Exhibit 99.1
| |
|
| VeriFone, Inc. |
| 2099 Gateway Place, Suite 600 |
| San Jose, CA, 95110 |
| |
| www.verifone.com |
Investor Contact:
William Nettles - Director Corporate
Development & IR
Tel: 408-232-7979
Email: ir@verifone.com
Editorial Contact:
Pete Bartolik
VeriFone, Inc.
Tel: 508-283-4112
Email: pete_bartolik@verifone.com
VeriFone Reports
Fourth Quarter and Fiscal 2006 Results
Fourth-Quarter Revenues Increased 20% to $157 Million
EBITDA, as adjusted, Margins Increased to 24.2% for the Quarter
Fourth Quarter Net Income, as adjusted, Increased 50% to $22.3 Million
SAN JOSE, CA – December 7, 2006 – VeriFone Holdings, Inc. (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months and fiscal year ended October 31, 2006.
Net revenues for the three months ended October 31, 2006 were $156.6 million, an increase of 20% over net revenues of $130.5 million for the comparable period of 2005. The increase was driven by a 30% increase in net revenues from VeriFone’s International business and a 14% increase in net revenues from VeriFone’s North America business.
Gross margins, under generally accepted accounting principles (GAAP), for the three months ended October 31, 2006 were 46.0%, compared to 42.7% for the three months ended October 31, 2005. Gross margins, excluding non-cash amortization of purchased intangibles and stock-based compensation expense, expanded for the eighth consecutive quarter and reached 47.1% for the three months ended October 31, 2006 compared to 44.0% for the comparable period of 2005.
Net income for the three months ended October 31, 2006 was $13.9 million, or $0.20 per diluted share, compared to $12.1 million, or $0.18 per diluted share, for the comparable period of fiscal 2005. GAAP net income was impacted in the quarter by the $4.1 million after-tax write off of debt issuance costs, attributable to the refinancing of outstanding debt in
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connection with the Lipman acquisition. Net income, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, for the three months ended October 31, 2006 was $22.3 million, or $0.32 per diluted share, compared to $14.9 million, or $0.22 per diluted share, for the comparable period of fiscal 2005.
EBITDA, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, expanded for the ninth consecutive quarter and reached a record level of $38.0 million, a 44% increase over the $26.5 million recorded in the three months ended October 31, 2005. EBITDA, as adjusted, margins for the three months ended October 31, 2006 reached 24.2%, as compared to the 20.3% recorded in the three months ended October 31, 2005.
Net revenues for the fiscal year ended October 31, 2006 were $581.1 million, an increase of 20% over the $485.4 million recorded for fiscal 2005.
Net income for the fiscal year ended October 31, 2006 was $59.5 million, compared to $33.2 million for fiscal 2005. Net income, as adjusted, for the fiscal year ended October 31, 2006 was $76.4 million, compared to $49.7 million, for fiscal 2005.
EBITDA, as adjusted, for the fiscal year ended October 31, 2006 was $130.4 million, an increase of 51% over the $86.4 million recorded for fiscal 2005. EBITDA, as adjusted, margins for the fiscal year ended October 31, 2006 were 22.4%, compared to 17.8% for the comparable period of 2005.
“VeriFone has completed another outstanding quarter and achieved record revenue and earnings for fiscal year 2006. This year was highlighted by our transformative acquisition of Lipman which combined the two strongest financial performers in the industry to create the world leader in payment technology,” said Douglas G. Bergeron, Chairman and Chief Executive Officer.
“We enter our new financial year poised to capitalize on our numerous competitive advantages and our very wide range of product offerings,” continued Bergeron. “The integration of Lipman into VeriFone has been
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completed ahead of schedule and we have created a single-branded, unified company with tremendous scale advantages. Already, we are enjoying several supply chain efficiencies and earnings accretion.”
“As a result, we have increased our internal expectations for fiscal Q1 2007 net earnings per share, as adjusted, to be in the range of $0.33 to $0.34. We remain very confident of our prospects in fiscal 2007.”
Fourth Quarter Highlights
· VeriFone continued to gain strong momentum in the multi-lane retail vertical with key multi-million dollar competitive wins at IKEA and Kroger. A major factor in the success of our multi-lane retail business is the MX870, the only large screen solution currently in the market for customers seeking to meet upcoming PCI deadlines.
· VeriFone benefited in Mexico from strong FIMPE activity, as we enjoy the vast majority of this ongoing business. FIMPE is a non-profit private fund formed by financial institutions to promote and extend the benefits of access to the electronic payments network to small to medium size businesses and to foster the culture of electronic payments among merchants and consumers.
· VeriFone continued to make good progress in the UK market this quarter, as demonstrated by its competitive win of CardNet, a joint venture between Lloyds and First Data. CardNet chose VeriFone as its primary supplier for desktop and mobile payment systems, offering an end-to-end service.
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Financial Measures
Reconciliations for both of the non-GAAP measures presented in this press release are provided at the end of this press release. Management uses the non-GAAP measures presented in this release to help them evaluate VeriFone’s performance and to compare VeriFone’s current results with those for prior periods as well as with the results of other companies in our industry, but cautions investors that these non-GAAP measures should not be considered as substitutes for disclosures made in accordance with GAAP.
Conference Call
The management of VeriFone will host a conference call, which will be simultaneously webcast, on December 7, 2006 at 1:30 p.m. (PST) to discuss VeriFone’s fourth quarter results. Management may also provide forward looking guidance on this call. To access the live conference call, the dial-in numbers are as follows:
Domestic callers: 800-291-5365
International callers: 617-614-3922
Passcode: 41604248
To access the audio webcast, please go to VeriFone’s website (http://ir.verifone.com) at least ten minutes prior to the call to register. The recorded audio webcast will be available on VeriFone’s website until December 15, 2006.
A replay of the conference call, which can be accessed by dialing toll-free 888-286-8010, and outside the U.S. 617-801-6888, will be available until December 15, 2006. The access code for the replay is 31150146.
-ends-
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About VeriFone Holdings, Inc. (www.verifone.com)
VeriFone Holdings, Inc. (“VeriFone”) (NYSE: PAY) is the global leader in secure electronic payment solutions. VeriFone provides expertise, solutions and services that add value to the point of sale with merchant-operated, consumer-facing and self-service payment systems for the financial, retail, hospitality, petroleum, government and healthcare vertical markets. VeriFone solutions are designed to meet the needs of merchants, processors and acquirers in developed and emerging economies worldwide.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of VeriFone Holdings, Inc. These risks and uncertainties include: the status of our relationship with and condition of third parties upon whom we rely in the conduct of our business, our dependence on a limited number of customers, uncertainties related to the conduct of our business internationally, our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations, our dependence on a limited number of key employees, short product cycles, rapidly changing technologies and maintaining competitive leadership position with respect to our payment solution offerings, our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, and our ability to protect against fraud. For a further list and description of such risks and uncertainties, see our filings with the Securities and Exchange Commission, including our quarterly reports on Form 10-Q and our annual report on Form 10-K. VeriFone is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.
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VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
| | Three Months Ended | | | | Years Ended | | | |
| | October 31, | | | | October 31, | | | |
| | 2006 | | 2005 | | Change | | 2006 | | 2005 | | Change | |
| | (unaudited) | |
Net revenues: | | | | | | | | | | | | | |
System Solutions | | $ | 138,373 | | $ | 114,950 | | 20 | % | $ | 517,154 | | $ | 429,741 | | 20 | % |
Services | | 18,260 | | 15,540 | | 18 | | 63,916 | | 55,626 | | 15 | |
Total net revenues | | 156,633 | | 130,490 | | 20 | | 581,070 | | 485,367 | | 20 | |
Cost of net revenues: | | | | | | | | | | | | | |
System Solutions(2) | | 73,922 | | 64,967 | | 14 | | 281,423 | | 252,476 | | 11 | |
Amortization of purchased core and developed technology assets | | 1,542 | | 1,680 | | -8 | | 5,625 | | 6,935 | | -19 | |
Total cost of System Solutions net revenues | | 75,464 | | 66,647 | | 13 | | 287,048 | | 259,411 | | 11 | |
Services(2) | | 9,086 | | 8,177 | | 11 | | 32,477 | | 29,131 | | 11 | |
Total cost of net revenues | | 84,550 | | 74,824 | | 13 | | 319,525 | | 288,542 | | 11 | |
| | | | | | | | | | | | | |
Gross profit | | 72,083 | | 55,666 | | 29 | | 261,545 | | 196,825 | | 33 | |
Operating expenses:(2) | | | | | | | | | | | | | |
Research and development | | 11,999 | | 11,479 | | 5 | | 47,353 | | 41,830 | | 13 | |
Sales and marketing | | 15,821 | | 13,921 | | 14 | | 58,607 | | 52,231 | | 12 | |
General and administrative | | 11,946 | | 8,002 | | 49 | | 42,573 | | 29,609 | | 44 | |
Amortization of purchased intangible assets | | 1,226 | | 1,159 | | 6 | | 4,703 | | 4,967 | | -5 | |
Total operating expenses | | 40,992 | | 34,561 | | 19 | | 153,236 | | 128,637 | | 19 | |
| | | | | | | | | | | | | |
Operating income | | 31,091 | | 21,105 | | 47 | | 108,309 | | 68,188 | | 59 | |
Interest expense | | (3,703 | ) | (3,426 | ) | 8 | | (13,617 | ) | (15,384 | ) | -11 | |
Interest income | | 820 | | 398 | | nm | | 3,372 | | 598 | | nm | |
Other expense, net | | (6,465 | ) | (360 | ) | nm | | (6,394 | ) | (6,673 | ) | nm | |
Income before income taxes | | 21,743 | | 17,717 | | 23 | | 91,670 | | 46,729 | | 96 | |
Provision for income taxes | | 7,817 | | 5,657 | | 38 | | 32,159 | | 13,490 | | 138 | |
| | | | | | | | | | | | | |
Net income | | $ | 13,926 | | $ | 12,060 | | 15 | % | $ | 59,511 | | $ | 33,239 | | 79 | % |
| | | | | | | | | | | | | |
Net income per share: | | | | | | | | | | | | | |
Basic | | $ | 0.21 | | $ | 0.19 | | | | $ | 0.90 | | $ | 0.57 | | | |
Diluted | | $ | 0.20 | | $ | 0.18 | | | | $ | 0.86 | | $ | 0.54 | | | |
| | | | | | | | | | | | | |
Weighted-average shares used in computing net income per common share: | | | | | | | | | | | | | |
Basic | | 67,065 | | 64,137 | | | | 66,217 | | 58,318 | | | |
Diluted | | 69,052 | | 67,112 | | | | 68,894 | | 61,460 | | | |
VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
ADDITIONAL CONSOLIDATED STATEMENTS OF OPERATIONS DISCLOSURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
| | Three Months Ended | | Years Ended | |
| | October 31, | | October 31, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | (unaudited) | |
Gross profit as reported | | $ | 72,083 | | $ | 55,666 | | $ | 261,545 | | $ | 196,825 | |
Amortization of purchased core and developed technology assets | | 1,542 | | 1,680 | | 5,625 | | 6,935 | |
Stock-based compensation | | 190 | | 114 | | 709 | | 187 | |
Gross profit excluding amortization of purchased core and developed technology assets and stock-based compensation(3) | | $ | 73,815 | | $ | 57,460 | | $ | 267,879 | | $ | 203,947 | |
As a percentage of net revenues: | | | | | | | | | |
Gross profit as reported | | 46.0 | % | 42.7 | % | 45.0 | % | 40.6 | % |
Gross profit excluding amortization of purchased core and developed technology assets and stock-based compensation | | 47.1 | % | 44.0 | % | 46.1 | % | 42.0 | % |
| | Three Months Ended | | Year Ended | |
| | October 31, | | October 31, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | (unaudited) | |
(2)Stock-based compensation included above: | | | | | | | | | |
Cost of net revenues - System Solutions | | $ | 190 | | $ | 114 | | $ | 709 | | $ | 187 | |
Research and development | | 478 | | 173 | | 1,194 | | 358 | |
Sales and marketing | | 748 | | 308 | | 2,057 | | 663 | |
General and administrative | | 786 | | 177 | | 2,040 | | 479 | |
| | $ | 2,202 | | $ | 772 | | $ | 6,000 | | $ | 1,687 | |
(1) “nm” means not meaningful.
(2) The Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment” effective May 1, 2005 using the modified-prospective transition method. For periods prior to May 1, 2005, the Company followed the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.”
(3) Management uses gross profit without amortization of purchased core and developed technology assets and stock-based compensation, a non-GAAP measure, to evaluate the Company’s gross profit and to compare the Company’s current results with those of prior periods, but cautions that it should not be considered as a substitute for disclosures made in accordance with GAAP.
VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
| | October 31, | |
| | 2006 | | 2005 | |
| | (unaudited) | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 86,564 | | $ | 65,065 | |
Marketable securities | | — | | 16,769 | |
Accounts receivable, net of allowances of $2,364 and $1,571 | | 119,839 | | 87,424 | |
Inventories | | 86,631 | | 33,501 | |
Other current assets | | 26,210 | | 20,835 | |
Total current assets | | 319,244 | | 223,594 | |
| | | | | |
Equipment and improvements, net | | 7,300 | | 5,873 | |
Purchased intangible assets, net | | 16,544 | | 18,912 | |
Goodwill | | 52,689 | | 47,260 | |
Other assets | | 57,168 | | 31,713 | |
| | | | | |
Total assets | | $ | 452,945 | | $ | 327,352 | |
| | | | | |
Liabilities and stockholders’ equity | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 66,685 | | $ | 47,161 | |
Income taxes payable | | 5,951 | | 8,746 | |
Deferred revenue, net | | 23,567 | | 15,523 | |
Other current liabilities | | 54,480 | | 37,729 | |
Current portion of long-term debt | | 1,985 | | 1,994 | |
Total current liabilities | | 152,668 | | 111,153 | |
| | | | | |
Deferred revenue | | 7,371 | | 6,835 | |
Long-term debt, less current portion | | 190,904 | | 180,812 | |
Other long-term liabilities | | 3,261 | | 2,014 | |
| | | | | |
Total stockholders’ equity | | 98,741 | | 26,538 | |
| | | | | |
Total liabilities and stockholders’ equity | | $ | 452,945 | | $ | 327,352 | |
VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
| | Three Months Ended | | Years Ended | |
| | October 31, | | October 31, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | (unaudited) | | (unaudited) | |
Cash flows from operating activities | | | | | | | | | |
Net income | | $ | 13,926 | | $ | 12,060 | | $ | 59,511 | | $ | 33,239 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | |
Amortization of purchased intangibles | | 2,768 | | 2,839 | | 10,328 | | 11,902 | |
Depreciation and amortization of equipment and improvements | | 973 | | 1,399 | | 3,505 | | 3,691 | |
Amortization of capitalized software | | 339 | | 393 | | 1,231 | | 1,173 | |
Amortization of interest rate caps | | — | | 29 | | 236 | | 109 | |
Amortization of debt issuance costs | | 286 | | 259 | | 1,105 | | 1,150 | |
Stock-based compensation | | 2,202 | | 772 | | 6,000 | | 1,687 | |
Non-cash portion of loss on debt extinguishment | | 6,359 | | — | | 6,359 | | 2,898 | |
Other | | 22 | | (17 | ) | (52 | ) | (17 | ) |
Net cash provided by operating activities before changes in working capital | | 26,875 | | 17,734 | | 88,223 | | 55,832 | |
Changes in operating assets and liabilities: | | | | | | | | | |
Accounts receivable, net | | (9,841 | ) | (13,119 | ) | (28,938 | ) | (8,817 | ) |
Inventories, net | | (11,614 | ) | (2,504 | ) | (51,983 | ) | (3,407 | ) |
Deferred tax assets | | (3,138 | ) | (5,705 | ) | (5,801 | ) | (9,853 | ) |
Prepaid expenses and other current assets | | (3,240 | ) | (1,389 | ) | (4,444 | ) | (269 | ) |
Other assets | | (1,182 | ) | (1,119 | ) | (2,106 | ) | (1,118 | ) |
Accounts payable | | 1,768 | | 11,699 | | 17,189 | | 3,227 | |
Income taxes payable | | 1,111 | | 7,764 | | 1,542 | | 2,403 | |
Tax benefit from stock-based compensation | | (748 | ) | (423 | ) | (3,414 | ) | (441 | ) |
Accrued compensation | | 2,456 | | 1,650 | | 2,656 | | 838 | |
Accrued warranty | | (415 | ) | (144 | ) | (1,301 | ) | 1,448 | |
Deferred revenue, net | | 1,641 | | 1,009 | | 7,150 | | 3,464 | |
Deferred tax liabilities | | 64 | | (3,017 | ) | 64 | | (2,047 | ) |
Accrued expenses and other liabilities | | (630 | ) | 2,107 | | (2,090 | ) | (1,101 | ) |
Net cash provided by operating activities | | 3,107 | | 14,543 | | 16,747 | | 40,159 | |
| | | | | | | | | |
Cash flows from investing activities | | | | | | | | | |
Software development costs capitalized | | (268 | ) | (172 | ) | (1,999 | ) | (863 | ) |
Purchases of equipment and improvements | | (886 | ) | (955 | ) | (3,666 | ) | (3,121 | ) |
Purchases of other assets | | (230 | ) | (245 | ) | (903 | ) | (863 | ) |
Purchases of marketable securities | | — | | (23,952 | ) | (125,034 | ) | (23,952 | ) |
Sales and maturities of marketable securities | | 14,544 | | 7,200 | | 141,869 | | 7,200 | |
Transaction costs, pending acquistions | | (928 | ) | — | | (3,425 | ) | — | |
Acquisition of business, net of cash and cash equivalents acquired | | (10,867 | ) | 51 | | (10,867 | ) | (13,405 | ) |
Net cash provided by (used in) investing activities | | 1,365 | | (18,073 | ) | (4,025 | ) | (35,004 | ) |
| | | | | | | | | |
Cash flows from financing activities | | | | | | | | | |
Proceeds from long-term debt, net of costs | | 184,060 | | — | | 184,060 | | — | |
Repayments of long-term debt | | (181,166 | ) | (465 | ) | (182,552 | ) | (78,972 | ) |
Repayments of capital leases | | (19 | ) | (53 | ) | (144 | ) | (409 | ) |
Proceeds from revolving promissory notes payable and revolver | | — | | — | | — | | 19,680 | |
Repayments of revolving promissory notes payable and revolver | | — | | — | | — | | (19,680 | ) |
Proceeds from issuance of common stock | | — | | 51,950 | | — | | 136,950 | |
Payments of IPO and follow-on financing costs | | — | | (4,102 | ) | — | | (11,444 | ) |
Proceeds from exercises of stock options | | 936 | | 606 | | 3,056 | | 753 | |
Tax benefit of stock-based compensation | | 748 | | 423 | | 3,414 | | 441 | |
Net cash provided by financing activities | | 4,559 | | 48,359 | | 7,834 | | 47,319 | |
Effect of foreign currency exchange rate changes on cash | | (68 | ) | 145 | | 943 | | (114 | ) |
Net increase in cash and cash equivalents | | 8,963 | | 44,974 | | 21,499 | | 52,360 | |
Cash and cash equivalents, beginning of period | | 77,601 | | 20,091 | | 65,065 | | 12,705 | |
Cash and cash equivalents, end of period | | $ | 86,564 | | $ | 65,065 | | $ | 86,564 | | $ | 65,065 | |
| | | | | | | | | |
Supplemental disclosures of cash flow information | | | | | | | | | |
Cash paid for interest | | $ | 3,389 | | $ | 3,859 | | $ | 12,402 | | $ | 14,843 | |
Cash paid for income taxes | | $ | 10,372 | | $ | 6,305 | | $ | 37,253 | | $ | 22,350 | |
SUPPLEMENTAL DATA
VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
GEOGRAPHIC REVENUE INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES)
| | Three Months Ended | | Years Ended | |
| | October 31, | | October 31, | |
| | 2006 | | 2005 | | Change | | 2006 | | 2005 | | Change | |
| | | | | | | | | | | | | |
North America | | $ | 90,628 | | $ | 79,566 | | 14 | % | $ | 333,673 | | $ | 289,720 | | 15 | % |
Latin America | | 29,799 | | 18,935 | | 57 | | 104,225 | | 71,265 | | 46 | |
Europe | | 28,135 | | 23,110 | | 22 | | 108,889 | | 88,995 | | 22 | |
Asia | | 8,658 | | 9,084 | | -5 | | 35,269 | | 36,087 | | -2 | |
Corporate | | (587 | ) | (205 | ) | nm | | (986 | ) | (700 | ) | 41 | |
| | $ | 156,633 | | $ | 130,490 | | 20 | % | $ | 581,070 | | $ | 485,367 | | 20 | % |
SUPPLEMENTAL DATA
VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
| | Three Months Ended October 31, | | Years Ended October 31, | |
| | 2006 | | 2005 | | Change | | 2006 | | 2005 | | Change | |
| | | | | | | | | | | | | |
U.S. GAAP net income | | $ | 13,926 | | $ | 12,060 | | 15 | % | $ | 59,511 | | $ | 33,239 | | 79 | % |
Provision for income taxes | | 7,817 | | 5,657 | | 38 | | 32,159 | | 13,490 | | 138 | |
Interest expense | | 3,703 | | 3,426 | | 8 | | 13,617 | | 15,384 | | -11 | |
Interest income | | (820 | ) | (398 | ) | nm | | (3,372 | ) | (598 | ) | nm | |
Depreciation and amortization of equipment and improvements | | 973 | | 1,399 | | -30 | | 3,505 | | 3,691 | | -5 | |
Amortization of capitalized software | | 339 | | 393 | | -14 | | 1,231 | | 1,173 | | 5 | |
Amortization of purchased intangible assets | | 2,768 | | 2,839 | | -3 | | 10,328 | | 11,902 | | -13 | |
Amortization of step-up in deferred revenue on acquisition | | 587 | | 205 | | 186 | | 986 | | 700 | | 41 | |
Amortization of step-up in inventory on acquisition | | 121 | | — | | nm | | 121 | | — | | nm | |
Stock-based compensation(2) | | 2,202 | | 772 | | 185 | | 6,000 | | 1,687 | | 256 | |
Management fees to majority stockholder | | — | | — | | nm | | — | | 125 | | nm | |
Loss on debt extinguishment and debt repricing fee | | 6,359 | | 100 | | nm | | 6,359 | | 5,630 | | 13 | |
EBITDA as adjusted (3) | | $ | 37,975 | | $ | 26,453 | | 44 | % | $ | 130,445 | | $ | 86,423 | | 51 | % |
| | | | | | | | | | | | | |
U.S. GAAP net income | | $ | 13,926 | | $ | 12,060 | | 15 | % | $ | 59,511 | | $ | 33,239 | | 79 | % |
Amortization of purchased intangible assets | | 2,768 | | 2,839 | | -3 | | 10,328 | | 11,902 | | -13 | |
Amortization of step-up in deferred revenue on acquisition | | 587 | | 205 | | 186 | | 986 | | 700 | | 41 | |
Amortization of step-up in inventory on acquisition | | 121 | | — | | nm | | 121 | | — | | nm | |
Stock-based compensation(2) | | 2,202 | | 772 | | 185 | | 6,000 | | 1,687 | | 256 | |
Amortization of debt issuance costs | | 286 | | 259 | | 10 | | 1,105 | | 1,150 | | -4 | |
Interest adjustment on debt repaid on initial public offering | | — | | — | | nm | | — | | 3,157 | | nm | |
Loss on debt extinguishment and debt repricing fee | | 6,359 | | 100 | | nm | | 6,359 | | 5,630 | | 13 | |
Total adjustments | | 12,323 | | 4,175 | | 195 | | 24,899 | | 24,226 | | 3 | |
| | | | | | | | | | | | | |
Tax effect of adjustments | | 3,943 | | 1,336 | | 195 | | 7,968 | | 7,752 | | 3 | |
Estimated long term tax rate | | 32 | % | 32 | % | nm | | 32 | % | 32 | % | nm | |
Net adjustments | | 8,380 | | 2,839 | | 195 | | 16,931 | | 16,474 | | 3 | |
| | | | | | | | | | | | | |
Net Income as Adjusted (3) | | $ | 22,306 | | $ | 14,899 | | 50 | % | $ | 76,442 | | $ | 49,713 | | 54 | % |
| | | | | | | | | | | | | |
Net Income as Adjusted per diluted share | | $ | 0.32 | | $ | 0.22 | | | | $ | 1.11 | | $ | 0.81 | | | |
| | | | | | | | | | | | | |
Weighted-average shares used in computing diluted net income as adjusted per common share | | 69,052 | | 67,112 | | | | 68,894 | | 61,460 | | | |
(1) “nm” means not meaningful.
(2) The Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment” effective May 1, 2005 using the modified-prospective transition method. For periods prior to May 1, 2005, the Company followed the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.”
(3) Management uses EBITDA as Adjusted and Net Income as Adjusted, both non-GAAP measures to evaluate the Company’s operating performance and compare the Company’s current results with those for prior periods, but cautions that they should not be considered as substitutes for disclosures made in accordance with GAAP.
VERIFONE HOLDINGS, INC.
RECONCILIATION OF GUIDANCE FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE AND NET INCOME
(In $ million, except per share data; unaudited)
| | Three months ending January 31, 2007 | |
| | Non-GAAP | | | | GAAP | |
| | Range of Estimates | | | | Range of Estimates | |
| | From | | To | | Adjustments | | From | | To | |
Net income | | $ | 27.5 | | $ | 28.5 | | $ | (25.6 | )(a) | $ | 1.9 | | $ | 2.9 | |
| | | | | | | | | | | |
Net income per share - diluted | | $ | 0.33 | | $ | 0.34 | | | | $ | 0.02 | | $ | 0.03 | |
| | | | | | | | | | | |
Shares used to compute net income per share (millions) | | 83.3 | | 83.3 | | | | 83.3 | | 83.3 | |
| | | | | | | | | | | | | | | | |
(a) Reflects estimated adjustments as follows:
| | Before Tax | | After Tax
@28% | |
| | | | | |
(i) Amortization of purchased core and developed technology assets | | $ | 13.0 | | $ | 9.2 | |
(ii) Step-up in inventory on acquisition | | 7.0 | | 5.1 | |
(iii) In-process research and development | | 5.5 | | 4.0 | |
(iv) Stock compensation expenses | | 5.2 | | 3.8 | |
(v) Amortization of step-up in deferred revenue on acquisition | | 4.5 | | 3.2 | |
(vi) Amortization of debt issuance costs | | 0.4 | | 0.3 | |
| | $ | 35.6 | | $ | 25.6 | |
