VERIFONE SYSTEMS, INC. | |
Date: July 6, 2017 | By: /s/ Albert Liu Name: Albert Liu Title: Executive Vice President, Corporate Development and General Counsel |
Exhibit No. | Description |
99.1 | Unaudited Pro Forma Condensed Consolidated Financial Information of Verifone Systems, Inc. |
VERIFONE SYSTEMS, INC. | ||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||||||||
SIX MONTHS ENDED APRIL 30, 2017 | ||||||||||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | ||||||||||||||||||||
Historical | China Business | Other Pro Forma Adjustments | Notes | Pro Forma Results | ||||||||||||||||
Net revenues: | ||||||||||||||||||||
Systems | $ | 551,076 | $ | (6,901 | ) | $ | — | $ | 544,175 | |||||||||||
Services | 376,480 | (636 | ) | — | 375,844 | |||||||||||||||
Total net revenues | 927,556 | (7,537 | ) | — | 920,019 | |||||||||||||||
Cost of net revenues: | ||||||||||||||||||||
Systems | 342,611 | (7,684 | ) | — | 334,927 | |||||||||||||||
Services | 240,753 | (667 | ) | — | 240,086 | |||||||||||||||
Total cost of net revenues | 583,364 | (8,351 | ) | — | 575,013 | |||||||||||||||
Gross margin | 344,192 | 814 | — | 345,006 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 107,723 | (3,383 | ) | 327 | A | 104,667 | ||||||||||||||
Sales and marketing | 100,141 | (2,051 | ) | (58 | ) | A | 98,032 | |||||||||||||
General and administrative | 97,558 | (313 | ) | 223 | A | 97,468 | ||||||||||||||
Restructuring and related charges | 70,038 | (366 | ) | — | 69,672 | |||||||||||||||
Amortization of purchased intangible assets | 37,177 | — | — | 37,177 | ||||||||||||||||
Goodwill impairment | 17,384 | — | — | 17,384 | ||||||||||||||||
Total operating expenses | 430,021 | (6,113 | ) | 492 | 424,400 | |||||||||||||||
Operating loss | (85,829 | ) | 6,927 | (492 | ) | (79,394 | ) | |||||||||||||
Interest expense, net | (16,332 | ) | (3 | ) | — | (16,335 | ) | |||||||||||||
Other income (expense), net | 6,574 | (140 | ) | — | 6,434 | |||||||||||||||
Loss before income taxes | (95,587 | ) | 6,784 | (492 | ) | (89,295 | ) | |||||||||||||
Income tax provision | 11,802 | (223 | ) | (93 | ) | B | 11,486 | |||||||||||||
Consolidated net loss | (107,389 | ) | 7,007 | (399 | ) | (100,781 | ) | |||||||||||||
Net loss attributable to noncontrolling interests | (1,499 | ) | — | — | (1,499 | ) | ||||||||||||||
Net loss attributable to VeriFone Systems, Inc. stockholders | (105,890 | ) | 7,007 | (399 | ) | (99,282 | ) | |||||||||||||
Net loss per share attributable to VeriFone Systems, Inc. stockholders: | ||||||||||||||||||||
Basic | $ | (0.95 | ) | $ | (0.89 | ) | ||||||||||||||
Diluted | $ | (0.95 | ) | $ | (0.89 | ) | ||||||||||||||
Weighted average number of shares used in computing net loss per share attributable to VeriFone Systems, Inc. stockholders: | ||||||||||||||||||||
Basic | 111,522 | 111,522 | ||||||||||||||||||
Diluted | 111,522 | 111,522 | ||||||||||||||||||
VERIFONE SYSTEMS, INC. | ||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||||||||
YEAR ENDED OCTOBER 31, 2016 | ||||||||||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | ||||||||||||||||||||
Historical | China Business | Other Pro Forma Adjustments | Notes | Pro Forma Results | ||||||||||||||||
Net revenues: | ||||||||||||||||||||
Systems | $ | 1,236,361 | $ | (14,590 | ) | $ | — | $ | 1,221,771 | |||||||||||
Services | 755,788 | (1,879 | ) | — | 753,909 | |||||||||||||||
Total net revenues | 1,992,149 | (16,469 | ) | — | 1,975,680 | |||||||||||||||
Cost of net revenues: | ||||||||||||||||||||
Systems | 744,311 | (13,928 | ) | — | 730,383 | |||||||||||||||
Services | 453,527 | (1,514 | ) | — | 452,013 | |||||||||||||||
Total cost of net revenues | 1,197,838 | (15,442 | ) | — | 1,182,396 | |||||||||||||||
Gross margin | 794,311 | (1,027 | ) | — | 793,284 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 207,503 | (9,451 | ) | 1,394 | A | 199,446 | ||||||||||||||
Sales and marketing | 217,039 | (5,232 | ) | 224 | A | 212,031 | ||||||||||||||
General and administrative | 204,552 | (900 | ) | 449 | A | 204,101 | ||||||||||||||
Restructuring and related charges | 41,254 | (130 | ) | — | 41,124 | |||||||||||||||
Litigation settlement and loss contingency expense | 650 | — | — | 650 | ||||||||||||||||
Amortization of purchased intangible assets | 90,534 | — | — | 90,534 | ||||||||||||||||
Total operating expenses | 761,532 | (15,713 | ) | 2,067 | 747,886 | |||||||||||||||
Operating income | 32,779 | 14,686 | (2,067 | ) | 45,398 | |||||||||||||||
Interest expense, net | (34,564 | ) | (11 | ) | — | (34,575 | ) | |||||||||||||
Other income (expense), net | 3,612 | (501 | ) | — | 3,111 | |||||||||||||||
Income before income taxes | 1,827 | 14,174 | (2,067 | ) | 13,934 | |||||||||||||||
Income tax provision | 11,527 | (353 | ) | (385 | ) | B | 10,789 | |||||||||||||
Consolidated net income (loss) | (9,700 | ) | 14,527 | (1,682 | ) | 3,145 | ||||||||||||||
Net loss attributable to noncontrolling interests | (419 | ) | — | — | (419 | ) | ||||||||||||||
Net income (loss) attributable to VeriFone Systems, Inc. stockholders | $ | (9,281 | ) | 14,527 | (1,682 | ) | $ | 3,564 | ||||||||||||
Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: | ||||||||||||||||||||
Basic | $ | (0.08 | ) | $ | 0.03 | |||||||||||||||
Diluted | $ | (0.08 | ) | $ | 0.03 | |||||||||||||||
Weighted average number of shares used in computing net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: | ||||||||||||||||||||
Basic | 110,829 | 110,829 | ||||||||||||||||||
Diluted | 110,829 | 111,571 | ||||||||||||||||||
VERIFONE SYSTEMS, INC. | ||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||||||||
AS OF APRIL 30, 2017 | ||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||
Historical | China Business | Other Pro Forma Adjustments | Notes | Pro Forma | ||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 134,493 | $ | (1,939 | ) | $ | (4,061 | ) | C | $ | 128,493 | |||||||
Accounts receivable, net | 335,198 | (5,862 | ) | — | 329,336 | |||||||||||||
Inventories | 141,698 | (7,430 | ) | — | 134,268 | |||||||||||||
Prepaid expenses and other current assets | 195,158 | (2,773 | ) | 1,000 | D | 193,385 | ||||||||||||
Total current assets | 806,547 | (18,004 | ) | (3,061 | ) | 785,482 | ||||||||||||
Property and equipment, net | 130,488 | (1,179 | ) | — | 129,309 | |||||||||||||
Purchased intangible assets, net | 261,379 | — | — | 261,379 | ||||||||||||||
Goodwill | 1,069,900 | — | — | 1,069,900 | ||||||||||||||
Deferred tax assets, net | 35,459 | (1,349 | ) | — | 34,110 | |||||||||||||
Other long-term assets | 100,295 | (1,332 | ) | — | E | 98,963 | ||||||||||||
Total assets | $ | 2,404,068 | $ | (21,864 | ) | $ | (3,061 | ) | $ | 2,379,143 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 154,940 | $ | (1,213 | ) | $ | — | $ | 153,727 | |||||||||
Accruals and other current liabilities | 245,997 | (2,220 | ) | 519 | B | 244,296 | ||||||||||||
Deferred revenue, net | 109,207 | (889 | ) | — | 108,318 | |||||||||||||
Short-term debt | 74,540 | — | — | 74,540 | ||||||||||||||
Total current liabilities | 584,684 | (4,322 | ) | 519 | 580,881 | |||||||||||||
Long-term deferred revenue, net | 69,705 | (1,613 | ) | — | 68,092 | |||||||||||||
Deferred tax liabilities, net | 100,915 | — | — | 100,915 | ||||||||||||||
Long-term debt | 803,345 | — | — | 803,345 | ||||||||||||||
Other long-term liabilities | 68,623 | (405 | ) | — | 68,218 | |||||||||||||
Total liabilities | 1,627,272 | (6,340 | ) | 519 | 1,621,451 | |||||||||||||
Redeemable noncontrolling interest in subsidiary | 1,579 | — | — | 1,579 | ||||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Common stock | 1,118 | — | — | 1,118 | ||||||||||||||
Additional paid-in capital | 1,792,238 | — | — | 1,792,238 | ||||||||||||||
Accumulated deficit | (724,229 | ) | (16,559 | ) | (3,580 | ) | F | (744,368 | ) | |||||||||
Accumulated other comprehensive loss | (318,998 | ) | 1,035 | — | (317,963 | ) | ||||||||||||
Total VeriFone Systems, Inc. stockholders’ equity | 750,129 | (15,524 | ) | (3,580 | ) | 731,025 | ||||||||||||
Noncontrolling interests in subsidiaries | 25,088 | — | 25,088 | |||||||||||||||
Total equity | 775,217 | (15,524 | ) | (3,580 | ) | 756,113 | ||||||||||||
Total liabilities, redeemable noncontrolling interest in subsidiary and equity | $ | 2,404,068 | $ | (21,864 | ) | $ | (3,061 | ) | $ | 2,379,143 |
A. | Reflects inclusion of costs and expenses that were historically allocated to the China business and will remain with Verifone’s operations. Certain of these costs may be recoverable prospectively as part of our transfer services agreement with Verifone Systems (China), Inc. |
B. | Reflects the pro forma tax adjustments related to Other Pro Forma Adjustments, which were estimated using applicable statutory rates. |
C. | Represents our cash contribution of $4.1 million. |
D. | Represents the estimated fair value of net intercompany receivables and payables that will be treated as third-party arrangements. |
E. | Reflects the 30% equity investment that we retained in connection with the divestiture transaction. |
F. | Represents adjustments to Retained earnings, as a result of Other Pro Forma Adjustments made per notes B, C, D, and E above. These adjustments reflect a loss of approximately $20.1 million arising from the divestiture transaction. The estimated loss has not been reflected in the Unaudited Pro Forma Condensed Consolidated Statements of Operations as it is considered to be nonrecurring in nature. |
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