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):  March 28, 2012

 

VERINT SYSTEMS INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

(State or Other Jurisdiction of

Incorporation)

 

001-34807

(Commission File Number)

 

11-3200514

(IRS Employer Identification
No.)

 

330 South Service Road, Melville, New York

(Address of Principal Executive Offices)

 

11747

(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.):

 

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

 

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

 

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

 

¨       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 March 28, 2012, Verint Systems Inc. issued a press release providing selected financial information for the fourth quarter and full year ended January 31, 2012. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated by reference in its entirety into this Item 2.02 and Item 7.01.

 

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 March 28, 2012.

 

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: March 28, 2012

 

 

 

 

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 March 28, 2012.

 

4


Exhibit 99.1

 

 

Press Release

 

Contacts:

Investor Relations

Alan Roden

Verint Systems Inc.

(631) 962-9304

alan.roden@verint.com

 

Verint Announces Fourth Quarter and Full Year Results

 

Conference Call to Discuss Selected Financial Information and Outlook to be Held Today at 4:30 p.m. ET

 

MELVILLE, N.Y., March 28, 2012Verint® Systems Inc. (NASDAQ: VRNT), a global leader in Actionable Intelligence® solutions and value-added services, today announced results for the quarter and full year ended January 31, 2012.

 

“We are pleased with our fourth quarter non-GAAP revenue of $219 million, up from $187 million in the fourth quarter of the prior year. We experienced year-over-year and sequential revenue growth in both the enterprise and security intelligence markets, as well as in all three regions — Americas, EMEA, and APAC. We achieved strong results while investing significantly in the business, including expansion of our enterprise and security solution portfolios and increasing our market coverage, which we believe well positions Verint for continued growth,” said Dan Bodner, CEO and President.

 

Financial Highlights

Below is selected unaudited financial information for the three months and year ended January 31, 2012 prepared in accordance with generally accepted accounting principles (“GAAP”) and not in accordance with GAAP (“non-GAAP”).

 

Three Months Ended January 31, 2012 – GAAP

 

Three Months Ended January 31, 2012 – Non-GAAP

 

 

 

·      Revenue: $212.0 million

 

·      Revenue: $219.4 million

·      Operating Income: $28.0 million

 

·      Operating Income: $52.6 million

·      Diluted EPS: $0.34

 

·      Diluted EPS: $0.75

 

 

 

Year Ended January 31, 2012 – GAAP

 

Year Ended January 31, 2012 – Non-GAAP

 

 

 

·      Revenue: $782.6 million

 

·      Revenue: $796.2 million

·      Operating Income: $86.5 million

 

·      Operating Income: $176.6 million

·      Diluted EPS: $0.56

 

·      Diluted EPS: $2.47

 

1



 

Financial Outlook

Below is Verint’s Non-GAAP outlook for the Year Ending January 31, 2013.

 

·                  We expect revenue in the range of $860 to $880 million

·                  We expect fully diluted earnings per share in the range of $2.55 to $2.70

·                  While this is our annual outlook, there are seasonal trends in the enterprise software industry, and therefore we expect Q1 to be down sequentially from Q4 levels both in terms of revenue and profitability

 

Business Highlights

Below is a summary of some key announcements since our last quarterly earnings release:

 

·                  Introduced enhancements to the industry’s most comprehensive Voice of the Customer solution for multichannel analytics, including integrated text analytics and automated survey capabilities.

·                  Introduced enhancements to Nextiva video management software, EdgeVR network video recorder, and high-definition IP cameras.

·                  Coordination of the first FP7 Emergency Support System (ESS) field trial project in France, which incorporates products and technologies from 12 industrial organizations for the purpose of providing web-based intelligence for real-life crisis management situations.

·                  Named a Preferred Solution Developer within the Contact Center and Unified Communications technology category of Cisco’s Developer Network Program, which is the program’s highest attainable level.

·                  Named CRM Magazine’s Top Service Winner for Workforce Optimization Suite for the fifth consecutive year and CRM Magazine’s Top Service Winner for Vovici Enterprise Feedback Management.

·                  Received a Product of the Year Award for Impact 360® Enterprise Workforce Management from Customer Interaction Solutions and a Speech Technology Excellence Award for Voice of the Customer Analytics from Customer Interaction Solutions.

·                  Zhejiang Mobile, one of the largest mobile communications network operators in China, is using Verint Impact 360 Speech Analytics to gain deeper insight into why customers call its contact center.

·                  Leading South American retailer Falabella is deploying Verint’s Nextiva IP video solution to help secure stores and distribution centers, prevent loss and drive operational efficiency.

 

Conference Call Information

We will conduct a conference call today at 4:30 p.m. ET to discuss our results for the fourth quarter and full year ended January 31, 2012 and outlook for the year ending January 31, 2013. An online, 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 1-888-679-8035 (United States) and 1-617-213-4848 (international) and the passcode is 42147672. 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 Tables 2 and 3 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, 2013.

 

2



 

About Verint Systems Inc.

Verint® (NASDAQ: VRNT) is the global leader in Actionable Intelligence® solutions and value-added services. Its extensive portfolio of Enterprise Intelligence Solutions™ and Security Intelligence Solutions™ helps worldwide organizations capture and analyze complex, underused information sources—such as voice, video and unstructured text—to enable more timely, effective decisions. More than 10,000 organizations in 150 countries, including over 85 percent of the Fortune 100, use Verint solutions to improve enterprise performance and make the world a safer place. Headquartered in N.Y. and a member of the Russell 3000 Index, Verint has offices worldwide and an extensive global partner network. Learn more at 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 associated with our ability to keep pace with technological changes and evolving industry standards in our product offerings and to successfully develop, launch, and drive demand for new and enhanced, innovative, high-quality products that meet or exceed customer needs; 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 created by the continued consolidation of our competitors or the introduction of large competitors in our markets with greater resources than we have; risks associated with our ability to successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with capital constraints, costs and expenses, maintaining profitability levels, management distraction, post-acquisition integration activities, and potential asset impairments; risks associated with Comverse Technology, Inc. (“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; risks to the business associated with Comverse’s strategic plans and related speculation and announcements, such as its recently announced plan to eliminate its holding company structure either simultaneously with or shortly after the completion of a spin-off of its Comverse, Inc. subsidiary; risks that we may be unable to maintain and enhance relationships with key resellers, partners, and systems integrators; risks relating to our ability to effectively and efficiently execute on our growth strategy, including managing investment in our business and operations and enhancing and securing our internal and external operations; risks relating to our ability to successfully implement and maintain 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 the mishandling or perceived mishandling of sensitive or confidential information, security lapses, or with information technology system failures or disruptions; risks associated with our ability to efficiently and effectively allocate 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 international operations, including, among others, in Israel, Europe, and Asia, exposure to regions subject to political or economic instability, and fluctuations in foreign exchange rates; risks associated with complex and changing local and foreign regulatory environments in the jurisdictions in which we operate; risks associated with our ability to recruit and retain qualified personnel in regions in which we operate; challenges associated with selling sophisticated solutions, long sales cycles, and emphasis on larger transactions, including in accurately forecasting revenue and expenses and maintaining profitability; risks that our intellectual property rights may not

 

3



 

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 that our products may contain undetected defects, which could expose us to substantial liability; 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 associated with our dependence on a limited number of suppliers or original equipment manufacturers for certain components of our products, including companies that may compete with us or work with our competitors; risks that our 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 that we may experience liquidity or working capital issues and related risks that financing sources may be unavailable to us on reasonable terms or at all; risks associated with significant leverage resulting from our current debt position, including with respect to covenant limitations and compliance, fluctuations in interest rates, and our ability to maintain our credit ratings; risks associated with being a consolidated, controlled subsidiary of Comverse and formerly part of Comverse’s consolidated tax group; risks relating to our ability to timely implement new accounting pronouncements or new interpretations of existing accounting pronouncements and related risks of future restatements or filing delays; and risks associated with changing tax rates, tax laws and regulations, and the continuing availability of expected tax benefits. 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 and our Annual Report on Form 10-K for the fiscal year ended January 31, 2012, when filed, and other filings we make with the SEC.

 

VERINT, ACTIONABLE INTELLIGENCE, INTELLIGENCE IN ACTION, IMPACT 360, WITNESS, VERINT VERIFIED, VOVICI, GMT, AUDIOLOG, ENTERPRISE INTELLIGENCE SOLUTIONS, SECURITY INTELLIGENCE SOLUTIONS, VOICE OF THE CUSTOMER ANALYTICS, NEXTIVA, EDGEVR, RELIANT, VANTAGE, STAR-GATE, ENGAGE, CYBERVISION, FOCALINFO, SUNTECH, and VIGIA are trademarks or registered trademarks of Verint Systems Inc. or its subsidiaries. Other trademarks mentioned are the property of their respective owners.

 

4



 

Table 1

Verint Systems Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

Product

 

$

105,527

 

$

92,222

 

$

390,392

 

$

375,164

 

Service and support

 

106,466

 

94,647

 

392,256

 

351,635

 

Total revenue

 

211,993

 

186,869

 

782,648

 

726,799

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

Product

 

36,682

 

23,578

 

126,050

 

111,989

 

Service and support

 

33,442

 

35,287

 

129,911

 

117,261

 

Amortization of acquired technology

 

3,640

 

2,385

 

12,400

 

9,094

 

Total cost of revenue

 

73,764

 

61,250

 

268,361

 

238,344

 

Gross profit

 

138,229

 

125,619

 

514,287

 

488,455

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development, net

 

29,361

 

23,981

 

111,001

 

96,525

 

Selling, general and administrative

 

74,919

 

73,336

 

293,906

 

297,365

 

Amortization of other acquired intangible assets

 

5,998

 

5,407

 

22,902

 

21,460

 

Total operating expenses

 

110,278

 

102,724

 

427,809

 

415,350

 

Operating income

 

27,951

 

22,895

 

86,478

 

73,105

 

Other income (expense), net

 

 

 

 

 

 

 

 

 

Interest income

 

214

 

145

 

661

 

454

 

Interest expense

 

(7,802

)

(9,071

)

(32,358

)

(29,896

)

Loss on extinguishment of debt

 

 

 

(8,136

)

 

Other income (expense), net

 

(925

)

(1,151

)

(488

)

(5,138

)

Total other expense, net

 

(8,513

)

(10,077

)

(40,321

)

(34,580

)

Income before provision for (benefit from) income taxes

 

19,438

 

12,818

 

46,157

 

38,525

 

Provision for (benefit from) income taxes

 

1,564

 

(604

)

5,532

 

9,940

 

Net income

 

17,874

 

13,422

 

40,625

 

28,585

 

Net income attributable to noncontrolling interest

 

696

 

282

 

3,632

 

3,004

 

Net income attributable to Verint Systems Inc.

 

17,178

 

13,140

 

36,993

 

25,581

 

Dividends on preferred stock

 

(3,787

)

(3,629

)

(14,790

)

(14,178

)

Net income attributable to Verint Systems Inc. common shares

 

$

13,391

 

$

9,511

 

$

22,203

 

$

11,403

 

 

 

 

 

 

 

 

 

 

 

Net income per common share attributable to Verint Systems Inc.

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

$

0.26

 

$

0.58

 

$

0.33

 

Diluted

 

$

0.34

 

$

0.25

 

$

0.56

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

38,891

 

36,788

 

38,419

 

34,544

 

Diluted

 

39,674

 

38,641

 

39,499

 

37,179

 

 

5



 

Table 2

Verint Systems Inc. and Subsidiaries

Segment Revenue

(Unaudited)

(In thousands)

 

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

GAAP Revenue By Segment

 

 

 

 

 

 

 

 

 

Enterprise Intelligence

 

$

120,783

 

$

112,381

 

$

438,018

 

$

410,529

 

 

 

 

 

 

 

 

 

 

 

Video Intelligence

 

35,800

 

34,796

 

138,016

 

134,012

 

Communications Intelligence

 

55,410

 

39,692

 

206,614

 

182,258

 

Total Video and Communications Intelligence

 

91,210

 

74,488

 

344,630

 

316,270

 

 

 

 

 

 

 

 

 

 

 

GAAP Total Revenue

 

$

211,993

 

$

186,869

 

$

782,648

 

$

726,799

 

 

 

 

 

 

 

 

 

 

 

Revenue adjustments related to acquisitions

 

 

 

 

 

 

 

 

 

Enterprise Intelligence

 

$

3,858

 

$

 

$

6,682

 

$

 

 

 

 

 

 

 

 

 

 

 

Video Intelligence

 

780

 

 

2,594

 

 

Communications Intelligence

 

2,788

 

 

4,323

 

 

Total Video and Communications Intelligence

 

3,568

 

 

6,917

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue adjustments related to acquisitions

 

$

7,426

 

$

 

$

13,599

 

$

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Revenue By Segment

 

 

 

 

 

 

 

 

 

Enterprise Intelligence

 

$

124,641

 

$

112,381

 

$

444,700

 

$

410,529

 

 

 

 

 

 

 

 

 

 

 

Video Intelligence

 

36,580

 

34,796

 

140,610

 

134,012

 

Communications Intelligence

 

58,198

 

39,692

 

210,937

 

182,258

 

Total Video and Communications Intelligence

 

94,778

 

74,488

 

351,547

 

316,270

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Total Revenue

 

$

219,419

 

$

186,869

 

$

796,247

 

$

726,799

 

 

6



 

Table 3

Verint Systems Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended January 31,

 

Year Ended January 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

138,229

 

$

125,619

 

$

514,287

 

$

488,455

 

Revenue adjustments related to acquisitions

 

7,426

 

 

13,599

 

 

Amortization of acquired technology

 

3,640

 

2,385

 

12,400

 

9,094

 

Stock-based compensation expenses

 

946

 

906

 

3,307

 

6,206

 

M&A and other adjustments

 

8

 

 

404

 

 

Non-GAAP gross profit

 

$

150,249

 

$

128,910

 

$

543,997

 

$

503,755

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

27,951

 

$

22,895

 

$

86,478

 

$

73,105

 

Revenue adjustments related to acquisitions

 

7,426

 

 

13,599

 

 

Amortization of acquired technology

 

3,640

 

2,385

 

12,400

 

9,094

 

Amortization of other acquired intangible assets

 

5,998

 

5,407

 

22,902

 

21,460

 

Stock-based compensation expenses

 

7,070

 

7,725

 

27,911

 

46,819

 

M&A and other adjustments

 

535

 

2,642

 

12,255

 

5,188

 

Expenses related to our filing delay

 

 

1,825

 

1,008

 

28,920

 

Non-GAAP operating income

 

$

52,620

 

$

42,879

 

$

176,553

 

$

184,586

 

 

 

 

 

 

 

 

 

 

 

GAAP Depreciation and Amortization

 

13,888

 

12,851

 

53,040

 

48,951

 

Amortization of acquired technology

 

(3,640

)

(2,385

)

(12,400

)

(9,094

)

Amortization of other acquired intangible assets

 

(5,998

)

(5,407

)

(22,902

)

(21,460

)

M&A and other adjustments

 

 

(837

)

(244

)

(843

)

Non-GAAP Depreciation and Amortization

 

$

4,250

 

$

4,222

 

$

17,494

 

$

17,554

 

Non-GAAP EBITDA

 

$

56,870

 

$

47,101

 

$

194,047

 

$

202,140

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP other expense, net

 

$

(8,513

)

$

(10,077

)

$

(40,321

)

$

(34,580

)

Loss on extinguishment of debt

 

 

 

8,136

 

 

Unrealized (gains) losses on derivatives, net

 

(459

)

855

 

(417

)

(5,986

)

M&A and other adjustments

 

4

 

 

93

 

 

Non-GAAP other expense, net

 

$

(8,968

)

$

(9,222

)

$

(32,509

)

$

(40,566

)

 

 

 

 

 

 

 

 

 

 

Table of Reconciliation from GAAP Provision for (Benefit From) Income Taxes to Non-GAAP Provision for Income Taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP provision for (benefit from) income taxes

 

$

1,564

 

$

(604

)

$

5,532

 

$

9,940

 

Non-cash tax adjustments

 

3,520

 

1,407

 

11,097

 

(1,412

)

Non-GAAP provision for income taxes

 

$

5,084

 

$

803

 

$

16,629

 

$

8,528

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to Verint Systems Inc.

 

$

17,178

 

$

13,140

 

$

36,993

 

$

25,581

 

Revenue adjustments related to acquisitions

 

7,426

 

 

13,599

 

 

Amortization of acquired technology

 

3,640

 

2,385

 

12,400

 

9,094

 

Amortization of other acquired intangible assets

 

5,998

 

5,407

 

22,902

 

21,460

 

Stock-based compensation expenses

 

7,070

 

7,725

 

27,911

 

46,819

 

M&A and other adjustments

 

539

 

2,642

 

12,348

 

5,188

 

Expenses related to our filing delay

 

 

1,825

 

1,008

 

28,920

 

Loss on extinguishment of debt

 

 

 

8,136

 

 

Unrealized (gains) losses on derivatives, net

 

(459

)

855

 

(417

)

(5,986

)

Non-cash tax adjustments

 

(3,520

)

(1,407

)

(11,097

)

1,412

 

Total GAAP net income adjustments

 

20,694

 

19,432

 

86,790

 

106,907

 

Non-GAAP net income attributable to Verint Systems Inc.

 

$

37,872

 

$

32,572

 

$

123,783

 

$

132,488

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to Verint Systems Inc. common shares

 

$

13,391

 

$

9,511

 

$

22,203

 

$

11,403

 

Total GAAP net income adjustments

 

20,694

 

19,432

 

86,790

 

106,907

 

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

 

$

34,085

 

$

28,943

 

$

108,993

 

$

118,310

 

 

 

 

 

 

 

 

 

 

 

Table Comparing GAAP Diluted Net Income 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 per common share attributable to Verint Systems Inc.

 

$

0.34

 

$

0.25

 

$

0.56

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.75

 

$

0.66

 

$

2.47

 

$

2.79

 

 

 

 

 

 

 

 

 

 

 

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

 

39,674

 

38,641

 

39,499

 

37,179

 

 

 

 

 

 

 

 

 

 

 

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

 

50,453

 

49,012

 

50,123

 

47,402

 

 

7



 

Table 4

Verint Systems Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)

 

 

 

January 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

150,662

 

$

169,906

 

Restricted cash and bank time deposits

 

12,863

 

13,639

 

Accounts receivable, net of allowance for doubtful accounts of $2.9 million and $5.4 million, respectively.

 

154,753

 

150,769

 

Inventories

 

14,414

 

16,987

 

Deferred cost of revenue

 

11,951

 

6,269

 

Deferred income taxes

 

13,060

 

13,179

 

Prepaid expenses and other current assets

 

42,987

 

31,195

 

Total current assets

 

400,690

 

401,944

 

Property and equipment, net

 

28,289

 

23,176

 

Goodwill

 

831,687

 

738,674

 

Intangible assets, net

 

184,873

 

157,071

 

Capitalized software development costs, net

 

5,846

 

6,787

 

Long-term deferred cost of revenue

 

13,285

 

21,715

 

Long-term deferred income taxes

 

9,237

 

6,700

 

Other assets

 

28,961

 

20,060

 

Total assets

 

$

1,502,868

 

$

1,376,127

 

 

 

 

 

 

 

Liabilities, Preferred Stock, and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

49,411

 

$

36,861

 

Accrued expenses and other current liabilities

 

168,125

 

162,650

 

Current maturities of long-term debt

 

6,228

 

 

Deferred revenue

 

156,772

 

142,465

 

Deferred income taxes

 

1,056

 

379

 

Liabilities to affiliates

 

1,760

 

1,847

 

Total current liabilities

 

383,352

 

344,202

 

Long-term debt

 

591,151

 

583,234

 

Long-term deferred revenue

 

25,987

 

40,424

 

Long-term deferred income taxes

 

13,353

 

13,226

 

Other liabilities

 

59,188

 

31,812

 

Total liabilities

 

1,073,031

 

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 $352,034 at January 31, 2012.

 

285,542

 

285,542

 

Commitments and Contingencies

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Common stock - $0.001 par value; authorized 120,000,000 shares. Issued 39,265,000 and 37,349,000 shares, respectively; outstanding 38,982,000 and 37,089,000 shares, as of January 31, 2012 and January 31, 2011, respectively.

 

40

 

38

 

Additional paid-in capital

 

554,351

 

519,834

 

Treasury stock, at cost — 283,000 and 260,000 shares as of January 31, 2012 and January 31, 2011, respectively.

 

(7,466

)

(6,639

)

Accumulated deficit

 

(357,764

)

(394,757

)

Accumulated other comprehensive loss

 

(47,736

)

(42,069

)

Total Verint Systems Inc. stockholders’ equity

 

141,425

 

76,407

 

Noncontrolling interest

 

2,870

 

1,280

 

Total stockholders’ equity

 

144,295

 

77,687

 

Total liabilities, preferred stock, and stockholders’ equity

 

$

1,502,868

 

$

1,376,127

 

 



 

Table 5

Verint Systems Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Year Ended January 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

40,625

 

$

28,585

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

53,040

 

48,951

 

Provision for doubtful accounts

 

1,055

 

1,863

 

Stock-based compensation — equity portion

 

21,781

 

28,784

 

Provision (benefit) for deferred income taxes

 

(11,101

)

(1,092

)

Excess tax benefits from stock award plans

 

(847

)

(815

)

Non-cash losses on derivative financial instruments, net

 

896

 

5,863

 

Loss on extinguishment of debt

 

8,136

 

 

Other non-cash items, net

 

(802

)

1,139

 

 

 

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

(2,942

)

(24,574

)

Inventories

 

1,080

 

(3,471

)

Deferred cost of revenue

 

3,199

 

16,616

 

Prepaid expenses and other assets

 

6,339

 

9,924

 

Accounts payable and accrued expenses

 

(7,192

)

15,839

 

Deferred revenue

 

(3,424

)

(51,226

)

Other liabilities

 

(3,326

)

(5,933

)

Other, net

 

(19

)

67

 

Net cash provided by operating activities

 

106,498

 

70,520

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Cash paid for business combinations, net of cash acquired

 

(109,780

)

(23,485

)

Purchases of property and equipment

 

(13,080

)

(8,536

)

Sales and maturities of investments

 

245

 

 

Settlements of derivative financial instruments not designated as hedges

 

(1,313

)

(34,783

)

Cash paid for capitalized software development costs

 

(3,399

)

(2,527

)

Changes in restricted cash and bank time deposits

 

479

 

(8,502

)

Net cash used in investing activities

 

(126,848

)

(77,833

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from borrowings, net of original issuance discount

 

597,136

 

 

Repayments of borrowings and other financing obligations

 

(587,549

)

(38,163

)

Proceeds from exercises of stock options

 

12,474

 

40,787

 

Payment of debt issuance and other debt-related costs

 

(15,276

)

(4,039

)

Dividends paid to noncontrolling interest

 

(1,930

)

(2,191

)

Purchases of treasury stock

 

(1,655

)

(4,146

)

Excess tax benefits from stock award plans

 

847

 

815

 

Other financing activities

 

(1,969

)

 

Net cash provided by (used in) financing activities

 

2,078

 

(6,937

)

Effect of exchange rate changes on cash and cash equivalents

 

(972

)

(179

)

Net decrease in cash and cash equivalents

 

(19,244

)

(14,429

)

Cash and cash equivalents, beginning of year

 

169,906

 

184,335

 

Cash and cash equivalents, end of year

 

$

150,662

 

$

169,906

 

 



 

Verint Systems Inc. and Subsidiaries

Supplemental Information About Non-GAAP Financial Measures

 

This press release contains non-GAAP financial measures. Tables 2 and 3 include 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, stock bonus plans 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 prior 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.

 

M&A and 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.

 

10



 

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.

 

11