UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check one): [ ] Form 10-K [ ] Form 20-F [ ] Form 11-K |X| Form 10-Q
[ ] Form N-SAR
For Period ended: October 31, 2009
----------------
|_| Transition Report on Form 10-K
|_| Transition Report on Form 20-F
|_| Transition Report on Form 11-K
|_| Transition Report on Form 10-Q
|_| Transition Report on Form N-SAR
|_| For the Transition Period Ended:______________________________
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
- --------------------------------------------------------------------------------
PART 1 -- REGISTRANT INFORMATION
Verint Systems Inc.
- --------------------------------------------------------------------------------
Full Name of Registrant
N/A
- --------------------------------------------------------------------------------
Former Name if Applicable
330 South Service Road
- --------------------------------------------------------------------------------
Address of Principal Executive Office (Street and Number)
Melville, New York 11747
- --------------------------------------------------------------------------------
City, State and Zip Code
PART II -- RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate.)
(a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
|_| (b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, Form 11-K, [ ] or Form N-SAR, or portion
thereof, will be filed on or before the fifteenth calendar day
following the prescribed due date; or the subject quarterly report or
transition report on Form 10-Q, or portion thereof will be filed on or
before the fifth calendar day following the prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
PART III -- NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
10-D, N-SAR, N-CSR, or the transition report or portion thereof, could not be
filed within the prescribed time period. (Attach extra sheets if needed.)
Verint Systems Inc. ("Verint" or the "Company") plans to file its Quarterly
Report on Form 10-Q for the fiscal quarter ended October 31, 2009 by January 29,
2010, but does not currently expect that it will be filed on or before the fifth
calendar day following the required filing date as prescribed in Rule 12b-25.
Prior to Verint's initial public offering in May 2002, Verint was a
wholly-owned subsidiary of Comverse Technology, Inc. ("Comverse") and, as a
result, during that period certain Verint employees received from Comverse
options to purchase Comverse common stock. Since May 2002 (other than the June
2002 repricing of stock options by Comverse), no Verint employee has received
compensatory awards from Comverse. As previously announced, the Board of
Directors of Comverse, which remains the Company's majority stockholder, created
a special committee (the "Comverse Special Committee") composed of outside
directors, to review matters relating to Comverse's stock option grants,
including the accuracy of the stated dates of Comverse option grants and whether
Comverse followed all proper corporate procedures. Comverse later announced that
its Special Committee had expanded its investigation into certain non-options
related accounting matters, including possible revenue recognition errors,
errors in recording of certain deferred tax assets, expense misclassification,
misuse of accounting reserves, and understatement of backlog. On January 29,
2008, Comverse announced that the Comverse Special Committee had completed its
investigation and disclosed a summary of the Special Committee's findings
including with respect to the backdating of Comverse stock options.
As a result of the backdating of the Comverse stock options granted to
Verint employees, and as previously disclosed by Verint on February 23, 2007,
Verint expects to record additional non-cash stock-based compensation expense in
prior periods. For the six fiscal years ended January 31, 2009, 2008, 2007,
2006, 2005, and 2004, the Company estimates these charges to be approximately
$0, $0, $0, $28,000, $47,000 and $105,000, respectively, and less than $20
million in the aggregate for all periods. These figures exclude any tax expense
or related payments, which have not yet been fully determined but are not
expected to exceed $0.5 million. In April of 2006, Verint expects to record
additional non-cash stock-based compensation expense of $0.6 million related to
the modification by Comverse of Comverse stock options held by Verint employees
extending their life during the period Comverse has not been compliant with its
periodic filings with the SEC. The Company also expects to record non-cash
charges (benefits) of $15,000, $(0.5) million, and $1.2 million for changes in
the settlement value of Comverse stock options held by Verint employees for the
years ended January 31, 2009, 2008, and 2007, respectively, due to certain cash
payments made by Comverse to employees of Verint who hold expired Comverse stock
options. Additionally, for the fiscal years ended January 31, 2009, 2008 and
2007, the Company expects to record non-cash stock-based compensation charges
estimated at $0.6 million, $1.7 million, and $2.9 million, respectively, related
to the modification of Verint stock options extending their life during the
period the Company has not been compliant with its periodic filings with the
SEC.
Although there were no allegations or evidence suggesting that measurement
dates for options to acquire Verint common stock differed from the recorded
grant dates, following the announcement of the Comverse Special Committee
investigation, Verint conducted an internal review of its own stock option grant
practices to determine whether backdating had occurred. No such conduct was
uncovered at Verint. In addition, no evidence of option backdating at Verint was
discovered by the Audit Committee as part of its independent investigation
described below.
2
Following the expansion of the Comverse Special Committee investigation
into non-options related accounting matters, Verint commenced its own internal
investigation into certain non-option accounting matters, including accounting
reserves, income statement expense classification, and revenue recognition.
On March 20, 2008, Verint announced that the Audit Committee of the Board
of Directors of Verint had completed its independent investigation. As a result
of this investigation, the Audit Committee has proposed adjustments to the
historical accounting recorded by the Company, which will form the basis of a
restatement of the Company's historical financial statements. The restatement
related to reserves is expected to affect periods during which reserves were
overstated and subsequent periods in which overstated reserves were reduced.
In connection with the audit of the Company's open and prior periods by
Verint's independent registered public accountants, the Company is also
conducting a review of its accounting treatment for revenue recognition under
complex contractual arrangements under AICPA Statement of Position (SOP) 97-2,
Software Revenue Recognition ("SOP 97-2") and other accounting regulations and
pronouncements, and of its accounting for associated cost of revenue. In
connection with this examination, Verint has, among other things, been
performing a comprehensive review of its license and sale agreements, as well as
re-performing technical calculations associated with the establishment of vendor
specific objective evidence ("VSOE"). VSOE calculations involve making
determinations regarding the fair value of the Company's maintenance,
professional and implementation services, as well as the application of the
relative fair value method to allocate revenue to each element of the Company's
bundled hardware and software arrangements. If the Company for accounting
purposes is unable to determine the fair value of an undelivered element within
a multiple element arrangement, as defined by VSOE, revenue for the entire
arrangement is generally deferred until all elements have been delivered.
The restatement as a result of the Audit Committee's independent
investigation described above will also include adjustments relating to the
Company's historical application of SOP 97-2, associated cost of revenue, and
possibly other revenue recognition rules. Verint is continuing to examine the
SOP 97-2 matters described above, as well as other revenue recognition and
accounting issues that may arise during the completion of the audit of open and
prior periods. There can be no assurance that Verint will not discover
additional accounting errors or issues or that such errors or issues, if they
exist, will not be material.
The Company expects the restatement to have a material impact on the
Company's historical financial statements, including on reserves, accruals,
income, revenue recognition, cost of revenue, and stock-based compensation
expense. Nevertheless, based on currently available information, Verint believes
that the restatement will not impact the existence of Verint's aggregate
revenue, including deferred revenue, or the validity of the transactions
underlying the Company's revenue. Further, except for the impact of any tax
expense or related payments in connection with the recognition of stock-based
compensation expense, the restatement is not expected to impact historically
reported cash balances and cash flows.
On December 3, 2009, the Company announced that it expects to file a
comprehensive Annual Report on Form 10-K covering the years ended January 31,
2006, 2007, and 2008, an Annual Report on Form 10-K for the year ended January
31, 2009, and Quarterly Reports on Form 10-Q for the first three quarters of the
year ending January 31, 2010 with the SEC by January 29, 2010.
3
Note: Certain statements and information in this Form 12b-25 that involve
expectations, plans, intentions or strategies regarding the future are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. They are often identified by words such as
"will," "anticipates," "expects," "intends," "plans," "believes," "estimates"
and similar expressions and statements about present trends and conditions that
may extend into the future. These statements are not facts and are based upon
information available to the Company as of the date of this document. The
Company assumes no obligation to revise or update any such forward-looking
statement except as otherwise required by law. Forward-looking statements
believed true when made may ultimately prove to be incorrect. These statements
are not guarantees of future performance and are subject to risks, uncertainties
and other factors, some of which are beyond our control and may cause actual
results to differ materially from our current expectations. Some of the factors
that could cause actual future results or conditions to differ materially from
current expectations include risks relating to the timely filing of our
Securities and Exchange Commission ("SEC") reports, including the occurrence of
unforeseen events that could delay our plan for completion of our financial
statements by the date specified above, management distraction, significant
expense, and compliance with the financial statement delivery requirements of
our credit facility; uncertainty regarding the impact of general economic
conditions, particularly in information technology spending, on our business;
risk 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; risk that we will experience liquidity or working capital issues
and related risk that financing sources will be unavailable to us on reasonable
terms or at all; uncertainty regarding the future impact on our business of our
internal investigation, restatement, and extended filing delay, including
customer, partner, employee, and investor concern and potential customer and
partner transaction deferrals or losses; risks relating to the remediation or
inability to adequately remediate internal control weaknesses and to the proper
application of highly complex accounting rules and pronouncements in order to
produce accurate SEC reports on a timely basis; risks relating to our
implementation and maintenance of adequate systems and internal controls for our
current and future operations and reporting needs; risk of possible future
restatements; risk associated with current or future regulatory actions or
private litigations relating to our internal investigation, restatement, or
delay in timely making required SEC filings; risk that we will be unable to
re-list our common stock on a national securities exchange and maintain such
listing; risks associated with being a consolidated, controlled subsidiary of
Comverse Technology, Inc. ("Comverse") and formerly part of Comverse's
consolidated tax group, including risk of any future impact on us resulting from
Comverse's special committee investigation and restatement or related effects;
risks associated with Comverse controlling our board of directors and a majority
of our common stock (and therefore the results of any significant shareholder
vote); risks associated with significant leverage resulting from our current
debt position; risk that our financial results will cause us not to be compliant
with the leverage ratio covenant under our credit facility; risks due to
aggressive competition in all of our markets, including with respect to
maintaining margins and sufficient levels of investment in the business and with
respect to introducing quality products which achieve market acceptance; risks
created by continued consolidation of competitors or introduction of large
competitors in our markets with greater resources than us; risks associated with
significant foreign and international operations, including exposure to
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 all geographies in which we operate;
challenges in accurately forecasting revenue and expenses; risks associated with
acquisitions and related system integrations; 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 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; risk that we
improperly handle sensitive or confidential information or perception of such
mishandling; risks associated with dependence on a limited number of suppliers
for certain components of our products; risk that we are unable to maintain and
enhance relationships with key resellers, partners, and systems integrators; and
risk that use of our net operating losses or other tax benefits may be
restricted or eliminated in the future; and other risks described in filings
with the Securities and Exchange Commission, including Verint's Current Report
on Form 8-K filed September 10, 2007, as supplemented by the Current Reports on
Form 8-K filed on November 5, 2007, January 16, 2008 and April 9, 2008. All
documents are available through the SEC's Electronic Data Gathering Analysis and
Retrieval system (EDGAR) at www.sec.gov or from Verint's website at
www.verint.com.
- --------------------------------------------------------------------------------
PART IV -- OTHER INFORMATION
1. Name and telephone number of person to contact in regard to this
notification
Peter Fante 631 962-9600
---------------------------------------------------------------------------
(Name) (Area Code) (Telephone Number)
2. Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s). |_| Yes |X| No
Verint did not file its Current Report on Form 8-K/A, which would have
amended the Current Report on Form 8-K dated January 9, 2006 to include the
financial information required by Form 8-K in connection with the January
9, 2006 acquisition by the Company of MultiVision Intelligence Surveillance
Limited's networked video security business.
Verint did not file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2006.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2006.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2006.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended October 31, 2006.
Verint did not file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2007.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2007.
Verint did not file its Current Report on Form 8-K/A, which would have
amended the Current Report on Form 8-K dated May 29, 2007 to include the
financial information required by Form 8-K in connection with the May 25,
2007 acquisition by the Company of Witness Systems, Inc.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2007.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended October 31, 2007.
Verint did not file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2008.
4
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2008.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2008.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended October 31, 2008.
Verint did not file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2009.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2009.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2009.
---------------------------------------------------------------------------
3. Is it anticipated that any significant change in results of operations for
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion
thereof? |X| Yes |_| No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
Because of the ongoing audit work relating to the preparation of the
Company's financial statements for open and prior periods, the Company cannot
yet complete its procedures for the fiscal quarter ended October 31, 2009 and
therefore cannot at this time provide a reasonable estimate and comparison of
the results of its operations for the fiscal quarter ended October 31, 2009
compared to the fiscal quarter ended October 31, 2008.
================================================================================
Verint Systems Inc.
--------------------------------------------------
(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
VERINT SYSTEMS INC.
Date: December 10, 2009 By: /s/ Peter Fante
----------------------
Name: Peter Fante
Title: Chief Legal Officer
5