Form 8-K
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, 2010
VERINT SYSTEMS INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-34807
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11-3200514 |
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.) |
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330 South Service Road, Melville, New York
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11747 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (631) 962-9600
None
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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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, 2010, Verint Systems Inc. (Verint) issued a press release providing selected
financial information for the fiscal quarter ended July 31, 2010. 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.
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Exhibit |
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Number |
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Description |
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99.1
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Press Release of Verint Systems Inc., dated September 8, 2010. |
-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.
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Date: September 8, 2010
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Verint Systems Inc.
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By: |
/s/ Douglas E. Robinson
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Name: |
Douglas E. Robinson |
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Title: |
Chief Financial Officer |
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EXHIBIT INDEX
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Exhibit |
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Number |
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Description |
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99.1
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Press Release of Verint Systems Inc., dated September 8, 2010. |
Exhibit 99.1
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, 2010 Verint® Systems Inc. (NASDAQ: VRNT) a global leader
in Actionable Intelligence® solutions and value-added services, today announced its second quarter
results.
We are pleased with our strong performance in the second quarter which we believe reflects our
leadership position and growth in the actionable intelligence market as well as an improving
economic environment. Our non-GAAP operating margin came in strong at 25.6%, ahead of our annual
target, reflecting sustained focus on execution in the workforce optimization and security
intelligence markets. We look forward to discussing our results and outlook during todays
conference call, said Dan Bodner, CEO and President of Verint Systems Inc.
Below is selected financial information for the three and six months ended July 31, 2010 and 2009
prepared in accordance with generally accepted accounting principles (GAAP) and not prepared in
accordance with GAAP (Non-GAAP).
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Selected GAAP Information |
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Three Months Ended July 31, |
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Six Months Ended July 31, |
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(In thousands, except per share data) |
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2010 |
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2009 |
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2010 |
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2009 |
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Revenue |
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$ |
180,676 |
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$ |
169,269 |
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$ |
353,289 |
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$ |
344,417 |
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Gross Profit |
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120,330 |
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110,202 |
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235,136 |
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228,281 |
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Gross Margin |
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66.6 |
% |
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65.1 |
% |
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66.6 |
% |
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66.3 |
% |
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Operating Income |
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23,799 |
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13,709 |
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19,817 |
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49,718 |
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Operating Margin |
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13.2 |
% |
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8.1 |
% |
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5.6 |
% |
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14.4 |
% |
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Diluted Net Income (Loss) per Share Attributable to Verint Systems Inc. |
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$ |
0.23 |
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$ |
(0.06 |
) |
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$ |
(0.35 |
) |
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$ |
0.45 |
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Selected Non-GAAP Information |
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Three Months Ended July 31, |
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Six Months Ended July 31, |
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2010 |
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2009 |
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2010 |
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2009 |
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Revenue |
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$ |
180,676 |
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$ |
169,269 |
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$ |
353,289 |
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$ |
344,417 |
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Gross Profit |
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123,785 |
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113,735 |
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243,232 |
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234,828 |
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Gross Margin |
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68.5 |
% |
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67.2 |
% |
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68.8 |
% |
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68.2 |
% |
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Operating Income |
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46,323 |
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44,639 |
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88,602 |
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101,808 |
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Operating Margin |
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25.6 |
% |
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26.4 |
% |
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25.1 |
% |
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29.6 |
% |
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Diluted Net Income per Share Attributable to Verint Systems Inc. |
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$ |
0.69 |
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$ |
0.73 |
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$ |
1.25 |
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$ |
1.66 |
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1
Outlook for the Year Ending January 31, 2011
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We are updating our revenue outlook from a range of $700 to $715 million to a range of
$710 to $720 million. |
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We are updating our target non-GAAP operating margin from a range of 20% to 23% to a
range of 22% to 24%. |
Conference Call Information
Verint will be conducting a conference call today at 8:30 a.m. to discuss its second quarter
results and outlook for the year ending January 31, 2011. An on-line, real-time Web cast 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 1-888-277-1184 (United States) and 1-617-597-5360 (international)
and the passcode is 18560023. 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 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, 2011.
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 countriesincluding over 80 percent of the Fortune 100use
Verint 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.
Verint is listed on the NASDAQ Stock Market under the symbol VRNT. Visit us at our website
www.verint.com.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, 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 managements 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: risks relating to the filing of
our SEC reports, including the occurrence of known contingencies or unforeseen events that could
delay our future filings, management distractions, and significant expense; risks that our credit
rating could be downgraded or placed on a credit watch based on, among other things, our financial
results or delays in the filing of our periodic reports; risks associated with being a
consolidated, controlled subsidiary of Comverse Technology, Inc. (Comverse) and formerly part of
Comverses consolidated tax group, including risk of any future impact on us resulting from
Comverses special committee investigation and restatement or related effects, and risks related to
our dependence on Comverse to provide us with accurate financial information, including with
respect to stock-based compensation expense and net operating loss carryforwards (NOLs), for our
financial statements; uncertainties regarding the impact of general economic conditions,
particularly in information technology spending, on our business; risks that our financial results
will cause us not to be compliant with the leverage ratio covenant under our credit facility or
that any delays in the filing of future SEC reports could cause us not to be compliant with the
financial statement delivery covenant under our credit facility; 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 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; uncertainties regarding the future impact on our business of our now concluded
internal investigation, restatement, and extended filing delay, including customer, partner,
employee, and investor concern, and potential customer and partner
2
transaction deferrals or losses; risks relating to the remediation or inability to adequately
remediate material weaknesses in our internal controls over financial reporting and relating 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;
risks of possible future restatements if the processes used to produce the financial statements
contained in our SEC reports are inadequate; risks associated with future regulatory actions or
private litigations relating to our internal investigation, restatement, or previous delays in
filing required SEC reports; risk that we will be unable maintain our listing on the NASDAQ Global
Market; risks associated with Comverse controlling our board of directors and a majority of our
common stock (and therefore the results of any significant stockholder vote); risks associated with
significant leverage resulting from our current debt position; 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; risks 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; risks that we are unable to
maintain and enhance relationships with key resellers, partners, and systems integrators; 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, 2010.
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, and
CLICK2STAFF are trademarks or registered trademarks of Verint Systems Inc. or its subsidiaries.
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)
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Three Months Ended July 31, |
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Six Months Ended July 31, |
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2010 |
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2009 |
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2010 |
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2009 |
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Revenue: |
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Product |
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$ |
93,103 |
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$ |
88,107 |
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$ |
185,173 |
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$ |
185,178 |
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Service and support |
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87,573 |
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81,162 |
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|
168,116 |
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|
159,239 |
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Total revenue |
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180,676 |
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169,269 |
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353,289 |
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|
344,417 |
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Cost of revenue: |
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Product |
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31,909 |
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30,900 |
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|
60,255 |
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|
62,957 |
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Service and support |
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26,217 |
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26,190 |
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|
53,445 |
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49,103 |
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Amortization of acquired technology and backlog |
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2,220 |
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1,977 |
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4,453 |
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4,076 |
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Total cost of revenue |
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60,346 |
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|
59,067 |
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118,153 |
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116,136 |
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Gross profit |
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120,330 |
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|
110,202 |
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|
235,136 |
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228,281 |
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Operating expenses: |
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Research and development, net |
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22,049 |
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20,638 |
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48,481 |
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39,539 |
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Selling, general and administrative |
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69,144 |
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70,258 |
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156,161 |
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127,484 |
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Amortization of other acquired intangible assets |
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5,338 |
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5,586 |
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|
10,677 |
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|
11,516 |
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Restructuring |
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11 |
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24 |
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Total operating expenses |
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96,531 |
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|
96,493 |
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|
215,319 |
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|
178,563 |
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Operating income |
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23,799 |
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|
13,709 |
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|
19,817 |
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49,718 |
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Other income (expense), net |
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Interest income |
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117 |
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|
98 |
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|
200 |
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|
245 |
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Interest expense |
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(5,936 |
) |
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(6,369 |
) |
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(11,884 |
) |
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(12,722 |
) |
Other expense, net |
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(2,448 |
) |
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(3,106 |
) |
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(6,146 |
) |
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(8,069 |
) |
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Total other expense, net |
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(8,267 |
) |
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(9,377 |
) |
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(17,830 |
) |
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(20,546 |
) |
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Income before provision for income taxes |
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15,532 |
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|
4,332 |
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|
1,987 |
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|
29,172 |
|
Provision for income taxes |
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|
3,141 |
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|
2,850 |
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|
5,212 |
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|
7,118 |
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Net income (loss) |
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|
12,391 |
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|
1,482 |
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|
|
(3,225 |
) |
|
|
22,054 |
|
Net income (loss) attributable to noncontrolling interest |
|
|
916 |
|
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|
(116 |
) |
|
|
1,508 |
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|
822 |
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|
Net income (loss) attributable to Verint Systems Inc. |
|
|
11,475 |
|
|
|
1,598 |
|
|
|
(4,733 |
) |
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|
21,232 |
|
Dividends on preferred stock |
|
|
(3,554 |
) |
|
|
(3,406 |
) |
|
|
(6,957 |
) |
|
|
(6,668 |
) |
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|
Net income (loss) attributable to Verint Systems Inc. common
shares |
|
$ |
7,921 |
|
|
$ |
(1,808 |
) |
|
$ |
(11,690 |
) |
|
$ |
14,564 |
|
|
|
|
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|
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|
|
|
|
|
|
|
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|
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|
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|
Net income (loss) per share attributable to Verint Systems Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.24 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.35 |
) |
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.23 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.35 |
) |
|
$ |
0.45 |
|
|
|
|
|
|
|
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|
|
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Weighted-average common shares outstanding |
|
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|
|
Basic |
|
|
33,272 |
|
|
|
32,465 |
|
|
|
32,972 |
|
|
|
32,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
35,006 |
|
|
|
32,465 |
|
|
|
32,972 |
|
|
|
32,606 |
|
|
|
|
|
|
|
|
|
|
|
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|
4
Table 2
Verint Systems Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Results
(Unaudited)
(In thousands, except per share data)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Six Months Ended July 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table of Reconciliation from
GAAP Gross Profit to Non-GAAP Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit |
|
$ |
120,330 |
|
|
$ |
110,202 |
|
|
$ |
235,136 |
|
|
$ |
228,281 |
|
Amortization of acquired technology and backlog |
|
|
2,220 |
|
|
|
1,977 |
|
|
|
4,453 |
|
|
|
4,076 |
|
Stock-based compensation expenses |
|
|
1,235 |
|
|
|
1,556 |
|
|
|
3,643 |
|
|
|
2,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross profit |
|
$ |
123,785 |
|
|
$ |
113,735 |
|
|
$ |
243,232 |
|
|
$ |
234,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table of Reconciliation from
GAAP Operating Income to Non-GAAP Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income |
|
$ |
23,799 |
|
|
$ |
13,709 |
|
|
$ |
19,817 |
|
|
$ |
49,718 |
|
Amortization of acquired technology and backlog |
|
|
2,220 |
|
|
|
1,977 |
|
|
|
4,453 |
|
|
|
4,076 |
|
Amortization of other acquired intangible assets |
|
|
5,338 |
|
|
|
5,586 |
|
|
|
10,677 |
|
|
|
11,516 |
|
Restructuring costs |
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|
22 |
|
Stock-based compensation expenses |
|
|
8,035 |
|
|
|
13,138 |
|
|
|
26,004 |
|
|
|
19,694 |
|
Other adjustments |
|
|
864 |
|
|
|
|
|
|
|
1,371 |
|
|
|
|
|
Expenses related to our filing delay |
|
|
6,067 |
|
|
|
10,220 |
|
|
|
26,280 |
|
|
|
16,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income |
|
$ |
46,323 |
|
|
$ |
44,639 |
|
|
$ |
88,602 |
|
|
$ |
101,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table of Reconciliation from
GAAP Other Expense, Net to Non-GAAP Other Expense, Net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP other expense, net |
|
$ |
(8,267 |
) |
|
$ |
(9,377 |
) |
|
$ |
(17,830 |
) |
|
$ |
(20,546 |
) |
Unrealized gains on derivatives, net |
|
|
(3,796 |
) |
|
|
(1,381 |
) |
|
|
(7,763 |
) |
|
|
(3,843 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP other expense, net |
|
$ |
(12,063 |
) |
|
$ |
(10,758 |
) |
|
$ |
(25,593 |
) |
|
$ |
(24,389 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table of Reconciliation from
GAAP Provision for Income Taxes to Non-GAAP Provision for Income
Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP provision for income taxes |
|
$ |
3,141 |
|
|
$ |
2,850 |
|
|
$ |
5,212 |
|
|
$ |
7,118 |
|
Non-cash tax adjustments |
|
|
(948 |
) |
|
|
(146 |
) |
|
|
143 |
|
|
|
(940 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP provision for income taxes |
|
$ |
2,193 |
|
|
$ |
2,704 |
|
|
$ |
5,355 |
|
|
$ |
6,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
7,921 |
|
|
$ |
(1,808 |
) |
|
$ |
(11,690 |
) |
|
$ |
14,564 |
|
Amortization of acquired technology and backlog |
|
|
2,220 |
|
|
|
1,977 |
|
|
|
4,453 |
|
|
|
4,076 |
|
Amortization of other acquired intangible assets |
|
|
5,338 |
|
|
|
5,586 |
|
|
|
10,677 |
|
|
|
11,516 |
|
Restructuring costs |
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|
22 |
|
Stock-based compensation expenses |
|
|
8,035 |
|
|
|
13,138 |
|
|
|
26,004 |
|
|
|
19,694 |
|
Other adjustments |
|
|
864 |
|
|
|
|
|
|
|
1,371 |
|
|
|
|
|
Expenses related to our filing delay |
|
|
6,067 |
|
|
|
10,220 |
|
|
|
26,280 |
|
|
|
16,782 |
|
Unrealized gains on derivatives, net |
|
|
(3,796 |
) |
|
|
(1,381 |
) |
|
|
(7,763 |
) |
|
|
(3,843 |
) |
Non-cash tax adjustments |
|
|
948 |
|
|
|
146 |
|
|
|
(143 |
) |
|
|
940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to Verint Systems Inc. common shares |
|
$ |
27,597 |
|
|
$ |
27,887 |
|
|
$ |
49,189 |
|
|
$ |
63,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table Comparing GAAP Diluted Net
Income (Loss) Per Share Attributable to Verint Systems Inc. to
Non-GAAP Diluted Net Income Per Share Attributable to Verint Systems
Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income (loss) per share |
|
$ |
0.23 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.35 |
) |
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted net income per share |
|
$ |
0.69 |
|
|
$ |
0.73 |
|
|
$ |
1.25 |
|
|
$ |
1.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing GAAP diluted net income (loss) per share (in thousands) |
|
|
35,006 |
|
|
|
32,465 |
|
|
|
32,972 |
|
|
|
32,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP diluted net income per share (in thousands) |
|
|
45,178 |
|
|
|
42,682 |
|
|
|
45,071 |
|
|
|
42,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
Table 3
Verint Systems Inc. and Subsidiaries
Segment Revenue
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Six Months Ended July 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Revenue By Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce Optimization Segment |
|
$ |
94,795 |
|
|
$ |
88,289 |
|
|
$ |
191,675 |
|
|
$ |
173,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video Intelligence Segment |
|
|
37,060 |
|
|
|
40,885 |
|
|
|
68,605 |
|
|
|
82,563 |
|
Communications Intelligence Segment |
|
|
48,821 |
|
|
|
40,095 |
|
|
|
93,009 |
|
|
|
88,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Video and Communications Intelligence |
|
|
85,881 |
|
|
|
80,980 |
|
|
|
161,614 |
|
|
|
170,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
$ |
180,676 |
|
|
$ |
169,269 |
|
|
$ |
353,289 |
|
|
$ |
344,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2010 |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
128,199 |
|
|
$ |
184,335 |
|
Restricted cash and bank time deposits |
|
|
14,893 |
|
|
|
5,206 |
|
Accounts receivable, net |
|
|
132,553 |
|
|
|
127,826 |
|
Inventories |
|
|
16,271 |
|
|
|
14,373 |
|
Deferred cost of revenue |
|
|
8,536 |
|
|
|
11,232 |
|
Prepaid expenses and other current assets |
|
|
59,263 |
|
|
|
64,554 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
359,715 |
|
|
|
407,526 |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
22,683 |
|
|
|
24,453 |
|
Goodwill |
|
|
733,046 |
|
|
|
724,670 |
|
Intangible assets, net |
|
|
164,716 |
|
|
|
173,833 |
|
Capitalized software development costs, net |
|
|
7,148 |
|
|
|
8,530 |
|
Deferred cost of revenue |
|
|
25,702 |
|
|
|
33,019 |
|
Other assets |
|
|
29,134 |
|
|
|
24,306 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,342,144 |
|
|
$ |
1,396,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Preferred Stock, and Stockholders Equity (Deficit) |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
45,923 |
|
|
$ |
46,570 |
|
Accrued expenses and other liabilities |
|
|
153,311 |
|
|
|
155,422 |
|
Current maturities of long-term debt |
|
|
|
|
|
|
22,678 |
|
Deferred revenue |
|
|
153,203 |
|
|
|
183,719 |
|
Liabilities to affiliates |
|
|
1,751 |
|
|
|
1,709 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
354,188 |
|
|
|
410,098 |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
598,234 |
|
|
|
598,234 |
|
Deferred revenue |
|
|
44,724 |
|
|
|
51,412 |
|
Other liabilities |
|
|
57,814 |
|
|
|
65,618 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
1,054,960 |
|
|
|
1,125,362 |
|
|
|
|
|
|
|
|
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 $332,196 at July 31, 2010. |
|
|
285,542 |
|
|
|
285,542 |
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
Stockholders Equity (Deficit): |
|
|
|
|
|
|
|
|
Common stock $0.001 par value; authorized 120,000,000 shares.
Issued 34,911,000 and 32,687,000 shares, respectively;
outstanding 34,651,000 and 32,584,000 shares, as of July 31,
2010 and January 31, 2010, respectively. |
|
|
35 |
|
|
|
33 |
|
Additional paid-in capital |
|
|
478,031 |
|
|
|
451,166 |
|
Treasury stock, at cost 260,000 and 103,000 shares as of
July 31, 2010 and January 31, 2010, respectively. |
|
|
(6,639 |
) |
|
|
(2,493 |
) |
Accumulated deficit |
|
|
(425,071 |
) |
|
|
(420,338 |
) |
Accumulated other comprehensive loss |
|
|
(46,432 |
) |
|
|
(43,134 |
) |
|
|
|
|
|
|
|
Total Verint Systems Inc. stockholders deficit |
|
|
(76 |
) |
|
|
(14,766 |
) |
Noncontrolling interest |
|
|
1,718 |
|
|
|
199 |
|
|
|
|
|
|
|
|
Total liabilities stockholders equity (deficit) |
|
|
1,642 |
|
|
|
(14,567 |
) |
|
|
|
|
|
|
|
Total liabilities, preferred stock, and stockholders
equity (deficit) |
|
$ |
1,342,144 |
|
|
$ |
1,396,337 |
|
|
|
|
|
|
|
|
7
Table 5
Verint Systems Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended July 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(3,225 |
) |
|
$ |
22,054 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
23,952 |
|
|
|
25,507 |
|
Stock-based compensation |
|
|
15,636 |
|
|
|
15,532 |
|
Non-cash losses on derivative financial instruments, net |
|
|
3,347 |
|
|
|
7,035 |
|
Other non-cash items, net |
|
|
867 |
|
|
|
(1,816 |
) |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities, net of effects of business
combinations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(5,447 |
) |
|
|
(2,513 |
) |
Inventories |
|
|
(2,124 |
) |
|
|
3,430 |
|
Deferred cost of revenue |
|
|
9,273 |
|
|
|
6,165 |
|
Accounts payable and accrued expenses |
|
|
(3,798 |
) |
|
|
(11,321 |
) |
Deferred revenue |
|
|
(33,273 |
) |
|
|
(518 |
) |
Prepaid expenses and other assets |
|
|
2,936 |
|
|
|
(8,759 |
) |
Other, net |
|
|
(2,632 |
) |
|
|
(2,616 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
5,512 |
|
|
|
52,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Cash paid for business combination, net of cash acquired, and payments
of contingent consideration associated with business combinations in
prior periods |
|
|
(15,292 |
) |
|
|
(96 |
) |
Purchases of property and equipment |
|
|
(3,550 |
) |
|
|
(2,019 |
) |
Settlements of derivative financial instruments not designated as hedges |
|
|
(11,997 |
) |
|
|
(8,261 |
) |
Cash paid for capitalized software development costs |
|
|
(858 |
) |
|
|
(1,258 |
) |
Other investing activities |
|
|
(9,720 |
) |
|
|
223 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(41,417 |
) |
|
|
(11,411 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repayments of borrowings and other financing obligations |
|
|
(22,679 |
) |
|
|
(5,988 |
) |
Proceeds from exercises of stock |
|
|
11,650 |
|
|
|
|
|
Dividends paid to noncontrolling interest |
|
|
|
|
|
|
(2,142 |
) |
Purchases of treasury stock |
|
|
(4,146 |
) |
|
|
|
|
Other financing activities |
|
|
(3,688 |
) |
|
|
(202 |
) |
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(18,863 |
) |
|
|
(8,332 |
) |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(1,368 |
) |
|
|
5,349 |
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
(56,136 |
) |
|
|
37,786 |
|
Cash and cash equivalents, beginning of period |
|
|
184,335 |
|
|
|
115,928 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
128,199 |
|
|
$ |
153,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
10,236 |
|
|
$ |
13,184 |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
|
$ |
3,244 |
|
|
$ |
4,991 |
|
|
|
|
|
|
|
|
Non-cash investing and financing transactions: |
|
|
|
|
|
|
|
|
Accrued but unpaid purchases of property and equipment |
|
$ |
936 |
|
|
$ |
329 |
|
|
|
|
|
|
|
|
Inventory transfers to property and equipment |
|
$ |
87 |
|
|
$ |
347 |
|
|
|
|
|
|
|
|
Stock options exercised, proceeds received subsequent to period end |
|
$ |
285 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Accrued but unpaid debt fees |
|
$ |
310 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Supplier financing arrangements |
|
$ |
1,480 |
|
|
$ |
|
|
|
|
|
|
|
|
|
8
Verint Systems Inc. and Subsidiaries
Supplemental Information About Non-GAAP 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 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 Measures
Amortization of acquired intangible assets, including acquired technology and backlog. 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 them over their useful lives. We exclude the amortization of
acquired intangible assets, including acquired technology and backlog, 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.
Restructuring costs. We exclude from our non-GAAP financial measures expense associated with the
restructuring of our operations due to internal or external market factors. These expenses are
excluded from our non-GAAP financial measures because we believe that they are not reflective of
our ongoing operations.
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 to our
employees.
Other adjustments. We exclude from our non-GAAP financial measures legal and other professional
fees associated with acquisitions and certain extraordinary transactions. 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
associated with 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. These expenses are excluded from our non-GAAP
financial measures because we believe that they are not reflective of our ongoing operations.
9
Unrealized gains on derivatives, net. We exclude from our non-GAAP financial measures unrealized
gains on interest rate swaps and foreign currency derivatives. These gains are excluded from our
non-GAAP financial measures because they are non-cash gains.
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