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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 | |
---|---|---|---|---|---|---|---|---|
0.57 | 2.71% | 21.59 | 21.6807 | 20.75 | 21.42 | 311,174 | 01:00:00 |
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended July 31, 2017
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
Delaware
|
|
04-3692546
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
þ
|
|
Smaller reporting company
o
|
Accelerated filer
o
|
Non-accelerated filer
o
|
|
|
Emerging growth company
o
|
Class
|
|
|
Number of shares
|
|
|
Common Stock, $0.01 par value per share
|
112,201,333
|
|
|
PART I — FINANCIAL INFORMATION
|
||
|
|
|
Item 1.
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II — OTHER INFORMATION
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
|
(Unaudited, in thousands, except per share data)
|
|||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
Systems
|
$
|
265,951
|
|
|
$
|
292,072
|
|
|
$
|
817,027
|
|
|
$
|
972,107
|
|
|
Services
|
200,915
|
|
|
196,060
|
|
|
577,395
|
|
|
555,842
|
|
|
||||
Total net revenues
|
466,866
|
|
|
488,132
|
|
|
1,394,422
|
|
|
1,527,949
|
|
|
||||
Cost of net revenues:
|
|
|
|
|
|
|
|
|
||||||||
Systems
|
177,774
|
|
|
175,690
|
|
|
520,385
|
|
|
571,039
|
|
|
||||
Services
|
114,642
|
|
|
121,295
|
|
|
355,395
|
|
|
340,099
|
|
|
||||
Total cost of net revenues
|
292,416
|
|
|
296,985
|
|
|
875,780
|
|
|
911,138
|
|
|
||||
Gross margin
|
174,450
|
|
|
191,147
|
|
|
518,642
|
|
|
616,811
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
50,731
|
|
|
52,394
|
|
|
158,454
|
|
|
158,150
|
|
|
||||
Sales and marketing
|
46,665
|
|
|
52,830
|
|
|
146,806
|
|
|
167,289
|
|
|
||||
General and administrative
|
44,867
|
|
|
49,753
|
|
|
142,425
|
|
|
157,040
|
|
|
||||
Restructuring and related charges
|
65,705
|
|
|
33,629
|
|
|
135,743
|
|
|
34,196
|
|
|
||||
Litigation settlement and loss contingency expense
|
—
|
|
|
600
|
|
|
—
|
|
|
600
|
|
|
||||
Amortization of purchased intangible assets
|
16,696
|
|
|
24,286
|
|
|
53,873
|
|
|
65,886
|
|
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
17,384
|
|
|
—
|
|
|
||||
Total operating expenses
|
224,664
|
|
|
213,492
|
|
|
654,685
|
|
|
583,161
|
|
|
||||
Operating income (loss)
|
(50,214
|
)
|
|
(22,345
|
)
|
|
(136,043
|
)
|
|
33,650
|
|
|
||||
Interest expense, net
|
(8,380
|
)
|
|
(9,023
|
)
|
|
(24,712
|
)
|
|
(25,870
|
)
|
|
||||
Other income (expense), net
|
(1,908
|
)
|
|
156
|
|
|
4,666
|
|
|
(6,833
|
)
|
|
||||
Net income (loss) before income taxes
|
(60,502
|
)
|
|
(31,212
|
)
|
|
(156,089
|
)
|
|
947
|
|
|
||||
Income tax provision
|
10,286
|
|
|
286
|
|
|
22,088
|
|
|
5,372
|
|
|
||||
Consolidated net loss
|
(70,788
|
)
|
|
(31,498
|
)
|
|
(178,177
|
)
|
|
(4,425
|
)
|
|
||||
Net income (loss) attributable to noncontrolling interests
|
167
|
|
|
(360
|
)
|
|
(1,332
|
)
|
|
313
|
|
|
||||
Net loss attributable to VeriFone Systems, Inc. stockholders
|
$
|
(70,955
|
)
|
|
$
|
(31,138
|
)
|
|
$
|
(176,845
|
)
|
|
$
|
(4,738
|
)
|
|
Net loss per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.63
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(1.58
|
)
|
|
$
|
(0.04
|
)
|
|
Diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(1.58
|
)
|
|
$
|
(0.04
|
)
|
|
Weighted average number of shares used in computing net loss per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
111,951
|
|
|
110,689
|
|
|
111,669
|
|
|
110,763
|
|
|
||||
Diluted
|
111,951
|
|
|
110,689
|
|
|
111,669
|
|
|
110,763
|
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
|
(Unaudited, in thousands)
|
|||||||||||||||
Consolidated net loss
|
$
|
(70,788
|
)
|
|
$
|
(31,498
|
)
|
|
$
|
(178,177
|
)
|
|
$
|
(4,425
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments, net of tax
|
65,202
|
|
|
(46,460
|
)
|
|
74,563
|
|
|
(24,410
|
)
|
|
||||
Unrealized gain (loss) on derivatives designated as cash flow hedges
|
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gain (loss) on derivatives designated as cash flow hedges
|
(369
|
)
|
|
(301
|
)
|
|
4,003
|
|
|
(3,540
|
)
|
|
||||
Amounts reclassified from Accumulated other comprehensive loss
|
129
|
|
|
890
|
|
|
1,217
|
|
|
3,004
|
|
|
||||
Tax impact on unrealized gain (loss) on derivatives designated as cash flow hedges
|
91
|
|
|
—
|
|
|
(1,981
|
)
|
|
—
|
|
|
||||
Net change in unrealized gain (loss) on derivatives designated as cash flow hedges
|
(149
|
)
|
|
589
|
|
|
3,239
|
|
|
(536
|
)
|
|
||||
Net change in other
|
136
|
|
|
27
|
|
|
190
|
|
|
78
|
|
|
||||
Other comprehensive income (loss)
|
65,189
|
|
|
(45,844
|
)
|
|
77,992
|
|
|
(24,868
|
)
|
|
||||
Total comprehensive loss
|
(5,599
|
)
|
|
(77,342
|
)
|
|
(100,185
|
)
|
|
(29,293
|
)
|
|
||||
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of tax
|
2,352
|
|
|
(360
|
)
|
|
(8,341
|
)
|
|
313
|
|
|
||||
Comprehensive loss attributable to VeriFone Systems, Inc. stockholders
|
$
|
(7,951
|
)
|
|
$
|
(76,982
|
)
|
|
$
|
(91,844
|
)
|
|
$
|
(29,606
|
)
|
|
|
July 31, 2017
|
|
October 31, 2016
|
||||
|
(Unaudited, in thousands, except par value)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
158,826
|
|
|
$
|
148,352
|
|
Accounts receivable, net of allowances of $14,291 and $14,063, respectively
|
326,327
|
|
|
323,447
|
|
||
Inventories
|
127,496
|
|
|
175,231
|
|
||
Prepaid expenses and other current assets
|
165,856
|
|
|
110,397
|
|
||
Total current assets
|
778,505
|
|
|
757,427
|
|
||
Property and equipment, net
|
130,454
|
|
|
202,277
|
|
||
Purchased intangible assets, net
|
257,532
|
|
|
306,298
|
|
||
Goodwill
|
1,116,752
|
|
|
1,110,493
|
|
||
Deferred tax assets, net
|
36,144
|
|
|
36,989
|
|
||
Other long-term assets
|
99,786
|
|
|
81,323
|
|
||
Total assets
|
$
|
2,419,173
|
|
|
$
|
2,494,807
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
157,118
|
|
|
$
|
154,574
|
|
Accruals and other current liabilities
|
253,239
|
|
|
213,411
|
|
||
Deferred revenue, net
|
110,639
|
|
|
104,797
|
|
||
Short-term debt
|
68,216
|
|
|
66,017
|
|
||
Total current liabilities
|
589,212
|
|
|
538,799
|
|
||
Long-term deferred revenue, net
|
66,806
|
|
|
66,516
|
|
||
Deferred tax liabilities, net
|
102,401
|
|
|
99,371
|
|
||
Long-term debt
|
809,885
|
|
|
859,896
|
|
||
Other long-term liabilities
|
69,982
|
|
|
76,840
|
|
||
Total liabilities
|
1,638,286
|
|
|
1,641,422
|
|
||
Commitments and contingencies
|
|
|
|
||||
Redeemable noncontrolling interest in subsidiary
|
1,084
|
|
|
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, 112,188 and 111,261 shares issued and outstanding as of July 31, 2017 and October 31, 2016, respectively
|
1,122
|
|
|
1,113
|
|
||
Additional paid-in capital
|
1,802,204
|
|
|
1,771,951
|
|
||
Accumulated deficit
|
(795,185
|
)
|
|
(618,339
|
)
|
||
Accumulated other comprehensive loss
|
(255,993
|
)
|
|
(340,994
|
)
|
||
Total VeriFone Systems, Inc. stockholders’ equity
|
752,148
|
|
|
813,731
|
|
||
Noncontrolling interests in subsidiaries
|
27,655
|
|
|
34,674
|
|
||
Total equity
|
779,803
|
|
|
848,405
|
|
||
Total liabilities, redeemable noncontrolling interest in subsidiary and equity
|
$
|
2,419,173
|
|
|
$
|
2,494,807
|
|
|
Nine Months Ended July 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Unaudited, in thousands)
|
||||||
Cash flows from operating activities
|
|
|
|
||||
Consolidated net loss
|
$
|
(178,177
|
)
|
|
$
|
(4,425
|
)
|
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
116,845
|
|
|
133,795
|
|
||
Stock-based compensation expense
|
30,050
|
|
|
32,889
|
|
||
Deferred income taxes, net
|
(1,164
|
)
|
|
(7,226
|
)
|
||
Non-cash restructuring and related charges
|
107,535
|
|
|
29,100
|
|
||
Goodwill impairment
|
17,384
|
|
|
—
|
|
||
Other
|
11,471
|
|
|
5,044
|
|
||
Net cash provided by operating activities before changes in operating assets and liabilities
|
103,944
|
|
|
189,177
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(15,014
|
)
|
|
13,501
|
|
||
Inventories
|
30,908
|
|
|
(53,300
|
)
|
||
Prepaid expenses and other assets
|
(11,747
|
)
|
|
(23,209
|
)
|
||
Accounts payable
|
3,043
|
|
|
(2,294
|
)
|
||
Deferred revenue, net
|
5,837
|
|
|
28,398
|
|
||
Other current and long-term liabilities
|
23,132
|
|
|
(21,764
|
)
|
||
Net change in operating assets and liabilities
|
36,159
|
|
|
(58,668
|
)
|
||
Net cash provided by operating activities
|
140,103
|
|
|
130,509
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Capital expenditures
|
(52,802
|
)
|
|
(82,271
|
)
|
||
Acquisition of businesses, net of cash and cash equivalents acquired
|
(4,973
|
)
|
|
(172,219
|
)
|
||
Divestiture of businesses
|
1,469
|
|
|
—
|
|
||
Other investing activities, net
|
321
|
|
|
1,938
|
|
||
Net cash used in investing activities
|
(55,985
|
)
|
|
(252,552
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from debt, net of issuance costs
|
215,384
|
|
|
490,378
|
|
||
Repayments of debt
|
(277,700
|
)
|
|
(333,930
|
)
|
||
Proceeds from issuance of common stock through employee equity incentive plans
|
849
|
|
|
3,329
|
|
||
Stock repurchases
|
—
|
|
|
(79,866
|
)
|
||
Other financing activities, net
|
(3,777
|
)
|
|
(4,078
|
)
|
||
Net cash provided by (used in) financing activities
|
(65,244
|
)
|
|
75,833
|
|
||
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash
|
6,330
|
|
|
(2,119
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
25,204
|
|
|
(48,329
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
159,181
|
|
|
215,869
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
184,385
|
|
|
$
|
167,540
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
Basic and diluted net loss per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to VeriFone Systems, Inc. stockholders
|
$
|
(70,955
|
)
|
|
$
|
(31,138
|
)
|
|
$
|
(176,845
|
)
|
|
(4,738
|
)
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares attributable to VeriFone Systems, Inc. stockholders - basic
|
111,951
|
|
|
110,689
|
|
|
111,669
|
|
|
110,763
|
|
|
||||
Weighted average effect of dilutive stock options, RSUs and RSAs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||
Weighted average shares attributable to VeriFone Systems, Inc. stockholders - diluted
|
111,951
|
|
|
110,689
|
|
|
111,669
|
|
|
110,763
|
|
|
||||
Net loss per share attributable to VeriFone Systems, Inc. stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.63
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(1.58
|
)
|
|
$
|
(0.04
|
)
|
|
Diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(1.58
|
)
|
|
$
|
(0.04
|
)
|
|
|
July 31, 2017
|
|
October 31, 2016
|
||||
Cash and cash equivalents
|
$
|
158,826
|
|
|
$
|
148,352
|
|
Restricted cash included in Prepaid expenses and other current assets
|
24,114
|
|
|
9,008
|
|
||
Restricted cash included in Other long-term assets
|
1,445
|
|
|
1,821
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
184,385
|
|
|
$
|
159,181
|
|
|
July 31, 2017
|
|
October 31, 2016
|
||||
Raw materials
|
$
|
31,568
|
|
|
$
|
35,453
|
|
Work-in-process
|
551
|
|
|
3,884
|
|
||
Finished goods
|
95,377
|
|
|
135,894
|
|
||
Total inventories
|
$
|
127,496
|
|
|
$
|
175,231
|
|
|
July 31, 2017
|
|
|
October 31, 2016
|
|||
Assets held for sale
|
$
|
50,731
|
|
|
$
|
5,131
|
|
Prepaid expenses
|
53,234
|
|
|
46,240
|
|
||
Other current assets
|
61,891
|
|
|
59,026
|
|
||
Total prepaid expenses and other current assets
|
$
|
165,856
|
|
|
$
|
110,397
|
|
|
Estimated Useful Life (Years)
|
|
July 31, 2017
|
|
|
October 31, 2016
|
|||
Revenue generating assets
|
5
|
|
$
|
141,009
|
|
|
$
|
209,725
|
|
Computer hardware and software
|
3-5
|
|
106,830
|
|
|
112,984
|
|
||
Machinery and equipment
|
3-10
|
|
49,254
|
|
|
57,020
|
|
||
Leasehold improvements
|
Lesser of the term of the lease or the estimated useful life
|
|
30,881
|
|
|
31,328
|
|
||
Office equipment, furniture, and fixtures
|
3-5
|
|
20,341
|
|
|
18,573
|
|
||
Buildings
|
40-50
|
|
6,026
|
|
|
6,011
|
|
||
Total depreciable property and equipment, at cost
|
|
|
354,341
|
|
|
435,641
|
|
||
Accumulated depreciation
|
|
|
(232,142
|
)
|
|
(243,127
|
)
|
||
Depreciable property and equipment, net
|
|
|
122,199
|
|
|
192,514
|
|
||
Construction in progress
|
|
|
7,081
|
|
|
8,600
|
|
||
Land
|
|
|
1,174
|
|
|
1,163
|
|
||
Total property and equipment, net
|
|
|
$
|
130,454
|
|
|
$
|
202,277
|
|
|
July 31, 2017
|
|
October 31, 2016
|
||||
Accrued expenses
|
$
|
55,166
|
|
|
$
|
76,187
|
|
Accrued compensation
|
59,503
|
|
|
52,555
|
|
||
Other current liabilities
|
138,570
|
|
|
84,669
|
|
||
Total accruals and other current liabilities
|
$
|
253,239
|
|
|
$
|
213,411
|
|
|
Nine Months Ended July 31,
|
||||||
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
$
|
16,656
|
|
|
$
|
16,320
|
|
Warranty charged to Cost of net revenues
|
8,546
|
|
|
7,156
|
|
||
Utilization of warranty accrual
|
(10,005
|
)
|
|
(7,348
|
)
|
||
Other
|
385
|
|
|
124
|
|
||
Balance at end of period
|
15,582
|
|
|
16,252
|
|
||
Less: current portion
|
(13,667
|
)
|
|
(12,918
|
)
|
||
Long-term portion
|
$
|
1,915
|
|
|
$
|
3,334
|
|
|
July 31, 2017
|
|
October 31, 2016
|
||||
Deferred revenue
|
$
|
199,050
|
|
|
$
|
185,788
|
|
Deferred cost of revenue
|
(21,605
|
)
|
|
(14,475
|
)
|
||
Deferred revenue, net
|
177,445
|
|
|
171,313
|
|
||
Less: current portion
|
(110,639
|
)
|
|
(104,797
|
)
|
||
Long-term portion
|
$
|
66,806
|
|
|
$
|
66,516
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
Cost of net revenues
|
$
|
1,172
|
|
|
$
|
871
|
|
|
$
|
3,227
|
|
|
2,563
|
|
|
|
Research and development
|
1,776
|
|
|
1,850
|
|
|
5,175
|
|
|
5,644
|
|
|
||||
Sales and marketing
|
2,929
|
|
|
3,204
|
|
|
8,760
|
|
|
10,303
|
|
|
||||
General and administrative
|
3,442
|
|
|
4,925
|
|
|
12,888
|
|
|
14,379
|
|
|
||||
Total stock-based compensation expense
|
$
|
9,319
|
|
|
$
|
10,850
|
|
|
$
|
30,050
|
|
|
$
|
32,889
|
|
|
|
|
Foreign currency translation adjustments
(1)
|
|
Unrealized gain (loss) on derivatives designated as cash flow hedges
(2)
|
|
Other
(3)
|
|
Total
|
||||||||
Balance at October 31, 2016
|
|
$
|
(333,280
|
)
|
|
$
|
(2,419
|
)
|
|
$
|
(5,295
|
)
|
|
$
|
(340,994
|
)
|
Gains before reclassifications
|
|
74,952
|
|
|
4,003
|
|
|
—
|
|
|
78,955
|
|
||||
Amounts reclassified from Accumulated other comprehensive loss
|
|
7,011
|
|
|
1,217
|
|
|
190
|
|
|
8,418
|
|
||||
Tax effect
|
|
(391
|
)
|
|
(1,981
|
)
|
|
—
|
|
|
(2,372
|
)
|
||||
Other comprehensive income
|
|
81,572
|
|
|
3,239
|
|
|
190
|
|
|
85,001
|
|
||||
Balance at July 31, 2017
|
|
$
|
(251,708
|
)
|
|
$
|
820
|
|
|
$
|
(5,105
|
)
|
|
$
|
(255,993
|
)
|
|
Verifone Systems
|
|
Verifone Services
|
|
Total
|
||||||
Balance at October 31, 2016
|
$
|
497,126
|
|
|
$
|
613,367
|
|
|
$
|
1,110,493
|
|
Additions
|
—
|
|
|
5,647
|
|
|
5,647
|
|
|||
Goodwill impairment
|
—
|
|
|
(17,384
|
)
|
|
(17,384
|
)
|
|||
Reclassification to assets held for sale
|
—
|
|
|
(28,327
|
)
|
|
(28,327
|
)
|
|||
Disposals
|
—
|
|
|
(10,096
|
)
|
|
(10,096
|
)
|
|||
Currency translation adjustments
|
22,173
|
|
|
34,246
|
|
|
56,419
|
|
|||
Balance at July 31, 2017
|
$
|
519,299
|
|
|
$
|
597,453
|
|
|
$
|
1,116,752
|
|
|
July 31, 2017
|
|
October 31, 2016
|
||||||||||||||||||||
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
||||||||||||
Customer relationships
|
$
|
512,812
|
|
|
$
|
(279,020
|
)
|
|
$
|
233,792
|
|
|
$
|
521,964
|
|
|
$
|
(249,513
|
)
|
|
$
|
272,451
|
|
Other
|
46,179
|
|
|
(22,439
|
)
|
|
23,740
|
|
|
73,175
|
|
|
(39,328
|
)
|
|
33,847
|
|
||||||
Total
|
$
|
558,991
|
|
|
$
|
(301,459
|
)
|
|
$
|
257,532
|
|
|
$
|
595,139
|
|
|
$
|
(288,841
|
)
|
|
$
|
306,298
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Included in Cost of net revenues
|
$
|
1,428
|
|
|
$
|
3,952
|
|
|
$
|
5,502
|
|
|
$
|
11,761
|
|
Included in Operating expenses
|
16,696
|
|
|
24,286
|
|
|
53,873
|
|
|
65,886
|
|
||||
Total amortization of purchased intangible assets
|
$
|
18,124
|
|
|
$
|
28,238
|
|
|
$
|
59,375
|
|
|
$
|
77,647
|
|
|
Cost of
Net Revenues |
|
Operating
Expenses |
|
Total
|
||||||
Fiscal Years Ending October 31:
|
|
|
|
|
|
||||||
Remaining of fiscal year 2017
|
$
|
1,504
|
|
|
$
|
15,388
|
|
|
$
|
16,892
|
|
2018
|
5,564
|
|
|
58,256
|
|
|
63,820
|
|
|||
2019
|
5,441
|
|
|
52,494
|
|
|
57,935
|
|
|||
2020
|
3,730
|
|
|
44,386
|
|
|
48,116
|
|
|||
2021
|
2,552
|
|
|
32,258
|
|
|
34,810
|
|
|||
Thereafter
|
1,101
|
|
|
34,858
|
|
|
35,959
|
|
|||
Total future amortization expense
|
$
|
19,892
|
|
|
$
|
237,640
|
|
|
$
|
257,532
|
|
|
July 31, 2017
|
|
October 31, 2016
|
||||
Credit Agreement
|
|
|
|
||||
Term A loan
|
$
|
480,000
|
|
|
$
|
525,000
|
|
Term B loan
|
194,000
|
|
|
195,500
|
|
||
Revolving loan
|
201,153
|
|
|
204,684
|
|
||
Capital leases and other debt
|
10,793
|
|
|
11,573
|
|
||
Total principal payments due
|
885,946
|
|
|
936,757
|
|
||
Less: original issue discount and debt issuance costs
|
(7,845
|
)
|
|
(10,844
|
)
|
||
Total amounts outstanding
|
878,101
|
|
|
925,913
|
|
||
Less: current portion
|
(68,216
|
)
|
|
(66,017
|
)
|
||
Long-term portion
|
$
|
809,885
|
|
|
$
|
859,896
|
|
|
Restructuring Plans
|
|
|
|
|
||||||||||||||||||
|
Prior year Plans
|
|
June 2016 Plan
|
|
June 2017 Plan
|
|
|
|
|
||||||||||||||
|
Employee
Involuntary Termination Benefits |
|
Employee Involuntary Termination Benefits
|
|
Facilities Related Costs
|
|
Employee Involuntary Termination Benefits
|
|
Other Business Exit Costs
|
|
Total
|
||||||||||||
Balance at October 31, 2016
|
$
|
1,700
|
|
|
$
|
5,225
|
|
|
$
|
2,807
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,732
|
|
Charges, net of adjustments
|
(736
|
)
|
|
7,283
|
|
|
(750
|
)
|
|
9,783
|
|
|
28,063
|
|
|
43,643
|
|
||||||
Cash payments
|
(822
|
)
|
|
(7,793
|
)
|
|
(857
|
)
|
|
(3,765
|
)
|
|
(5,809
|
)
|
|
(19,046
|
)
|
||||||
Balance at July 31, 2017
|
$
|
142
|
|
|
$
|
4,715
|
|
|
$
|
1,200
|
|
|
$
|
6,018
|
|
|
$
|
22,254
|
|
|
$
|
34,329
|
|
Cumulative costs to date
|
$
|
18,596
|
|
|
$
|
19,190
|
|
|
$
|
2,679
|
|
|
$
|
9,783
|
|
|
$
|
28,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Included in Cost of net revenues
|
$
|
12,893
|
|
|
$
|
2,301
|
|
|
$
|
25,250
|
|
|
$
|
2,212
|
|
Included in Operating expenses
|
65,705
|
|
|
33,629
|
|
|
135,743
|
|
|
34,196
|
|
||||
Total restructuring and related charges
|
$
|
78,598
|
|
|
$
|
35,930
|
|
|
$
|
160,993
|
|
|
$
|
36,408
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Segment net revenues:
|
|
|
|
|
|
|
|
||||||||
Verifone Systems
|
$
|
265,951
|
|
|
$
|
292,072
|
|
|
$
|
817,027
|
|
|
$
|
972,107
|
|
Verifone Services
|
200,915
|
|
|
200,513
|
|
|
580,388
|
|
|
566,390
|
|
||||
Total segment net revenues
|
466,866
|
|
|
492,585
|
|
|
1,397,415
|
|
|
1,538,497
|
|
||||
Amortization of step down in deferred services net revenues at acquisition
|
—
|
|
|
(4,453
|
)
|
|
(2,993
|
)
|
|
(10,548
|
)
|
||||
Total net revenues
|
$
|
466,866
|
|
|
$
|
488,132
|
|
|
$
|
1,394,422
|
|
|
$
|
1,527,949
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Operating income by segment:
|
|
|
|
|
|
|
|
||||||||
Verifone Systems
|
$
|
43,627
|
|
|
$
|
63,564
|
|
|
$
|
131,368
|
|
|
$
|
222,434
|
|
Verifone Services
|
56,017
|
|
|
50,400
|
|
|
144,576
|
|
|
138,975
|
|
||||
Total segment operating income
|
99,644
|
|
|
113,964
|
|
|
275,944
|
|
|
361,409
|
|
||||
Items not attributable to segment operating income:
|
|
|
|
|
|
|
|
||||||||
Amortization of step down in deferred services gross margin at acquisition
|
—
|
|
|
(3,057
|
)
|
|
(2,385
|
)
|
|
(7,482
|
)
|
||||
Restructuring and related charges
|
(78,598
|
)
|
|
(38,851
|
)
|
|
(160,993
|
)
|
|
(39,329
|
)
|
||||
Amortization of purchase intangible assets
|
(18,124
|
)
|
|
(28,238
|
)
|
|
(59,375
|
)
|
|
(77,647
|
)
|
||||
Stock-based compensation expense
|
(9,319
|
)
|
|
(10,850
|
)
|
|
(30,050
|
)
|
|
(32,889
|
)
|
||||
Litigation settlement and loss contingency expense
|
—
|
|
|
(600
|
)
|
|
—
|
|
|
(600
|
)
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
(17,384
|
)
|
|
—
|
|
||||
Unallocated general and administrative expenses
|
(41,425
|
)
|
|
(44,828
|
)
|
|
(129,539
|
)
|
|
(142,663
|
)
|
||||
Unallocated research and development expenses
|
1,470
|
|
|
(5,652
|
)
|
|
(6,456
|
)
|
|
(15,245
|
)
|
||||
Other unallocated costs
|
(3,862
|
)
|
|
(4,233
|
)
|
|
(5,805
|
)
|
|
(11,904
|
)
|
||||
Total operating income (loss)
|
$
|
(50,214
|
)
|
|
$
|
(22,345
|
)
|
|
$
|
(136,043
|
)
|
|
$
|
33,650
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended July 31,
|
||||||||||
|
2017
|
|
% of Net revenues
(1)
|
|
2016
|
|
% of Net revenues
(1)
|
||||
|
(in thousands, except percentages)
|
||||||||||
Net revenues:
|
|
||||||||||
Systems
|
$
|
265,951
|
|
|
57.0%
|
|
$
|
292,072
|
|
|
59.8%
|
Services
|
200,915
|
|
|
43.0%
|
|
196,060
|
|
|
40.2%
|
||
Total net revenues
|
466,866
|
|
|
100.0%
|
|
488,132
|
|
|
100.0%
|
||
|
|
|
|
|
|
|
|
||||
Gross margin:
|
|
|
|
|
|
|
|
||||
Systems
|
88,177
|
|
|
33.2%
|
|
116,382
|
|
|
39.8%
|
||
Services
|
86,273
|
|
|
42.9%
|
|
74,765
|
|
|
38.1%
|
||
Gross margin
|
174,450
|
|
|
37.4%
|
|
191,147
|
|
|
39.2%
|
||
|
|
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Research and development
|
50,731
|
|
|
10.9%
|
|
52,394
|
|
|
10.7%
|
||
Sales and marketing
|
46,665
|
|
|
10.0%
|
|
52,830
|
|
|
10.8%
|
||
General and administrative
|
44,867
|
|
|
9.6%
|
|
49,753
|
|
|
10.2%
|
||
Restructuring and related charges
|
65,705
|
|
|
14.1%
|
|
33,629
|
|
|
6.9%
|
||
Litigation settlement and loss contingency expense
|
—
|
|
|
—%
|
|
600
|
|
|
0.1%
|
||
Amortization of purchased intangible assets
|
16,696
|
|
|
3.5%
|
|
24,286
|
|
|
5.0%
|
||
Total operating expenses
|
224,664
|
|
|
48.1%
|
|
213,492
|
|
|
43.7%
|
||
Operating loss
|
(50,214
|
)
|
|
(10.8)%
|
|
(22,345
|
)
|
|
(4.6)%
|
||
Interest expense, net
|
(8,380
|
)
|
|
(1.8)%
|
|
(9,023
|
)
|
|
(1.8)%
|
||
Other income (expense), net
|
(1,908
|
)
|
|
(0.4)%
|
|
156
|
|
|
—%
|
||
Net loss before income taxes
|
(60,502
|
)
|
|
(13.0)%
|
|
(31,212
|
)
|
|
(6.4)%
|
||
Income tax provision
|
10,286
|
|
|
2.2%
|
|
286
|
|
|
0.1%
|
||
Consolidated net loss
|
$
|
(70,788
|
)
|
|
(15.2)%
|
|
$
|
(31,498
|
)
|
|
(6.5)%
|
|
|
|
|
Three Months Ended July 31,
|
||||||||||
|
|
|
|
2017
|
|
% of Net revenues
|
|
2016
|
|
% of Net revenues
|
||||
|
|
|
|
(in thousands, except percentages)
|
||||||||||
Net Revenues
|
||||||||||||||
North America
|
|
$
|
152,866
|
|
|
32.7%
|
|
$
|
191,509
|
|
|
39.2%
|
||
Latin America
|
|
71,266
|
|
|
15.3%
|
|
55,069
|
|
|
11.3%
|
||||
EMEA
|
|
193,483
|
|
|
41.4%
|
|
190,045
|
|
|
38.9%
|
||||
Asia-Pacific
|
|
49,251
|
|
|
10.6%
|
|
51,509
|
|
|
10.6%
|
||||
|
|
Total
|
|
$
|
466,866
|
|
|
100.0%
|
|
$
|
488,132
|
|
|
100.0%
|
•
|
North America net revenues
decreased
$38.6 million
, due primarily to reduced demand for our EMV capable terminals by customers, particularly in the petroleum market, that had upgraded to products that support EMV requirements in the prior year associated with the expected EMV liability deadline that has since been extended.
|
•
|
Latin America net revenues
increased
$16.2 million
, due primarily to changes in timing of purchase decisions by large customers, which were influenced by factors such as macroeconomic conditions and compliance with various government e-payment initiatives. This increase includes a $5.9 million increase in services net revenues due to new service contracts with customers.
|
•
|
EMEA net revenues
increased
$3.4 million
, primarily due to growth in services revenues and as a result of changes in timing of purchase decisions by large customers in Russia and Germany and increased systems sales in Greece to comply with government fiscalization requirements, partially offset by lower sales in other European countries.
|
•
|
Asia-Pacific net revenues
decreased
$2.3 million
, due primarily to decreased revenue in Australia as a result of reduced demand from some of our large banking customers that were upgrading and expanding terminals at their merchant customers in the prior year. The decrease was partially offset by increased revenue in India as a result of government demonetization initiatives.
|
|
Nine Months Ended July 31,
|
||||||||||
|
2017
|
|
% of Net revenues
(1)
|
|
2016
|
|
% of Net revenues
(1)
|
||||
|
(in thousands, except percentages)
|
||||||||||
Net revenues:
|
|
||||||||||
Systems
|
$
|
817,027
|
|
|
58.6%
|
|
$
|
972,107
|
|
|
63.6%
|
Services
|
577,395
|
|
|
41.4%
|
|
555,842
|
|
|
36.4%
|
||
Total net revenues
|
1,394,422
|
|
|
100.0%
|
|
1,527,949
|
|
|
100.0%
|
||
|
|
|
|
|
|
|
|
||||
Gross margin:
|
|
|
|
|
|
|
|
||||
Systems
|
296,642
|
|
|
36.3%
|
|
401,068
|
|
|
41.3%
|
||
Services
|
222,000
|
|
|
38.4%
|
|
215,743
|
|
|
38.8%
|
||
Total gross margin
|
518,642
|
|
|
37.2%
|
|
616,811
|
|
|
40.4%
|
||
|
|
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Research and development
|
158,454
|
|
|
11.4%
|
|
158,150
|
|
|
10.4%
|
||
Sales and marketing
|
146,806
|
|
|
10.5%
|
|
167,289
|
|
|
10.9%
|
||
General and administrative
|
142,425
|
|
|
10.2%
|
|
157,040
|
|
|
10.3%
|
||
Restructuring and related charges
|
135,743
|
|
|
9.7%
|
|
34,196
|
|
|
2.2%
|
||
Litigation settlement and loss contingency expense
|
—
|
|
|
—%
|
|
600
|
|
|
—%
|
||
Amortization of purchased intangible assets
|
53,873
|
|
|
3.9%
|
|
65,886
|
|
|
4.3%
|
||
Goodwill impairment
|
17,384
|
|
|
1.2%
|
|
—
|
|
|
—%
|
||
Total operating expenses
|
654,685
|
|
|
46.9%
|
|
583,161
|
|
|
38.2%
|
||
Operating income (loss)
|
(136,043
|
)
|
|
(9.8)%
|
|
33,650
|
|
|
2.2%
|
||
Interest expense, net
|
(24,712
|
)
|
|
(1.8)%
|
|
(25,870
|
)
|
|
(1.7)%
|
||
Other income (expense), net
|
4,666
|
|
|
0.3%
|
|
(6,833
|
)
|
|
(0.4)%
|
||
Income (loss) before income taxes
|
(156,089
|
)
|
|
(11.2)%
|
|
947
|
|
|
0.1%
|
||
Income tax provision
|
22,088
|
|
|
1.6%
|
|
5,372
|
|
|
0.4%
|
||
Consolidated net loss
|
$
|
(178,177
|
)
|
|
(12.8)%
|
|
$
|
(4,425
|
)
|
|
(0.3)%
|
|
|
|
|
Nine Months Ended July 31,
|
||||||||||
|
|
|
|
2017
|
|
% of net revenues
|
|
2016
|
|
% of net revenues
|
||||
|
|
|
|
(in thousands, except percentages)
|
||||||||||
Net Revenues
|
||||||||||||||
North America
|
|
$
|
476,107
|
|
|
34.2%
|
|
$
|
636,543
|
|
|
41.7%
|
||
Latin America
|
|
190,806
|
|
|
13.7%
|
|
179,637
|
|
|
11.8%
|
||||
EMEA
|
|
539,318
|
|
|
38.6%
|
|
557,415
|
|
|
36.4%
|
||||
Asia-Pacific
|
|
188,191
|
|
|
13.5%
|
|
154,354
|
|
|
10.1%
|
||||
|
|
Total
|
|
$
|
1,394,422
|
|
|
100.0%
|
|
$
|
1,527,949
|
|
|
100.0%
|
•
|
North America net revenues
decreased
$160.4 million
, due primarily to reduced demand for our EMV capable terminals by customers that had upgraded to products that support EMV requirements in the prior year.
|
•
|
Latin America net revenues
increased
$11.2 million
, due primarily to changes in timing of purchase decisions by large customers, which were influenced by factors such as macroeconomic conditions and compliance with various government e-payment initiatives.
|
•
|
EMEA net revenues
decreased
$18.1 million
, as a result of changes in timing of purchase decisions, which were influenced by factors such as macroeconomic conditions, government fiscalization programs, timing of customer technology refreshes, and ongoing competitive pricing. Also, EMEA net revenues increased $9.9 million due to our acquisition of InterCard in December 2015.
|
•
|
Asia-Pacific net revenues
increased
$33.8 million
, due primarily to increases in India as a result of government demonetization initiatives.
|
|
Three Months Ended July 31,
|
||||||||||||
|
2017
|
|
% of Net revenues
|
|
2016
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
265,951
|
|
|
57.0
|
%
|
|
$
|
292,072
|
|
|
59.3
|
%
|
Operating income
|
$
|
43,627
|
|
|
16.4
|
%
|
|
$
|
63,564
|
|
|
21.8
|
%
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2017
|
|
% of Net revenues
|
|
2016
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
817,027
|
|
|
58.5
|
%
|
|
$
|
972,107
|
|
|
63.2
|
%
|
Operating income
|
$
|
131,368
|
|
|
16.1
|
%
|
|
$
|
222,434
|
|
|
22.9
|
%
|
|
Three Months Ended July 31,
|
||||||||||||
|
2017
|
|
% of Net revenues
|
|
2016
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
200,915
|
|
|
43.0
|
%
|
|
$
|
200,513
|
|
|
40.7
|
%
|
Operating income
|
$
|
56,017
|
|
|
27.9
|
%
|
|
$
|
50,400
|
|
|
25.1
|
%
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2017
|
|
% of Net revenues
|
|
2016
|
|
% of Net revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
Net revenues
|
$
|
580,388
|
|
|
41.5
|
%
|
|
$
|
566,390
|
|
|
36.8
|
%
|
Operating income
|
$
|
144,576
|
|
|
24.9
|
%
|
|
$
|
138,975
|
|
|
24.5
|
%
|
|
Nine Months Ended July 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
140,104
|
|
|
$
|
130,509
|
|
|
$
|
9,595
|
|
Investing activities
|
(55,985
|
)
|
|
(252,552
|
)
|
|
196,567
|
|
|||
Financing activities
|
(65,244
|
)
|
|
75,833
|
|
|
(141,077
|
)
|
|||
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash
|
6,330
|
|
|
(2,119
|
)
|
|
8,449
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
25,205
|
|
|
$
|
(48,329
|
)
|
|
$
|
73,534
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1A.
|
RISK FACTORS
|
•
|
rapid technological advancements;
|
•
|
frequent product introductions and enhancements;
|
•
|
local certification requirements and product customizations;
|
•
|
evolving industry and government performance and security standards and regulatory requirements;
|
•
|
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 and digital services, at the POS; and
|
•
|
rapidly changing customer and end user preferences or requirements.
|
•
|
the type, timing, and size of orders and shipments;
|
•
|
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;
|
•
|
delays in customer purchases in anticipation of product or service enhancements or due to uncertainty in economic conditions;
|
•
|
demand for and acceptance of our new offerings;
|
•
|
changes in competitive conditions, including from traditional payment solution providers and from alternative payment solution providers;
|
•
|
the rate at which we transition customers to our services model;
|
•
|
timing of or completion of divestitures;
|
•
|
decisions by our distributors and other customers relating to the overall channel inventories of our products held in a particular quarter;
|
•
|
excess inventory;
|
•
|
concentration in certain of our customer bases;
|
•
|
changes in economic or market conditions, such as fluctuations in foreign currency exchange rates;
|
•
|
variations in product and service mix and cost during any period;
|
•
|
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;
|
•
|
component supply, manufacturing, or distribution difficulties;
|
•
|
timing of commencement, execution, or completion of major product or service implementation projects;
|
•
|
timing of governmental, statutory and industry association requirements, such as PCI compliance deadlines, EMV liability deadline extensions, or the pace of EMV adoption in the U.S. or elsewhere;
|
•
|
the introduction, modification or termination of government initiatives relating to cashless payments;
|
•
|
the relative geographic mix of net revenues;
|
•
|
the fixed nature of many of our expenses;
|
•
|
the timing, effectiveness and efficiency of our restructuring activities;
|
•
|
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;
|
•
|
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;
|
•
|
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
|
•
|
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, Syria, Turkey, Ukraine and their spillover effect on surrounding areas as well as the political and military conditions in Israel and the Palestinian territories.
|
•
|
securing commercial relationships to help establish or increase our presence in new and existing international markets;
|
•
|
hiring and training personnel capable of marketing, installing and integrating our solutions, supporting customers, and effectively managing operations in foreign countries;
|
•
|
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;
|
•
|
building our brand name and awareness of our services in new and existing international markets;
|
•
|
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
|
•
|
implementing effective systems, procedures, and controls to monitor and manage our operations across our international markets.
|
•
|
multiple, changing, and often inconsistent enforcement of laws and regulations;
|
•
|
local regulatory or industry imposed requirements, including security or other certification requirements;
|
•
|
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;
|
•
|
tariffs and trade barriers, including the imposition of new or enforcement of existing import restrictions in jurisdictions in which we do business;
|
•
|
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;
|
•
|
laws and business practices that may favor local competitors;
|
•
|
changes in trade relations and trade policy as a result of the 2016 U.S. presidential election, including implementation of or changes to trade sanctions, tariffs and embargoes;
|
•
|
restrictions on the repatriation of funds, including remittance of dividends by foreign subsidiaries, foreign currency exchange restrictions, and currency exchange rate fluctuations;
|
•
|
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;
|
•
|
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;
|
•
|
different and/or more stringent data protection, privacy and other laws;
|
•
|
the introduction, modification or termination of government initiatives relating to cashless payments;
|
•
|
antitrust and competition regulations;
|
•
|
infrastructure challenges;
|
•
|
supply chain challenges and product delivery delays;
|
•
|
changes or instability in a specific country's or region's political or economic conditions; and
|
•
|
greater difficulty in safeguarding intellectual property, including in areas such as China, India, Russia, and Latin America.
|
•
|
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;
|
•
|
the challenge of managing acquired lines of business, particularly those lines of business with which we have limited operational experience;
|
•
|
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;
|
•
|
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;
|
•
|
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;
|
•
|
the need to coordinate research and development and support activities across our existing and newly acquired products and services in a cost-effective manner;
|
•
|
the challenges of incorporating acquired technologies, products and service offerings into our next generation of products and solutions in an effective and timely manner;
|
•
|
the potential disruption of our ongoing business, including the diversion of management attention to issues related to integration and administration;
|
•
|
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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•
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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;
|
•
|
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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•
|
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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•
|
buying components in bulk for better pricing;
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•
|
entering into purchase commitments based on early estimates of quantities for longer lead time components;
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•
|
responding to the unpredictable demand for products;
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•
|
cancellation of customer orders;
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•
|
responding to customer requests for quick delivery schedules; and
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•
|
timing of end-of-life decisions regarding products.
|
•
|
increasing our vulnerability to general adverse economic conditions;
|
•
|
limiting our ability to obtain additional financing on acceptable terms; and
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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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•
|
authorization of the issuance of “blank check” preferred stock without the need for action by stockholders;
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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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•
|
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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•
|
inability of stockholders to call special meetings of stockholders; and
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•
|
advance notice requirements for board nominations and proposing matters to be acted on by stockholders at annual stockholder meetings.
|
•
|
actual or anticipated variations in quarterly operating results;
|
•
|
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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•
|
uncertainty about current global or regional economic conditions;
|
•
|
changes in the market valuations of other companies operating in our industry or in the technology sector;
|
•
|
the rate at which we return capital to our shareholders;
|
•
|
announcements by us or our competitors related to acquisitions, strategic partnerships, or divestitures;
|
•
|
business disruptions, costs and future events related to shareholder activism;
|
•
|
additions or departures of key personnel;
|
•
|
sales or purchases of our stock, including sales or purchases of our stock by our directors and officers or by significant stockholders; and
|
•
|
repurchases of our stock by us pursuant to our share repurchase program.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 5.
|
OTHER INFORMATION
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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.
|
**
|
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.
|
VERIFONE SYSTEMS, INC.
|
||
|
|
|
By:
|
|
/
S
/ P
AUL
S. G
ALANT
|
|
|
Paul S. Galant
|
|
|
Chief Executive Officer
|
|
|
|
By:
|
|
/
S
/ M
ARC
E
.
R
OTHMAN
|
|
|
Marc E. Rothman
|
|
|
Executive Vice President and Chief Financial Officer
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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.
|
**
|
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.
|
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