|
|
|||||||
Tax effects of stock-based compensation
|
—
|
|
|
—
|
|
|
(268
|
)
|
|
—
|
|
|
—
|
|
|
(268
|
)
|
|
—
|
|
|
(268
|
)
|
|||||||
Stock repurchases
|
(2,458
|
)
|
|
(27
|
)
|
|
—
|
|
|
(76,605
|
)
|
|
—
|
|
|
(76,632
|
)
|
|
—
|
|
|
(76,632
|
)
|
|||||||
Adjustment on redemption of noncontrolling interest
|
—
|
|
|
—
|
|
|
422
|
|
|
—
|
|
|
—
|
|
|
422
|
|
|
—
|
|
|
422
|
|
|||||||
Dividends paid to noncontrolling interests shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,412
|
)
|
|
(2,412
|
)
|
|||||||
Total comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
79,097
|
|
|
(187,491
|
)
|
|
(108,394
|
)
|
|
1,241
|
|
|
(107,153
|
)
|
|||||||
Balance as of October 31, 2015
|
112,684
|
|
|
1,125
|
|
|
1,726,416
|
|
|
(535,716
|
)
|
|
(292,321
|
)
|
|
899,504
|
|
|
34,937
|
|
|
934,441
|
|
|||||||
Issuance of common stock, net of issuance costs
|
1,411
|
|
|
14
|
|
|
5,061
|
|
|
—
|
|
|
—
|
|
|
5,075
|
|
|
—
|
|
|
5,075
|
|
|||||||
Tax payments related to restricted stock units
|
—
|
|
|
—
|
|
|
(1,969
|
)
|
|
—
|
|
|
—
|
|
|
(1,969
|
)
|
|
—
|
|
|
(1,969
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
42,278
|
|
|
—
|
|
|
—
|
|
|
42,278
|
|
|
—
|
|
|
42,278
|
|
|||||||
Tax effects of stock-based compensation
|
—
|
|
|
—
|
|
|
165
|
|
|
—
|
|
|
—
|
|
|
165
|
|
|
—
|
|
|
165
|
|
|||||||
Stock repurchases
|
(2,834
|
)
|
|
(26
|
)
|
|
—
|
|
|
(73,342
|
)
|
|
—
|
|
|
(73,368
|
)
|
|
—
|
|
|
(73,368
|
)
|
|||||||
Dividends paid to noncontrolling interests shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,293
|
)
|
|
(2,293
|
)
|
|||||||
Total comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,281
|
)
|
|
(48,673
|
)
|
|
(57,954
|
)
|
|
2,030
|
|
|
(55,924
|
)
|
|||||||
Balance as of October 31, 2016
|
111,261
|
|
|
$
|
1,113
|
|
|
$
|
1,771,951
|
|
|
$
|
(618,339
|
)
|
|
$
|
(340,994
|
)
|
|
$
|
813,731
|
|
|
$
|
34,674
|
|
|
$
|
848,405
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In thousands)
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Consolidated net income (loss)
|
$
|
(9,700
|
)
|
|
$
|
80,357
|
|
|
$
|
(36,442
|
)
|
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
179,236
|
|
|
169,400
|
|
|
213,641
|
|
|||
Stock-based compensation expense
|
42,278
|
|
|
42,253
|
|
|
53,897
|
|
|||
Deferred income taxes, net
|
(13,980
|
)
|
|
(31,574
|
)
|
|
(37,975
|
)
|
|||
Non-cash restructuring and related charges
|
31,208
|
|
|
—
|
|
|
—
|
|
|||
Write-off of debt issuance cost upon extinguishment
|
—
|
|
|
—
|
|
|
7,153
|
|
|||
Other
|
(6,225
|
)
|
|
13,050
|
|
|
16,811
|
|
|||
Net cash provided by operating activities before changes in operating assets and liabilities
|
222,817
|
|
|
273,486
|
|
|
217,085
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
59,600
|
|
|
(75,432
|
)
|
|
(29,518
|
)
|
|||
Inventories
|
(45,679
|
)
|
|
(16,415
|
)
|
|
9,454
|
|
|||
Prepaid expenses and other assets
|
779
|
|
|
(16,934
|
)
|
|
10,154
|
|
|||
Accounts payable
|
(39,571
|
)
|
|
41,206
|
|
|
47,389
|
|
|||
Deferred revenue, net
|
28,708
|
|
|
12,707
|
|
|
20,042
|
|
|||
Other current and long-term liabilities
|
(32,914
|
)
|
|
30,669
|
|
|
(75,539
|
)
|
|||
Net change in operating assets and liabilities
|
(29,077
|
)
|
|
(24,199
|
)
|
|
(18,018
|
)
|
|||
Net cash provided by operating activities
|
193,740
|
|
|
249,287
|
|
|
199,067
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Capital expenditures
|
(105,335
|
)
|
|
(106,492
|
)
|
|
(85,011
|
)
|
|||
Acquisition of businesses, net of cash and cash equivalents acquired
|
(172,219
|
)
|
|
(22,072
|
)
|
|
—
|
|
|||
Other investing activities, net
|
2,365
|
|
|
115
|
|
|
7,118
|
|
|||
Net cash used in investing activities
|
(275,189
|
)
|
|
(128,449
|
)
|
|
(77,893
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Proceeds from debt, net of issuance costs
|
560,378
|
|
|
125,000
|
|
|
1,099,434
|
|
|||
Repayments of debt
|
(453,054
|
)
|
|
(198,289
|
)
|
|
(1,260,794
|
)
|
|||
Proceeds from issuance of common stock through employee equity incentive plans
|
5,125
|
|
|
13,269
|
|
|
35,384
|
|
|||
Stock repurchases
|
(79,866
|
)
|
|
(70,134
|
)
|
|
—
|
|
|||
Other financing activities, net
|
(8,224
|
)
|
|
(3,404
|
)
|
|
(2,095
|
)
|
|||
Net cash provided by (used in) financing activities
|
24,359
|
|
|
(133,558
|
)
|
|
(128,071
|
)
|
|||
Effect of foreign currency exchange rate changes on cash and cash equivalents
|
(3,428
|
)
|
|
(28,597
|
)
|
|
(11,136
|
)
|
|||
Net decrease in cash and cash equivalents
|
(60,518
|
)
|
|
(41,317
|
)
|
|
(18,033
|
)
|
|||
Cash and cash equivalents, beginning of period
|
208,870
|
|
|
250,187
|
|
|
268,220
|
|
|||
Cash and cash equivalents, end of period
|
$
|
148,352
|
|
|
$
|
208,870
|
|
|
$
|
250,187
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
29,757
|
|
|
$
|
27,301
|
|
|
$
|
32,253
|
|
Cash paid for income taxes
|
$
|
28,203
|
|
|
$
|
20,529
|
|
|
$
|
27,333
|
|
|
InterCard
|
|
AJB
|
|
Panaroma
|
|
Total
|
||||||||
Acquisition date
|
December 23, 2015
|
|
February 2, 2016
|
|
May 20, 2016
|
|
|
||||||||
Tangible assets acquired (liabilities assumed), net
(1)
|
$
|
3,874
|
|
|
$
|
16,811
|
|
|
$
|
(2,479
|
)
|
|
$
|
18,206
|
|
Purchased intangible assets
(2)
|
52,681
|
|
|
41,100
|
|
|
14,220
|
|
|
108,001
|
|
||||
Redeemable noncontrolling interest
(3)
|
—
|
|
|
—
|
|
|
(7,430
|
)
|
|
(7,430
|
)
|
||||
Goodwill
(4)
|
37,292
|
|
|
30,989
|
|
|
6,090
|
|
|
74,371
|
|
||||
Total purchase price
|
$
|
93,847
|
|
|
$
|
88,900
|
|
|
$
|
10,401
|
|
|
$
|
193,148
|
|
(1)
|
The net assets acquired include trade receivables valued at
$23.5 million
. The gross contractual value of the trade receivables was
$31.5 million
, of which
$8.0 million
was not expected to be collected.
|
(2)
|
Purchased intangible assets include customer relationships valued at
$76.9 million
, which are amortized over their estimated useful lives of one to thirteen years, acquired technology valued at
$21.0 million
, which are amortized over their estimated useful lives of four to six years, and other intangibles valued at
$10.1 million
, which are amortized over their estimated useful lives of one to seven years.
|
(3)
|
The minority shareholder holding the remaining
49%
of Panaroma has a put option that is exercisable for three years after January 1, 2020 and if exercised requires us to purchase the remaining
49%
equity of Panaroma at a multiple of earnings before taxes, depreciation and amortization for the year ended December 31, 2019. Since the noncontrolling interest is redeemable at the option of the minority shareholder and is outside our control, it is reported in the mezzanine section in the Consolidated Balance Sheets and recognized at the greater of the initial carrying amount increased or decreased for the noncontrolling interest's share of net income or loss, or its redemption value.
|
(4)
|
Goodwill represents the expected benefits of combining the acquisitions' operations with our operations. Goodwill from the InterCard and AJB acquisitions was assigned to our Verifone Services reportable segment. The goodwill of the Panaroma acquisition was assigned to our Verifone Systems reportable segment. The goodwill associated with the AJB acquisition that is deductible for income tax purposes is
$19.3 million
and goodwill recognized on the other fiscal year 2016 acquisitions is not deductible for income tax purposes.
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Basic and diluted net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss) attributable to VeriFone Systems, Inc. stockholders
|
$
|
(9,281
|
)
|
|
$
|
79,097
|
|
|
$
|
(38,130
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares attributable to VeriFone Systems, Inc. stockholders - basic
|
110,829
|
|
|
114,044
|
|
|
111,586
|
|
|||
Weighted average effect of dilutive stock options, RSUs and RSAs
|
—
|
|
|
1,890
|
|
|
—
|
|
|||
Weighted average shares attributable to VeriFone Systems, Inc. stockholders - diluted
|
110,829
|
|
|
115,934
|
|
|
111,586
|
|
|||
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.08
|
)
|
|
$
|
0.69
|
|
|
$
|
(0.34
|
)
|
Diluted
|
$
|
(0.08
|
)
|
|
$
|
0.68
|
|
|
$
|
(0.34
|
)
|
|
Number
of Shares (in thousands) |
|
Weighted
Average Exercise Price (per share) |
|
Weighted
Average Remaining Contractual Term (Years) |
|
Aggregate
Intrinsic Value (in thousands) |
|||||
Outstanding at beginning of period
|
3,593
|
|
|
$
|
28.15
|
|
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Exercised
|
(450
|
)
|
|
$
|
11.24
|
|
|
|
|
|
||
Canceled
|
(70
|
)
|
|
$
|
24.40
|
|
|
|
|
|
||
Expired
|
(214
|
)
|
|
$
|
38.08
|
|
|
|
|
|
||
Outstanding at end of period
|
2,859
|
|
|
$
|
30.16
|
|
|
2.30
|
|
$
|
89,385
|
|
Vested or expected to vest at October 31, 2016
|
2,846
|
|
|
$
|
30.19
|
|
|
2.29
|
|
$
|
89,385
|
|
Exercisable at October 31, 2016
|
2,656
|
|
|
$
|
30.70
|
|
|
2.18
|
|
$
|
89,385
|
|
|
Number
of Shares |
|
Aggregate
Intrinsic Value |
|||
Outstanding at beginning of period
|
3,324
|
|
|
|
||
Granted
|
1,863
|
|
|
|
||
Vested
|
(1,042
|
)
|
|
|
||
Canceled
|
(767
|
)
|
|
|
||
Outstanding at end of period
|
3,378
|
|
|
$
|
52,291
|
|
Vested or expected to vest at October 31, 2016
|
2,880
|
|
|
$
|
44,579
|
|
Vested and deferred at October 31, 2016
|
96
|
|
|
$
|
1,492
|
|
|
Years Ended October 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Expected term (in years)
|
3.0
|
|
|
3.0
|
|
|
3.0
|
|
Risk-free interest rate
|
1.3
|
%
|
|
1.1
|
%
|
|
1.0
|
%
|
Expected dividend rate
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Expected stock price volatility
|
46.8
|
%
|
|
52.7
|
%
|
|
54.5
|
%
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of net revenues
|
$
|
3,324
|
|
|
$
|
2,548
|
|
|
$
|
1,994
|
|
Research and development
|
7,207
|
|
|
6,669
|
|
|
10,720
|
|
|||
Sales and marketing
|
13,503
|
|
|
16,219
|
|
|
19,151
|
|
|||
General and administrative
|
18,244
|
|
|
16,817
|
|
|
22,032
|
|
|||
Total stock-based compensation expense
|
$
|
42,278
|
|
|
$
|
42,253
|
|
|
$
|
53,897
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
(2,894
|
)
|
|
$
|
69,458
|
|
|
$
|
(89,764
|
)
|
Foreign
|
4,721
|
|
|
3,490
|
|
|
49,880
|
|
|||
Income (loss) before income taxes
|
$
|
1,827
|
|
|
$
|
72,948
|
|
|
$
|
(39,884
|
)
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(917
|
)
|
|
$
|
1,965
|
|
|
$
|
6,568
|
|
State
|
961
|
|
|
206
|
|
|
351
|
|
|||
Foreign
|
26,093
|
|
|
21,664
|
|
|
25,306
|
|
|||
Total current provision for income taxes
|
26,137
|
|
|
23,835
|
|
|
32,225
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
3,377
|
|
|
(306
|
)
|
|
(395
|
)
|
|||
State
|
336
|
|
|
(44
|
)
|
|
(18
|
)
|
|||
Foreign
|
(18,323
|
)
|
|
(30,894
|
)
|
|
(35,254
|
)
|
|||
Total deferred benefit from income taxes
|
(14,610
|
)
|
|
(31,244
|
)
|
|
(35,667
|
)
|
|||
Income tax provision (benefit)
|
$
|
11,527
|
|
|
$
|
(7,409
|
)
|
|
$
|
(3,442
|
)
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Provision for (benefit from) income taxes computed at the federal statutory rate
|
$
|
638
|
|
|
$
|
25,532
|
|
|
$
|
(13,960
|
)
|
State income tax, net of federal tax benefit
|
961
|
|
|
469
|
|
|
210
|
|
|||
Foreign income taxes at other than U.S. rates
|
17,155
|
|
|
(2,544
|
)
|
|
(22,726
|
)
|
|||
Valuation allowance, net
|
(1,919
|
)
|
|
(31,065
|
)
|
|
41,096
|
|
|||
Impact of tax rate changes
|
(1,523
|
)
|
|
485
|
|
|
(4,279
|
)
|
|||
Investment write-off
|
—
|
|
|
—
|
|
|
(9,612
|
)
|
|||
Unrealized inter-company profits
|
(130
|
)
|
|
409
|
|
|
5,559
|
|
|||
Foreign exchange
|
1,067
|
|
|
(2,692
|
)
|
|
(832
|
)
|
|||
Stock compensation
|
918
|
|
|
1,516
|
|
|
1,244
|
|
|||
Research Credit
|
(2,926
|
)
|
|
(1,662
|
)
|
|
(577
|
)
|
|||
Other
|
(2,714
|
)
|
|
2,143
|
|
|
435
|
|
|||
Income tax provision (benefit)
|
$
|
11,527
|
|
|
$
|
(7,409
|
)
|
|
$
|
(3,442
|
)
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Loss carry forwards
|
$
|
111,955
|
|
|
$
|
121,717
|
|
Basis differences in deductible goodwill and purchased intangibles
|
49,807
|
|
|
66,296
|
|
||
Foreign tax credit carry forwards
|
14,544
|
|
|
10,962
|
|
||
Foreign taxes on basis differences
|
54,170
|
|
|
55,113
|
|
||
Accrued expenses and reserves
|
29,609
|
|
|
32,733
|
|
||
Deferred revenue
|
55,657
|
|
|
35,653
|
|
||
Stock based compensation
|
19,965
|
|
|
20,770
|
|
||
Unrealized foreign currency losses
|
17,144
|
|
|
23,074
|
|
||
R&D credit carry forwards
|
10,712
|
|
|
7,316
|
|
||
Interest carry forward
|
11,221
|
|
|
9,973
|
|
||
Inventories
|
7,637
|
|
|
6,959
|
|
||
Other deferred tax assets
|
6,895
|
|
|
7,594
|
|
||
Total deferred tax assets
|
389,316
|
|
|
398,160
|
|
||
Valuation allowance
|
(326,935
|
)
|
|
(332,289
|
)
|
||
Deferred tax liabilities:
|
|
|
|
||||
Basis differences on purchased intangibles
|
(52,827
|
)
|
|
(62,549
|
)
|
||
Basis differences in investments in foreign subsidiaries
|
(57,657
|
)
|
|
(56,763
|
)
|
||
Other deferred tax liabilities
|
(14,278
|
)
|
|
(13,583
|
)
|
||
Total deferred tax liabilities
|
(124,762
|
)
|
|
(132,895
|
)
|
||
Net deferred tax liabilities
|
$
|
(62,381
|
)
|
|
$
|
(67,024
|
)
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
110,564
|
|
|
$
|
111,002
|
|
|
$
|
114,528
|
|
Lapse of statute of limitations
|
(1,185
|
)
|
|
(501
|
)
|
|
(2,072
|
)
|
|||
Increases in balances related to tax positions taken during prior periods
|
488
|
|
|
2,988
|
|
|
358
|
|
|||
Decreases in balances related to tax positions taken during prior periods
|
(3,834
|
)
|
|
(3,615
|
)
|
|
(2,551
|
)
|
|||
Increases in balances related to tax positions taken during current period
|
5,100
|
|
|
1,246
|
|
|
739
|
|
|||
Settlements
|
(5,030
|
)
|
|
(556
|
)
|
|
—
|
|
|||
Balance at end of period
|
$
|
106,103
|
|
|
$
|
110,564
|
|
|
$
|
111,002
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
7,904
|
|
|
$
|
8,510
|
|
|
$
|
10,463
|
|
Charges to bad debt expense
|
7,607
|
|
|
2,329
|
|
|
2,339
|
|
|||
Write-offs, recoveries, and adjustments
|
(2,915
|
)
|
|
(2,935
|
)
|
|
(4,292
|
)
|
|||
Balance at end of period
|
$
|
12,596
|
|
|
$
|
7,904
|
|
|
$
|
8,510
|
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
Raw materials
|
$
|
35,453
|
|
|
$
|
30,297
|
|
Work-in-process
|
3,884
|
|
|
2,588
|
|
||
Finished goods
|
135,894
|
|
|
96,831
|
|
||
Total inventories
|
$
|
175,231
|
|
|
$
|
129,716
|
|
|
|
|
October 31,
|
||||||
|
Estimated Useful Life (Years)
|
|
2016
|
|
2015
|
||||
Revenue generating assets
|
5
|
|
$
|
209,725
|
|
|
$
|
191,337
|
|
Computer hardware and software
|
3-5
|
|
112,984
|
|
|
96,711
|
|
||
Machinery and equipment
|
3-10
|
|
57,020
|
|
|
51,136
|
|
||
Leasehold improvements
|
Lesser of the term of the lease or the estimated useful life
|
|
31,328
|
|
|
27,927
|
|
||
Office equipment, furniture, and fixtures
|
3-5
|
|
18,573
|
|
|
17,606
|
|
||
Buildings
|
40-50
|
|
6,011
|
|
|
6,652
|
|
||
Total depreciable property and equipment, at cost
|
|
|
435,641
|
|
|
391,369
|
|
||
Accumulated depreciation
|
|
|
(243,127
|
)
|
|
(213,526
|
)
|
||
Depreciable property and equipment, net
|
|
|
192,514
|
|
|
177,843
|
|
||
Construction in progress
|
|
|
8,600
|
|
|
11,923
|
|
||
Land
|
|
|
1,163
|
|
|
1,199
|
|
||
Total property and equipment, net
|
|
|
$
|
202,277
|
|
|
$
|
190,965
|
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
Accrued expenses
|
$
|
76,187
|
|
|
$
|
85,973
|
|
Accrued compensation
|
52,555
|
|
|
69,174
|
|
||
Other current liabilities
|
84,669
|
|
|
74,753
|
|
||
Total accruals and other current liabilities
|
$
|
213,411
|
|
|
$
|
229,900
|
|
|
Years Ended October 31,
|
||||||
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
16,320
|
|
|
$
|
15,411
|
|
Warranty charged to Cost of net revenues
|
13,111
|
|
|
17,611
|
|
||
Utilization of warranty accrual
|
(12,957
|
)
|
|
(14,983
|
)
|
||
Other
|
182
|
|
|
(1,719
|
)
|
||
Balance at end of period
|
16,656
|
|
|
16,320
|
|
||
Less: current portion
|
(13,640
|
)
|
|
(13,527
|
)
|
||
Long-term portion
|
$
|
3,016
|
|
|
$
|
2,793
|
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred revenue
|
$
|
185,788
|
|
|
$
|
157,747
|
|
Deferred cost of revenue
|
(14,475
|
)
|
|
(19,526
|
)
|
||
Deferred revenue, net
|
171,313
|
|
|
138,221
|
|
||
Less: current portion
|
(104,797
|
)
|
|
(82,899
|
)
|
||
Long-term portion
|
$
|
66,516
|
|
|
$
|
55,322
|
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
Unrecognized tax benefits liability, net
|
$
|
33,745
|
|
|
$
|
35,860
|
|
Contingent consideration payable
|
5,254
|
|
|
10,776
|
|
||
Other long-term liabilities
|
37,841
|
|
|
32,260
|
|
||
Total other long-term liabilities
|
$
|
76,840
|
|
|
$
|
78,896
|
|
|
Years Ended October 31
|
||||||
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
—
|
|
|
$
|
774
|
|
Additions due to acquisition
|
7,430
|
|
|
—
|
|
||
Adjustment on redemption of noncontrolling interest
|
—
|
|
|
(797
|
)
|
||
Net income (loss) attributable to redeemable noncontrolling interest in subsidiary
|
(2,450
|
)
|
|
23
|
|
||
Balance at end of period
|
$
|
4,980
|
|
|
$
|
—
|
|
|
|
Foreign currency translation adjustments
|
|
Unrealized loss on derivatives designated as cash flow hedges
(1)
|
|
Adjustment of pension plan obligations
(2)
|
|
Total
|
||||||||
Balance at October 31, 2014
|
|
$
|
(102,767
|
)
|
|
$
|
(720
|
)
|
|
$
|
(1,343
|
)
|
|
$
|
(104,830
|
)
|
Losses before reclassifications, net of tax
|
|
(183,895
|
)
|
|
(7,830
|
)
|
|
—
|
|
|
(191,725
|
)
|
||||
Amounts reclassified from Accumulated other comprehensive income, net of tax
|
|
—
|
|
|
4,141
|
|
|
93
|
|
|
4,234
|
|
||||
Other comprehensive gain (loss)
|
|
(183,895
|
)
|
|
(3,689
|
)
|
|
93
|
|
|
(187,491
|
)
|
||||
Balance at October 31, 2015
|
|
(286,662
|
)
|
|
(4,409
|
)
|
|
(1,250
|
)
|
|
(292,321
|
)
|
||||
Losses before reclassifications, net of tax
|
|
(46,618
|
)
|
|
(1,971
|
)
|
|
—
|
|
|
(48,589
|
)
|
||||
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax
|
|
—
|
|
|
3,961
|
|
|
(4,045
|
)
|
|
(84
|
)
|
||||
Other comprehensive gain (loss)
|
|
(46,618
|
)
|
|
1,990
|
|
|
(4,045
|
)
|
|
(48,673
|
)
|
||||
Balance at October 31, 2016
|
|
$
|
(333,280
|
)
|
|
$
|
(2,419
|
)
|
|
$
|
(5,295
|
)
|
|
$
|
(340,994
|
)
|
|
October 31, 2016
|
|
October 31, 2015
|
||||||||||||||||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other current and long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange forward contracts not designated as hedging instruments
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
53
|
|
|
$
|
—
|
|
Interest rate swap agreements designated as cash flow hedges
|
301
|
|
|
—
|
|
|
301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total assets measured and recorded at fair value
|
$
|
370
|
|
|
$
|
—
|
|
|
$
|
370
|
|
|
$
|
—
|
|
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
53
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other current and long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent consideration payable
|
$
|
5,997
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,997
|
|
|
$
|
12,786
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,786
|
|
Foreign exchange forward contracts not designated as hedging instruments
|
153
|
|
|
—
|
|
|
153
|
|
|
—
|
|
|
377
|
|
|
—
|
|
|
377
|
|
|
—
|
|
||||||||
Interest rate swap agreements designated as cash flow hedges
|
2,676
|
|
|
—
|
|
|
2,676
|
|
|
—
|
|
|
4,407
|
|
|
—
|
|
|
4,407
|
|
|
—
|
|
||||||||
Total liabilities measured and recorded at fair value
|
$
|
8,826
|
|
|
$
|
—
|
|
|
$
|
2,829
|
|
|
$
|
5,997
|
|
|
$
|
17,570
|
|
|
$
|
—
|
|
|
$
|
4,784
|
|
|
$
|
12,786
|
|
|
Years Ended October 31,
|
||||||
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
12,786
|
|
|
$
|
11,824
|
|
Additions
|
5,252
|
|
|
1,781
|
|
||
Payments
|
(2,010
|
)
|
|
(485
|
)
|
||
Changes in estimates, included in Other income (expense), net
|
(12,003
|
)
|
|
(2,474
|
)
|
||
Interest expense, net
|
1,972
|
|
|
2,140
|
|
||
Balance at end of period
|
$
|
5,997
|
|
|
$
|
12,786
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Gains (losses) recognized in Other income (expense), net in our Consolidated Statements of Operations
|
$
|
(1,988
|
)
|
|
$
|
17,113
|
|
|
$
|
(2,661
|
)
|
|
North America
|
|
EMEA
|
|
Latin America
|
|
Asia-Pacific
|
|
Verifone Systems
|
|
Verifone Services
|
|
Total
|
||||||||||||||
Balance at October 31, 2014
|
$
|
90,156
|
|
|
$
|
906,866
|
|
|
$
|
100,846
|
|
|
$
|
88,024
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,185,892
|
|
Acquisitions
|
16,640
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,640
|
|
|||||||
Other adjustments
|
12
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Currency translation adjustments
|
(167
|
)
|
|
(96,804
|
)
|
|
(15,037
|
)
|
|
(6,493
|
)
|
|
—
|
|
|
—
|
|
|
(118,501
|
)
|
|||||||
Balance at October 31, 2015
|
106,641
|
|
|
810,062
|
|
|
85,797
|
|
|
81,531
|
|
|
—
|
|
|
—
|
|
|
1,084,031
|
|
|||||||
Segment reallocation
|
(106,641
|
)
|
|
(810,062
|
)
|
|
(85,797
|
)
|
|
(81,531
|
)
|
|
512,182
|
|
|
571,849
|
|
|
—
|
|
|||||||
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,090
|
|
|
68,281
|
|
|
74,371
|
|
|||||||
Other adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,431
|
)
|
|
(3,431
|
)
|
|||||||
Currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,146
|
)
|
|
(23,332
|
)
|
|
(44,478
|
)
|
|||||||
Balance at October 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
497,126
|
|
|
$
|
613,367
|
|
|
$
|
1,110,493
|
|
|
October 31, 2016
|
|
October 31, 2015
|
||||||||||||||||||||
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
||||||||||||
Customer relationships
|
$
|
521,964
|
|
|
$
|
(249,513
|
)
|
|
$
|
272,451
|
|
|
$
|
591,930
|
|
|
$
|
(298,812
|
)
|
|
$
|
293,118
|
|
Other
|
73,175
|
|
|
(39,328
|
)
|
|
33,847
|
|
|
115,143
|
|
|
(90,744
|
)
|
|
24,399
|
|
||||||
Total
|
$
|
595,139
|
|
|
$
|
(288,841
|
)
|
|
$
|
306,298
|
|
|
$
|
707,073
|
|
|
$
|
(389,556
|
)
|
|
$
|
317,517
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Included in Cost of net revenues
|
$
|
15,130
|
|
|
$
|
18,307
|
|
|
$
|
42,682
|
|
Included in Operating expenses
|
90,534
|
|
|
82,492
|
|
|
97,580
|
|
|||
Total amortization of purchased intangible assets
|
$
|
105,664
|
|
|
$
|
100,799
|
|
|
$
|
140,262
|
|
|
Cost of
Net Revenues |
|
Operating
Expenses |
|
Total
|
||||||
Fiscal Years Ending October 31:
|
|
|
|
|
|
||||||
2017
|
$
|
7,278
|
|
|
$
|
69,063
|
|
|
$
|
76,341
|
|
2018
|
5,241
|
|
|
55,707
|
|
|
60,948
|
|
|||
2019
|
4,861
|
|
|
49,994
|
|
|
54,855
|
|
|||
2020
|
3,198
|
|
|
42,335
|
|
|
45,533
|
|
|||
2021
|
2,460
|
|
|
30,783
|
|
|
33,243
|
|
|||
Thereafter
|
946
|
|
|
34,432
|
|
|
35,378
|
|
|||
Total future amortization expense
|
$
|
23,984
|
|
|
$
|
282,314
|
|
|
$
|
306,298
|
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
Credit Agreement
|
|
|
|
||||
Term A loan
|
$
|
525,000
|
|
|
$
|
562,500
|
|
Term B loan
|
195,500
|
|
|
197,500
|
|
||
Revolving loan
|
204,684
|
|
|
54,000
|
|
||
Capital leases and other debt
|
11,573
|
|
|
342
|
|
||
Total principal payments due
|
936,757
|
|
|
814,342
|
|
||
Less: original issue discount and debt issuance cost
|
(10,844
|
)
|
|
(15,013
|
)
|
||
Total amounts outstanding
|
925,913
|
|
|
799,329
|
|
||
Less: current portion
|
(66,017
|
)
|
|
(39,088
|
)
|
||
Long-term portion
|
$
|
859,896
|
|
|
$
|
760,241
|
|
•
|
A restriction on incurring additional indebtedness, subject to specified permitted debt;
|
•
|
A restriction on creating certain liens, subject to specified exceptions;
|
•
|
A restriction on mergers and consolidations, subject to specified exceptions;
|
•
|
A restriction on asset dispositions, subject to specified exceptions for ordinary course and other transactions;
|
•
|
A restriction on certain investments, subject to certain exceptions and a suspension if we achieve certain credit ratings;
|
•
|
A restriction on the payment of dividends, subject to specified exceptions; and
|
•
|
A restriction on entering into certain transactions with affiliates, subject to specified exceptions.
|
|
Amounts
|
||
Years Ending October 31:
|
|
||
2017
|
$
|
66,524
|
|
2018
|
64,466
|
|
|
2019
|
614,211
|
|
|
2020
|
3,767
|
|
|
2021
|
187,572
|
|
|
Thereafter
|
217
|
|
|
Total
|
$
|
936,757
|
|
|
Restructuring Plans
|
|
|
||||||||||||||||||||||||||||
|
April 2014 Plan
|
|
June 2014 Plan
|
|
July 2015 Plan
|
|
June 2016 Plan
|
|
|
||||||||||||||||||||||
|
Employee Involuntary Termination Benefits
|
|
Facilities Related Costs
|
|
Employee
Involuntary Termination Benefits |
|
Facilities
Related Costs |
|
Employee
Involuntary Termination Benefits |
|
Employee Involuntary Termination Benefits
|
|
Facilities Related Costs
|
|
Total
|
||||||||||||||||
Balance at October 31, 2014
|
$
|
319
|
|
|
$
|
1,194
|
|
|
$
|
5,500
|
|
|
$
|
399
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,412
|
|
Charges, net of adjustments
|
(69
|
)
|
|
537
|
|
|
884
|
|
|
82
|
|
|
7,343
|
|
|
—
|
|
|
—
|
|
|
8,777
|
|
||||||||
Cash payments
|
(250
|
)
|
|
(1,866
|
)
|
|
(5,357
|
)
|
|
(476
|
)
|
|
(2,253
|
)
|
|
—
|
|
|
—
|
|
|
(10,202
|
)
|
||||||||
Other
|
—
|
|
|
135
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
135
|
|
||||||||
Balance at October 31, 2015
|
—
|
|
|
—
|
|
|
1,027
|
|
|
5
|
|
|
5,090
|
|
|
—
|
|
|
—
|
|
|
6,122
|
|
||||||||
Charges, net of adjustments
|
—
|
|
|
—
|
|
|
549
|
|
|
—
|
|
|
(721
|
)
|
|
11,907
|
|
|
3,430
|
|
|
15,165
|
|
||||||||
Cash payments
|
—
|
|
|
—
|
|
|
(579
|
)
|
|
(5
|
)
|
|
(3,666
|
)
|
|
(6,682
|
)
|
|
(623
|
)
|
|
(11,555
|
)
|
||||||||
Balance at October 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
997
|
|
|
$
|
—
|
|
|
$
|
703
|
|
|
$
|
5,225
|
|
|
$
|
2,807
|
|
|
$
|
9,732
|
|
Cumulative costs to date
|
$
|
5,140
|
|
|
$
|
1,967
|
|
|
$
|
12,772
|
|
|
$
|
853
|
|
|
$
|
6,622
|
|
|
$
|
11,907
|
|
|
$
|
3,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended October 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Included in Cost of net revenues
|
$
|
2,202
|
|
|
$
|
348
|
|
|
$
|
2,847
|
|
Included in Operating expenses
|
12,963
|
|
|
8,429
|
|
|
15,289
|
|
|||
Total restructuring charges, net of adjustments
|
$
|
15,165
|
|
|
$
|
8,777
|
|
|
$
|
18,136
|
|
|
Minimum
Lease Payments |
|
Sublease
Rental Income |
|
Net Minimum
Lease Payments |
||||||
Years Ending October 31:
|
|
|
|
|
|
|
|||||
2017
|
$
|
48,065
|
|
|
$
|
(13
|
)
|
|
$
|
48,052
|
|
2018
|
28,782
|
|
|
(13
|
)
|
|
28,769
|
|
|||
2019
|
24,210
|
|
|
(13
|
)
|
|
24,197
|
|
|||
2020
|
18,166
|
|
|
(13
|
)
|
|
18,153
|
|
|||
2021
|
13,575
|
|
|
(13
|
)
|
|
13,562
|
|
|||
Thereafter
|
14,926
|
|
|
(37
|
)
|
|
14,889
|
|
|||
Total
|
$
|
147,724
|
|
|
$
|
(102
|
)
|
|
$
|
147,622
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Rent expense for non-cancelable taxi operating leases
|
$
|
32,543
|
|
|
$
|
35,297
|
|
|
$
|
36,413
|
|
Facility and other rent expense
|
27,706
|
|
|
26,885
|
|
|
29,521
|
|
|||
Total rent expense
|
$
|
60,249
|
|
|
$
|
62,182
|
|
|
$
|
65,934
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Segment net revenues:
|
|
|
|
|
|
||||||
Verifone Systems
|
$
|
1,236,361
|
|
|
$
|
1,309,629
|
|
|
$
|
1,162,226
|
|
Verifone Services
|
769,715
|
|
|
691,822
|
|
|
708,762
|
|
|||
Total segment net revenues
|
2,006,076
|
|
|
2,001,451
|
|
|
1,870,988
|
|
|||
Amortization of step down in deferred services net revenues at acquisition
|
(13,927
|
)
|
|
(994
|
)
|
|
(2,114
|
)
|
|||
Total net revenues
|
$
|
1,992,149
|
|
|
$
|
2,000,457
|
|
|
$
|
1,868,874
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating income by segment:
|
|
|
|
|
|
||||||
Verifone Systems
|
$
|
252,326
|
|
|
$
|
294,857
|
|
|
$
|
239,593
|
|
Verifone Services
|
198,426
|
|
|
178,754
|
|
|
184,334
|
|
|||
Total segment operating income
|
450,752
|
|
|
473,611
|
|
|
423,927
|
|
|||
Items not attributable to segment operating income:
|
|
|
|
|
|
||||||
Amortization of step down in deferred services gross margin at acquisition
|
(9,839
|
)
|
|
(994
|
)
|
|
(2,114
|
)
|
|||
Restructuring and related charges
|
(46,814
|
)
|
|
(8,777
|
)
|
|
(18,136
|
)
|
|||
Amortization of purchase intangible assets
|
(105,664
|
)
|
|
(100,799
|
)
|
|
(140,262
|
)
|
|||
Stock-based compensation expense
|
(42,278
|
)
|
|
(42,253
|
)
|
|
(53,897
|
)
|
|||
Litigation settlement and loss contingency (expense) benefit
|
(650
|
)
|
|
(1,213
|
)
|
|
8,632
|
|
|||
Unallocated general and administrative expenses
|
(186,308
|
)
|
|
(187,161
|
)
|
|
(181,972
|
)
|
|||
Unallocated research and development expenses
|
(14,593
|
)
|
|
(18,112
|
)
|
|
(19,206
|
)
|
|||
Other unallocated costs
|
(11,827
|
)
|
|
(7,311
|
)
|
|
(11,087
|
)
|
|||
Total operating income
|
$
|
32,779
|
|
|
$
|
106,991
|
|
|
$
|
5,885
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Verifone Systems
|
$
|
6,177
|
|
|
$
|
5,648
|
|
|
$
|
8,534
|
|
Verifone Services
|
43,184
|
|
|
41,484
|
|
|
39,427
|
|
|||
Unallocated
|
13,097
|
|
|
11,537
|
|
|
11,704
|
|
|||
Total depreciation and amortization expense
|
$
|
62,458
|
|
|
$
|
58,669
|
|
|
$
|
59,665
|
|
|
Years Ended October 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
807,229
|
|
|
$
|
789,386
|
|
|
$
|
522,982
|
|
Brazil
|
117,432
|
|
|
137,936
|
|
|
197,472
|
|
|||
Other countries
|
1,067,488
|
|
|
1,073,135
|
|
|
1,148,420
|
|
|||
Total net revenues
|
$
|
1,992,149
|
|
|
$
|
2,000,457
|
|
|
$
|
1,868,874
|
|
|
October 31,
|
||||||
|
2016
|
|
2015
|
||||
United States
|
$
|
99,807
|
|
|
$
|
99,961
|
|
Other countries
|
102,470
|
|
|
91,004
|
|
||
Property and equipment, net
|
$
|
202,277
|
|
|
$
|
190,965
|
|
|
Year Ended October 31, 2016
|
||||||||||||||
|
First
Quarter |
|
Second
Quarter (1) |
|
Third
Quarter (1) |
|
Fourth
Quarter (1) |
||||||||
Net revenues
|
$
|
513,539
|
|
|
$
|
526,278
|
|
|
$
|
488,132
|
|
|
$
|
464,200
|
|
Gross margin
|
215,285
|
|
|
210,379
|
|
|
191,147
|
|
|
177,500
|
|
||||
Operating income (loss)
|
36,216
|
|
|
19,779
|
|
|
(22,345
|
)
|
|
(871
|
)
|
||||
Consolidated net income (loss)
|
23,733
|
|
|
3,340
|
|
|
(31,498
|
)
|
|
(5,275
|
)
|
||||
Net income (loss) attributable to VeriFone Systems, Inc. stockholders
|
$
|
23,501
|
|
|
$
|
2,899
|
|
|
$
|
(31,138
|
)
|
|
$
|
(4,543
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per share
|
$
|
0.21
|
|
|
$
|
0.03
|
|
|
$
|
(0.28
|
)
|
|
$
|
(0.04
|
)
|
Diluted net income (loss) per share
|
$
|
0.21
|
|
|
$
|
0.03
|
|
|
$
|
(0.28
|
)
|
|
$
|
(0.04
|
)
|
(1)
|
The second, third, and fourth fiscal quarters of 2016 include $0.6 million, $38.8 million, and
$7.1 million
, respectively, of restructuring and related charges as part of cost optimization and corporate transformation initiatives. For further information, see Note 11,
Restructurings and related charges,
in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
|
|
Year Ended October 31, 2015
|
||||||||||||||
|
First
Quarter (1) |
|
Second
Quarter (1) |
|
Third
Quarter (1) |
|
Fourth
Quarter (1)(2) |
||||||||
Net revenues
|
$
|
486,226
|
|
|
$
|
490,144
|
|
|
$
|
509,940
|
|
|
$
|
514,147
|
|
Gross margin
|
199,170
|
|
|
203,903
|
|
|
206,541
|
|
|
216,369
|
|
||||
Operating income
|
23,175
|
|
|
29,716
|
|
|
20,284
|
|
|
33,816
|
|
||||
Consolidated net income
|
14,128
|
|
|
17,666
|
|
|
10,080
|
|
|
38,483
|
|
||||
Net income attributable to VeriFone Systems, Inc. stockholders
|
$
|
13,848
|
|
|
$
|
17,564
|
|
|
$
|
9,454
|
|
|
$
|
38,231
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per share
|
$
|
0.12
|
|
|
$
|
0.15
|
|
|
$
|
0.08
|
|
|
$
|
0.33
|
|
Diluted net income per share
|
$
|
0.12
|
|
|
$
|
0.15
|
|
|
$
|
0.08
|
|
|
$
|
0.33
|
|
(1)
|
The first, second, third, and fourth fiscal quarters of 2015 include $1.4 million, $0.1 million, $6.0 million, and $1.3 million, respectively, of restructuring and related charges as part of cost optimization and corporate transformation initiatives. For further information, see Note 11,
Restructurings and related charges,
in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
|
(2)
|
In the fourth fiscal quarter of 2015 we recorded a $16.1 million tax benefit as a result of releasing a portion of our valuation allowance against certain non-U.S. foreign deferred tax assets. For further information, see Note 6,
Income Taxes,
in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|
Exhibit
Number
|
|
Description
|
3.1(6)
|
|
Amended and Restated Certificate of Incorporation of VeriFone as amended.
|
|
|
|
3.2(15)
|
|
Amended and Restated Bylaws of VeriFone.
|
|
|
|
4.1(2)
|
|
Specimen Common Stock Certificate; reference is made to Exhibit 3.1.
|
|
|
|
10.1(1)+
|
|
2002 Securities Purchase Plan.
|
|
|
|
10.2(1)+
|
|
New Founders’ Stock Option Plan.
|
|
|
|
10.3(2)+
|
|
Outside Directors’ Stock Option Plan.
|
|
|
|
10.4(4)+
|
|
2005 Employee Equity Incentive Plan.
|
|
|
|
10.5(3)+
|
|
Form of Indemnification Agreement.
|
|
|
|
10.6(12)+
|
|
Amended and Restated VeriFone Systems, Inc. (formerly, VeriFone Holdings, Inc.) 2006 Equity Incentive Plan.
|
|
|
|
10.7(13)+
|
|
Form of Amended and Restated VeriFone Bonus Plan.
|
|
|
|
10.8(5)+
|
|
Lipman Electronic Engineering Ltd. 2003 Stock Option Plan.
|
Exhibit
Number
|
|
Description
|
|
|
|
10.9(5)+
|
|
Lipman Electronic Engineering Ltd. 2004 Stock Option Plan.
|
|
|
|
10.10(5)+
|
|
Lipman Electronic Engineering Ltd. 2004 Share Option Plan.
|
|
|
|
10.11(5)+
|
|
Amendment to Lipman Electronic Engineering Ltd. 2004 Share Option Plan.
|
|
|
|
10.12(5)+
|
|
Lipman Electronic Engineering Ltd. 2006 Share Incentive Plan.
|
|
|
|
10.13(7)
|
|
Sale and Purchase Agreement dated November 12, 2011 by and between Point Luxembourg Holding S.À.R.L. and Electronic Transactions Group Limited, as Sellers, and VeriFone Nordic AB, as Purchaser.
|
|
|
|
10.14(8)
|
|
Security Agreement, dated as of December 28, 2011, by and among JPMorgan Chase Bank, N.A., in its capacity as the Collateral Agent, and the VeriFone parties.
|
|
|
|
10.15(8)
|
|
Pledge Agreement, dated as of December 28, 2011, by and among the VeriFone parties and JPMorgan Chase Bank, N.A., in its capacity as the Collateral Agent.
|
|
|
|
10.16(8)
|
|
Guaranty, dated as of December 28, 2011, executed by each of the Guarantors party thereto in favor of JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent.
|
|
|
|
10.17(9)+
|
|
Offer Letter between the Company and Marc E. Rothman.
|
|
|
|
10.18(9)
|
|
Form of Restricted Stock Unit Award Notice.
|
|
|
|
10.19(10)
|
|
Amendment and Restatement Agreement, dated as of July 8, 2014, to the Credit Agreement, among VeriFone Intermediate Holdings, Inc., VeriFone, Inc., the other Loan Parties party thereto, the Lender parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent.
|
|
|
|
10.20(11)+
|
|
Offer Letter, dated September 15, 2013, between the Company and Paul Galant.
|
|
|
|
10.21*(13)+
|
|
Director Deferred Compensation Plan.
|
|
|
|
10.22(14)+
|
|
Executive Severance Policy.
|
|
|
|
10.23(16)
|
|
Offer letter, dated November 14, 2014, between the Company and Glen Robson
|
|
|
|
21.1*
|
|
List of subsidiaries of VeriFone.
|
|
|
|
Exhibit
Number
|
|
Description
|
23.1*
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
31.1*
|
|
Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1*
|
|
Certification of the Chief Executive Officer and the Chief Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS**
|
|
XBRL Instance Document
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
+
|
Indicates a management contract or compensatory plan or arrangement.
|
**
|
XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
(1)
|
Filed as an exhibit to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed February 23, 2005.
|
(2)
|
Filed as an exhibit to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 18, 2005.
|
(3)
|
Filed as an exhibit to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 29, 2005.
|
(4)
|
Filed as an exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-124545), filed May 2, 2005.
|
(5)
|
Incorporated by reference in the Registrant’s Registration Statement on Form S-8 (File No. 333-138533), filed November 9, 2006.
|
(6)
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K, filed December 21, 2010.
|
(7)
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q, filed March 12, 2012.
|
(8)
|
Filed as an exhibit to the Registrant's Current Report on Form 8-K, filed January 4, 2012.
|
(9)
|
Filed as an exhibit to the Registrant's Current Report on Form 8-K, filed February 4, 2013.
|
(10)
|
Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed July 10, 2014.
|
(11)
|
Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed September 23, 2013.
|
(12)
|
Filed as an appendix to the Registrant’s Definitive Proxy Statement for its 2015 Annual Meeting of Stockholders, filed February 11, 2015.
|
(13)
|
Filed as an exhibit to the Registrant’s Annual Report on Form 10-K, filed December 18, 2015.
|
(14)
|
Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed June 21, 2016.
|
(15)
|
Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed December 20, 2016.
|
(16)
|
Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed March 11, 2016.
|
|
VERIFONE SYSTEMS, INC.
|
|
|
|
|
|
B
Y
:
|
/
S
/ P
AUL
S. G
ALANT
|
|
|
Paul S. Galant
|
|
|
Chief Executive Officer
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
/
S
/ P
AUL
S. G
ALANT
|
|
Chief Executive Officer
|
|
December 27, 2016
|
Paul S. Galant
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ M
ARC
E
.
R
OTHMAN
|
|
Executive Vice President and Chief Financial Officer
|
|
December 27, 2016
|
Marc E. Rothman
|
|
(principal financial and accounting officer)
|
|
|
|
|
|
|
|
/s/ R
OBERT
W. A
LSPAUGH
|
|
Director
|
|
December 27, 2016
|
Robert W. Alspaugh
|
|
|
|
|
|
|
|
|
|
/s/ K
AREN
A
USTIN
|
|
Director
|
|
December 27, 2016
|
Karen Austin
|
|
|
|
|
|
|
|
|
|
/s/ A
LEX
W. H
ART
|
|
Chairman of the Board of Directors
|
|
December 27, 2016
|
Alex W. Hart
|
|
|
|
|
|
|
|
|
|
/s/ R
OBERT
B. H
ENSKE
|
|
Director
|
|
December 27, 2016
|
Robert B. Henske
|
|
|
|
|
|
|
|
|
|
/s/ E
ITAN
R
AFF
|
|
Director
|
|
December 27, 2016
|
Eitan Raff
|
|
|
|
|
|
|
|
|
|
/s/ J
ONATHAN
I. S
CHWARTZ
|
|
Director
|
|
December 27, 2016
|
Jonathan I. Schwartz
|
|
|
|
|
|
|
|
|
|
/s/ J
ANE
J. T
HOMPSON
|
|
Director
|
|
December 27, 2016
|
Jane J. Thompson
|
|
|
|
|
|
|
|
|
|
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