Alan Roden
Verint Systems Inc.
(631) 962-9304
alan.roden@verint.com
Selected GAAP Information | Selected Non-GAAP Information | |||||||||||||||||
For the Years Ended January 31, | For the Years Ended January 31, | |||||||||||||||||
(In thousands) | 2009 | 2010 | 2009 | 2010 | ||||||||||||||
Preliminary | Preliminary | |||||||||||||||||
Revenue | $ | 669,544 | $ | 705,000 | $ | 675,434 | $ | 705,000 | ||||||||||
Gross Profit | 411,294 | 467,000 | 431,641 | 481,000 | ||||||||||||||
Gross Margin | 61.4 | % | 66.2 | % | 63.9 | % | 68.2 | % | ||||||||||
Operating Income (Loss) | (15,026 | ) | 68,000 | 120,444 | 197,000 | |||||||||||||
Operating Margin | (2.2 | %) | 9.6 | % | 17.8 | % | 27.9 | % | (1) |
(1) | Our operating margin for the year ended January 31, 2010 benefited from the positive revenue impact from changes in our business practices and the application of certain revenue recognition methodologies as we worked towards completion of our financial filings, as well as other factors, including certain expense control initiatives. Therefore, as previously disclosed, we do not believe this level is sustainable. |
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About Verint Systems Inc.
Verint® Systems Inc. is a global leader in Actionable Intelligence® solutions and value-added services. Our solutions enable organizations of all sizes to make timely and effective decisions to improve enterprise performance and make the world a safer place. More than 10,000 organizations in over 150 countries — including over 80% of the Fortune 100 — use 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. Visit us at our websitewww.verint.com.
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Verint Systems Inc. and Subsidiaries
Selected GAAP Consolidated Statement of Operations Information
(In thousands, except per share data)
For the Years Ended January 31, | ||||||||||||
2008 | 2009 | 2010(1) | ||||||||||
Preliminary | ||||||||||||
Revenue | $ | 534,543 | $ | 669,544 | $ | 705,000 | ||||||
Cost of revenue | 230,042 | 258,250 | 238,000 | |||||||||
Gross profit | 304,501 | 411,294 | 467,000 | |||||||||
Operating expenses | 419,131 | 426,320 | 399,000 | |||||||||
Operating income (loss) | (114,630 | ) | (15,026 | ) | 68,000 | |||||||
Other expense, net | (55,186 | ) | (43,880 | ) | ||||||||
Loss before income taxes and noncontrolling interest | (169,816 | ) | (58,906 | ) | ||||||||
Provision for income taxes | 27,729 | 19,671 | ||||||||||
Noncontrolling interest in net income of joint venture | 1,064 | 1,811 | ||||||||||
Net loss | (198,609 | ) | (80,388 | ) | ||||||||
Dividends on preferred stock | (8,681 | ) | (13,064 | ) | ||||||||
Net loss applicable to common shares | $ | (207,290 | ) | $ | (93,452 | ) | ||||||
Net loss per share | ||||||||||||
Basic | $ | (6.43 | ) | $ | (2.88 | ) | ||||||
Diluted | $ | (6.43 | ) | $ | (2.88 | ) | ||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 32,222 | 32,394 | ||||||||||
Diluted | 32,222 | 32,394 | ||||||||||
(1) | January 31, 2010 excludes potential special charges such as impairments of goodwill and other acquired intangible assets because we have not completed the impairment testing for that period. |
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Verint Systems Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except per share data)
For the Years Ended January 31, | ||||||||||||
2008 | 2009 | 2010(1) | ||||||||||
Preliminary | ||||||||||||
Table of Reconciliation from GAAP Revenue to Non-GAAP Revenue | ||||||||||||
GAAP revenue | $ | 534,543 | $ | 669,544 | $ | 705,000 | ||||||
Revenue adjustments related to acquisitions | 37,254 | 5,890 | — | |||||||||
Non-GAAP revenue | $ | 571,797 | $ | 675,434 | $ | 705,000 | ||||||
Table of Reconciliation from GAAP Gross Profit to Non-GAAP Gross Profit | ||||||||||||
GAAP gross profit | $ | 304,501 | $ | 411,294 | $ | 467,000 | ||||||
Revenue adjustments related to acquisitions | 37,254 | 5,890 | — | |||||||||
Amortization and impairment of acquired technology and backlog | 8,018 | 9,024 | 8,000 | |||||||||
Stock-based compensation expenses | 4,548 | 5,433 | 6,000 | |||||||||
Expenses related to our restatement and extended filing delay | 2,427 | — | — | |||||||||
Non-GAAP gross profit | $ | 356,748 | $ | 431,641 | $ | 481,000 | ||||||
Table of Reconciliation from GAAP Operating Income (Loss) to Non-GAAP Operating Income | ||||||||||||
GAAP operating income (loss) | $ | (114,630 | ) | $ | (15,026 | ) | $ | 68,000 | ||||
Revenue adjustments related to acquisitions | 37,254 | 5,890 | — | |||||||||
Amortization and impairment of acquired technology and backlog | 8,018 | 9,024 | 8,000 | |||||||||
Amortization of other acquired intangible assets | 19,668 | 25,249 | 22,000 | |||||||||
Impairments of goodwill and other acquired intangible assets | 22,934 | 25,961 | — | |||||||||
In-process research and development | 6,682 | — | — | |||||||||
Integration costs | 10,980 | 3,261 | — | |||||||||
Restructuring costs | 3,308 | 5,685 | — | |||||||||
Other legal costs (recoveries) | 8,708 | (4,292 | ) | — | ||||||||
Stock-based compensation expenses | 31,061 | 36,011 | 44,000 | |||||||||
Acquisition related professional fees | — | — | 1,000 | |||||||||
Expenses related to our restatement and extended filing delay | 41,422 | 28,681 | 54,000 | |||||||||
Non-GAAP operating income | $ | 75,405 | $ | 120,444 | $ | 197,000 | ||||||
Table of Reconciliation from GAAP Other Expense, net to Non-GAAP Other Expense, net | ||||||||||||
GAAP other expense, net | $ | (55,186 | ) | $ | (43,880 | ) | ||||||
Unrealized gains and losses on investments and derivatives | 26,703 | (1,807 | ) | |||||||||
Non-GAAP other expense, net | $ | (28,483 | ) | $ | (45,687 | ) | ||||||
Table of Reconciliation from GAAP Tax Provision to Non-GAAP Tax Provision | ||||||||||||
GAAP tax provision | $ | 27,729 | $ | 19,671 | ||||||||
Non-cash tax adjustments | (23,616 | ) | (16,352 | ) | ||||||||
Non-GAAP tax provision | $ | 4,113 | $ | 3,319 | ||||||||
Table of Reconciliation from GAAP Net Loss Applicable to Common Shares to Non-GAAP Net Income Applicable to Common Shares | ||||||||||||
GAAP net loss applicable to common shares | $ | (207,290 | ) | $ | (93,452 | ) | ||||||
Revenue adjustments related to acquisitions | 37,254 | 5,890 | ||||||||||
Amortization and impairment of acquired technology and backlog | 8,018 | 9,024 | ||||||||||
Amortization of other acquired intangible assets | 19,668 | 25,249 | ||||||||||
Impairments of goodwill and other acquired intangible assets | 22,934 | 25,961 | ||||||||||
In-process research and development | 6,682 | — | ||||||||||
Integration costs | 10,980 | 3,261 | ||||||||||
Restructuring costs | 3,308 | 5,685 | ||||||||||
Other legal costs (recoveries) | 8,708 | (4,292 | ) | |||||||||
Stock-based compensation expenses | 31,061 | 36,011 | ||||||||||
Expenses related to our restatement and extended filing delay | 41,422 | 28,681 | ||||||||||
Unrealized gains and losses on investments and derivatives | 26,703 | (1,807 | ) | |||||||||
Non-cash tax adjustments | 23,616 | 16,352 | ||||||||||
Non-GAAP net income applicable to common shares | $ | 33,064 | $ | 56,563 | ||||||||
Table Comparing GAAP Diluted Net Loss Per Share to Non-GAAP Net Income Per Share | ||||||||||||
GAAP diluted net loss per share | $ | (6.43 | ) | $ | (2.88 | ) | ||||||
Non-GAAP diluted net income per share | $ | 1.00 | $ | 1.65 | ||||||||
Shares used in computing US GAAP diluted net loss per share (in thousands) | 32,222 | 32,394 | ||||||||||
Shares used in computing non-GAAP diluted net income per share (in thousands) | 33,035 | 42,298 | ||||||||||
(1) | January 31, 2010 excludes potential special charges such as impairments of goodwill and other acquired intangible assets because we have not completed the impairment testing for that period. |
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Verint Systems Inc. and Subsidiaries
GAAP and Non-GAAP Segment Revenue
(In thousands)
For the Years Ended January 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Preliminary | ||||||||||||
GAAP Revenue By Segment | ||||||||||||
Enterprise Workforce Optimization Segment | $ | 260,938 | $ | 352,367 | $ | 375,000 | ||||||
Video Intelligence Segment | 147,225 | 127,012 | 145,000 | |||||||||
Communications Intelligence and Investigative Segment | 126,380 | 190,165 | 185,000 | |||||||||
Total Video and Communications Intelligence | 273,605 | 317,177 | 330,000 | |||||||||
GAAP Total Revenue | $ | 534,543 | $ | 669,544 | $ | 705,000 | ||||||
Revenue adjustments related to acquisitions | $ | 37,254 | $ | 5,890 | $ | — | ||||||
Non-GAAP Revenue By Segment | ||||||||||||
Enterprise Workforce Optimization Segment | $ | 298,192 | $ | 358,257 | $ | 375,000 | ||||||
Video Intelligence Segment | 147,225 | 127,012 | 145,000 | |||||||||
Communications Intelligence and Investigative Segment | 126,380 | 190,165 | 185,000 | |||||||||
Total Video and Communications Intelligence | 273,605 | 317,177 | 330,000 | |||||||||
Non-GAAP Total Revenue | $ | 571,797 | $ | 675,434 | $ | 705,000 | ||||||
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Verint Systems Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)
As of January 31, | ||||||||
2008 | 2009 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 83,233 | $ | 115,928 | ||||
Restricted cash and bank time deposits | 3,612 | 7,722 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $6.5 million and $6.0 million, respectively. | 116,427 | 113,178 | ||||||
Inventories | 19,525 | 20,455 | ||||||
Deferred cost of revenue | 8,698 | 8,935 | ||||||
Deferred income taxes | 30,991 | 14,314 | ||||||
Prepaid expenses and other current assets | 31,565 | 32,434 | ||||||
Total current assets | 294,051 | 312,966 | ||||||
Property and equipment, net | 36,315 | 30,544 | ||||||
Goodwill | 785,014 | 709,984 | ||||||
Intangible assets, net | 249,542 | 200,203 | ||||||
Capitalized software development costs, net | 10,272 | 10,489 | ||||||
Deferred cost of revenue | 64,043 | 47,913 | ||||||
Deferred income taxes | 12,686 | 6,478 | ||||||
Other assets | 40,352 | 18,816 | ||||||
Total assets | $ | 1,492,275 | $ | 1,337,393 | ||||
Liabilities, Preferred Stock, and Stockholders’ Equity (Deficit) | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 49,434 | $ | 38,484 | ||||
Accrued expenses and other liabilities | 143,941 | 144,067 | ||||||
Current maturities of long-term debt | — | 4,088 | ||||||
Deferred revenue | 157,803 | 160,918 | ||||||
Deferred income taxes | 1,021 | 403 | ||||||
Liabilities to affiliates | 1,277 | 1,389 | ||||||
Income taxes payable | 3,360 | 2,271 | ||||||
Total current liabilities | 356,836 | 351,620 | ||||||
Long-term debt | 610,000 | 620,912 | ||||||
Deferred income taxes | 18,990 | 13,424 | ||||||
Deferred revenue | 114,897 | 88,985 | ||||||
Other liabilities | 68,591 | 53,653 | ||||||
Total liabilities | 1,169,314 | 1,128,594 | ||||||
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 $313,575 at January 31, 2009. | 293,663 | 285,542 | ||||||
Commitments and Contingencies | ||||||||
Stockholders’ Equity (Deficit): | ||||||||
Common stock — $0.001 par value; authorized 120,000,000 shares. Issued 32,600,000 and 32,623,000 shares, respectively; outstanding 32,526,000 and 32,535,000 shares, respectively. | 32 | 32 | ||||||
Additional paid-in capital | 387,537 | 419,937 | ||||||
Treasury stock, at cost — 74,000 and 88,000 shares, respectively. | (2,094 | ) | (2,353 | ) | ||||
Accumulated deficit | (355,567 | ) | (435,955 | ) | ||||
Accumulated other comprehensive loss | (610 | ) | (58,404 | ) | ||||
Total stockholders’ equity (deficit) | 29,298 | (76,743 | ) | |||||
Total liabilities, preferred stock, and stockholders’ equity (deficit) | $ | 1,492,275 | $ | 1,337,393 | ||||
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Verint Systems Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
For the Years Ended January 31, | ||||||||
2008 | 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (198,609 | ) | $ | (80,388 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 46,791 | 55,142 | ||||||
Provision for doubtful accounts | 3,380 | 793 | ||||||
Impairments of assets | 28,083 | 25,961 | ||||||
In-process research and development | 6,682 | — | ||||||
Stock-based compensation | 31,013 | 32,040 | ||||||
Provision for deferred income taxes | 19,992 | 17,768 | ||||||
Non-cash losses on derivative financial instruments, net | 22,267 | 14,591 | ||||||
Non-cash gains on sales of auction rate securities | — | (4,713 | ) | |||||
Other non-cash items, net | 2,631 | 2,252 | ||||||
Changes in operating assets and liabilities, net of effects of business combinations: | ||||||||
Accounts receivable | (20,184 | ) | (3,328 | ) | ||||
Inventories | 1,005 | (2,761 | ) | |||||
Deferred cost of revenue | 5,613 | 12,201 | ||||||
Accounts payable and accrued expenses | 8,480 | (10,754 | ) | |||||
Deferred revenue | 25,130 | (7,329 | ) | |||||
Prepaid expenses and other assets | 14,040 | 8,876 | ||||||
Other liabilities | 4,697 | (6,877 | ) | |||||
Other, net | (1,310 | ) | 161 | |||||
Net cash provided by (used in) operating activities | (299 | ) | 53,635 | |||||
Cash flows from investing activities: | ||||||||
Cash paid for business combinations, net of cash acquired, including payments of contingent consideration | (953,154 | ) | (3,092 | ) | ||||
Purchases of property and equipment | (14,247 | ) | (11,113 | ) | ||||
Purchases of investments | (208,000 | ) | — | |||||
Sales and maturities of investments | 328,465 | 7,000 | ||||||
Settlement of derivative financial instruments not designated as hedges | — | (10,041 | ) | |||||
Cash paid for capitalized software development costs | (4,624 | ) | (4,547 | ) | ||||
Other investing activities | (173 | ) | (4,454 | ) | ||||
Net cash used in investing activities | (851,733 | ) | (26,247 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of preferred stock | 293,000 | — | ||||||
Proceeds from borrowings | 650,000 | 15,000 | ||||||
Repayments of borrowings and other financing obligations | (42,496 | ) | (2,869 | ) | ||||
Payment of debt issuance costs and other debt related costs | (13,606 | ) | (150 | ) | ||||
Other financing activities | (1,881 | ) | (93 | ) | ||||
Net cash provided by financing activities | 885,017 | 11,888 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 923 | (6,581 | ) | |||||
Net increase in cash and cash equivalents | 33,908 | 32,695 | ||||||
Cash and cash equivalents, beginning of period | 49,325 | 83,233 | ||||||
Cash and cash equivalents, end of period | $ | 83,233 | $ | 115,928 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | 30,680 | $ | 36,544 | ||||
Cash paid for income taxes | $ | 4,113 | $ | 3,319 | ||||
Non-cash investing and financing transactions: | ||||||||
Fair value of stock options exchanged in connection with business combinations | $ | 4,717 | $ | — | ||||
Accrued but unpaid purchases of property and equipment | $ | 1,466 | $ | 382 | ||||
Inventory transfers to property and equipment | $ | 795 | $ | 1,325 | ||||
Business combination consideration earned, but paid in subsequent periods | $ | 1,796 | $ | — | ||||
Settlement of embedded derivative | $ | — | $ | 8,121 | ||||
Dividend to noncontrolling interest - declared, but paid in subsequent period | $ | — | $ | 2,142 | ||||
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Supplemental Information About Non-GAAP Measures
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