UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 


 

FORM 8-K

 


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  September 8, 2011

 

VERINT SYSTEMS INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

001-34807

 

11-3200514

(State or Other Jurisdiction of

 

(Commission File Number)

 

(IRS Employer Identification

Incorporation)

 

 

 

No.)

 

330 South Service Road, Melville, New York

 

11747

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (631) 962-9600

 

None
(Former Name or Former Address, if Changed Since Last Report)

 


 

Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a—12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d—2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02 Results of Operations and Financial Condition.

 

On September 8, 2011, Verint Systems Inc. (“Verint”) issued a press release providing selected financial information for the quarter ended July 31, 2011. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated by reference into Items 2.02 and 7.01 in its entirety.

 

Item 7.01 Regulation FD Disclosure.

 

The information referred to in “Item 2.02 Results of Operations and Financial Condition” above is hereby incorporated by reference herein.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit

 

 

Number

 

Description

 

 

 

99.1

 

Press Release of Verint Systems Inc., dated September 8, 2011.

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Verint Systems Inc.

 

 

 

 

Date: September 8, 2011

 

 

 

 

 

 

 

 

By:

/s/ Douglas E. Robinson

 

 

Name:

Douglas E. Robinson

 

 

Title:

Chief Financial Officer

 

3



 

EXHIBIT INDEX

 

Exhibit

 

 

Number

 

Description

 

 

 

99.1

 

Press Release of Verint Systems Inc., dated September 8, 2011.

 

4


Exhibit 99.1

 

 

Contacts:

 

Investor Relations

Alan Roden

Verint Systems Inc.

(631) 962-9304

alan.roden@verint.com

 

Press Release

 

Verint Announces Second Quarter Results

 

Conference Call to Discuss Selected Financial Information and Outlook to be Held Today at 8:30 a.m.

 

MELVILLE, N.Y., September 8, 2011Verint® Systems Inc. (NASDAQ: VRNT), a global leader in Actionable Intelligence® solutions and value-added services, today announced results for the quarter ended July 31, 2011.

 

“We are pleased with our second quarter performance, which reflects strong sequential revenue growth in both workforce optimization and security intelligence.  Behind Verint’s success is a commitment to innovation, as we continue to invest for long-term growth and sustained leadership in the actionable intelligence market,” said Dan Bodner, CEO and President of Verint Systems Inc.

 

Below is selected financial information for the three and six months ended July 31, 2011 and 2010 prepared in accordance with generally accepted accounting principles (“GAAP”) and not prepared in accordance with GAAP (“non-GAAP”).

 

 

 

Selected GAAP Information

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

(Dollars in thousands, except per share data)

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

194,959

 

$

180,676

 

$

371,291

 

$

353,289

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

125,850

 

120,330

 

246,833

 

235,136

 

Gross Margin

 

64.6

%

66.6

%

66.5

%

66.6

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

21,410

 

23,799

 

40,244

 

19,817

 

Operating Margin

 

11.0

%

13.2

%

10.8

%

5.6

%

 

 

 

 

 

 

 

 

 

 

Diluted Net Income (Loss) per Common Share Attributable to Verint Systems Inc.

 

$

0.17

 

$

0.23

 

$

0.08

 

$

(0.35

)

 

 

 

Selected Non-GAAP Information

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

195,686

 

$

180,676

 

$

372,253

 

$

353,289

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

130,303

 

123,785

 

255,140

 

243,232

 

Gross Margin

 

66.6

%

68.5

%

68.5

%

68.8

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

40,386

 

46,323

 

79,903

 

88,602

 

Operating Margin

 

20.6

%

25.6

%

21.5

%

25.1

%

 

 

 

 

 

 

 

 

 

 

Diluted Net Income per Common Share Attributable to Verint Systems Inc.

 

$

0.57

 

$

0.69

 

$

1.13

 

$

1.25

 

 

1



 

Outlook for the Year Ending January 31, 2012

 

·      We are increasing our annual revenue growth guidance from approximately 8% to approximately 9%  compared to the year ended January 31, 2011.

 

·      We are targeting a non-GAAP operating margin in the low 20%.

 

Conference Call Information

 

We will be conducting a conference call today at 8:30 a.m. to discuss our results for the second quarter and outlook for the year ending January 31, 2012.  An on-line, real-time webcast of the conference call will be available on our website at www.verint.com. The conference call can also be accessed live via telephone at 1-888-713-4214 (United States) and 1-617-213-4866 (international) and the passcode is 56607528.  Please dial in 5-10 minutes prior to the scheduled start time.

 

About Non-GAAP Financial Measures

 

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see Table 2 as well as “Supplemental Information About Non-GAAP Financial Measures” at the end of this press release. Because we do not predict special items that might occur in the future, and our outlook is developed at a level of detail different than that used to prepare GAAP financial measures, we are not providing a reconciliation to GAAP of our forward-looking financial measures for the year ending January 31, 2012.

 

About Verint Systems Inc.

 

Verint® Systems Inc. is a global leader in Actionable Intelligence® solutions and value-added services.  Our solutions enable organizations of all sizes to make timely and effective decisions to improve enterprise performance and make the world a safer place.  More than 10,000 organizations in over 150 countries—including over 85 percent of the Fortune 100—use Verint Actionable Intelligence solutions to capture, distill, and analyze complex and underused information sources, such as voice, video, and unstructured text.  Headquartered in Melville, New York, we support our customers around the globe directly and with an extensive network of selling and support partners.  Visit us at our website www.verint.com.

 

Cautions About Forward-Looking Statements

 

This press release contains forward-looking statements, including statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Verint Systems Inc. These forward-looking statements are not guarantees of future performance and they are based on management’s expectations that involve a number of risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause actual future results or conditions to differ materially from current expectations include: uncertainties regarding the impact of general economic conditions in the United States and abroad, particularly in information technology spending and government budgets, on our business; risks due to aggressive competition in all of our markets, including with respect to maintaining margins and sufficient levels of investment in our business; risks associated with keeping pace with technological changes and evolving industry standards in our product offerings and with successfully introducing new, quality products which meet customer needs and achieve market acceptance; risks created by continued consolidation of competitors or introduction of large competitors in our markets with greater resources than we have; risks associated with successfully competing for, consummating, and implementing mergers and acquisitions, including risks associated with capital constraints, costs and expenses, management distraction, post-acquisition integration activities, and potential asset impairments; risks that customers or partners delay or cancel orders or are unable to honor contractual commitments due to liquidity issues, challenges in their business, or otherwise; risks relating to our implementation and maintenance of adequate systems and internal controls for our current and future operations and reporting needs and related risks of financial statement omissions, misstatements, restatements, or filing delays; risks associated with being a consolidated, controlled subsidiary of Comverse Technology, Inc. (“Comverse”) and formerly part of Comverse’s consolidated tax group, including risks of any future impact on us resulting from Comverse’s extended filing delay or any other future issues; risks associated with Comverse controlling our board of directors and the outcome of all matters submitted for stockholder action, including the approval of significant corporate transactions, such as certain equity issuances or mergers and acquisitions, as

 

2



 

well as speculation or announcements regarding Comverse’s strategic plans; risks that products may contain undetected defects, which could expose us to substantial liability; risks associated with allocating limited financial and human resources to business, development, strategic or other opportunities that may not come to fruition or produce satisfactory returns; risks associated with significant foreign and international operations, including exposure to regions subject to political instability and fluctuations in exchange rates; risks associated with complex and changing local and foreign regulatory environments; risks associated with our ability to recruit and retain qualified personnel in geographies in which we operate; challenges in accurately forecasting revenue and expenses and maintaining profitability; risks relating to our ability to improve our infrastructure to support growth; risks that our intellectual property rights may not be adequate to protect our business or assets or that others may make claims on our intellectual property or claim infringement on their intellectual property rights; risks associated with a significant amount of our business coming from domestic and foreign government customers, including the ability to maintain security clearances for certain projects; risks that we improperly handle sensitive or confidential information or the perception of such mishandling; risks associated with our dependence on a limited number of suppliers or original equipment manufacturers (“OEMs”) for certain components of our products; risks that we are unable to maintain and enhance relationships with key resellers, partners, and systems integrators; risks that contract terms may expose us to unlimited liability or other unfavorable positions and risks that we may experience losses that are not covered by insurance; risks that we will experience liquidity or working capital issues and related risks that financing sources will be unavailable to us on reasonable terms or at all; risks associated with significant leverage resulting from our current debt position; risks that we will be unable to comply with the leverage ratio covenant under our credit facility; risks that our credit rating could be downgraded or placed on a credit watch; risks relating to timely implementation of new accounting pronouncements or new interpretations of existing accounting pronouncements and related risks of future restatements or filing delays; risks associated with future regulatory actions or private litigations relating to our extended filing delay and related circumstances; and risks that use of our tax benefits may be restricted or eliminated in the future.  We assume no obligation to revise or update any forward-looking statement, except as otherwise required by law. For a detailed discussion of these risk factors, see our Annual Report on Form 10-K for the fiscal year ended January 31, 2011.

 

VERINT, the VERINT logo, ACTIONABLE INTELLIGENCE, POWERING ACTIONABLE INTELLIGENCE, INTELLIGENCE IN ACTION, ACTIONABLE INTELLIGENCE FOR A SMARTER WORKFORCE, VERINT VERIFIED, WITNESS ACTIONABLE SOLUTIONS, STAR-GATE, RELIANT, VANTAGE, X-TRACT, NEXTIVA, EDGEVR, ULTRA, AUDIOLOG, WITNESS, the WITNESS logo, IMPACT 360, the IMPACT 360 logo, IMPROVE EVERYTHING, EQUALITY, CONTACTSTORE, EYRETEL, BLUE PUMPKIN SOFTWARE, BLUE PUMPKIN, the BLUE PUMPKIN logo, EXAMETRIC and the EXAMETRIC logo, CLICK2STAFF, STAFFSMART, AMAE SOFTWARE and the AMAE logo are trademarks and registered trademarks of Verint Systems Inc. Other trademarks mentioned are the property of their respective owners.

 

3



 

Table 1

Verint Systems Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

Product

 

$

100,423

 

$

93,103

 

$

183,701

 

$

185,173

 

Service and support

 

94,536

 

87,573

 

187,590

 

168,116

 

Total revenue

 

194,959

 

180,676

 

371,291

 

353,289

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

Product

 

33,214

 

29,866

 

55,745

 

56,718

 

Service and support

 

33,210

 

28,260

 

63,378

 

56,982

 

Amortization of acquired technology

 

2,685

 

2,220

 

5,335

 

4,453

 

Total cost of revenue

 

69,109

 

60,346

 

124,458

 

118,153

 

Gross profit

 

125,850

 

120,330

 

246,833

 

235,136

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development, net

 

26,808

 

22,049

 

53,176

 

48,481

 

Selling, general and administrative

 

72,217

 

69,144

 

142,452

 

156,161

 

Amortization of other acquired intangible assets

 

5,415

 

5,338

 

10,961

 

10,677

 

Total operating expenses

 

104,440

 

96,531

 

206,589

 

215,319

 

Operating income

 

21,410

 

23,799

 

40,244

 

19,817

 

Other income (expense), net

 

 

 

 

 

 

 

 

 

Interest income

 

146

 

117

 

294

 

200

 

Interest expense

 

(7,857

)

(5,936

)

(16,651

)

(11,884

)

Loss on extinguishment of debt

 

 

 

(8,136

)

 

Other income (expense), net

 

738

 

(2,448

)

1,750

 

(6,146

)

Total other expense, net

 

(6,973

)

(8,267

)

(22,743

)

(17,830

)

Income before provision for income taxes 

 

14,437

 

15,532

 

17,501

 

1,987

 

Provision for income taxes

 

3,163

 

3,141

 

4,672

 

5,212

 

Net income (loss) 

 

11,274

 

12,391

 

12,829

 

(3,225

)

Net income attributable to noncontrolling interest

 

799

 

916

 

2,466

 

1,508

 

Net income (loss) attributable to Verint Systems Inc.

 

10,475

 

11,475

 

10,363

 

(4,733

)

Dividends on preferred stock

 

(3,707

)

(3,554

)

(7,256

)

(6,957

)

Net income (loss) attributable to Verint Systems Inc. common shares

 

$

6,768

 

$

7,921

 

$

3,107

 

$

(11,690

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share attributable to Verint Systems Inc.

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.24

 

$

0.08

 

$

(0.35

)

Diluted

 

$

0.17

 

$

0.23

 

$

0.08

 

$

(0.35

)

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

38,557

 

33,272

 

37,984

 

32,972

 

Diluted

 

39,377

 

35,006

 

39,239

 

32,972

 

 

4



 

Table 2

Verint Systems Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Table of Reconciliation from GAAP Revenue to Non-GAAP Revenue

 

 

 

 

 

 

 

 

 

GAAP revenue

 

$

194,959

 

$

180,676

 

$

371,291

 

$

353,289

 

Revenue adjustments related to acquisitions

 

727

 

 

962

 

 

Non-GAAP revenue

 

$

195,686

 

$

180,676

 

$

372,253

 

$

353,289

 

 

 

 

 

 

 

 

 

 

 

Table of Reconciliation from GAAP Gross Profit to Non-GAAP Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

125,850

 

$

120,330

 

$

246,833

 

$

235,136

 

Revenue adjustments related to acquisitions

 

727

 

 

962

 

 

Amortization of acquired technology

 

2,685

 

2,220

 

5,335

 

4,453

 

Stock-based compensation expenses

 

627

 

1,235

 

1,596

 

3,643

 

Other adjustments

 

414

 

 

414

 

 

Non-GAAP gross profit

 

$

130,303

 

$

123,785

 

$

255,140

 

$

243,232

 

 

 

 

 

 

 

 

 

 

 

Table of Reconciliation from GAAP Operating Income to Non-GAAP Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

21,410

 

$

23,799

 

$

40,244

 

$

19,817

 

Revenue adjustments related to acquisitions

 

727

 

 

962

 

 

Amortization of acquired technology

 

2,685

 

2,220

 

5,335

 

4,453

 

Amortization of other acquired intangible assets

 

5,415

 

5,338

 

10,961

 

10,677

 

Stock-based compensation expenses

 

6,641

 

8,035

 

14,191

 

26,004

 

Other adjustments

 

3,491

 

864

 

7,202

 

1,371

 

Expenses related to our filing delay

 

17

 

6,067

 

1,008

 

26,280

 

Non-GAAP operating income

 

$

40,386

 

$

46,323

 

$

79,903

 

$

88,602

 

 

 

 

 

 

 

 

 

 

 

Table of Reconciliation from GAAP Other Expense, Net to Non-GAAP Other Expense, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP other expense, net

 

$

(6,973

)

$

(8,267

)

$

(22,743

)

$

(17,830

)

Loss on extinguishment of debt

 

 

 

8,136

 

 

Unrealized (gains) losses on derivatives, net

 

(377

)

(3,796

)

730

 

(7,763

)

Non-GAAP other expense, net

 

$

(7,350

)

$

(12,063

)

$

(13,877

)

$

(25,593

)

 

 

 

 

 

 

 

 

 

 

Table of Reconciliation from GAAP Provision for Income Taxes to Non-GAAP Provision for Income Taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP provision for income taxes

 

$

3,163

 

$

3,141

 

$

4,672

 

$

5,212

 

Non-cash tax adjustments

 

471

 

(948

)

2,591

 

143

 

Non-GAAP provision for income taxes

 

$

3,634

 

$

2,193

 

$

7,263

 

$

5,355

 

 

 

 

 

 

 

 

 

 

 

Table of Reconciliation from GAAP Net Income (Loss) Attributable to Verint Systems Inc. to Non-GAAP Net Income Attributable to Verint Systems Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss) attributable to Verint Systems Inc.

 

$

10,475

 

$

11,475

 

$

10,363

 

$

(4,733

)

Revenue adjustments related to acquisitions

 

727

 

 

962

 

 

Amortization of acquired technology

 

2,685

 

2,220

 

5,335

 

4,453

 

Amortization of other acquired intangible assets

 

5,415

 

5,338

 

10,961

 

10,677

 

Stock-based compensation expenses

 

6,641

 

8,035

 

14,191

 

26,004

 

Other adjustments

 

3,491

 

864

 

7,202

 

1,371

 

Expenses related to our filing delay

 

17

 

6,067

 

1,008

 

26,280

 

Loss on extinguishment of debt

 

 

 

8,136

 

 

Unrealized (gains) losses on derivatives, net

 

(377

)

(3,796

)

730

 

(7,763

)

Non-cash tax adjustments

 

(471

)

948

 

(2,591

)

(143

)

Total GAAP net income (loss) adjustments

 

18,128

 

19,676

 

45,934

 

60,879

 

Non-GAAP net income attributable to Verint Systems Inc.

 

$

28,603

 

$

31,151

 

$

56,297

 

$

56,146

 

 

 

 

 

 

 

 

 

 

 

Table of Reconciliation from GAAP Net Income (Loss) Attributable to Verint Systems Inc. Common Shares to Non-GAAP Net Income Attributable to Verint Systems Inc. Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss) attributable to Verint Systems Inc. common shares

 

$

6,768

 

$

7,921

 

$

3,107

 

$

(11,690

)

Total GAAP net income (loss) adjustments

 

18,128

 

19,676

 

45,934

 

60,879

 

Non-GAAP net income attributable to Verint Systems Inc. common shares

 

$

24,896

 

$

27,597

 

$

49,041

 

$

49,189

 

 

 

 

 

 

 

 

 

 

 

Table Comparing GAAP Diluted Net Income (Loss) Per Common Share Attributable to Verint Systems Inc. to Non-GAAP Diluted Net Income Per Common Share Attributable to Verint Systems Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income (loss) per common share attributable to Verint Systems Inc.

 

$

0.17

 

$

0.23

 

$

0.08

 

$

(0.35

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted net income per common share attributable to Verint Systems Inc.

 

$

0.57

 

$

0.69

 

$

1.13

 

$

1.25

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing GAAP diluted net income (loss) per common share (in thousands)

 

39,377

 

35,006

 

39,239

 

32,972

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing non-GAAP diluted net income per common share (in thousands)

 

49,949

 

45,178

 

49,760

 

45,071

 

 

5



 

Table 3

Verint Systems Inc. and Subsidiaries

Segment Revenue

(Unaudited)

(In thousands)

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

GAAP Revenue By Segment

 

 

 

 

 

 

 

 

 

Workforce Optimization Segment

 

$

105,654

 

$

94,795

 

$

202,923

 

$

191,675

 

 

 

 

 

 

 

 

 

 

 

Video Intelligence Segment

 

39,939

 

37,060

 

69,974

 

68,605

 

Communications Intelligence Segment

 

49,366

 

48,821

 

98,394

 

93,009

 

Total Video and Communications Intelligence

 

89,305

 

85,881

 

168,368

 

161,614

 

GAAP Total Revenue

 

$

194,959

 

$

180,676

 

$

371,291

 

$

353,289

 

 

 

 

 

 

 

 

 

 

 

Revenue adjustments related to acquisitions

 

$

727

 

$

 

$

962

 

$

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Revenue By Segment

 

 

 

 

 

 

 

 

 

Workforce Optimization Segment

 

$

105,654

 

$

94,795

 

$

202,923

 

$

191,675

 

 

 

 

 

 

 

 

 

 

 

Video Intelligence Segment

 

40,666

 

37,060

 

70,936

 

68,605

 

Communications Intelligence Segment

 

49,366

 

48,821

 

98,394

 

93,009

 

Total Video and Communications Intelligence

 

90,032

 

85,881

 

169,330

 

161,614

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Total Revenue

 

$

195,686

 

$

180,676

 

$

372,253

 

$

353,289

 

 

6



 

Table 4

Verint Systems Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)

 

 

 

July 31,

 

January 31,

 

 

 

2011

 

2011

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

179,147

 

$

169,906

 

Restricted cash and bank time deposits

 

15,647

 

13,639

 

Accounts receivable, net

 

155,309

 

150,769

 

Inventories

 

19,722

 

16,987

 

Deferred cost of revenue

 

5,529

 

6,269

 

Prepaid expenses and other current assets

 

49,384

 

44,374

 

Total current assets

 

424,738

 

401,944

 

Property and equipment, net

 

24,386

 

23,176

 

Goodwill

 

753,972

 

738,674

 

Intangible assets, net

 

146,927

 

157,071

 

Capitalized software development costs, net

 

6,064

 

6,787

 

Long-term deferred cost of revenue

 

17,330

 

21,715

 

Other assets

 

32,608

 

26,760

 

Total assets

 

$

1,406,025

 

$

1,376,127

 

 

 

 

 

 

 

Liabilities, Preferred Stock, and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

39,596

 

$

36,861

 

Accrued expenses and other current liabilities

 

148,161

 

163,029

 

Current maturities of long-term debt

 

6,000

 

 

Deferred revenue

 

145,553

 

142,465

 

Liabilities to affiliates

 

1,964

 

1,847

 

Total current liabilities

 

341,274

 

344,202

 

Long-term debt

 

591,105

 

583,234

 

Long-term deferred revenue

 

30,237

 

40,424

 

Other liabilities

 

41,391

 

45,038

 

Total liabilities

 

1,004,007

 

1,012,898

 

Preferred Stock - $0.001 par value; authorized 2,500,000 shares. Series A convertible preferred stock; 293,000 shares issued and outstanding; aggregate liquidation preference and redemption value of $345,257 at July 31, 2011.

 

285,542

 

285,542

 

Commitments and Contingencies

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Common stock - $0.001 par value; authorized 120,000,000 shares. Issued 39,070,000 and 37,349,000 shares, respectively; outstanding 38,787,000 and 37,089,000 shares, as of July 31, 2011 and January 31, 2011, respectively.

 

39

 

38

 

Additional paid-in capital

 

540,744

 

519,834

 

Treasury stock, at cost — 283,000 and 260,000 shares as of July 31, 2011 and January 31, 2011, respectively.

 

(7,466

)

(6,639

)

Accumulated deficit

 

(384,394

)

(394,757

)

Accumulated other comprehensive loss

 

(36,364

)

(42,069

)

Total Verint Systems Inc. stockholders’ equity

 

112,559

 

76,407

 

Noncontrolling interest

 

3,917

 

1,280

 

Total liabilities stockholders’ equity

 

116,476

 

77,687

 

Total liabilities, preferred stock, and stockholders’ equity

 

$

1,406,025

 

$

1,376,127

 

 

7



 

Table 5

Verint Systems Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Six Months Ended July 31,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

 

$

12,829

 

$

(3,225

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

25,539

 

23,952

 

Stock-based compensation

 

11,640

 

15,636

 

Non-cash losses on derivative financial instruments, net

 

1,907

 

3,347

 

Loss on extinguishment of debt

 

8,136

 

 

Other non-cash items, net

 

3,294

 

867

 

Changes in operating assets and liabilities, net of effects of business combination:

 

 

 

 

 

Accounts receivable

 

(4,491

)

(5,447

)

Inventories

 

(2,860

)

(2,124

)

Deferred cost of revenue

 

5,692

 

9,273

 

Prepaid expenses and other assets

 

(3,417

)

2,936

 

Accounts payable and accrued expenses

 

(16,207

)

(3,798

)

Deferred revenue

 

(10,432

)

(33,273

)

Other, net

 

(3,792

)

(2,632

)

Net cash provided by operating activities

 

27,838

 

5,512

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Cash paid for business combinations, net of cash acquired

 

(11,958

)

(15,292

)

Purchases of property and equipment

 

(6,715

)

(3,550

)

Settlements of derivative financial instruments not designated as hedges

 

(1,178

)

(11,997

)

Cash paid for capitalized software development costs

 

(1,662

)

(858

)

Change in restricted cash and bank time deposits

 

(1,883

)

(9,720

)

Other investing activities

 

(1,230

)

 

Net cash used in investing activities

 

(24,626

)

(41,417

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from borrowings, net of original issuance discount

 

597,000

 

 

Repayments of borrowings and other financing obligations

 

(583,786

)

(22,679

)

Payment of debt issuance and other debt-related costs

 

(15,034

)

(3,688

)

Proceeds from exercises of stock options

 

8,716

 

11,650

 

Purchases of treasury stock

 

(827

)

(4,146

)

Other financing activities

 

(2,004

)

 

Net cash provided by (used in) financing activities

 

4,065

 

(18,863

)

Effect of exchange rate changes on cash and cash equivalents

 

1,964

 

(1,368

)

Net increase (decrease) in cash and cash equivalents

 

9,241

 

(56,136

)

Cash and cash equivalents, beginning of period

 

169,906

 

184,335

 

Cash and cash equivalents, end of period

 

$

179,147

 

$

128,199

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid for interest

 

$

15,427

 

$

10,236

 

Cash paid for income taxes, net of refunds received

 

$

7,780

 

$

3,244

 

Non-cash investing and financing transactions:

 

 

 

 

 

Accrued but unpaid purchases of property and equipment

 

$

659

 

$

936

 

Inventory transfers to property and equipment

 

$

332

 

$

87

 

Liabilities for contingent consideration in business combinations

 

$

904

 

$

3,224

 

Stock options exercised, proceeds received subsequent to period end

 

$

17

 

$

285

 

Accrued but unpaid debt issuance and other debt-related costs

 

$

 

$

310

 

Supplier financing arrangements

 

$

 

$

1,480

 

 

8



 

Verint Systems Inc. and Subsidiaries

Supplemental Information About Non-GAAP Financial Measures

 

This press release contains non-GAAP financial measures. Table 2 includes a reconciliation of each non-GAAP financial measure presented in this press release to the most directly comparable GAAP financial measure. Non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP financial measures. The non-GAAP financial measures we present have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, and these non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures. These non-GAAP financial measures do not represent discretionary cash available to us to invest in the growth of our business, and we may in the future incur expenses similar to or in addition to the adjustments made in these non-GAAP financial measures.

 

We believe that the non-GAAP financial measures we present provide meaningful supplemental information regarding our operating results primarily because they exclude certain non-cash charges or items that we do not believe are reflective of our ongoing operating results when budgeting, planning and forecasting, determining compensation, and when assessing the performance of our business with our individual operating segments or our senior management. We believe that these non-GAAP financial measures also facilitate the comparison by management and investors of results between periods and among our peer companies. However, those companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

 

Adjustments to Non-GAAP Financial Measures

 

Revenue adjustments related to acquisitions.  We exclude from our non-GAAP revenue the impact of fair value adjustments required under GAAP relating to acquired customer support contracts which would have otherwise been recognized on a standalone basis.  We exclude these adjustments from our non-GAAP financial measures because these are not reflective of our ongoing operations.

 

Amortization of acquired intangible assets, including acquired technology.  When we acquire an entity, we are required under GAAP to record the fair value of the intangible assets of the acquired entity and amortize it over their useful lives.  We exclude the amortization of acquired intangible assets, including acquired technology, from our non-GAAP financial measures.  These expenses are excluded from our non-GAAP financial measures because they are non-cash charges.  In addition, these amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions.  Thus, we also exclude these amounts to provide better comparability of pre- and post-acquisition operating results.

 

Stock-based compensation expenses.  We exclude stock-based compensation expenses related to stock options, restricted stock awards and units, and phantom stock from our non-GAAP financial measures. These expenses are excluded from our non-GAAP financial measures because they are primarily non-cash charges. In recent periods, we also incurred significant cash-settled stock compensation due to our extended filing delay and restrictions on our ability to issue new shares of common stock to our employees.

 

Other adjustments.  We exclude from our non-GAAP financial measures legal, other professional fees and certain other expenses associated with acquisitions and certain extraordinary transactions, in both cases, whether or not consummated.  Also excluded are changes in the fair value of contingent consideration liabilities associated with business combinations.  These expenses are excluded from our non-GAAP financial measures because we believe that they are not reflective of our ongoing operations.

 

Expenses related to our filing delay.  We exclude from our non-GAAP financial measures expenses related to our restatement of previously filed financial statements and our extended filing delay.  These expenses included professional fees and related expenses, as well as expenses associated with a special cash retention program.

 

9



 

These expenses are excluded from our non-GAAP financial measures because we believe that they are not reflective of our ongoing operations.

 

Unrealized (gains) losses on derivatives, net.  We exclude from our non-GAAP financial measures unrealized gains and losses on interest rate swaps and foreign currency derivatives.  These gains and losses are excluded from our non-GAAP financial measures because they are non-cash transactions.

 

Loss on extinguishment of debt.  We exclude from our non-GAAP financial measures loss on extinguishment of debt attributable to refinancing of our debt because we believe it is not reflective of our ongoing operations.

 

Non-cash tax adjustments.  Non-cash tax adjustments represent the difference between the amount of taxes we actually paid and our GAAP tax provision on an annual basis. On a quarterly basis, this adjustment reflects our expected annual effective tax rate on a cash basis.

 

10