Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Jan. 31, 2017 | Feb. 28, 2017 | |
Entity Information [Line Items] | ||
Current Fiscal Year End Date | --10-31 | |
Document Fiscal Year Focus | 2,017 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 31, 2017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PAY | |
Entity Registrant Name | VERIFONE SYSTEMS, INC. | |
Entity Central Index Key | 1,312,073 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 111,614,825 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Net revenues: | ||
Systems | $ 265,401 | $ 337,592 |
Services | 188,470 | 175,947 |
Total net revenues | 453,871 | 513,539 |
Cost of net revenues: | ||
Systems | 166,392 | 194,805 |
Services | 116,048 | 103,449 |
Total cost of net revenues | 282,440 | 298,254 |
Gross margin | 171,431 | 215,285 |
Operating expenses: | ||
Research and development | 56,810 | 51,668 |
Sales and marketing | 49,453 | 54,949 |
General and administrative | 50,840 | 52,826 |
Amortization of purchased intangible assets | 18,763 | 19,626 |
Total operating expenses | 175,866 | 179,069 |
Operating income (loss) | (4,435) | 36,216 |
Interest expense, net | (8,147) | (8,304) |
Other income (expense), net | (2,222) | (2,180) |
Income (loss) before income taxes | (14,804) | 25,732 |
Income tax provision | 2,920 | 1,999 |
Consolidated net income (loss) | (17,724) | 23,733 |
Net income (loss) attributable to noncontrolling interests | (1,101) | 232 |
Net income (loss) attributable to noncontrolling interests | $ (16,623) | $ 23,501 |
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: | ||
Basic | $ (0.15) | $ 0.21 |
Diluted | $ (0.15) | $ 0.21 |
Weighted average number of shares used in computing net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: | ||
Basic | 111,388 | 111,266 |
Diluted | 111,388 | 112,351 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Consolidated net income (loss) | $ (17,724) | $ 23,733 |
Foreign currency translation adjustments, net of tax | (2,102) | (38,229) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | 678 | 1,162 |
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Tax | 1,722 | 0 |
Net change in unrealized gain (loss) on derivatives designated as cash flow hedges | 2,815 | (525) |
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, before Tax | 3,859 | (1,687) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Net of Tax | 26 | 26 |
Other comprehensive income (loss) | 739 | (38,728) |
Total comprehensive loss | (16,985) | (14,995) |
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | (1,101) | 232 |
Comprehensive loss attributable to VeriFone Systems, Inc. stockholders | $ (15,884) | $ (15,227) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jan. 31, 2017 | Oct. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 146,995 | $ 148,352 |
Accounts receivable, net of allowances of $15,116 and $14,063, respectively | 322,632 | 323,447 |
Inventories | 155,913 | 175,231 |
Prepaid expenses and other current assets | 105,465 | 110,397 |
Total current assets | 731,005 | 757,427 |
Property and equipment, net | 202,654 | 202,277 |
Purchased intangible assets, net | 282,963 | 306,298 |
Goodwill | 1,111,744 | 1,110,493 |
Deferred tax assets, net | 35,801 | 36,989 |
Other long-term assets | 79,117 | 81,323 |
Total assets | 2,443,284 | 2,494,807 |
Current liabilities: | ||
Accounts payable | 133,399 | 154,574 |
Accruals and other current liabilities | 206,742 | 213,411 |
Deferred revenue, net | 107,906 | 104,797 |
Short-term debt | 67,170 | 66,017 |
Total current liabilities | 515,217 | 538,799 |
Long-term deferred revenue, net | 69,848 | 66,516 |
Deferred tax liabilities, net | 100,850 | 99,371 |
Long-term debt | 836,553 | 859,896 |
Other long-term liabilities | 75,413 | 76,840 |
Total liabilities | 1,597,881 | 1,641,422 |
Commitments and contingencies | ||
Redeemable Noncontrolling Interest, Equity, Common, Carrying Amount | 3,476 | 4,980 |
Stockholders’ equity: | ||
Preferred stock: $0.01 par value, 10,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock: $0.01 par value, 200,000 shares authorized, 111,577 and 111,261 shares issued and outstanding as of January 31, 2017 and October 31, 2016, respectively | 1,116 | 1,113 |
Additional paid-in capital | 1,781,340 | 1,771,951 |
Accumulated deficit | (634,962) | (618,339) |
Accumulated other comprehensive loss | (340,255) | (340,994) |
Total VeriFone Systems, Inc. stockholders’ equity | 807,239 | 813,731 |
Noncontrolling interests in subsidiaries | 34,688 | 34,674 |
Total equity | 841,927 | 848,405 |
Total liabilities, redeemable noncontrolling interest in subsidiary and equity | $ 2,443,284 | $ 2,494,807 |
CONSOLIDATED BALANCE SHEETS Con
CONSOLIDATED BALANCE SHEETS Consolidated balance sheets parenthetical information - USD ($) | Jan. 31, 2017 | Oct. 31, 2016 |
Allowance for Doubtful Accounts Receivable, Current | $ 15,116,000 | $ 14,063,000 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 111,577,000 | 111,261,000 |
Common Stock, Shares, Outstanding | 111,577,000 | 111,261,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Cash flows from operating activities | ||
Consolidated net income (loss) | $ (17,724) | $ 23,733 |
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 40,879 | 40,463 |
Stock-based compensation expense | 9,553 | 10,460 |
Deferred income taxes, net | 995 | (2,775) |
Other | (5,768) | (3,547) |
Net cash provided by operating activities before changes in operating assets and liabilities | 39,471 | 75,428 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (516) | 10,491 |
Inventories | 19,374 | (8,254) |
Prepaid expenses and other assets | 3,698 | (8,721) |
Accounts payable | (20,229) | (4,239) |
Deferred revenue, net | 6,894 | 15,138 |
Other current and long-term liabilities | (4,038) | (13,385) |
Net change in operating assets and liabilities | 5,183 | (8,970) |
Net cash provided by operating activities | 44,654 | 66,458 |
Cash flows from investing activities | ||
Capital expenditures | (19,482) | (30,605) |
Acquisition of businesses, net of cash and cash equivalents acquired | 0 | (88,739) |
Other investing activities, net | 1,129 | (222) |
Net cash used in investing activities | (18,353) | (119,566) |
Net Cash Provided by (Used in) Financing Activities [Abstract] | ||
Proceeds from debt, net of issuance costs | 60,000 | 222,378 |
Repayments of debt | 86,088 | 93,011 |
Proceeds from issuance of common stock through employee equity incentive plans | 636 | 998 |
Stock repurchases | 0 | 79,866 |
Other financing activities, net | (1,494) | (289) |
Net Cash Provided by (Used in) Financing Activities | (26,946) | 50,210 |
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | (485) | (7,121) |
Net decrease in cash, cash equivalents and restricted cash | (1,130) | (10,019) |
cash, cash equivalents and restricted cash | $ 158,051 | $ 205,850 |
Principles of Consolidation and
Principles of Consolidation and Summary of Significant Accounting Policies | 3 Months Ended |
Jan. 31, 2017 | |
Principles of Consolidation and Summary of Significant Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | Principles of Consolidation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of VeriFone Systems, Inc. and our wholly-owned and majority-owned subsidiaries, including a variable interest entity where we are deemed to be the primary beneficiary, and have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions on Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. The Condensed Consolidated Balance Sheet at October 31, 2016 has been derived from the audited Consolidated Balance Sheet at that date. All significant inter-company accounts and transactions have been eliminated. In accordance with these rules and regulations, we have omitted certain information and notes normally provided in our annual consolidated financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring items, necessary for the fair presentation of our financial position and results of operations for the interim periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016. The results of operations for the three months ended January 31, 2017 are not necessarily indicative of the results expected for the entire fiscal year. We have two operating segments: Verifone Systems and Verifone Services. Verifone Systems delivers point of sale electronic payment devices that run our unique operating systems, security and encryption software and certified payment software for both payments and commerce. Verifone Services delivers device related services and maintenance, payment transaction routing and reporting, and commerce based services such as advertising on digital screens. Our reportable segments are the same as our operating segments. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. We evaluate our estimates on an ongoing basis when updated information related to such estimates becomes available. We base our estimates on historical experience and information available to us at the time these estimates are made. Actual results could differ materially from these estimates . Significant Accounting Policies During the three months ended January 31, 2017 , there have been no changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016. Concentrations of Credit Risk For the three months ended January 31, 2017 and 2016, no single customer accounted for more than 10% of our total Net revenues. As of January 31, 2017 and October 31, 2016, no single customer accounted for more than 10% of our total Accounts receivable, net. Recently Adopted Accounting Pronouncements During August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted ASU 2016-15 retrospectively, effective November 1, 2016. Adoption had no impact on our consolidated statements of cash flows in any periods presented. During November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash, which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We adopted ASU 2016-18 retrospectively, effective November 1, 2016. Restricted cash is now included as a component of Cash, cash equivalents and restricted cash on our Consolidated Statements of Cash Flows for all periods presented. Recent Accounting Pronouncements Not Yet Adopted During January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business , which provides new guidance to assist entities with evaluating when a set of transferred assets and activities is a business. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted in certain circumstances. We are currently in the process of evaluating our adoption timing and the impact of this new pronouncement on our consolidated financial position and results of operations. During January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The standard is effective for annual or interim impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently in the process of evaluating the impact of this new pronouncement on our consolidated financial position and results of operations. |
Net Income (Loss) Per Share of
Net Income (Loss) Per Share of Common Stock | 3 Months Ended |
Jan. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income per Share of Common Stock | Net Income (loss) per Share of Common Stock Basic net income (loss) per share of common stock is computed by dividing net income (loss) attributable to VeriFone Systems, Inc. stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per share of common stock is computed using the weighted average number of shares of common stock outstanding plus the effect of common stock equivalents, unless the common stock equivalents are anti-dilutive. The potential dilutive shares of our common stock resulting from assumed exercises of equity related instruments are determined using the treasury stock method. Under the treasury stock method, an increase in the fair market value of our common stock will result in a greater number of dilutive securities. The following table presents the computation of net income (loss) per share of common stock (in thousands, except per share data): Three Months Ended January 31, 2017 2016 Basic and diluted net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Numerator: Net income (loss) attributable to VeriFone Systems, Inc. stockholders $ (16,623 ) $ 23,501 Denominator: Weighted average shares attributable to VeriFone Systems, Inc. stockholders - basic 111,388 111,266 Weighted average effect of dilutive stock options, RSUs and RSAs — 1,085 Weighted average shares attributable to VeriFone Systems, Inc. stockholders - diluted 111,388 112,351 Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Basic $ (0.15 ) $ 0.21 Diluted $ (0.15 ) $ 0.21 For the three months ended January 31, 2017 and 2016, equity incentive awards representing 8.0 million and 3.4 million shares of common stock, respectively, were excluded from the calculation of weighted average shares for diluted net income per share as they were anti-dilutive. Anti-dilutive awards, which include stock options, RSUs and RSAs, could impact future calculations of diluted net income per share if the fair market value of our common stock increases. For the three months ended January 31, 2016 , we repurchased approximately 2.6 million shares of our common stock on the open market at an average repurchase price of $28.02 per share pursuant to a stock repurchase program authorized by our Board of Directors in September 2015. No shares were repurchased during the three months ended January 31, 2017. |
Income Taxes
Income Taxes | 3 Months Ended |
Jan. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We recorded tax provisions totaling $2.9 million and $2.0 million for the three months ended January 31, 2017 and 2016, respectively. The income tax provisions for the three months ended January 31, 2017 and 2016 are primarily related to foreign taxes partially offset by the reversal of unrecognized tax benefits where statute of limitations expired or audits have been settled. Our total unrecognized tax benefits were approximately $106.5 million as of January 31, 2017 . The amount of unrecognized tax benefits could be reduced upon closure of tax examinations or if the statute of limitations on certain tax filings expires without assessment from the relevant tax authorities. We believe that it is reasonably possible that there could be an immaterial reduction in unrecognized tax benefits due to statute of limitation expirations in multiple tax jurisdictions during the next 12 months. Interest and penalties accrued on these uncertain tax positions will also be released upon the expiration of the applicable statute of limitations. Israel Tax Audit Assessment We are currently under audit by the Israeli Tax Authorities for fiscal years 2008 through 2009 and 2011 through 2013. The Israeli Tax Authorities issued a tax assessment in October 2014 for fiscal year 2009 or alternatively for fiscal year 2008 claiming there was a business restructuring that resulted in a transfer of some functions, assets and risks from VeriFone Israel Ltd. to the U.S. parent company that the Israeli Tax Authorities claim was a sale valued at 1.36 billion New Israeli Shekels (approximately $361.4 million at the foreign exchange rate as of January 31, 2017 ). We filed our objection to the tax assessment in January 2015 and received the Israeli Tax Authorities decision through an Order (a second stage assessment) in January 2016. The Order increased the value of the sale to 2.20 billion New Israeli Shekels in fiscal year 2009 (approximately $584.2 million at the foreign exchange rate as of January 31, 2017 ) or alternatively 2.23 billion New Israeli Shekels in fiscal year 2008 (approximately $591.0 million at the foreign exchange rate as of January 31, 2017 ) and contended secondary adjustments relating to a deemed dividend and/or interest. Based on the Order, these and other claims result in a tax liability and deficiency penalty assessment in the amount of 1.29 billion New Israeli Shekels (approximately $341.8 million at the foreign exchange rate as of January 31, 2017 ), if the claim was assessed for fiscal year 2009, to 1.53 billion New Israeli Shekels (approximately $405.4 million at the foreign exchange rate as of January 31, 2017 ) if the claim was assessed for fiscal year 2008, including interest, the required Israeli price index adjustments (referred to as the linkage differentials) and deficiency fines (as applicable) through January 31, 2017 . The Israeli Tax Authorities' contention regarding secondary adjustments relating to deemed dividend was not quantified by them. We continue to believe the Israeli Tax Authorities' assessment position is without merit and appealed the assessment to the district court. We have agreed with the Israeli Tax Authorities to repay our $69.0 million intercompany loan from VeriFone Israel Ltd. to the extent of the amount of a final agreed tax assessment concerning fiscal year 2008 and fiscal year 2009 or a judgment of a district court in an appeal on the decision of the Israeli Tax Authorities in the objection, if any. Other Audits We have certain other foreign subsidiaries under audit by foreign tax authorities, including India for fiscal years 2008 to 2015, Spain for fiscal years 2011 to 2013 and New Zealand for fiscal years 2014 and 2015. Although we believe we have appropriately provided for income taxes for the years subject to audit, the India, Israel, Spain and New Zealand taxing authorities may adopt different interpretations. We have not yet received any final determinations with respect to these audits. We have accrued tax liabilities associated with these audits. With few exceptions, we are no longer subject to tax examination for periods prior to 2008. |
Balance Sheet and Statement of
Balance Sheet and Statement of Operations Components | 3 Months Ended |
Jan. 31, 2017 | |
Notes to Financial Statements [Abstract] | |
Balance Sheet and Statement of Income Details | Balance Sheet and Statement of Operations Components Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows (in thousands): January 31, 2017 October 31, 2016 Cash and cash equivalents $ 146,995 $ 148,352 Restricted cash included in Prepaid expenses and other current assets 9,360 9,008 Restricted cash included in Other long-term assets 1,696 1,821 Cash, cash equivalents and restricted cash $ 158,051 $ 159,181 Restricted cash as of January 31, 2017 and October 31, 2016 was mainly comprised of pledged deposits. Inventories Inventories consisted of the following (in thousands): January 31, 2017 October 31, 2016 Raw materials $ 36,581 $ 35,453 Work-in-process 1,360 3,884 Finished goods 117,972 135,894 Total inventories $ 155,913 $ 175,231 Accruals and Other Current Liabilities Accruals and other current liabilities consisted of the following (in thousands): January 31, 2017 October 31, 2016 Accrued expenses $ 73,253 $ 76,187 Accrued compensation 52,528 52,555 Other current liabilities 80,961 84,669 Total accruals and other current liabilities $ 206,742 $ 213,411 Other current liabilities were comprised primarily of sales and value-added taxes payable, accrued warranty, accrued restructuring expenses and customer deposits. Accrued Warranty Activity related to accrued warranty consisted of the following (in thousands): Three Months Ended January 31, 2017 2016 Balance at beginning of period $ 16,656 $ 16,320 Warranty charged to Cost of net revenues 3,349 3,026 Utilization of warranty accrual (3,146 ) (3,937 ) Balance at end of period 16,859 15,409 Less: current portion (14,095 ) (12,313 ) Long-term portion $ 2,764 $ 3,096 Accrued Restructuring Expenses Activity related to accrued restructuring expenses consisted of the following (in thousands): Restructuring Plans June 2014 Plan July 2015 Plan June 2016 Plan Employee Facilities Employee Employee Involuntary Termination Benefits Facilities Related Costs Total Balance at October 31, 2016 $ 997 $ — $ 703 $ 5,225 $ 2,807 $ 9,732 Charges, net of adjustments (24 ) — 190 2,232 10 2,408 Cash payments (15 ) — (171 ) (2,455 ) (10 ) (2,651 ) Balance at January 31, 2017 $ 958 $ — $ 722 $ 5,002 $ 2,807 $ 9,489 Cumulative costs to date $ 12,748 $ 853 $ 6,812 $ 14,139 $ 3,440 Deferred Revenue, Net Deferred revenue, net of related costs consisted of the following (in thousands): January 31, 2017 October 31, 2016 Deferred revenue $ 192,587 $ 185,788 Deferred cost of revenue (14,833 ) (14,475 ) Deferred revenue, net 177,754 171,313 Less: current portion (107,906 ) (104,797 ) Long-term portion $ 69,848 $ 66,516 Stock-Based Compensation Expense The following table presents the stock-based compensation expense recognized in our Condensed Consolidated Statements of Operations (in thousands): Three Months Ended January 31, 2017 2016 Cost of net revenues $ 930 $ 812 Research and development 1,568 1,908 Sales and marketing 2,587 3,259 General and administrative 4,468 4,481 Total stock-based compensation expense $ 9,553 $ 10,460 Accumulated Other Comprehensive Loss Activity related to Accumulated other comprehensive loss consisted of the following (in thousands): Foreign currency translation adjustments Unrealized gain (loss) on derivatives designated as cash flow hedges (1) Adjustment of pension plan obligations (2) Total Balance at October 31, 2016 $ (333,280 ) $ (2,419 ) $ (5,295 ) $ (340,994 ) Gains (losses) before reclassifications (1,890 ) 3,859 — 1,969 Amounts reclassified from Accumulated other comprehensive loss — 678 26 704 Tax effect (212 ) (1,722 ) — (1,934 ) Other comprehensive gain (loss) (2,102 ) 2,815 26 739 Balance at January 31, 2017 $ (335,382 ) $ 396 $ (5,269 ) $ (340,255 ) (1) Amounts reclassified from Accumulated other comprehensive loss were recorded in Interest expense, net in the Consolidated Statements of Operations. (2) Amounts reclassified from Accumulated other comprehensive loss, net of tax, were recorded in General and administrative expenses in the Consolidated Statements of Operations. The related tax impacts were insignificant. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Jan. 31, 2017 | |
Notes to Financial Statements [Abstract] | |
Fair Value Measurements | . Financial Instruments Fair Value Measurements Our financial assets and liabilities consist principally of cash, accounts receivable, accounts payable, debt, foreign exchange forward contracts, interest rate swaps and contingent consideration payable. The estimated fair value of cash, accounts receivable and accounts payable approximates their carrying value. The estimated fair value of our debt approximates the carrying value because the interest rate on such debt adjusts to market rates on a periodic basis. Contingent consideration payable, assets held for sale, interest rate swaps and foreign exchange forward contracts are recorded at estimated fair value. During the three months ended January 31, 2017, there was no material change in the items we measure and record at fair value on a recurring basis. Additionally, there were no transfers between levels of the fair value hierarchy in the three months ended January 31, 2017 . Fair Value of Contingent Consideration Payable The fair value of contingent consideration payable totaled $6.0 million at both January 31, 2017 and October 31, 2016, and is comprised of amounts payable related to acquisitions. We evaluate changes in the assumptions used to calculate the fair value of contingent consideration payable at the end of each period. The maximum liability on contingent consideration payable is indeterminate because it is based on contributions from the acquired businesses. Derivative Financial Instruments Interest Rate Swap Agreements Designated as Cash Flow Hedges We use interest rate swap agreements to hedge the variability in cash flows related to interest payments. As of January 31, 2017, we have outstanding interest rate swap agreements to effectively convert $500.0 million of the term A loan from a floating rate plus applicable margin to a fixed rate of 1.20% plus applicable margin through March 30, 2018. The principal amount under the term A loan covered by the interest rate swap agreements will decrease to $450.0 million from April 1, 2017 through September 30, 2017 and $400.0 million from October 1, 2017 through March 30, 2018. In addition, we have outstanding an interest rate swap agreement to effectively convert $350.0 million of the term A loan to a fixed rate of 0.975% plus applicable margin from March 30, 2018 through June 30, 2019. The interest rate swaps qualify for hedge accounting treatment as cash flow hedges. The notional amounts of interest rate swap agreements outstanding as of January 31, 2017 and October 31, 2016 were each $500.0 million . Foreign Exchange Forward Contracts Not Designated as Hedging Instruments We arrange and maintain foreign currency exchange forward contracts so as to yield gains or losses to offset changes in foreign currency denominated assets or liabilities due to changes in foreign exchange rates, with the objective to mitigate the volatility associated with foreign currency transaction gains or losses. Our foreign currency exposures are predominantly inter-company receivables and payables arising from product sales and loans from one of our entities to another. Our foreign exchange forward contracts generally mature within 90 days. The notional amounts of such contracts outstanding as of January 31, 2017 and October 31, 2016 were $245.7 million and $175.0 million , respectively. Gains on foreign exchange forward contracts not designated as cash flow hedges totaled $0.5 million and $4.3 million in the three months ended January 31, 2017 and 2016, respectively. |
Goodwill and purchased intangib
Goodwill and purchased intangible assets (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | Goodwill and Purchased Intangible Assets Goodwill Activity related to goodwill by reportable segment consisted of the following (in thousands): Verifone Systems Verifone Services Total Balance at October 31, 2016 $ 497,126 $ 613,367 $ 1,110,493 Dispositions — (596 ) (596 ) Currency translation adjustments 247 1,600 1,847 Balance at January 31, 2017 $ 497,373 $ 614,371 $ 1,111,744 Goodwill is not amortized. We review goodwill for impairment annually and whenever events or changes in circumstances indicate its carrying amount may not be recoverable. Based upon our review, there were no indicators of impairment during the three months ended January 31, 2017 . The purchase price allocation for the Panaroma acquisition has not been finalized with respect to the fair value of income and non-income based taxes and the associated residual goodwill. Purchased Intangible Assets, Net Purchased Intangible assets, net consisted of the following (in thousands): January 31, 2017 October 31, 2016 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 521,788 $ (267,701 ) $ 254,087 $ 521,964 $ (249,513 ) $ 272,451 Other 50,931 (22,055 ) 28,876 73,175 (39,328 ) 33,847 Total $ 572,719 $ (289,756 ) $ 282,963 $ 595,139 $ (288,841 ) $ 306,298 Other intangible assets, net, were comprised primarily of developed and core technology. When purchased intangible assets reach the end of their useful lives, gross carrying amount and accumulated amortization are offset. During the three months ended January 31, 2017 , we offset $20.8 million of Gross carrying amount and Accumulated amortization of intangible assets related to developed technology because they reached the end of their useful lives. Amortization of purchased intangible assets was allocated as follows (in thousands): Three Months Ended January 31, 2017 2016 Included in Cost of net revenues $ 2,445 $ 3,989 Included in Operating expenses 18,763 19,626 Total amortization of purchased intangible assets $ 21,208 $ 23,615 Total future amortization expense for purchased intangible assets that have finite lives, based on our existing intangible assets and their current estimated useful lives as of January 31, 2017 , is estimated as follows (in thousands): Cost of Operating Total Fiscal Years Ending October 31: Remaining of fiscal year 2017 $ 4,809 $ 49,195 $ 54,004 2018 5,216 55,448 60,664 2019 4,836 50,017 54,853 2020 3,173 42,305 45,478 2021 2,435 30,660 33,095 Thereafter 943 33,926 34,869 Total future amortization expense $ 21,412 $ 261,551 $ 282,963 |
Debt
Debt | 3 Months Ended |
Jan. 31, 2017 | |
Notes to Financial Statements [Abstract] | |
Debt Disclosure [Text Block] | Debt Amounts outstanding under our financing arrangements consisted of the following (in thousands): January 31, 2017 October 31, 2016 Credit Agreement Term A loan $ 510,000 $ 525,000 Term B loan 195,000 195,500 Revolving loan 192,942 204,684 Capital leases and other debt 15,605 11,573 Total principal payments due 913,547 936,757 Less: original issue discount and debt issuance costs (9,824 ) (10,844 ) Total amounts outstanding 903,723 925,913 Less: current portion (67,170 ) (66,017 ) Long-term portion $ 836,553 $ 859,896 Credit Agreement Key terms of our credit agreement include financial maintenance covenants and certain representations, warranties, covenants and conditions that are customarily required for similar financings. We were in compliance with all financial covenants under our credit agreement as of January 31, 2017 . Borrowings under the credit agreement may be “Base Rate Borrowings” or “Eurodollar Borrowings” at our option. As of January 31, 2017 , we have elected the Eurodollar option for all of our borrowings. Eurodollar loans bear interest at a monthly market interest rate plus a margin according to the credit agreement. As of January 31, 2017 , the monthly market interest rate was 0.78% for our term A and revolver loans, and 0.78% for our term B loan, and the margins were 1.75% for our term A and revolver loans and 2.75% for our term B loan. Accordingly, as of January 31, 2017 , the interest rate was 2.53% for the term A and revolving loans and 3.53% for the term B loan. We have a number of interest rate swap agreements under which we currently pay banks a fixed rate of 1.20% and receive a monthly floating rate, which effectively converts $500.0 million of the term A loan from a floating interest rate to a fixed interest rate as of January 31, 2017 . See Note 5, Financial Instruments for additional information. As of January 31, 2017 , the commitment fee for the unused portion of the revolving loan was 0.25% per annum, payable quarterly in arrears, and the amount available to draw under the revolving loan was $307.1 million . |
Financings | Amounts outstanding under our financing arrangements consisted of the following (in thousands): January 31, 2017 October 31, 2016 Credit Agreement Term A loan $ 510,000 $ 525,000 Term B loan 195,000 195,500 Revolving loan 192,942 204,684 Capital leases and other debt 15,605 11,573 Total principal payments due 913,547 936,757 Less: original issue discount and debt issuance costs (9,824 ) (10,844 ) Total amounts outstanding 903,723 925,913 Less: current portion (67,170 ) (66,017 ) Long-term portion $ 836,553 $ 859,896 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jan. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments There have been no material changes to our non-cancelable operating lease commitments and manufacturing agreements since October 31, 2016. Bank Guarantees We have arranged bank guarantees with maturities ranging from two months to nine years to certain of our customers and vendors as required in some countries to support certain performance obligations under our service or other agreements with those parties. As of January 31, 2017 , the maximum amount that may become payable under these guarantees was $15.6 million , of which $1.5 million was collateralized by restricted cash deposits. Contingencies We evaluate the circumstances regarding outstanding and potential litigation and other contingencies on a quarterly basis to determine whether there is at least a reasonable possibility that a loss exists requiring accrual or disclosure, and if so, whether an estimate of the possible loss or range of loss can be made, or whether such an estimate cannot be made. When a loss is probable and reasonably estimable, we accrue for such amount based on our estimate of the probable loss considering information available at the time. When a loss is reasonably possible, we disclose the estimated possible loss or range of loss in excess of amounts accrued, if material. Except as otherwise disclosed below, we do not believe that material losses were probable or that there was a reasonable possibility that a material loss may have been incurred with respect to the matters disclosed. Brazilian Tax Assessments State Value-Added Tax The Brazilian subsidiary we acquired as part of our acquisition of Hypercom in August 2011 received an unfavorable administrative decision on a tax enforcement action against it filed by the São Paulo State Revenue Department for collection of state sales taxes related to purported sales of software for the 1998 and 1999 tax years. In 2004, an appeal against this unfavorable administrative decision was filed in a judicial proceeding. The first level decision in the judicial proceeding was issued in our favor. The São Paulo State Revenue Department filed an appeal of this decision. The second level administrative decision ordered that the case be returned to the lower court in order to allow the production of further evidence. Based on our current understanding of the underlying facts of this matter, we believe it is reasonably possible that we may receive an unfavorable decision in this proceeding. The tax assessment including estimated interest through January 31, 2017 for this matter totals approximately 9.1 million Brazilian reais (approximately $2.9 million at the foreign exchange rate as of January 31, 2017 ). As of January 31, 2017 , we have not accrued for this matter, but we have posted a bank bond as a guaranty. Federal Tax Assessments and Amnesty In December 2013, without admitting any fault or liability, we elected to enroll certain of our pending Brazilian tax assessments in the Brazilian Federal Tax Amnesty Program created by Law n. 11.941/2009 in 2009 and reopened for enrollment from October 2013 to December 2013, known as the “ REFIS Amnesty.” The REFIS Amnesty is a program administered by the Brazilian tax authorities and allows entities charged with tax assessments that fall within the program’s scope to voluntarily settle such assessments with certain discounts applied to the amounts due. After conducting an evaluation of our existing Brazilian federal tax assessments and the terms offered by the REFIS Amnesty, we determined to voluntarily settle a number of our pending assessments. Tax assessment matters that fall within the REFIS Amnesty's scope are generally listed in the program's web-based portal for enrollment. Although no formal acceptance by the tax authorities is issued at the time of our enrollment of a matter, we expect the tax authorities to confirm our enrollment as they complete their process to formally consolidate the matters we enrolled in the REFIS Amnesty. In connection with our enrollment of the tax assessments into the REFIS Amnesty, we were required to forgo any further legal defense or proceedings with respect to the merits of such assessments. In exchange, the enrolled assessments were closed and we were granted discounts on our payment of the related accrued interest and penalties and are able to pay under an installment plan, subject to our compliance with the terms of the program. For certain assessments, existing net operating loss carryforwards, or net operating losses, may be used to satisfy a portion of the settlement obligation. Under the terms of the REFIS Amnesty, our right to fund the settlement through the installment payment plan would be canceled after three instances of our not timely paying the installment amounts as scheduled, in which case the full amounts of the original tax debts, including interest and penalties without the benefit of discount, would become immediately due and payable. Excluding the assessments that have been enrolled in the REFIS Amnesty as previously reported, which have been accrued net of the net operating losses that we expect to apply against the settlement obligations, the remaining assessments totaled approximately 3.3 million Brazilian reais (approximately $1.0 million at the foreign exchange rate as of January 31, 2017 ), including estimated penalties and interest, as of January 31, 2017 . In December 2016, we learned that the appeal of these remaining assessments not subject to amnesty was decided in our favor. The Federal Treasury has elected not to appeal, and accordingly there are no longer any assessments in dispute. Municipality Services Tax Assessments In December 2009, one of the Brazilian subsidiaries that was acquired as part of the Lipman acquisition was notified of a tax assessment regarding alleged nonpayment of tax on services rendered for the period from September 2004 to December 2004. This assessment was issued by the municipality of São Paulo (the "municipality") and asserts a services tax deficiency and related penalties totaling 875,000 Brazilian reais (approximately $280,000 at the foreign exchange rate as of January 31, 2017 ), excluding interest. The municipality claims that the Brazilian subsidiary rendered certain services within the municipality of São Paulo but simulated that those services were rendered in another city. At the end of December 2010 the municipality issued further tax assessments alleging the same claims for 2005 through June 2007. These additional subsequent claims assert services tax deficiencies and related penalties totaling 5.9 million Brazilian reais (approximately $1.9 million at the foreign exchange rate as of January 31, 2017 ), excluding interest. We received unfavorable decisions from the administrative courts, which ruled to maintain the tax assessments for each of these matters. No further grounds of appeal are available to us for these assessments within the administrative courts. In October 2012, as a result of the decision at the administrative level, the tax authorities filed an enforcement action in the civil courts to collect on the services tax assessments amounts awarded by the administrative court and seeking other related costs and fees. On March 6, 2013, we filed our defensive claims in the civil courts in response to the tax authorities' enforcement action. In February 2013 the tax authorities filed an additional enforcement action in the civil courts to collect on the penalties related to the services tax assessments amounts awarded by the administrative courts. Based on our understanding of the underlying facts of this matter and our evaluation of the potential outcome at the judicial level, we believe it is reasonably possible that our Brazilian subsidiary will be required to pay some amount of the alleged tax assessments and penalties related to these matters, as well as amounts of interest and certain costs and fees imposed by the court related thereto. As of January 31, 2017 , the amount of the alleged tax assessments and penalties related to these matters was approximately 25.2 million Brazilian reais (approximately $8.0 million at the foreign exchange rate as of January 31, 2017 ), including interest, costs and fees related thereto. The Brazilian subsidiary we acquired as part of our acquisition of Hypercom in August 2011 received an unfavorable administrative decision on a tax enforcement action against it filed by the municipality of Curitiba for collection of alleged services tax deficiency. An appeal against this unfavorable administrative decision was filed in a judicial proceeding and currently the case is pending the municipality of Curitiba's compliance with the writ of summons. As of January 31, 2017 , the underlying assessment, including estimated interest, was approximately 5.8 million Brazilian reais (approximately $1.8 million at the foreign exchange rate as of January 31, 2017 ). Based on our current understanding of the underlying facts of this matter, we believe it is reasonably possible that we may receive an unfavorable decision in this proceeding. Israel Securities Class Actions On January 27, 2008, a class action complaint was filed against us in the Central District Court in Tel Aviv, Israel on behalf of purchasers of our stock on the Tel Aviv Stock Exchange. The complaint sought compensation for damages allegedly incurred by the class of plaintiffs due to the publication of erroneous financial reports. On April 2, 2015, the Israeli Supreme Court ruled that the applicable law is U.S. law and dismissed this action as estopped by settlement of the similar consolidated federal securities class action in the U.S. ( In re VeriFone Holdings, Inc., previously reported). The plaintiff and putative class members in this Israeli action are included in the stipulated settlement of the U.S. class action unless an individual plaintiff opts out. On June 29, 2015, the plaintiff filed a motion for award of compensation and attorneys' fees based on the amount of settlement compensation received by Israelis in the U.S. class action. On January 14, 2016, the Israeli District Court denied this motion. Plaintiff has not timely appealed, that ruling is now final, and this 2008 action is now concluded. On May 12, 2015, a new class action complaint was filed against us in Israel alleging similar claims as the dismissed Israeli class action and alleging that Israeli shareholders were deprived of due process in the U.S. class action settlement proceedings. We are opposing the new class action and plaintiff's class certification motion on substantially the same grounds on which the previous case was dismissed. The court held a pretrial hearing on that motion on May 19, 2016 at which it requested additional information including expert reports, a position paper from the Israel Securities Authority ("ISA") and further briefing. In July 2016, the ISA submitted a position paper supporting our position regarding applicable law. Other requested information has also now been submitted, but the court has not yet ruled. Dolled v. Bergeron et al. On April 19, 2013, a derivative action, Dolled v. Bergeron et al. , Case No. 113-CV-245056, was filed in the Superior Court of California, County of Santa Clara in connection with our February 20, 2013 announcement of preliminary financial results for the fiscal quarter ended January 31, 2013. The action, brought derivatively on behalf of Verifone, names Verifone as a nominal defendant and brings claims for insider selling, breach of fiduciary duty and unjust enrichment variously against certain of our current and former officers and directors. The complaint seeks unspecified monetary damages, restitution and disgorgement of profits and compensation paid to defendants, injunctive relief directing us to reform its corporate governance, and payment of the plaintiff's costs and attorneys' fees. On May 30, 2013, the court entered the parties' stipulation and proposed order, which appointed plaintiff and plaintiff's counsel as lead plaintiff and lead counsel, respectively, in the consolidated action, captioned In re VeriFone Systems, Inc. Derivative Litigation . The next case management conference is scheduled for July 14, 2017. Zoumboulakis v. McGinn et al. On May 24, 2013, a federal derivative action, Zoumboulakis v. McGinn et al. , Case No. 13-CV-02379, was filed in the U.S. District Court for the Northern District of California against certain current and former directors and officers derivatively on our behalf. The complaint, which named us as a nominal defendant, alleges breach of fiduciary duty and abuse of control and asserts claims under Section 14(a) of the Securities Exchange Act of 1934 for false or misleading financial statements and proxy statement disclosures. The original complaint sought unspecified monetary damages, including exemplary damages, restitution from defendants, injunctive relief directing us to make certain corporate governance reforms, and payment of the plaintiff's costs and attorneys' fees. On August 12, 2013, the court granted defendants' motion to relate this action to the pending shareholder class action, Sanders v. VeriFone Systems, Inc. et al . On January 21, 2014, plaintiff filed a first amended complaint, which removed one of our former officers from the action and added an additional former director as a defendant. The first amended complaint asserted claims against the defendants for breach of fiduciary duty, abuse of control, violations of Securities Exchange Act Section 14(a) and unjust enrichment. The first amended complaint also included claims for insider trading against three of the named former and current directors. On August 7, 2014, the court granted our motion to dismiss the first amended complaint with leave to amend. On October 17, 2014, plaintiff filed a second amended complaint, to which we responded by filing another motion to dismiss. On December 3, 2015, the court granted our motion to dismiss, again with leave to amend. On January 20, 2016, plaintiff filed a third amended complaint alleging demand futility with respect to the current Board. On March 1, 2016, we filed another motion to dismiss, on which the court has not yet ruled. If either of these derivative lawsuits is resolved adversely to us, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. Indian Antitrust Proceedings The Competition Commission of India ("CCI") investigated certain complaints made against us alleging unfair practices based on certain provisions in our software development license arrangements in India. We cooperated with requests by the CCI in its investigation. In March 2014, the Director General of the CCI investigating the allegations issued a report rejecting certain of the allegations, but also finding that certain provisions of our licenses may constitute unfair business practices. VeriFone India Sales Pvt. Ltd. filed objections to that report. In April 2015, the CCI issued rulings directing Verifone India to cease and desist from engaging in the alleged anti-competitive conduct and imposing a penalty, the amount of which is not material to our results of operations. We have deposited 10% of this penalty amount and accrued the balance while we appeal these rulings. On June 15, 2015, we filed appeals and interim applications to stay the CCI orders. The appellate court has granted our interim applications to stay all proceedings at least until the final appellate hearing, which commenced on January 19, 2016, and is next scheduled to continue on March 22, 2017. The CCI's rulings reserved the right to pursue additional proceedings against individuals that it deems responsible for the alleged conduct. We are unable to make any estimate of potential loss for any further proceedings the CCI may pursue but do not expect it to be material to our results of operations. Other Litigation Certain of the foregoing cases are still in the preliminary stages and we are not able to quantify the extent of our potential liability, if any, other than as described above. Further, the outcome of litigation is inherently unpredictable and subject to significant uncertainties. If any of these matters are resolved adversely to us, this could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, defending these legal proceedings is likely to be costly, which may have a material adverse effect on our financial condition, results of operations and cash flows, and may divert management's attention from the day-to-day operations of our business. We are subject to various other legal proceedings related to commercial, customer and employment matters that have arisen during the ordinary course of business. The outcome of such legal proceedings is inherently unpredictable and subject to significant uncertainties. Although there can be no assurance as to the ultimate disposition of these matters, our management has determined, based upon the information available at the date of these financial statements, including anticipated expected availability of insurance coverage, that the expected outcome of these matters, individually or in the aggregate, will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Income Tax Uncertainties As of January 31, 2017 , the amount payable for unrecognized tax benefits was $34.2 million , including accrued interest and penalties, none of which is expected to be paid within one year. This amount is included in Other long-term liabilities in our Condensed Consolidated Balance Sheet as of January 31, 2017 . We are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur. |
Segment Information
Segment Information | 3 Months Ended |
Jan. 31, 2017 | |
Notes to Financial Statements [Abstract] | |
Segment and Geographic Information | . Segment and Geographic Information Net revenues and operating income of each segment reflect net revenues and expenses that are directly attributable to that segment. Net revenues and expenses not allocated to segment net revenues and segment operating income include amortization of purchased intangible assets, amortization of step-down in deferred services net revenues and associated costs of net revenues at acquisition, restructuring and related charges, stock-based compensation, as well as general and administrative and corporate research and development expense. We do not separately evaluate assets by segment and therefore assets by segment are not presented below. The following table sets forth net revenues for our reportable segments and reconciles segment net revenues to total net revenues (in thousands): Three Months Ended January 31, 2017 2016 Segment net revenues: Verifone Systems $ 265,401 $ 337,592 Verifone Services 191,218 175,964 Total segment net revenues 456,619 513,556 Amortization of step down in deferred services net revenues at acquisition (2,748 ) (17 ) Total net revenues $ 453,871 $ 513,539 The following table sets forth operating income for our reportable segments and reconciles segment operating income to consolidated operating income (loss) (in thousands): Three Months Ended January 31, 2017 2016 Operating income by segment: Verifone Systems $ 40,712 $ 80,901 Verifone Services 44,823 42,129 Total segment operating income 85,535 123,030 Items not attributable to segment operating income: Amortization of step down in deferred services gross margin at acquisition (2,194 ) (17 ) Amortization of purchase intangible assets (21,208 ) (23,615 ) Stock-based compensation expense (9,553 ) (10,460 ) Unallocated general and administrative expenses (46,886 ) (47,944 ) Unallocated research and development expenses (9,638 ) (4,888 ) Other unallocated costs (491 ) 110 Total operating income (loss) $ (4,435 ) $ 36,216 |
Subsequent Events (Notes)
Subsequent Events (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events On March 8, 2017, we signed an agreement to acquire a 50% equity interest in Gas Media Holdings, LLC, a newly formed holding company into which we will contribute certain assets associated with our marketing, promoting, selling and distributing media and advertising solutions for display or use in petroleum forecourts in the United States. DMI Parent, LLC, will contribute 100% of their equity interests in DMI Holdings, LLC, in exchange for the other 50% equity interest of this newly formed holding company. Subject to customary closing conditions, we expect this transaction to close during the three months ended July 31, 2017. |
Principles of Consolidation a17
Principles of Consolidation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jan. 31, 2017 | |
Principles of Consolidation and Summary of Significant Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | Principles of Consolidation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of VeriFone Systems, Inc. and our wholly-owned and majority-owned subsidiaries, including a variable interest entity where we are deemed to be the primary beneficiary, and have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions on Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. The Condensed Consolidated Balance Sheet at October 31, 2016 has been derived from the audited Consolidated Balance Sheet at that date. All significant inter-company accounts and transactions have been eliminated. In accordance with these rules and regulations, we have omitted certain information and notes normally provided in our annual consolidated financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring items, necessary for the fair presentation of our financial position and results of operations for the interim periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016. The results of operations for the three months ended January 31, 2017 are not necessarily indicative of the results expected for the entire fiscal year. We have two operating segments: Verifone Systems and Verifone Services. Verifone Systems delivers point of sale electronic payment devices that run our unique operating systems, security and encryption software and certified payment software for both payments and commerce. Verifone Services delivers device related services and maintenance, payment transaction routing and reporting, and commerce based services such as advertising on digital screens. Our reportable segments are the same as our operating segments. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. We evaluate our estimates on an ongoing basis when updated information related to such estimates becomes available. We base our estimates on historical experience and information available to us at the time these estimates are made. Actual results could differ materially from these estimates . Significant Accounting Policies During the three months ended January 31, 2017 , there have been no changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016. Concentrations of Credit Risk For the three months ended January 31, 2017 and 2016, no single customer accounted for more than 10% of our total Net revenues. As of January 31, 2017 and October 31, 2016, no single customer accounted for more than 10% of our total Accounts receivable, net. Recently Adopted Accounting Pronouncements During August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted ASU 2016-15 retrospectively, effective November 1, 2016. Adoption had no impact on our consolidated statements of cash flows in any periods presented. During November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash, which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We adopted ASU 2016-18 retrospectively, effective November 1, 2016. Restricted cash is now included as a component of Cash, cash equivalents and restricted cash on our Consolidated Statements of Cash Flows for all periods presented. Recent Accounting Pronouncements Not Yet Adopted During January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business , which provides new guidance to assist entities with evaluating when a set of transferred assets and activities is a business. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted in certain circumstances. We are currently in the process of evaluating our adoption timing and the impact of this new pronouncement on our consolidated financial position and results of operations. During January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The standard is effective for annual or interim impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently in the process of evaluating the impact of this new pronouncement on our consolidated financial position and results of operations. |
Business Description and Basis of Presentation [Text Block] | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of VeriFone Systems, Inc. and our wholly-owned and majority-owned subsidiaries, including a variable interest entity where we are deemed to be the primary beneficiary, and have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions on Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. The Condensed Consolidated Balance Sheet at October 31, 2016 has been derived from the audited Consolidated Balance Sheet at that date. All significant inter-company accounts and transactions have been eliminated. In accordance with these rules and regulations, we have omitted certain information and notes normally provided in our annual consolidated financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring items, necessary for the fair presentation of our financial position and results of operations for the interim periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016. The results of operations for the three months ended January 31, 2017 are not necessarily indicative of the results expected for the entire fiscal year. We have two operating segments: Verifone Systems and Verifone Services. Verifone Systems delivers point of sale electronic payment devices that run our unique operating systems, security and encryption software and certified payment software for both payments and commerce. Verifone Services delivers device related services and maintenance, payment transaction routing and reporting, and commerce based services such as advertising on digital screens. Our reportable segments are the same as our operating segments. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. We evaluate our estimates on an ongoing basis when updated information related to such estimates becomes available. We base our estimates on historical experience and information available to us at the time these estimates are made. Actual results could differ materially from these estimates . |
Significant Accounting Policies [Text Block] | Significant Accounting Policies During the three months ended January 31, 2017 , there have been no changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations of Credit Risk For the three months ended January 31, 2017 and 2016, no single customer accounted for more than 10% of our total Net revenues. As of January 31, 2017 and October 31, 2016, no single customer accounted for more than 10% of our total Accounts receivable, net. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Adopted Accounting Pronouncements During August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted ASU 2016-15 retrospectively, effective November 1, 2016. Adoption had no impact on our consolidated statements of cash flows in any periods presented. During November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash, which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We adopted ASU 2016-18 retrospectively, effective November 1, 2016. Restricted cash is now included as a component of Cash, cash equivalents and restricted cash on our Consolidated Statements of Cash Flows for all periods presented. Recent Accounting Pronouncements Not Yet Adopted During January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business , which provides new guidance to assist entities with evaluating when a set of transferred assets and activities is a business. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted in certain circumstances. We are currently in the process of evaluating our adoption timing and the impact of this new pronouncement on our consolidated financial position and results of operations. During January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The standard is effective for annual or interim impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently in the process of evaluating the impact of this new pronouncement on our consolidated financial position and results of operations. |
Net Income (Loss) Per Share o18
Net Income (Loss) Per Share of Common Stock (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Basic and Diluted | The following table presents the computation of net income (loss) per share of common stock (in thousands, except per share data): Three Months Ended January 31, 2017 2016 Basic and diluted net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Numerator: Net income (loss) attributable to VeriFone Systems, Inc. stockholders $ (16,623 ) $ 23,501 Denominator: Weighted average shares attributable to VeriFone Systems, Inc. stockholders - basic 111,388 111,266 Weighted average effect of dilutive stock options, RSUs and RSAs — 1,085 Weighted average shares attributable to VeriFone Systems, Inc. stockholders - diluted 111,388 112,351 Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Basic $ (0.15 ) $ 0.21 Diluted $ (0.15 ) $ 0.21 |
Balance Sheet and Statement o19
Balance Sheet and Statement of Operations Components (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Notes to Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents [Table Text Block] | The following table provides a reconciliation of cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows (in thousands): January 31, 2017 October 31, 2016 Cash and cash equivalents $ 146,995 $ 148,352 Restricted cash included in Prepaid expenses and other current assets 9,360 9,008 Restricted cash included in Other long-term assets 1,696 1,821 Cash, cash equivalents and restricted cash $ 158,051 $ 159,181 |
Schedule of Inventory, Current [Table Text Block] | Inventories consisted of the following (in thousands): January 31, 2017 October 31, 2016 Raw materials $ 36,581 $ 35,453 Work-in-process 1,360 3,884 Finished goods 117,972 135,894 Total inventories $ 155,913 $ 175,231 |
Schedule of Accrued Liabilities [Table Text Block] | Accruals and other current liabilities consisted of the following (in thousands): January 31, 2017 October 31, 2016 Accrued expenses $ 73,253 $ 76,187 Accrued compensation 52,528 52,555 Other current liabilities 80,961 84,669 Total accruals and other current liabilities $ 206,742 $ 213,411 |
Schedule of product warranty liability | Activity related to accrued warranty consisted of the following (in thousands): Three Months Ended January 31, 2017 2016 Balance at beginning of period $ 16,656 $ 16,320 Warranty charged to Cost of net revenues 3,349 3,026 Utilization of warranty accrual (3,146 ) (3,937 ) Balance at end of period 16,859 15,409 Less: current portion (14,095 ) (12,313 ) Long-term portion $ 2,764 $ 3,096 |
Schedule of Restructuring Reserve by Type of Cost [Table Text Block] | Activity related to accrued restructuring expenses consisted of the following (in thousands): Restructuring Plans June 2014 Plan July 2015 Plan June 2016 Plan Employee Facilities Employee Employee Involuntary Termination Benefits Facilities Related Costs Total Balance at October 31, 2016 $ 997 $ — $ 703 $ 5,225 $ 2,807 $ 9,732 Charges, net of adjustments (24 ) — 190 2,232 10 2,408 Cash payments (15 ) — (171 ) (2,455 ) (10 ) (2,651 ) Balance at January 31, 2017 $ 958 $ — $ 722 $ 5,002 $ 2,807 $ 9,489 Cumulative costs to date $ 12,748 $ 853 $ 6,812 $ 14,139 $ 3,440 |
Schedule of deferred revenue | Deferred revenue, net of related costs consisted of the following (in thousands): January 31, 2017 October 31, 2016 Deferred revenue $ 192,587 $ 185,788 Deferred cost of revenue (14,833 ) (14,475 ) Deferred revenue, net 177,754 171,313 Less: current portion (107,906 ) (104,797 ) Long-term portion $ 69,848 $ 66,516 |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | Stock-Based Compensation Expense The following table presents the stock-based compensation expense recognized in our Condensed Consolidated Statements of Operations (in thousands): Three Months Ended January 31, 2017 2016 Cost of net revenues $ 930 $ 812 Research and development 1,568 1,908 Sales and marketing 2,587 3,259 General and administrative 4,468 4,481 Total stock-based compensation expense $ 9,553 $ 10,460 |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Activity related to Accumulated other comprehensive loss consisted of the following (in thousands): Foreign currency translation adjustments Unrealized gain (loss) on derivatives designated as cash flow hedges (1) Adjustment of pension plan obligations (2) Total Balance at October 31, 2016 $ (333,280 ) $ (2,419 ) $ (5,295 ) $ (340,994 ) Gains (losses) before reclassifications (1,890 ) 3,859 — 1,969 Amounts reclassified from Accumulated other comprehensive loss — 678 26 704 Tax effect (212 ) (1,722 ) — (1,934 ) Other comprehensive gain (loss) (2,102 ) 2,815 26 739 Balance at January 31, 2017 $ (335,382 ) $ 396 $ (5,269 ) $ (340,255 ) (1) Amounts reclassified from Accumulated other comprehensive loss were recorded in Interest expense, net in the Consolidated Statements of Operations. (2) Amounts reclassified from Accumulated other comprehensive loss, net of tax, were recorded in General and administrative expenses in the Consolidated Statements of Operations. The related tax impacts were insignificant. |
Goodwill and purchased intang20
Goodwill and purchased intangible assets (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill [Table Text Block] | Activity related to goodwill by reportable segment consisted of the following (in thousands): Verifone Systems Verifone Services Total Balance at October 31, 2016 $ 497,126 $ 613,367 $ 1,110,493 Dispositions — (596 ) (596 ) Currency translation adjustments 247 1,600 1,847 Balance at January 31, 2017 $ 497,373 $ 614,371 $ 1,111,744 |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | Purchased Intangible assets, net consisted of the following (in thousands): January 31, 2017 October 31, 2016 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 521,788 $ (267,701 ) $ 254,087 $ 521,964 $ (249,513 ) $ 272,451 Other 50,931 (22,055 ) 28,876 73,175 (39,328 ) 33,847 Total $ 572,719 $ (289,756 ) $ 282,963 $ 595,139 $ (288,841 ) $ 306,298 |
Intangible Assets Amortization Expense [Table Text Block] | Amortization of purchased intangible assets was allocated as follows (in thousands): Three Months Ended January 31, 2017 2016 Included in Cost of net revenues $ 2,445 $ 3,989 Included in Operating expenses 18,763 19,626 Total amortization of purchased intangible assets $ 21,208 $ 23,615 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Cost of Operating Total Fiscal Years Ending October 31: Remaining of fiscal year 2017 $ 4,809 $ 49,195 $ 54,004 2018 5,216 55,448 60,664 2019 4,836 50,017 54,853 2020 3,173 42,305 45,478 2021 2,435 30,660 33,095 Thereafter 943 33,926 34,869 Total future amortization expense $ 21,412 $ 261,551 $ 282,963 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Notes to Financial Statements [Abstract] | |
Schedule of Debt [Table Text Block] | Amounts outstanding under our financing arrangements consisted of the following (in thousands): January 31, 2017 October 31, 2016 Credit Agreement Term A loan $ 510,000 $ 525,000 Term B loan 195,000 195,500 Revolving loan 192,942 204,684 Capital leases and other debt 15,605 11,573 Total principal payments due 913,547 936,757 Less: original issue discount and debt issuance costs (9,824 ) (10,844 ) Total amounts outstanding 903,723 925,913 Less: current portion (67,170 ) (66,017 ) Long-term portion $ 836,553 $ 859,896 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Notes to Financial Statements [Abstract] | |
Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | The following table sets forth net revenues for our reportable segments and reconciles segment net revenues to total net revenues (in thousands): Three Months Ended January 31, 2017 2016 Segment net revenues: Verifone Systems $ 265,401 $ 337,592 Verifone Services 191,218 175,964 Total segment net revenues 456,619 513,556 Amortization of step down in deferred services net revenues at acquisition (2,748 ) (17 ) Total net revenues $ 453,871 $ 513,539 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] | The following table sets forth operating income for our reportable segments and reconciles segment operating income to consolidated operating income (loss) (in thousands): Three Months Ended January 31, 2017 2016 Operating income by segment: Verifone Systems $ 40,712 $ 80,901 Verifone Services 44,823 42,129 Total segment operating income 85,535 123,030 Items not attributable to segment operating income: Amortization of step down in deferred services gross margin at acquisition (2,194 ) (17 ) Amortization of purchase intangible assets (21,208 ) (23,615 ) Stock-based compensation expense (9,553 ) (10,460 ) Unallocated general and administrative expenses (46,886 ) (47,944 ) Unallocated research and development expenses (9,638 ) (4,888 ) Other unallocated costs (491 ) 110 Total operating income (loss) $ (4,435 ) $ 36,216 |
Principles of Consolidation a23
Principles of Consolidation and Summary of Significant Accounting Policies concentration of credit risks (Details) - customers | 3 Months Ended | ||
Jan. 31, 2017 | Jan. 31, 2016 | Oct. 31, 2015 | |
Entity Wide Revenue, Major Customer, Count | 0 | 0 | |
Credit Concentration Risk [Member] | |||
Concentration Risk, Major Customer, Count | 0 | 0 |
Computation of Net Income Per C
Computation of Net Income Per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 8,000 | 3,400 |
Net income (loss) attributable to VeriFone Systems, Inc. stockholders | $ (16,623) | $ 23,501 |
Weighted average shares attributable to VeriFone Systems, Inc. stockholders - basic | 111,388 | 111,266 |
Weighted average effect of dilutive stock options, RSUs and RSAs | 0 | 1,085 |
Weighted average shares attributable to VeriFone Systems, Inc. stockholders - diluted | 111,388 | 112,351 |
Basic | $ (0.15) | $ 0.21 |
Diluted | $ (0.15) | $ 0.21 |
Stock Repurchased During Period, Shares | 2,600 | |
Treasury Stock Acquired, Average Cost Per Share | $ 28.02 |
Net Income Per Common Share - A
Net Income Per Common Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 8 | 3.4 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) $ in Thousands, ₪ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Jan. 31, 2016USD ($) | Jan. 31, 2016ILS (₪) | Oct. 31, 2014USD ($) | Oct. 31, 2014ILS (₪) | Jan. 31, 2017USD ($) | Jan. 31, 2016USD ($) | Oct. 31, 2017USD ($) | Jan. 31, 2017ILS (₪) | |
Unrecognized Tax Benefits | $ 106,500 | |||||||
Provision for (benefit from) income taxes | 2,920 | $ 1,999 | ||||||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | (14,804) | $ 25,732 | ||||||
Foreign Tax Authority [Member] | ||||||||
Amount of transaction under examination | $ 361,400 | ₪ 1,360 | ||||||
Scenario, Forecast [Member] | intercompany loan [Member] | ISRAEL | ||||||||
Repayments of Debt | $ 69,000 | |||||||
Tax Year 2009 [Member] | Foreign Tax Authority [Member] | ||||||||
Amount of transaction under examination | $ 584,200 | ₪ 2,200 | ||||||
Loss Contingency, Estimate of Possible Loss | 341,800 | ₪ 1,290 | ||||||
Tax Year 2008 [Member] | Foreign Tax Authority [Member] | ||||||||
Amount of transaction under examination | $ 591,000 | ₪ 2,230 | ||||||
Loss Contingency, Estimate of Possible Loss | $ 405,400 | ₪ 1,530 |
Balance Sheet and Statement o27
Balance Sheet and Statement of Operations Components Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jan. 31, 2017 | Oct. 31, 2016 | Jan. 31, 2016 | Oct. 31, 2015 |
Cash and Cash Equivalents [Abstract] | ||||
Restricted Cash and Cash Equivalents, Current | $ 9,360 | $ 9,008 | ||
Restricted Cash and Cash Equivalents, Noncurrent | 1,696 | 1,821 | ||
cash, cash equivalents and restricted cash | 158,051 | 159,181 | $ 205,850 | $ 215,869 |
Cash and cash equivalents | $ 146,995 | $ 148,352 |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Thousands | Jan. 31, 2017 | Oct. 31, 2016 |
Disclosure - Inventories [Abstract] | ||
Raw materials | $ 36,581 | $ 35,453 |
Work-in-process | 1,360 | 3,884 |
Finished goods | 117,972 | 135,894 |
Total inventories | $ 155,913 | $ 175,231 |
Accruals and Other Current Liab
Accruals and Other Current Liabilities (Detail) - USD ($) $ in Thousands | Jan. 31, 2017 | Oct. 31, 2016 |
Disclosure - Other Current Liabilities [Abstract] | ||
Accrued expenses | $ 73,253 | $ 76,187 |
Accrued compensation | 52,528 | 52,555 |
Other current liabilities | 80,961 | 84,669 |
Total accruals and other current liabilities | $ 206,742 | $ 213,411 |
Accrued Warranty (Detail)
Accrued Warranty (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Disclosure - Activity Related to Accrued Warranty [Abstract] | ||
Balance at beginning of period | $ 16,656 | $ 16,320 |
Warranty charged to Cost of net revenues | 3,349 | 3,026 |
Utilization of warranty accrual | (3,146) | (3,937) |
Balance at end of period | 16,859 | 15,409 |
Less: current portion | (14,095) | (12,313) |
Long-term portion | $ 2,764 | $ 3,096 |
Balance Sheet and Statement o31
Balance Sheet and Statement of Operations Components Accrued Restructuring Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Oct. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | $ 9,489 | $ 9,732 |
Restructuring Charges | (2,408) | |
Payments for Restructuring | 2,651 | |
Employee Involuntary Termination Benefits | June2014plan [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | 958 | 997 |
Restructuring Charges | (24) | |
Payments for Restructuring | 15 | |
Restructuring and Related Cost, Cost Incurred to Date | 12,748 | |
Employee Involuntary Termination Benefits | July2015plan [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | 722 | 703 |
Restructuring Charges | (190) | |
Payments for Restructuring | 171 | |
Restructuring and Related Cost, Cost Incurred to Date | 6,812 | |
Employee Involuntary Termination Benefits | June2016plan [Member] [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | 5,002 | 5,225 |
Restructuring Charges | (2,232) | |
Payments for Restructuring | 2,455 | |
Restructuring and Related Cost, Cost Incurred to Date | 14,139 | |
Facilities Related Costs | June2014plan [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | 0 | 0 |
Restructuring Charges | 0 | |
Payments for Restructuring | 0 | |
Restructuring and Related Cost, Cost Incurred to Date | 853 | |
Facilities Related Costs | June2016plan [Member] [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | 2,807 | $ 2,807 |
Restructuring Charges | (10) | |
Payments for Restructuring | 10 | |
Restructuring and Related Cost, Cost Incurred to Date | $ 3,440 |
Deferred Revenue, Net (Detail)
Deferred Revenue, Net (Detail) - USD ($) $ in Thousands | Jan. 31, 2017 | Oct. 31, 2016 |
Disclosure - Deferred Revenue, Net [Abstract] | ||
Deferred revenue | $ 192,587 | $ 185,788 |
Deferred cost of revenue | (14,833) | (14,475) |
Deferred revenue, net | 177,754 | 171,313 |
Less: current portion | (107,906) | (104,797) |
Long-term portion | $ 69,848 | $ 66,516 |
Balance Sheet and Statement o33
Balance Sheet and Statement of Operations Components Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 9,553 | $ 10,460 |
Cost of net revenues | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 930 | 812 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 1,568 | 1,908 |
Sales and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 2,587 | 3,259 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 4,468 | $ 4,481 |
Balance Sheet and Statement o34
Balance Sheet and Statement of Operations Components Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2017 | Jan. 31, 2016 | Oct. 31, 2016 | |
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | $ 2,815 | ||
Net change in pension plan obligations | 26 | ||
Other Comprehensive Income (Loss), Net of Tax | 739 | $ (38,728) | |
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | 0 | ||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | 678 | 1,162 | |
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (335,382) | $ (333,280) | |
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax | 396 | (2,419) | |
Accumulated other comprehensive income, other | (5,269) | (5,295) | |
Accumulated other comprehensive loss | (340,255) | $ (340,994) | |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax | (1,890) | ||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, before Tax | 3,859 | (1,687) | |
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Tax | 0 | ||
Other Comprehensive Income (Loss), before Reclassifications, before Tax | 1,969 | ||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax | (2,102) | (38,229) | |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Net of Tax | 26 | 26 | |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), before Tax | 26 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 704 | ||
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax | (212) | ||
Change in unrealized gain (loss) on derivatives designated as cash flow hedges | (1,722) | $ 0 | |
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Tax | 0 | ||
Other Comprehensive Income (Loss), Tax | $ (1,934) |
Financial Instruments - Reconci
Financial Instruments - Reconciliation for Earn-Out Payables Measured and Recorded at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Earn-Out Payable [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Business Combination, Contingent Consideration, Liability | $ 6 | $ 6 |
Financial Instruments Financial
Financial Instruments Financial instruments - Derivatives (Details) - USD ($) $ in Millions | 3 Months Ended | |||||
Jan. 31, 2017 | Jan. 31, 2016 | Mar. 30, 2018 | Oct. 01, 2017 | Apr. 01, 2017 | Oct. 31, 2016 | |
Interest Rate Swap [Member] | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative, Notional Amount | $ 500 | $ 500 | ||||
Not Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative, Gain (Loss) on Derivative, Net | 0.5 | $ 4.3 | ||||
Derivative, Notional Amount | 245.7 | $ 175 | ||||
Term A Loan [Member] | Interest Rate Swap [Member] | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative, Amount of Hedged Item | $ 500 | |||||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 1.20% | |||||
Scenario, Forecast [Member] | Term A Loan [Member] | Interest Rate Swap [Member] | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative, Amount of Hedged Item | $ 350 | $ 400 | $ 450 | |||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 0.975% | |||||
Maximum [Member] | Foreign Exchange Forward [Member] | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Derivative, Maturity Period (Days) | 90 months |
Goodwill and purchased intang37
Goodwill and purchased intangible assets Activity related to goodwill (Details) $ in Thousands | 3 Months Ended |
Jan. 31, 2017USD ($) | |
Goodwill [Line Items] | |
Balance at October 31, 2015 | $ 1,110,493 |
Other adjustments | (596) |
Currency translation adjustments | 1,847 |
Balance at October 31, 2016 | 1,111,744 |
Verifone Systems [Member] | |
Goodwill [Line Items] | |
Balance at October 31, 2015 | 497,126 |
Other adjustments | 0 |
Currency translation adjustments | 247 |
Balance at October 31, 2016 | 497,373 |
Verifone Services [Member] | |
Goodwill [Line Items] | |
Balance at October 31, 2015 | 613,367 |
Other adjustments | (596) |
Currency translation adjustments | 1,600 |
Balance at October 31, 2016 | $ 614,371 |
Goodwill and purchased intang38
Goodwill and purchased intangible assets Purchased intangible assets (Details) - USD ($) $ in Thousands | Jan. 31, 2017 | Oct. 31, 2016 |
Goodwill [Line Items] | ||
Gross Carrying Amount | $ 572,719 | $ 595,139 |
Accumulated Amortization | (289,756) | (288,841) |
Net Carrying Amount | 282,963 | |
Total | 282,963 | 306,298 |
Customer Relationships [Member] | ||
Goodwill [Line Items] | ||
Gross Carrying Amount | 521,788 | 521,964 |
Accumulated Amortization | (267,701) | (249,513) |
Net Carrying Amount | 254,087 | 272,451 |
Other Intangible Assets [Member] | ||
Goodwill [Line Items] | ||
Gross Carrying Amount | 50,931 | 73,175 |
Accumulated Amortization | (22,055) | (39,328) |
Net Carrying Amount | $ 28,876 | $ 33,847 |
Goodwill and purchased intang39
Goodwill and purchased intangible assets Amortization of purchased intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization of purchased intangible assets | $ 18,763 | $ 19,626 |
Cost of Sales [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization of purchased intangible assets | 2,445 | 3,989 |
IncludingCOGSandOperatingExpense [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total amortization of purchased intangible assets | $ 21,208 | $ 23,615 |
Goodwill and purchased intang40
Goodwill and purchased intangible assets Additional information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Oct. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | $ 54,004 | |
Goodwill | 1,111,744 | $ 1,110,493 |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 60,664 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 54,853 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 45,478 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 33,095 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 34,869 | |
Net Carrying Amount | 282,963 | |
Other adjustments | (596) | |
Currency translation adjustments | 1,847 | |
Cost of Sales [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | 4,809 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 5,216 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 4,836 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 3,173 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 2,435 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 943 | |
Net Carrying Amount | 21,412 | |
Operating Expense [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | 49,195 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 55,448 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 50,017 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 42,305 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 30,660 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 33,926 | |
Net Carrying Amount | 261,551 | |
Developed Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
intangible assets reaching the end of useful life | 20,800 | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net Carrying Amount | 254,087 | 272,451 |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net Carrying Amount | 28,876 | 33,847 |
Verifone Systems [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | 497,373 | 497,126 |
Other adjustments | 0 | |
Currency translation adjustments | 247 | |
Verifone Services [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | 614,371 | $ 613,367 |
Other adjustments | (596) | |
Currency translation adjustments | $ 1,600 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2017 | Oct. 31, 2016 | |
Debt Instrument [Line Items] | ||
Debt, Current | $ (67,170) | $ (66,017) |
Long-term Debt, Gross | 913,547 | 936,757 |
Debt Instrument, Unamortized Discount | (9,824) | (10,844) |
Debt, Long-term and Short-term, Combined Amount | 903,723 | 925,913 |
Long-term debt, less current portion | 836,553 | 859,896 |
Other Long-term Debt | 15,605 | 11,573 |
Term B Loan | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 195,000 | 195,500 |
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 3.53% | |
Revolving Loan | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 192,942 | 204,684 |
Line of Credit Facility, Commitment Fee Percentage | 0.25% | |
Line of Credit Facility, Remaining Borrowing Capacity | $ 307,100 | |
Term A Loan [Member] | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 510,000 | $ 525,000 |
Term A Loan And Revolving Loan [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 2.53% | |
Eurodollar Rate [Member] | Term B Loan | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Interest Rate at Period End | 0.78% | |
Interest Rate Margin | 2.75% | |
Eurodollar Rate [Member] | Term A Loan And Revolving Loan [Member] | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Interest Rate at Period End | 0.78% | |
Interest Rate Margin | 1.75% | |
Interest Rate Swap [Member] | Term A Loan [Member] | ||
Debt Instrument [Line Items] | ||
Derivative, Amount of Hedged Item | $ 500,000 | |
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 1.20% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Jan. 31, 2017USD ($) | Jan. 31, 2017BRL | Dec. 31, 2010USD ($) | Dec. 31, 2010BRL | Dec. 31, 2009USD ($) | Dec. 31, 2009BRL |
Commitments and Contingencies Disclosure [Line Items] | ||||||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 15,600,000 | |||||
Deferred Income Taxes and Other Tax Liabilities, Noncurrent | 106,500,000 | |||||
Unrecognized tax benefits liability, net | 34,200,000 | |||||
Sao Paulo [Member] | Revised Municipality Tax on Services Assessments | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 8,000,000 | BRL 25,200,000 | ||||
Interest Rate Swap [Member] | Term A Loan [Member] | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Derivative, Amount of Hedged Item | 500,000,000 | |||||
Loans Insured or Guaranteed by non-US Government Authorities [Member] | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Guarantor Obligations, Maximum Exposure, Undiscounted | 1,500,000 | |||||
Maximum [Member] | State Value Added Tax | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 2,900,000 | 9,100,000 | ||||
Maximum [Member] | Curitiba [Member] | Municipality Tax on Services Assessments [Member] | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 1,800,000 | 5,800,000 | ||||
Maximum [Member] | Sao Paulo [Member] | Revised Municipality Tax on Services Assessments | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | $ 1,900,000 | BRL 5,900,000 | ||||
Maximum [Member] | Sao Paulo [Member] | Municipality Tax on Services Assessments [Member] | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | $ 1,000,000 | BRL 3,300,000 | $ 280,000 | BRL 875,000 |
Segment Information - Net Reven
Segment Information - Net Revenues and Operating Income (Loss) for Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2017 | Jan. 31, 2016 | Oct. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Goodwill | $ 1,111,744 | $ 1,110,493 | |
Property and equipment, net | 202,654 | 202,277 | |
Total segment net revenues | 456,619 | $ 513,556 | |
Reconciling items from segment revenue to consolidated revenue | 2,748 | ||
Total net revenues | 453,871 | 513,539 | |
Total segment operating income | 85,535 | 123,030 | |
Amortization of step down in deferred services gross margin at acquisition | (2,194) | (17) | |
Amortization of purchase intangible assets | (18,763) | (19,626) | |
Unallocated general and administrative expenses | (46,886) | (47,944) | |
Unallocated research and development expenses | (9,638) | (4,888) | |
Stock-based compensation expense | (9,553) | (10,460) | |
Other unallocated costs | 491 | 110 | |
Operating income (loss) | (4,435) | 36,216 | |
Verifone Systems [Member] | |||
Segment Reporting Information [Line Items] | |||
Goodwill | 497,373 | 497,126 | |
Total net revenues | 265,401 | 337,592 | |
Total segment operating income | 40,712 | 80,901 | |
Verifone Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Goodwill | 614,371 | $ 613,367 | |
Total net revenues | 191,218 | 175,964 | |
Total segment operating income | 44,823 | 42,129 | |
IncludingCOGSandOperatingExpense [Member] | |||
Segment Reporting Information [Line Items] | |||
Amortization of purchase intangible assets | $ (21,208) | $ (23,615) |