Verifone Systems 8-K VeriFone Reports Results for the Second Quarter of Fiscal 2013

Exhibit 99.1

VeriFone Reports Results for the Second Quarter of Fiscal 2013

SAN JOSE, Calif. - June 5, 2013 - VeriFone Systems, Inc. (NYSE: PAY)

Second Quarter Financial Highlights

• Non-GAAP net revenues of $430 million

• GAAP net revenues of $426 million

• Non-GAAP net income per diluted share of $0.42

• GAAP net loss per share of $0.54, including $0.44 per share for certain legal charges

• Operating cash flow of $79 million

VeriFone Systems, Inc. (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months ended April 30, 2013 (“Q2 FY13”). Non-GAAP net revenues for Q2 FY13 were $430 million, compared to $479 million a year ago, a 10% decrease. GAAP net revenues were $426 million, compared to $472 million a year ago, a 10% decrease. Non-GAAP net income per diluted share was $0.42, compared to $0.64 a year ago, a 34% decrease. GAAP net loss per diluted share was $0.54, compared to net profit of $0.03 a year ago. The table below provides additional summary non-GAAP and GAAP financial information and comparisons.

(IN MILLIONS, EXCEPT PER SHARE AND PERCENTAGES, UNAUDITED)
	Three Months Ended April 30,								Six Months Ended April 30,
	2013			2012			% Change (2)		2013			2012			% Change (2)
Non-GAAP (1):
Net revenues (Note A, D, F)	$	430		$	479		(10.4	)%	859			905			(5.0	)%
Gross margin as a % of net revenues	42.2		%	44.6		%	(2.4) pts		42.9		%	43.8		%	(0.9) pts
Net income per diluted share	$	0.42		$	0.64		(34.4	)%	$	0.93		$	1.23		(24.4	)%
GAAP:
Net revenues	$	426		$	472		(9.7	)%	855			892			(4.1	)%
Gross margin as a % of net revenues	36.2		%	40.7		%	(4.5) pts		38.2		%	39.1		%	(0.9) pts
Net income (loss) per diluted share	$	(0.54	)	$	0.03		nm		$	(0.43	)	$	—		nm

(1) Reconciliations for the non-GAAP measures are provided at the end of this press release.

(2) "nm" means not meaningful or relevant

Commenting on the results, Richard McGinn, Interim Chief Executive Officer, said, “We are keenly aware of the significant short-term challenges impacting our fiscal year 2013 financial results. To regain our momentum, we are addressing the critical issues head-on. We have empowered a new senior leadership team. We are substantially increasing our R&D investment to best serve our customers and regain competitiveness in markets where we have product gaps. And, we have increased our focus on cash management, as evidenced by our generation of $79 million of operating cash flow in the second quarter.

“While we are pleased with many aspects of our business, the next twelve months will be devoted to investing heavily in our customers, our products, and our people, to reverse the current trend and reposition ourselves to resume growth. We believe there is significant upside potential for both the payment technology business and our company,” concluded McGinn.

Additional Financial and Business Highlights

• Displaced incumbent competitors at twelve U.S. multi-lane retailers while not losing any large U.S merchant customers.

• Won a two-year tender with Sberbank, the largest bank in Russia, to deliver 450K VX systems.

• Secured significant orders with major customers in Spain and Italy.

• Announced a new GlobalBay SMB mobile point of sale application for our channel partners.

• Achieved service revenue record of 35% of total non-GAAP net revenues in Q2.

• Completed the acquisition of EFTPOS New Zealand for approximately $57 million.

Guidance

Guidance for the third fiscal quarter of 2013 is as follows:

• Non-GAAP net revenues of approximately $400 million

• Non-GAAP net income per diluted share of approximately $0.20

The company expects modest sequential increases in non-GAAP net revenues and non-GAAP net income per diluted share in Q4.

Conference Call

VeriFone will hold its earnings conference call today at 1:30 pm (PT). To listen to the call and view the slides, visit VeriFone's website http://ir.verifone.com. To listen to the call over the phone, dial (877) 280-4958 within the U.S., or (857) 244-7315 outside the U.S., and use conference passcode 5960 5148. The recorded audio webcast will be available on VeriFone's website until June 12, 2013.

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 on currently available competitive, financial and economic data and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the forward-looking 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 Systems, Inc. These risks and uncertainties include, but are not limited to: our assumptions, judgments and estimates regarding the impact on our business of the continued uncertainty in the global economic environment and financial markets, our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, whether the expected benefits of our business initiatives are achieved, our ability to protect against fraud, the status of our relationship with and condition of third parties such as our contract manufacturers, distributors and key suppliers upon whom we rely in the conduct of our business, our dependence on a limited number of customers, risks and uncertainties related to the conduct of our business and operations 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. The forward-looking statements in this press release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. For a further list and description of the risks and uncertainties affecting the operations of our business, see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. 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.

About VeriFone Systems, Inc. (www.verifone.com)

VeriFone Systems, 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.

Additional Resources:

http://ir.verifone.com

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
(UNAUDITED)
			Three Months Ended April 30,								Six Months Ended April 30,
			2013			2012			% Change (1)		2013			2012			% Change (1)
Net revenues:
	System solutions		$	276,560		$	340,443		(18.8	)%	$	558,268		$	653,084		(14.5	)%
	Services		149,727			131,575			13.8	%	296,766			238,458			24.5	%
		Total net revenues	426,287			472,018			(9.7	)%	855,034			891,542			(4.1	)%
Cost of net revenues:
	System solutions		180,872			202,273			(10.6	)%	355,115			401,025			(11.4	)%
	Services		91,109			77,586			17.4	%	173,651			141,720			22.5	%
		Total cost of net revenues	271,981			279,859			(2.8	)%	528,766			542,745			(2.6	)%
Total gross margin			154,306			192,159			(19.7	)%	326,268			348,797			(6.5	)%
Operating expenses:
	Research and development		41,581			37,849			9.9	%	81,383			72,928			11.6	%
	Sales and marketing		46,496			46,141			0.8	%	92,244			86,127			7.1	%
	General and administrative		43,676			48,696			(10.3	)%	83,657			94,734			(11.7	)%
	Litigation loss contingency expense		69,000			17,632			nm		69,000			17,632			nm
	Amortization of purchased intangible assets		23,122			23,757			(2.7	)%	47,818			37,372			28.0	%
		Total operating expenses	223,875			174,075			28.6	%	374,102			308,793			21.1	%
Operating income (loss)			(69,569		)	18,084			nm		(47,834		)	40,004			nm
Interest expense			(11,979		)	(18,636		)	(35.7	)%	(24,569		)	(33,270		)	(26.2	)%
Interest income			730			1,143			(36.1	)%	1,818			2,150			(15.4	)%
Other income (expense), net			2,306			(1,780		)	nm		6,246			(22,629		)	nm
Loss before income taxes			(78,512		)	(1,189		)	nm		(64,339		)	(13,745		)	nm
Income tax benefit			(21,483		)	(4,598		)	nm		(19,020		)	(14,380		)	nm
Consolidated net income (loss)			(57,029		)	3,409			nm		(45,319		)	635			nm
Net (income) loss attributable to noncontrolling interests			(1,347		)	68			nm		(1,219		)	(282		)	nm
Net income (loss) attributable to VeriFone Systems, Inc. stockholders			$	(58,376	)	$	3,477		nm		$	(46,538	)	$	353		nm
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
	Basic		$	(0.54	)	$	0.03				$	(0.43	)	$	—
	Diluted		$	(0.54	)	$	0.03				$	(0.43	)	$	—
Weighted average number of shares used in computing net income (loss) per share:
	Basic		108,314			106,898					108,122			106,359
	Diluted		108,314			111,148					108,122			110,349
		(1) "nm" means not meaningful or relevant

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
NET REVENUE INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES, UNAUDITED)
		Three Months Ended												Six Months Ended
	Note	April 30, 2013			January 31, 2013 (1)		April 30, 2012			% Change (1) SEQ		% Change (1) YoY		April 30, 2013			April 30, 2012			% Change (1)
GAAP net revenues:
International
EMEA		$	171,868		$	171,626	$	198,941		0.1	%	(13.6	)%	$	343,494		$	353,848		(2.9	)%
LAC		82,814			73,026		96,205			13.4	%	(13.9	)%	155,840			196,494			(20.7	)%
ASPAC		49,559			50,880		47,965			(2.6	)%	3.3	%	100,439			92,663			8.4	%
Total International		304,241			295,532		343,111			2.9	%	(11.3	)%	599,773			643,005			(6.7	)%
North America		122,046			133,215		128,907			(8.4	)%	(5.3	)%	255,261			248,537			2.7	%
Total		$	426,287		$	428,747	$	472,018		(0.6	)%	(9.7	)%	$	855,034		$	891,542		(4.1	)%
Non-GAAP net revenues: (2) (Notes A, D, F)
International
EMEA	A	$	172,719		$	172,884	$	205,073		(0.1	)%	(15.8	)%	$	345,603		$	364,076		(5.1	)%
LAC	A, F	85,314			73,026		96,205			16.8	%	(11.3	)%	158,340			196,494			(19.4	)%
ASPAC	A	49,654			51,017		48,881			(2.7	)%	1.6	%	100,671			94,824			6.2	%
Total International		307,687			296,927		350,159			3.6	%	(12.1	)%	604,614			655,394			(7.7	)%
North America	A, D	122,061			132,727		129,205			(8.0	)%	(5.5	)%	254,788			249,170			2.3	%
Total		$	429,748		$	429,654	$	479,364		—	%	(10.4	)%	$	859,402		$	904,564		(5.0	)%
GAAP net revenues		$	426,287		$	428,747	$	472,018		(0.6	)%	(9.7	)%	$	855,034		$	891,542		(4.1	)%
Plus: Non-GAAP net revenues adjustments	A, D, F	3,461			907		7,346			nm		nm		4,368			13,022			nm
Non-GAAP net revenues (Notes A, D, F)		429,748			429,654		479,364			—	%	(10.4	)%	859,402			904,564			(5.0	)%
Less: net revenues from businesses acquired in the past 12 months
Point	B	—			nm		—			nm		nm		(38,279		)	(4,128		)	nm
Other	B	(749		)	nm		(348		)	nm		nm		(1,089		)	(348		)	nm
Total		(749		)	nm		(348		)	nm		nm		(39,368		)	(4,476		)	nm
Organic non-GAAP net revenues (Note B)		$	428,999		nm		$	479,016		nm		(10.4	)%	$	820,034		$	900,088		(8.9	)%

(1) "nm" means not meaningful or relevant

(2) Reconciliations for the non-GAAP measures are provided at the end of this press release.

	For three months ended April 30, 2013 compared with three months ended April 30, 2012								For six months ended April 30, 2013 compared with six months ended April 30, 2012
	Net revenues growth		Impact due to acquired businesses (A) (B)	Organic non-GAAP net revenues growth		Impact due to foreign currency (C)	Organic non-GAAP net revenues at constant currency growth		Net revenues growth		Impact due to acquired businesses (A) (B)	Organic non-GAAP net revenues growth		Impact due to foreign currency (C)	Organic non-GAAP net revenues at constant currency growth
International
EMEA	(13.6	)%	2.2pts	(15.8	)%	(1.2)pts	(14.6	)%	(2.9	)%	11.7pts	(14.6	)%	(0.9)pts	(13.7	)%
LAC	(13.9	)%	(2.6)pts	(11.3	)%	(3.5)pts	(7.8	)%	(20.7	)%	(1.3)pts	(19.4	)%	(4.7)pts	(14.7	)%
ASPAC	3.3	%	2.0pts	1.3	%	(0.9)pts	2.2	%	8.4	%	2.4pts	6.0	%	(0.2)pts	6.2	%
Total International	(11.3	)%	0.9pts	(12.2	)%	(1.8)pts	(10.4	)%	(6.7	)%	6.4pts	(13.1	)%	(2.0)pts	(11.1	)%
North America	(5.3	)%	0.4pts	(5.7	)%	(0.1)pts	(5.6	)%	2.7	%	0.7pts	2.0	%	0.0pts	2.0	%
Total	(9.7	)%	0.7pts	(10.4	)%	(1.3)pts	(9.1	)%	(4.1	)%	4.8pts	(8.9	)%	(1.4)pts	(7.5	)%

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
		April 30, 2013			October 31, 2012
		(UNAUDITED)
ASSETS
Current assets:
	Cash and cash equivalents	$	505,953		$	454,072
	Accounts receivable, net of allowances of $10,934 and $8,491	315,908			366,887
	Inventories	181,348			178,274
	Prepaid expenses and other current assets	139,514			136,210
Total current assets		1,142,723			1,135,443
Fixed assets, net		147,173			146,803
Purchased intangible assets, net		672,244			734,808
Goodwill		1,186,163			1,179,381
Deferred tax assets		240,135			215,139
Other long-term assets		78,978			79,033
Total assets		$	3,467,416		$	3,490,607
LIABILITIES AND EQUITY
Current liabilities:
	Accounts payable	$	151,469		$	193,062
	Accruals and other current liabilities	288,613			230,867
	Deferred revenue, net	97,965			91,545
	Short-term debt	67,054			54,916
Total current liabilities		605,101			570,390
Long-term deferred revenue, net		41,783			37,062
Long-term debt		1,212,213			1,252,701
Long-term deferred tax liabilities		198,597			214,537
Other long-term liabilities		81,039			70,440
Total liabilities		2,138,733			2,145,130
Redeemable noncontrolling interest in subsidiary		758			861
Stockholders’ equity:
Common stock		1,086			1,081
Additional paid-in capital		1,569,102			1,543,127
Accumulated deficit		(250,561		)	(204,023		)
Accumulated other comprehensive loss		(28,157		)	(32,390		)
Total stockholders’ equity		1,291,470			1,307,795
Noncontrolling interest in subsidiaries		36,455			36,821
Total liabilities and equity		$	3,467,416		$	3,490,607

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
			Six Months Ended April 30,
			2013			2012
Cash flows from operating activities
Consolidated net income (loss)			$	(45,319	)	$	635
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
	Depreciation and amortization, net		101,224			83,525
	Stock-based compensation expense		22,388			21,727
	Non-cash interest expense		—			8,537
	Deferred income taxes		(42,216		)	(13,321		)
	Gain on divestiture of assets		(4,080		)	—
	Asset impairment		6,763			—
	Other		(1,683		)	3,158
	Net cash provided by operating activities before changes in operating assets and liabilities		37,077			104,261
	Changes in operating assets and liabilities, net of effects of business acquisitions:
		Accounts receivable, net	50,140			(18,128		)
		Inventories, net	(1,646		)	8,212
		Prepaid expenses and other assets	(3,294		)	(18,632		)
		Accounts payable	(41,537		)	(25,098		)
		Deferred revenue, net	12,043			27,343
		Other current and long term liabilities	79,798			(15,037		)
		Net change in operating assets and liabilities	95,504			(41,340		)
Net cash provided by operating activities			132,581			62,921
Cash flows from investing activities
Capital expenditures			(42,213		)	(26,986		)
Acquisition of businesses, net of cash and cash equivalents acquired			(11,953		)	(1,069,762		)
Proceeds from divestiture of assets			6,000			—
Other investing activities, net			1,989			(127		)
Net cash used in investing activities			(46,177		)	(1,096,875		)
Cash flows from financing activities
Proceeds from debt, net of issuance costs			30,053			1,412,028
Repayments of debt			(58,402		)	(339,873		)
Repayments of senior convertible notes, including interest			—			(279,159		)
Proceeds from issuance of common stock through employee equity incentive plans			5,075			27,423
Payments of acquisition-related contingent consideration			(9,280		)	(14,209		)
Distribution to noncontrolling interest stockholders			(1,689		)	(1,543		)
Net cash provided by (used in) financing activities			(34,243		)	804,667
Effect of foreign currency exchange rate changes on cash and cash equivalents			(280		)	(4,238		)
Net increase (decrease) in cash and cash equivalents			51,881			(233,525		)
Cash and cash equivalents, beginning of period			454,072			594,562
Cash and cash equivalents, end of period			$	505,953		$	361,037

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
			Three Months Ended April 30, 2013
			GAAP			% of net revenues		Amortization of step-down in deferred revenue at acquisition		Acquisition, divestiture & restructure related			Stock based compensation			Other charges and income			Income tax effect			Non-GAAP			% of Non-GAAP net revenues
		NOTE:				(1) (2)		(A)		(D)			(E)			(F)			(G)						(1) (2)
Net revenues:
	System solutions		$	276,560		64.9	%	$	70	$	—		$	—		$	2,500		$	—		$	279,130		65.0	%
	Services		149,727			35.1	%	891		—			—			—			—			150,618			35.0	%
			426,287			100.0	%	961		—			—			2,500			—			429,748			100.0	%
Cost of net revenues:
	System solutions		180,872			65.4	%	—		(14,122		)	(289		)	(1,175		)	—			165,286			59.2	%
	Services		91,109			60.9	%	—		(1,075		)	(128		)	(6,899		)	—			83,007			55.1	%
			271,981			63.8	%	—		(15,197		)	(417		)	(8,074		)	—			248,293			57.8	%
Gross margin:
	System solutions		95,688			34.6	%	70		14,122			289			3,675			—			113,844			40.8	%
	Services		58,618			39.1	%	891		1,075			128			6,899			—			67,611			44.9	%
			154,306			36.2	%	961		15,197			417			10,574			—			181,455			42.2	%
Operating expenses:
	Research and development		41,581			9.8	%	—		(377		)	(1,390		)	(47		)	—			39,767			9.3	%
	Sales and marketing		46,496			10.9	%	—		(185		)	(3,769		)	(387		)	—			42,155			9.8	%
	General and administrative		43,676			10.2	%	—		(1,983		)	(4,454		)	(4,143		)	—			33,096			7.7	%
	Litigation loss contingency expense		69,000			16.2	%	—		—			—			(69,000		)	—			—			—
	Amortization of purchased intangible assets		23,122			5.4	%	—		(23,122		)	—			—			—			—			—
		Total operating expenses	223,875			52.5	%	—		(25,667		)	(9,613		)	(73,577		)	—			115,018			26.8	%
Operating income (loss)			(69,569		)	(16.3	)%	961		40,864			10,030			84,151			—			66,437			15.5	%
Interest expense			(11,979		)	nm		—		318			—			—			—			(11,661		)	nm
Interest income			730			nm		—		52			—			—			—			782			nm
Other income (expense), net			2,306			nm		—		(709		)	—			(2,175		)	—			(578		)	nm
Income (loss) before income taxes			(78,512		)	(18.4	)%	961		40,525			10,030			81,976			—			54,980			12.8	%
Provision for (benefit from) income taxes			(21,483		)	nm		—		—			—			—			29,095			7,612			nm
Consolidated net income (loss)			(57,029		)	(13.4	)%	961		40,525			10,030			81,976			(29,095		)	47,368			11.0	%
Net income attributable to noncontrolling interests			(1,347		)	nm		—		739			—			—			—			(608		)	nm
Net income (loss) attributable to VeriFone Systems, Inc. stockholders			$	(58,376	)	(13.7	)%	$	961	$	41,264		$	10,030		$	81,976		$	(29,095	)	$	46,760		10.9	%
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
	Basic		$	(0.54	)																	$	0.43
	Diluted		$	(0.54	)																	$	0.42
Weighted average number of shares used in computing net income (loss) per share:																Non-GAAP adjustment for dilutive shares (H)
	Basic		108,314																			108,314
	Diluted		108,314													2,218						110,532

(1) "nm" means not meaningful or relevant.

(2) System solutions and Services cost of net revenues and gross margin as a percentage of net revenues are computed as a percentage of the corresponding System solutions and Services net revenues.

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
			Three Months Ended January 31, 2013
			GAAP			% of net revenues		Amortization of step-down in deferred revenue at acquisition		Acquisition, divestiture & restructure related			Stock based compensation			Other charges and income			Income tax effect			Non-GAAP			% of Non-GAAP net revenues
		NOTE:				(1) (2)		(A)		(D)			(E)			(F)			(G)						(1) (2)
Net revenues:
	System solutions		$	281,708		65.7	%	$	123	$	—		$	—		$	—		$	—		$	281,831		65.6	%
	Services		147,039			34.3	%	1,312		(528		)	—			—			—			147,823			34.4	%
			428,747			100.0	%	1,435		(528		)	—			—			—			429,654			100.0	%
Cost of net revenues:
	System solutions		174,243			61.9	%	—		(11,617		)	(426		)	—			—			162,200			57.6	%
	Services		82,542			56.1	%	—		(2,028		)	(120		)	(73		)	—			80,321			54.3	%
			256,785			59.9	%	—		(13,645		)	(546		)	(73		)	—			242,521			56.4	%
Gross margin:
	System solutions		107,465			38.1	%	123		11,617			426			—			—			119,631			42.4	%
	Services		64,497			43.9	%	1,312		1,500			120			73			—			67,502			45.7	%
			171,962			40.1	%	1,435		13,117			546			73			—			187,133			43.6	%
Operating expenses:
	Research and development		39,802			9.3	%	—		(1,663		)	(1,617		)	30			—			36,552			8.5	%
	Sales and marketing		45,748			10.7	%	—		(336		)	(4,093		)	(223		)	—			41,096			9.6	%
	General and administrative		39,981			9.3	%	—		(2,783		)	(6,102		)	(109		)	—			30,987			7.2	%
	Amortization of purchased intangible assets		24,696			5.8	%	—		(24,696		)	—			—			—			—			—
		Total operating expenses	150,227			35.0	%	—		(29,478		)	(11,812		)	(302		)	—			108,635			25.3	%
Operating income (loss)			21,735			5.1	%	1,435		42,595			12,358			375			—			78,498			18.3	%
Interest expense			(12,590		)	nm		—		167			—			—			—			(12,423		)	nm
Interest income			1,088			nm		—		81			—			—			—			1,169			nm
Other income (expense), net			3,940			nm		—		(5,053		)	—			(261		)	—			(1,374		)	nm
Income before income taxes			14,173			3.3	%	1,435		37,790			12,358			114			—			65,870			15.3	%
Income tax provision			2,463			nm		—		—			—			—			6,696			9,159			nm
Consolidated net income			11,710			2.7	%	1,435		37,790			12,358			114			(6,696		)	56,711			13.2	%
Net income (loss) attributable to noncontrolling interests			128			nm		—		(574		)	—			—			—			(446		)	nm
Net income attributable to VeriFone Systems, Inc. stockholders			$	11,838		2.8	%	$	1,435	$	37,216		$	12,358		$	114		$	(6,696	)	$	56,265		13.1	%
Net income per share attributable to VeriFone Systems, Inc. stockholders:
	Basic		$	0.11																		$	0.52
	Diluted		$	0.11																		$	0.51
Weighted average number of shares used in computing net income per share:
	Basic		107,934																			107,934
	Diluted		110,558																			110,558

(1) "nm" means not meaningful or relevant.

(2) System solutions and Services cost of net revenues and gross margin as a percentage of net revenues are computed as a percentage of the corresponding System solutions and Services net revenues.

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
			Three Months Ended April 30, 2012
			GAAP			% of net revenues		Amortization of step-down in deferred revenue at acquisition		Acquisition, divestiture & restructure related			Stock based compensation			Other charges and income			Income tax effect			Non-GAAP			% of Non-GAAP net revenues
		NOTE:				(1) (2)		(A)		(D)			(E)			(F)			(G)						(1) (2)
Net revenues:
	System solutions		$	340,443		72.1	%	$	3,310	$	—		$	—		$	—		$	—		$	343,753		71.7	%
	Services		131,575			27.9	%	4,036		—			—			—			—			135,611			28.3	%
			472,018			100.0	%	7,346		—			—			—			—			479,364			100.0	%
Cost of net revenues:
	System solutions		202,273			59.4	%	—		(11,413		)	(418		)	—			—			190,442			55.4	%
	Services		77,586			59.0	%	—		(2,638		)	(45		)	—			—			74,903			55.2	%
			279,859			59.3	%	—		(14,051		)	(463		)	—			—			265,345			55.4	%
Gross margin:
	System solutions		138,170			40.6	%	3,310		11,413			418			—			—			153,311			44.6	%
	Services		53,989			41.0	%	4,036		2,638			45			—			—			60,708			44.8	%
			192,159			40.7	%	7,346		14,051			463			—			—			214,019			44.6	%
Operating expenses:
	Research and development		37,849			8.0	%	—		(1,043		)	(1,201		)	—			—			35,605			7.4	%
	Sales and marketing		46,141			9.8	%	—		(278		)	(4,405		)	—			—			41,458			8.6	%
	General and administrative		48,696			10.3	%	—		(8,937		)	(4,954		)	—			—			34,805			7.3	%
	Patent litigation loss contingency expense		17,632			3.7	%	—		—			—			(17,632		)	—			—			—
	Amortization of purchased intangible assets		23,757			5.0	%	—		(23,757		)	—			—			—			—			—
		Total operating expenses	174,075			36.9	%	—		(34,015		)	(10,560		)	(17,632		)	—			111,868			23.3	%
Operating income (loss)			18,084			3.8	%	7,346		48,066			11,023			17,632			—			102,151			21.3	%
Interest expense			(18,636		)	nm		—		470			—			4,094			—			(14,072		)	nm
Interest income			1,143			nm		—		180			—			—			—			1,323			nm
Other expense, net			(1,780		)	nm		—		107			—			98			—			(1,575		)	nm
Income (loss) before income taxes			(1,189		)	(0.3	)%	7,346		48,823			11,023			21,824			—			87,827			18.3	%
Provision for (benefit from) income taxes			(4,598		)	nm		—		—			—			—			20,281			15,683			nm
Consolidated net income			3,409			0.7	%	7,346		48,823			11,023			21,824			(20,281		)	72,144			15.0	%
Net income (loss) attributable to noncontrolling interests			68			nm		—		(774		)	—			—			—			(706		)	nm
Net income attributable to VeriFone Systems, Inc. stockholders			$	3,477		0.7	%	$	7,346	$	48,049		$	11,023		$	21,824		$	(20,281	)	$	71,438		14.9	%
																						��
Net income per share attributable to VeriFone Systems, Inc. stockholders:
	Basic		$	0.03																		$	0.67
	Diluted		$	0.03																		$	0.64
Weighted average number of shares used in computing net income per share:																Non-GAAP adjustment for dilutive shares (H)
	Basic		106,898																			106,898
	Diluted		111,148													(371					)	110,777

(1) "nm" means not meaningful or relevant.

(2) System solutions and Services cost of net revenues and gross margin as a percentage of net revenues are computed as a percentage of the corresponding System solutions and Services net revenues.

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
			Six Months Ended April 30, 2013
			GAAP			% of net revenues		Amortization of step-down in deferred revenue at acquisition		Acquisition, divestiture & restructure related			Stock based compensation			Other charges and income			Income tax effect			Non-GAAP			% of Non-GAAP net revenues
		NOTE:				(1) (2)		(A)		(D)			(E)			(F)			(G)						(1) (2)
Net revenues:
	System solutions		$	558,268		65.3	%	$	193	$	—		$	—		$	2,500		$	—		$	560,961		65.3	%
	Services		296,766			34.7	%	2,203		(528		)	—			—			—			298,441			34.7	%
			855,034			100.0	%	2,396		(528		)	—			2,500			—			859,402			100.0	%
Cost of net revenues:
	System solutions		355,115			63.6	%	—		(25,739		)	(715		)	(1,175		)	—			327,486			58.4	%
	Services		173,651			58.5	%	—		(3,103		)	(248		)	(6,972		)	—			163,328			54.7	%
			528,766			61.8	%	—		(28,842		)	(963		)	(8,147		)	—			490,814			57.1	%
Gross margin:
	System solutions		203,153			36.4	%	193		25,739			715			3,675			—			233,475			41.6	%
	Services		123,115			41.5	%	2,203		2,575			248			6,972			—			135,113			45.3	%
			326,268			38.2	%	2,396		28,314			963			10,647			—			368,588			42.9	%
Operating expenses:
	Research and development		81,383			9.5	%	—		(2,040		)	(3,007		)	(17		)	—			76,319			8.9	%
	Sales and marketing		92,244			10.8	%	—		(521		)	(7,862		)	(610		)	—			83,251			9.7	%
	General and administrative		83,657			9.8	%	—		(4,766		)	(10,556		)	(4,252		)	—			64,083			7.5	%
	Litigation loss contingency expense		69,000			8.1	%	—		—			—			(69,000		)	—			—			—
	Amortization of purchased intangible assets		47,818			5.6	%	—		(47,818		)	—			—			—			—			—
		Total operating expenses	374,102			43.8	%	—		(55,145		)	(21,425		)	(73,879		)	—			223,653			26.0	%
Operating income (loss)			(47,834		)	(5.6	)%	2,396		83,459			22,388			84,526			—			144,935			16.9	%
Interest expense			(24,569		)	nm		—		485			—			—			—			(24,084		)	nm
Interest income			1,818			nm		—		133			—			—			—			1,951			nm
Other income (expense), net			6,246			nm		—		(5,762		)	—			(2,436		)	—			(1,952		)	nm
Income (loss) before income taxes			(64,339		)	(7.5	)%	2,396		78,315			22,388			82,090			—			120,850			14.1	%
Provision for (benefit from) income taxes			(19,020		)	nm		—		—			—			—			35,791			16,771			nm
Consolidated net income (loss)			(45,319		)	(5.3	)%	2,396		78,315			22,388			82,090			(35,791		)	104,079			12.1	%
Net income (loss) attributable to noncontrolling interests			(1,219		)	nm		—		165			—			—			—			(1,054		)	nm
Net income (loss) attributable to VeriFone Systems, Inc. stockholders			$	(46,538	)	(5.4	)%	$	2,396	$	78,480		$	22,388		$	82,090		$	(35,791	)	$	103,025		12.0	%
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders:
	Basic		$	(0.43	)																	$	0.95
	Diluted		$	(0.43	)																	$	0.93
Weighted average number of shares used in computing net income (loss) per share:																Non-GAAP adjustment for dilutive shares (H)
	Basic		108,122																			108,122
	Diluted		108,122																2,421			110,543

(1) "nm" means not meaningful or relevant.

(2) System solutions and Services cost of net revenues and gross margin as a percentage of net revenues are computed as a percentage of the corresponding System solutions and Services net revenues.

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
			Six Months Ended April 30, 2012
			GAAP			% of net revenues		Amortization of step-down in deferred revenue at acquisition		Acquisition, divestiture & restructure related			Stock based compensation			Other charges and income			Income tax effect			Non-GAAP			% of Non-GAAP net revenues
		NOTE:				(1) (2)		(A)		(D)			(E)			(F)			(G)						(1) (2)
Net revenues:
	System solutions		$	653,084		73.3	%	$	5,338	$	—		$	—		$	—		$	—		$	658,422		72.8	%
	Services		238,458			26.7	%	7,684		—			—			—			—			246,142			27.2	%
			891,542			100.0	%	13,022		—			—			—			—			904,564			100.0	%
Cost of net revenues:
	System solutions		401,025			61.4	%	—		(29,688		)	(831		)	—			—			370,506			56.3	%
	Services		141,720			59.4	%	—		(4,103		)	(111		)	—			—			137,506			55.9	%
			542,745			60.9	%	—		(33,791		)	(942		)	—			—			508,012			56.2	%
Gross margin:
	System solutions		252,059			38.6	%	5,338		29,688			831			—			—			287,916			43.7	%
	Services		96,738			40.6	%	7,684		4,103			111			—			—			108,636			44.1	%
			348,797			39.1	%	13,022		33,791			942			—			—			396,552			43.8	%
Operating expenses:
	Research and development		72,928			8.2	%	—		(2,902		)	(2,454		)	—			—			67,572			7.5	%
	Sales and marketing		86,127			9.7	%	—		(1,101		)	(8,667		)	—			—			76,359			8.4	%
	General and administrative		94,734			10.6	%	—		(21,799		)	(9,664		)	—			—			63,271			7.0	%
	Litigation loss contingency expense		17,632			2.0	%	—		—			—			(17,632		)	—			—			—
	Amortization of purchased intangible assets		37,372			4.2	%	—		(37,372		)	—			—			—			—			—
		Total operating expenses	308,793			34.6	%	—		(63,174		)	(20,785		)	(17,632		)	—			207,202			22.9	%
Operating income (loss)			40,004			4.5	%	13,022		96,965			21,727			17,632			—			189,350			20.9	%
Interest expense			(33,270		)	nm		—		905			—			10,321			—			(22,044		)	nm
Interest income			2,150			nm		—		719			—			—			—			2,869			nm
Other expense, net			(22,629		)	nm		—		19,218			—			146			—			(3,265		)	nm
Income (loss) before income taxes			(13,745		)	(1.5	)%	13,022		117,807			21,727			28,099			—			166,910			18.5	%
Provision for (benefit from) income taxes			(14,380		)	nm		—		—			—			—			44,752			30,372			nm
Consolidated net income			635			0.1	%	13,022		117,807			21,727			28,099			(44,752		)	136,538			15.1	%
Net income attributable to noncontrolling interests			(282		)	nm		—		(774		)	—			—			—			(1,056		)	nm
Net income attributable to VeriFone Systems, Inc. stockholders			$	353		—	%	$	13,022	$	117,033		$	21,727		$	28,099		$	(44,752	)	$	135,482		15.0	%
Net income per share attributable to VeriFone Systems, Inc. stockholders:
	Basic		$	—																		$	1.27
	Diluted		$	—																		$	1.23
Weighted average number of shares used in computing net income per share:																Non-GAAP adjustment for dilutive shares (H)
	Basic		106,359																			106,359
	Diluted		110,349													(186					)	110,163

(1) "nm" means not meaningful or relevant.

(2) System solutions and Services cost of net revenues and gross margin as a percentage of net revenues are computed as a percentage of the corresponding System solutions and Services net revenues.

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
			GAAP net Revenues		Amortization of step-down in deferred revenue at acquisition		Other adjustments to net revenues		Non-GAAP net revenues		Net revenues from businesses acquired in the past 12 months			Non-GAAP organic net revenues		Constant currency adjustment		Non-GAAP organic net revenues at constant currency
		NOTE:			(A)		(D) (F)		(A)		(B)			(B)		(C)		(C)
Three Months Ended April 30, 2013
International
	EMEA		$	171,868	$	851	$	—	$	172,719	$	(89	)	$	172,630	$	2,479	$	175,109
	LAC		82,814		—		2,500		85,314		—			85,314		3,417		88,731
	ASPAC		49,559		95		—		49,654		(471		)	49,183		459		49,642
		Total International	304,241		946		2,500		307,687		(560		)	307,127		6,355		313,482
North America			122,046		15		—		122,061		(189		)	121,872		65		121,937
		Total	$	426,287	$	961	$	2,500	$	429,748	$	(749	)	$	428,999	$	6,420	$	435,419

Three Months Ended January 31, 2013
International
	EMEA		$	171,626	$	1,258	$	—		$	172,884
	LAC		73,026		—		—			73,026
	ASPAC		50,880		137		—			51,017
		Total International	295,532		1,395		—			296,927
North America			133,215		40		(528		)	132,727
		Total	$	428,747	$	1,435	$	(528	)	$	429,654

Three Months Ended April 30, 2012
International
	EMEA		$	198,941	$	6,132	$	—	$	205,073	$	(20	)	$	205,053
	LAC		96,205		—		—		96,205		—			96,205
	ASPAC		47,965		916		—		48,881		(328		)	48,553
		Total International	343,111		7,048		—		350,159		(348		)	349,811
North America			128,907		298		—		129,205		—			129,205
		Total	$	472,018	$	7,346	$	—	$	479,364	$	(348	)	$	479,016

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
			GAAP net Revenues		Amortization of step-down in deferred revenue at acquisition		Other adjustments to net revenues			Non-GAAP net revenues		Net revenues from businesses acquired in the past 12 months			Non-GAAP organic net revenues		Constant currency adjustment		Non-GAAP organic net revenues at constant currency
		NOTE:			(A)		(D) (F)			(A)		(B)			(B)		(C)		(C)
Six Months Ended April 30, 2013
International
	EMEA		$	343,494	$	2,109	$	—		$	345,603	$	(38,368	)	$	307,235	$	3,338	$	310,573
	LAC		155,840		—		2,500			158,340		—			158,340		9,330		167,670
	ASPAC		100,439		232		—			100,671		(471		)	100,200		128		100,328
		Total International	599,773		2,341		2,500			604,614		(38,839		)	565,775		12,796		578,571
North America			255,261		55		(528		)	254,788		(529		)	254,259		9		254,268
		Total	$	855,034	$	2,396	$	1,972		$	859,402	$	(39,368	)	$	820,034	$	12,805	$	832,839

Six Months Ended April 30, 2012
International
	EMEA		$	353,848	$	10,228	$	—	$	364,076	$	(4,148	)	$	359,928
	LAC		196,494		—		—		196,494		—			196,494
	ASPAC		92,663		2,161		—		94,824		(328		)	94,496
		Total International	643,005		12,389		—		655,394		(4,476		)	650,918
North America			248,537		633		—		249,170		—			249,170
		Total	$	891,542	$	13,022	$	—	$	904,564	$	(4,476	)	$	900,088

FINANCIAL MEASURES

This press release and its attachments include several non-GAAP financial measures, including non-GAAP net revenues; net revenues from businesses acquired in the past 12 months; non-GAAP organic net revenues; non-GAAP organic net revenues at constant currency; non-GAAP cost of net revenues; non-GAAP gross margin; non-GAAP research and development expenses; non-GAAP sales and marketing expenses; non-GAAP general and administrative expenses; non-GAAP operating expenses; non-GAAP operating income (loss); non-GAAP interest expense; non-GAAP interest income; non-GAAP other income (expense), net; non-GAAP income (loss) before income taxes; non-GAAP provision for (benefit from) income taxes; non-GAAP income tax rate; non-GAAP consolidated net income (loss); non-GAAP net income (loss) attributable to noncontrolling interests; non-GAAP net income (loss) attributable to VeriFone Systems, Inc. stockholders; non-GAAP diluted shares; non-GAAP net income (loss) per share attributable to VeriFone Systems, Inc. stockholders; non-GAAP net income (loss) per diluted share, as well as these non-GAAP financial measures as a percentage of non-GAAP net revenues. In order to assist investors, this press release provides consolidated statement of operations information on a non-GAAP basis, reflecting the adjustments made in the non-GAAP measures listed above.

Management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. Management believes that these non-GAAP financial measures help it to evaluate VeriFone's performance and operations and to compare VeriFone's current results with those for prior periods as well as with the results of peer companies. VeriFone incurs, due to differences in debt, capital structure and investment history, certain income and expense items, such as stock based compensation, amortization of acquired intangibles and other non-cash expenses, that differ significantly from VeriFone's competitors.  The non-GAAP financial measures reflect VeriFone's reported operating performance without such items.  Management also uses these non-GAAP financial measures in VeriFone's budget and planning process. Management believes that the presentation of these non-GAAP financial measures is useful to investors in comparing VeriFone's operating performance in any period with its performance in other periods and with the performance of other companies that represent alternative investment opportunities. These non-GAAP financial measures contain limitations and should be considered as a supplement to, and not as a substitute for, or superior to, disclosures made in accordance with GAAP.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and may therefore differ from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures do not reflect all amounts and costs, such as acquisition related costs, employee stock-based compensation costs, cash that may be expended for future capital expenditures or contractual commitments, working capital needs, cash used to service interest or principal payments on VeriFone's debt, income taxes and the related cash requirements, and restructuring charges, associated with VeriFone's results of operations as determined in accordance with GAAP.

Furthermore, VeriFone expects to continue to incur income and expense items that are similar to those that are excluded by the non-GAAP adjustments described herein. Management compensates for these limitations by also relying on the comparable GAAP financial measures.

Note A: Non-GAAP net revenues. Non-GAAP net revenues exclude the fair value decrease (step-down) in deferred revenue at acquisition. Although the step-down of deferred revenue fair value at acquisition is reflected in our GAAP financial statements, it results in net revenues immediately post-acquisition that are lower than net revenues that would be recognized in accordance with GAAP on those same services if they were sold under contracts entered into post-acquisition. We adjust the step-down to achieve comparability to net revenues of the acquired entity earned pre-acquisition and to our GAAP net revenues to be earned on contracts sold in future periods. These non-GAAP net revenues amounts are not intended to be a substitute for our GAAP disclosures of net revenues, and should be read together with our GAAP disclosures.

Note B: Non-GAAP organic net revenues. "Non-GAAP organic net revenues" is a non-GAAP financial measure of net revenues excluding "net revenues from businesses acquired in the past 12 months" (as defined below). VeriFone determines non-GAAP organic net revenues by deducting net revenues from businesses acquired in the past 12 months from non-GAAP net revenues. Where Organic non-GAAP net revenues is presented for a period longer than one fiscal quarter, it is computed as the sum of the Organic non-GAAP net revenues for each quarter during that period. This non-GAAP measure is used to evaluate VeriFone net revenues without the impact of net revenues from acquired businesses, as VeriFone analyzes performance both with and without the impact of our recent acquisitions.

Net revenues from businesses acquired in the past 12 months consists of net revenues derived from the sales channels of acquired resellers and distributors, and net revenues from system solutions and services attributable to businesses acquired in the 12 months preceding the respective financial quarter(s). For acquisitions of small businesses that are integrated within a relatively short time after the close of the acquisition, we assume quarterly net revenues attributable to such acquired businesses during the 12 months following acquisition remain at the same level as in the first full quarter after the acquisition closed. During periods prior to our acquisition of former customers, net revenues from businesses acquired in the past 12 months consists of sales by VeriFone to that former customer for that period.

Note C: Non-GAAP organic net revenues at constant currency. VeriFone determines non-GAAP organic net revenues at constant currency by recomputing non-GAAP organic net revenues denominated in currencies other than U.S. Dollars in the current fiscal period using average exchange rates for that particular currency during the corresponding financial period of the prior year. VeriFone uses this non-GAAP measure to evaluate performance on a comparable basis excluding the impact of foreign currency fluctuations. Where Organic non-GAAP net revenues at a constant currency is presented for a period longer than one fiscal quarter, it is computed as the sum of the Organic non-GAAP net revenues at constant currency for each quarter during that period.

Note D: Acquisition, Divestiture and Restructure Related. VeriFone adjusts certain revenues and expenses for items that are the result of acquisitions, divestitures and restructuring programs.

Acquisition related adjustments include the amortization of purchased intangible assets and fixed asset fair value adjustments, incremental costs associated with acquisitions (such as professional fees, legal fees related to litigation assumed as part of acquisitions, and one-time charges related to acquired balances), acquisition integration expenses (such as costs of personnel required to assist with integration transitions), loss on financial instruments entered into to fix the acquisition purchase price in U.S. dollars when it is payable in foreign currencies and fair value increase (step-up) of inventory on acquisition. In addition, we adjust for changes in estimate or final resolution of contingencies that existed at the time of acquisition. Acquisition related expenses also result from events which arise from unforeseen circumstances which often occur outside the ordinary course of business. These adjustments do not include the fair value adjustments relating to certain contracts acquired as part of an acquisition whereby third parties have yet to fulfill their contractual obligations.

In January 2013 we divested of certain assets and business operations related to one of our product offerings. The estimated gain on the divestiture, as well as the net revenues, cost of net revenues and operating expenses for the three months ended January 31, 2013, that are attributable to the divested assets and business operations have been excluded from our non-GAAP financial measures.

Restructure related adjustments include all restructure charges as defined in accordance with US GAAP.

VeriFone analyzes the performance of its operations without regard to these adjustments. In determining whether any acquisition, divestiture or restructure related adjustment is appropriate, VeriFone takes into consideration, among other things, how such adjustments would or would not aid the understanding of the performance of its operations.

Note E: Stock-Based Compensation. Our non-GAAP financial measures eliminate the effect of expense for stock-based compensation because they are non-cash expenses that management believes are not reflective of ongoing operating results. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types which affect the calculations of stock-based compensation, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to our peer companies. Stock-based compensation is very different from other forms of compensation. A cash salary or bonus has a fixed and unvarying cash cost. In contrast the expense associated with an award of an option or other stock based award is unrelated to the amount of compensation ultimately received by the employee; and the cost to the company is based on valuation methodology and underlying assumptions that may vary over time and does not reflect any cash expenditure by the company. Furthermore, the expense associated with granting an employee an option or other stock based award can be spread over multiple years and may be reversed based on forfeitures which may differ from our original assumptions unlike cash compensation expense which is typically recorded contemporaneously with the time of award or payment.

Note F: Other Charges and Income. VeriFone excludes certain revenue, expenses and other income (expense) that are the result of unique or unplanned events that are noted below. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, we exclude them in our non-GAAP financial measures because we believe these items may limit the comparability of our ongoing operations with prior and future periods. Examples of adjustments for other charges and income are:

• Estimated penalties due to customers related to the July 2012 fire that occurred in one of our repair and staging facilities in Brazil. These potential customer penalties are associated with deliveries that were delayed after the fire and are reflected as contra-revenue in accordance with GAAP.

• The $6.8 million charge to costs of net revenues during the three months ended April 30, 2013 related to revenue generating assets of our UK Taxi business for which the net book value of the assets exceeded their fair value since the UK Taxi business has not met expectations.

• Litigation loss contingency expense.

• Costs incurred in connection with senior executive management changes, such as separation payments, legal fees and recruiter fees.

• Certain personnel expenses that will continue to be incurred only for a fixed short period of time in connection with scheduled operational changes as we streamline and centralize some of our global operations, including international distribution and repair facilities.

• Gains or losses on financial transactions, such as the accelerated amortization of capitalized debt issuance costs due to the early repayment of debt.

• Non-cash interest expense recorded relating to the adoption of ASC 470-20 Debt with conversion and other options.

• The foreign currency loss during December 2011 related to the difference between the forward rate on contracts purchased to fix the U.S. dollar equivalent of the purchase price for our Point acquisition, and the actual rate on the date of derivative settlement.

We assess our operating performance with these amounts included and excluded, and by providing this information, we believe that users of our financial statements are better able to understand the financial results of what we consider to be our continuing operations.

Note G: Income taxes Income taxes are adjusted for the tax effect of the adjusting items related to our non-GAAP financial measures and to reflect our estimate of cash taxes on a non-GAAP basis, in order to provide our management and users of the financial statements with better clarity regarding the on-going comparable performance and future liquidity of our business. Our non-GAAP tax rates were 14% for the period August 1, 2012, through April 30, 2013, 18% for the period December 31, 2011, through January 31, 2012, and 20% for the period November 1, 2011, through December 30, 2011.

Note H: Non-GAAP diluted shares. During the three and six months ended April 30, 2013, the diluted non-GAAP weighted average shares include additional shares that are dilutive for non-GAAP purposes, because we have a non-GAAP net income and GAAP basis net loss.

During the three and six months ended April 30, 2012, the diluted non-GAAP weighted average shares exclude shares that are dilutive for GAAP purposes related to our Senior Convertible Notes that matured on June 15, 2012. In connection with our 1.375% Senior Convertible Notes we had entered into certain note hedge transactions. We repaid these Notes in cash upon maturity on June 15, 2012, and the then outstanding note hedge transactions expired unused on June 15, 2012. Non-GAAP diluted shares reflect the offset of shares that would have been deliverable in the periods presented prior to the maturity of the Notes pursuant to note hedge transactions. Under GAAP, shares delivered in hedge transactions are not considered offsetting shares in the fully diluted share calculation until they are actually delivered.

Contacts

VeriFone Systems, Inc.

Investor Relations:

Doug Reed, 408-232-7979

SVP, Treasury & Investor Relations

ir@verifone.com

or

Media Relations:

Andy Payment, 770-754-3541

andy.payment@verifone.com

Source: VeriFone Systems, Inc.