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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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11-3200514
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(State or Other Jurisdiction of Incorporation or
Organization)
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(I.R.S. Employer Identification No.)
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330 South Service Road, Melville, New York
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11747
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(Address of Principal Executive Offices)
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(Zip Code)
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(631) 962-9600
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(Registrant’s Telephone Number, Including Area Code)
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Large Accelerated Filer
þ
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Accelerated Filer
o
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Non-Accelerated Filer
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Smaller Reporting Company
o
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(Do not check if a smaller reporting company)
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•
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uncertainties regarding the impact of general economic conditions in the United States and abroad, particularly in information technology spending and government budgets, on our business;
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•
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risks associated with our ability to keep pace with technological changes and evolving industry standards in our product offerings and to successfully develop, launch, and drive demand for new and enhanced, innovative, high-quality products that meet or exceed customer needs;
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•
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risks associated with the planned merger (the "Merger") with our controlling stockholder, Comverse Technology, Inc. ("CTI"), pursuant to the terms and conditions of the Agreement and Plan of Merger we executed on August 12, 2012 (the “Merger Agreement”), including risks associated with our and CTI's ability to satisfy the conditions and terms of the Merger, and to execute the Merger in the estimated timeframe, or at all, and the issuance of shares of our common stock in connection with the Merger;
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•
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uncertainties regarding the expected benefits of the Merger;
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•
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risks arising as a result of unknown or unexpected CTI obligations or liabilities assumed upon completion of the Merger, or as a result of parties obligated to provide us with indemnification being unwilling or unable to stand behind such obligations;
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•
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risks associated with any litigation against us or our directors or officers that we may face, or any litigation against counterparties that we may inherit, in connection with the proposed Merger;
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uncertainties regarding the tax consequences of the Merger;
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•
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risks associated with CTI's ability to control our board of directors and the outcome of matters submitted for stockholder action;
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risks associated with being a consolidated subsidiary of CTI and formerly part of CTI's consolidated tax group;
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risks due to aggressive competition in all of our markets, including with respect to maintaining margins and sufficient levels of investment in our business;
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risks created by the continued consolidation of our competitors or the introduction of large competitors in our markets with greater resources than we have;
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risks associated with our ability to successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with capital constraints, costs and expenses, maintaining profitability levels, management distraction, post-acquisition integration activities, and potential asset impairments;
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risks that we may be unable to maintain and enhance relationships with key resellers, partners, and systems integrators;
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risks relating to our ability to effectively and efficiently execute on our growth strategy, including managing investments in our business and operations and enhancing and securing our internal and external operations;
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•
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risks relating to our ability to successfully implement and maintain adequate systems and internal controls for our current and future operations and reporting needs and related risks of financial statement omissions, misstatements, restatements, or filing delays;
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•
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risks associated with the mishandling or perceived mishandling of sensitive or confidential information, security
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•
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risks associated with our ability to efficiently and effectively allocate limited financial and human resources to business, development, strategic, or other opportunities that may not come to fruition or produce satisfactory returns;
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risks associated with significant international operations, including, among others, in Israel, Europe, and Asia, exposure to regions subject to political or economic instability, and fluctuations in foreign exchange rates;
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risks associated with complex and changing local and foreign regulatory environments in the jurisdictions in which we operate;
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•
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risks associated with our ability to recruit and retain qualified personnel in regions in which we operate;
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challenges associated with selling sophisticated solutions, long sales cycles, and emphasis on larger transactions, including in accurately forecasting revenue and expenses and in maintaining profitability;
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•
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risks that our intellectual property rights may not be adequate to protect our business or assets or that others may make claims on our intellectual property or claim infringement on their intellectual property rights;
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•
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risks that our products may contain undetected defects, which could expose us to substantial liability;
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•
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risks associated with a significant amount of our business coming from domestic and foreign government customers, including the ability to maintain security clearances for certain projects;
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•
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risks associated with our dependence on a limited number of suppliers or original equipment manufacturers for certain components of our products, including companies that may compete with us or work with our competitors;
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risks that our customers or partners delay or cancel orders or are unable to honor contractual commitments due to liquidity issues, challenges in their business, or otherwise;
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risks that we may experience liquidity or working capital issues and related risks that financing sources may be unavailable to us on reasonable terms or at all;
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risks associated with significant leverage resulting from our current debt position, including with respect to covenant limitations and compliance, fluctuations in interest rates, and our ability to maintain our credit ratings;
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risks relating to our ability to timely implement new accounting pronouncements or new interpretations of existing accounting pronouncements and related risks of future restatements or filing delays; and
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risks associated with changing tax rates, tax laws and regulations, and the continuing availability of expected tax benefits.
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(in thousands, except share and per share data)
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July 31,
2012 |
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January 31,
2012 |
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Assets
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Current Assets:
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Cash and cash equivalents
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$
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173,250
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$
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150,662
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Restricted cash and bank time deposits
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10,750
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12,863
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Accounts receivable, net
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167,616
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154,753
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Inventories
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10,000
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14,414
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Deferred cost of revenue
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4,454
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11,951
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Prepaid expenses and other current assets
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52,072
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56,047
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Total current assets
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418,142
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400,690
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Property and equipment, net
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32,142
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28,289
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Goodwill
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825,069
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828,758
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Intangible assets, net
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162,898
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184,230
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Capitalized software development costs, net
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6,217
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5,846
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Long-term deferred cost of revenue
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8,252
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13,285
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Other assets
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34,566
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38,497
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Total assets
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$
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1,487,286
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$
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1,499,595
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Liabilities, Preferred Stock, and Stockholders' Equity
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Current Liabilities:
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Accounts payable
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$
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49,231
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$
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49,441
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Accrued expenses and other current liabilities
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165,935
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168,947
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Current maturities of long-term debt
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6,292
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6,228
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Deferred revenue
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146,163
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156,772
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Liabilities to affiliates
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1,553
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1,760
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Total current liabilities
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369,174
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383,148
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Long-term debt
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587,675
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591,151
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Long-term deferred revenue
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16,673
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25,987
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Other liabilities
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51,768
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69,472
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Total liabilities
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1,025,290
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1,069,758
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Preferred Stock
- $0.001 par value; authorized 2,500,000 shares. Series A convertible preferred stock; 293,000 shares issued and outstanding; aggregate liquidation preference and redemption value of $358,869 at July 31, 2012.
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285,542
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285,542
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Commitments and Contingencies
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Stockholders' Equity:
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Common stock - $0.001 par value; authorized 120,000,000 shares. Issued 40,074,000 and 39,265,000 shares; outstanding 39,772,000 and 38,982,000 shares as of July 31, 2012 and January 31, 2012, respectively.
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40
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40
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Additional paid-in capital
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569,555
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554,351
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Treasury stock, at cost - 302,000 and 283,000 shares as of July 31, 2012 and January 31, 2012, respectively.
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(8,013
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)
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(7,466
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)
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Accumulated deficit
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(335,122
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)
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(357,764
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)
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Accumulated other comprehensive loss
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(55,178
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)
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(47,736
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)
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Total Verint Systems Inc. stockholders' equity
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171,282
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141,425
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Noncontrolling interest
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5,172
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2,870
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Total stockholders' equity
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176,454
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144,295
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Total liabilities, preferred stock, and stockholders' equity
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$
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1,487,286
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$
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1,499,595
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Three Months Ended July 31,
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Six Months Ended July 31,
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(in thousands, except per share data)
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2012
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2011
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2012
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2011
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Revenue:
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Product
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$
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101,990
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$
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100,423
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$
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193,989
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|
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$
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183,701
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Service and support
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110,436
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94,536
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215,072
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187,590
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Total revenue
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212,426
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194,959
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409,061
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371,291
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Cost of revenue:
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Product
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36,382
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33,214
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67,274
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55,745
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Service and support
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35,954
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|
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33,210
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|
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69,606
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|
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63,378
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|
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Amortization of acquired technology and backlog
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3,644
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2,685
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7,428
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5,335
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|
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Total cost of revenue
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75,980
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|
|
69,109
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|
|
144,308
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|
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124,458
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Gross profit
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136,446
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125,850
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|
|
264,753
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|
|
246,833
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|
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Operating expenses:
|
|
|
|
|
|
|
|
|
|
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Research and development, net
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30,195
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|
|
26,808
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|
|
58,598
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|
|
53,176
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|
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Selling, general and administrative
|
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73,953
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|
|
72,217
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|
|
146,676
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|
|
142,452
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|
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Amortization of other acquired intangible assets
|
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6,035
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|
|
5,415
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|
|
12,233
|
|
|
10,961
|
|
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Total operating expenses
|
|
110,183
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|
|
104,440
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|
|
217,507
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|
|
206,589
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|
||||
Operating income
|
|
26,263
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|
|
21,410
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|
|
47,246
|
|
|
40,244
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|
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Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
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|
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Interest income
|
|
124
|
|
|
146
|
|
|
254
|
|
|
294
|
|
||||
Interest expense
|
|
(7,867
|
)
|
|
(7,857
|
)
|
|
(15,585
|
)
|
|
(16,651
|
)
|
||||
Loss on extinguishment of debt
|
|
—
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|
|
—
|
|
|
—
|
|
|
(8,136
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)
|
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Other income (expense), net
|
|
(483
|
)
|
|
738
|
|
|
151
|
|
|
1,750
|
|
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Total other expense, net
|
|
(8,226
|
)
|
|
(6,973
|
)
|
|
(15,180
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)
|
|
(22,743
|
)
|
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Income before provision for income taxes
|
|
18,037
|
|
|
14,437
|
|
|
32,066
|
|
|
17,501
|
|
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Provision for income taxes
|
|
4,772
|
|
|
3,163
|
|
|
7,171
|
|
|
4,672
|
|
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Net income
|
|
13,265
|
|
|
11,274
|
|
|
24,895
|
|
|
12,829
|
|
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Net income attributable to noncontrolling interest
|
|
658
|
|
|
799
|
|
|
2,253
|
|
|
2,466
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|
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Net income attributable to Verint Systems Inc.
|
|
12,607
|
|
|
10,475
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|
|
22,642
|
|
|
10,363
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|
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Dividends on preferred stock
|
|
(3,868
|
)
|
|
(3,707
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)
|
|
(7,612
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)
|
|
(7,256
|
)
|
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Net income attributable to Verint Systems Inc. common shares
|
|
$
|
8,739
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|
|
$
|
6,768
|
|
|
$
|
15,030
|
|
|
$
|
3,107
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|
|
|
|
|
|
|
|
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Net income per common share attributable to Verint Systems Inc.
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|
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|
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|
|
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Basic
|
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$
|
0.22
|
|
|
$
|
0.18
|
|
|
$
|
0.38
|
|
|
$
|
0.08
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|
Diluted
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.38
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
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|
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Weighted-average common shares outstanding
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|
|
|
|
|
|
|
|
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|
|
|
||||
Basic
|
|
39,712
|
|
|
38,557
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|
|
39,392
|
|
|
37,984
|
|
||||
Diluted
|
|
40,072
|
|
|
39,377
|
|
|
39,938
|
|
|
39,239
|
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
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(in thousands)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net income
|
|
$
|
13,265
|
|
|
$
|
11,274
|
|
|
$
|
24,895
|
|
|
$
|
12,829
|
|
Other comprehensive income, before income taxes and net of reclassification adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
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Foreign currency translation adjustments
|
|
(9,396
|
)
|
|
(3,922
|
)
|
|
(4,381
|
)
|
|
5,315
|
|
||||
Net unrealized gains (losses) on derivative financial instruments designated as hedges
|
|
(3,486
|
)
|
|
(1,185
|
)
|
|
(3,340
|
)
|
|
557
|
|
||||
Other comprehensive income, before benefit from income taxes
|
|
383
|
|
|
6,167
|
|
|
17,174
|
|
|
18,701
|
|
||||
Benefit from income taxes, related to items of other comprehensive income
|
|
(362
|
)
|
|
(46
|
)
|
|
(328
|
)
|
|
(4
|
)
|
||||
Comprehensive income
|
|
745
|
|
|
6,213
|
|
|
17,502
|
|
|
18,705
|
|
||||
Comprehensive income attributable to noncontrolling interest
|
|
603
|
|
|
906
|
|
|
2,302
|
|
|
2,637
|
|
||||
Comprehensive income attributable to Verint Systems Inc.
|
|
$
|
142
|
|
|
$
|
5,307
|
|
|
$
|
15,200
|
|
|
$
|
16,068
|
|
|
|
Verint Systems Inc. Stockholders’ Equity
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Total Verint Systems Inc. Stockholders' Equity
|
|
|
|
Total Stockholders' Equity
|
|||||||||||||||||||
(in thousands)
|
|
Shares
|
|
Par
Value
|
|
|
Treasury
Stock
|
|
Accumulated
Deficit
|
|
|
|
Non-controlling
Interest
|
|
|||||||||||||||||||||
Balances as of January 31, 2011
|
|
37,089
|
|
|
$
|
38
|
|
|
$
|
519,834
|
|
|
$
|
(6,639
|
)
|
|
$
|
(394,757
|
)
|
|
$
|
(42,069
|
)
|
|
$
|
76,407
|
|
|
$
|
1,280
|
|
|
$
|
77,687
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,363
|
|
|
—
|
|
|
10,363
|
|
|
2,466
|
|
|
12,829
|
|
||||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,705
|
|
|
5,705
|
|
|
171
|
|
|
5,876
|
|
||||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
11,640
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,640
|
|
|
—
|
|
|
11,640
|
|
||||||||
Exercises of stock options
|
|
432
|
|
|
—
|
|
|
8,685
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,685
|
|
|
—
|
|
|
8,685
|
|
||||||||
Common stock issued for stock awards
|
|
1,289
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchases of treasury stock
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
(827
|
)
|
|
—
|
|
|
—
|
|
|
(827
|
)
|
|
—
|
|
|
(827
|
)
|
||||||||
Tax effects from stock award plans
|
|
—
|
|
|
—
|
|
|
586
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
586
|
|
|
—
|
|
|
586
|
|
||||||||
Balances as of July 31, 2011
|
|
38,787
|
|
|
$
|
39
|
|
|
$
|
540,744
|
|
|
$
|
(7,466
|
)
|
|
$
|
(384,394
|
)
|
|
$
|
(36,364
|
)
|
|
$
|
112,559
|
|
|
$
|
3,917
|
|
|
$
|
116,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balances as of January 31, 2012
|
|
38,982
|
|
|
$
|
40
|
|
|
$
|
554,351
|
|
|
$
|
(7,466
|
)
|
|
$
|
(357,764
|
)
|
|
$
|
(47,736
|
)
|
|
$
|
141,425
|
|
|
$
|
2,870
|
|
|
$
|
144,295
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,642
|
|
|
—
|
|
|
22,642
|
|
|
2,253
|
|
|
24,895
|
|
||||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,442
|
)
|
|
(7,442
|
)
|
|
49
|
|
|
(7,393
|
)
|
||||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
10,472
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,472
|
|
|
—
|
|
|
10,472
|
|
||||||||
Exercises of stock options
|
|
59
|
|
|
—
|
|
|
1,013
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,013
|
|
|
—
|
|
|
1,013
|
|
||||||||
Common stock issued for stock awards and stock bonuses
|
|
752
|
|
|
—
|
|
|
3,764
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,764
|
|
|
—
|
|
|
3,764
|
|
||||||||
Purchases of treasury stock
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
(615
|
)
|
|
—
|
|
|
—
|
|
|
(615
|
)
|
|
—
|
|
|
(615
|
)
|
||||||||
Treasury stock retired
|
|
—
|
|
|
—
|
|
|
(68
|
)
|
|
68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Tax effects from stock award plans
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||||||
Balances as of July 31, 2012
|
|
39,772
|
|
|
$
|
40
|
|
|
$
|
569,555
|
|
|
$
|
(8,013
|
)
|
|
$
|
(335,122
|
)
|
|
$
|
(55,178
|
)
|
|
$
|
171,282
|
|
|
$
|
5,172
|
|
|
$
|
176,454
|
|
|
|
Six Months Ended July 31,
|
||||||
(in thousands)
|
|
2012
|
|
2011
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||
Net income
|
|
$
|
24,895
|
|
|
$
|
12,829
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
28,265
|
|
|
25,539
|
|
||
Stock-based compensation - equity portion
|
|
10,994
|
|
|
11,640
|
|
||
Non-cash (gains) losses on derivative financial instruments, net
|
|
(131
|
)
|
|
1,907
|
|
||
Loss on extinguishment of debt
|
|
—
|
|
|
8,136
|
|
||
Other non-cash items, net
|
|
(6,123
|
)
|
|
3,294
|
|
||
Changes in operating assets and liabilities, net of effects of business combination:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
(13,295
|
)
|
|
(4,491
|
)
|
||
Inventories
|
|
3,599
|
|
|
(2,860
|
)
|
||
Deferred cost of revenue
|
|
12,292
|
|
|
5,692
|
|
||
Prepaid expenses and other assets
|
|
5,022
|
|
|
(3,417
|
)
|
||
Accounts payable and accrued expenses
|
|
(7,528
|
)
|
|
(16,207
|
)
|
||
Deferred revenue
|
|
(18,315
|
)
|
|
(10,432
|
)
|
||
Other, net
|
|
(424
|
)
|
|
(3,792
|
)
|
||
Net cash provided by operating activities
|
|
39,251
|
|
|
27,838
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Cash paid for business combinations, including adjustments, net of cash acquired
|
|
(660
|
)
|
|
(11,958
|
)
|
||
Purchases of property and equipment
|
|
(6,180
|
)
|
|
(6,715
|
)
|
||
Settlements of derivative financial instruments not designated as hedges
|
|
(266
|
)
|
|
(1,178
|
)
|
||
Cash paid for capitalized software development costs
|
|
(2,298
|
)
|
|
(1,662
|
)
|
||
Change in restricted cash and bank time deposits
|
|
1,811
|
|
|
(1,883
|
)
|
||
Other investing activities
|
|
—
|
|
|
(1,230
|
)
|
||
Net cash used in investing activities
|
|
(7,593
|
)
|
|
(24,626
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Proceeds from borrowings, net of original issuance discount
|
|
—
|
|
|
597,000
|
|
||
Repayments of borrowings and other financing obligations
|
|
(3,486
|
)
|
|
(583,786
|
)
|
||
Payments of debt issuance and other debt-related costs
|
|
(159
|
)
|
|
(15,034
|
)
|
||
Proceeds from exercises of stock options
|
|
1,395
|
|
|
8,716
|
|
||
Purchases of treasury stock
|
|
(615
|
)
|
|
(827
|
)
|
||
Payments of contingent consideration for business combinations (financing portion)
|
|
(5,140
|
)
|
|
(2,004
|
)
|
||
Net cash provided by (used in) financing activities
|
|
(8,005
|
)
|
|
4,065
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(1,065
|
)
|
|
1,964
|
|
||
Net increase in cash and cash equivalents
|
|
22,588
|
|
|
9,241
|
|
||
Cash and cash equivalents, beginning of period
|
|
150,662
|
|
|
169,906
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
173,250
|
|
|
$
|
179,147
|
|
1.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO VERINT SYSTEMS INC.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 31,
|
|
July 31,
|
||||||||||||
(in thousands, except per share amounts)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net income
|
|
$
|
13,265
|
|
|
$
|
11,274
|
|
|
$
|
24,895
|
|
|
$
|
12,829
|
|
Net income attributable to noncontrolling interest
|
|
658
|
|
|
799
|
|
|
2,253
|
|
|
2,466
|
|
||||
Net income attributable to Verint Systems Inc.
|
|
12,607
|
|
|
10,475
|
|
|
22,642
|
|
|
10,363
|
|
||||
Dividends on Preferred Stock
|
|
(3,868
|
)
|
|
(3,707
|
)
|
|
(7,612
|
)
|
|
(7,256
|
)
|
||||
Net income attributable to Verint Systems Inc. for basic net income per common share
|
|
8,739
|
|
|
6,768
|
|
|
15,030
|
|
|
3,107
|
|
||||
Dilutive effect of dividends on Preferred Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income attributable to Verint Systems Inc. for diluted net income per common share
|
|
$
|
8,739
|
|
|
$
|
6,768
|
|
|
$
|
15,030
|
|
|
$
|
3,107
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
39,712
|
|
|
38,557
|
|
|
39,392
|
|
|
37,984
|
|
||||
Dilutive effect of employee equity award plans
|
|
360
|
|
|
820
|
|
|
546
|
|
|
1,255
|
|
||||
Dilutive effect of assumed conversion of Preferred Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted
|
|
40,072
|
|
|
39,377
|
|
|
39,938
|
|
|
39,239
|
|
||||
Net income per common share attributable to Verint Systems Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
0.22
|
|
|
$
|
0.18
|
|
|
$
|
0.38
|
|
|
$
|
0.08
|
|
Diluted
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.38
|
|
|
$
|
0.08
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
|
July 31,
|
|
July 31,
|
||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||
Common shares excluded from calculation:
|
|
|
|
|
|
|
|
|
|
|
||
Stock options and restricted stock-based awards
|
|
1,224
|
|
|
824
|
|
|
1,068
|
|
|
830
|
|
Convertible Preferred Stock
|
|
10,988
|
|
|
10,571
|
|
|
10,935
|
|
|
10,521
|
|
3.
|
BUSINESS COMBINATIONS
|
•
|
For the Vovici purchase price allocation, we reduced certain liabilities by
$0.2 million
and recorded a corresponding reduction of goodwill.
|
•
|
For the purchase price allocation associated with our August 2, 2011 Communications Intelligence acquisition, we adjusted certain acquisition-date deferred income taxes, which also required us to change several assumptions in the discounted cash flow models used to estimate the fair values of certain identified intangible assets. As a result, the estimated acquisition-date fair values of the developed technology and customer relationship intangible assets identified in this acquisition decreased by
$0.3 million
and
$0.4 million
, respectively, net deferred income tax liabilities decreased by
$3.8 million
, and goodwill decreased by
$3.1 million
. For the purchase price allocation associated with our January 5, 2012 Communications Intelligence acquisition, we recorded minor refinements to the purchase price and to certain liabilities, which resulted in a
$0.1 million
increase in goodwill.
|
(in thousands)
|
|
Vovici
|
|
Other
Acquisitions
|
||||
Components of Purchase Price:
|
|
|
|
|
|
|
||
Cash
|
|
$
|
55,708
|
|
|
$
|
33,835
|
|
Fair value of contingent consideration
|
|
9,900
|
|
|
20,504
|
|
||
Fair value of stock options
|
|
60
|
|
|
—
|
|
||
Bank debt, repaid at closing
|
|
435
|
|
|
—
|
|
||
Other purchase price adjustments
|
|
—
|
|
|
816
|
|
||
Total purchase price
|
|
$
|
66,103
|
|
|
$
|
55,155
|
|
|
|
|
|
|
||||
Allocation of Purchase Price:
|
|
|
|
|
|
|
||
Net tangible assets (liabilities):
|
|
|
|
|
|
|
||
Accounts receivable
|
|
$
|
1,106
|
|
|
$
|
842
|
|
Other current assets
|
|
5,398
|
|
|
15,650
|
|
||
Other assets
|
|
913
|
|
|
5,579
|
|
||
Current and other liabilities
|
|
(2,931
|
)
|
|
(15,419
|
)
|
||
Deferred revenue
|
|
(2,264
|
)
|
|
(944
|
)
|
||
Bank debt
|
|
—
|
|
|
(3,330
|
)
|
||
Deferred income taxes - current and long-term
|
|
(6,021
|
)
|
|
186
|
|
||
Net tangible assets (liabilities)
|
|
(3,799
|
)
|
|
2,564
|
|
||
Identifiable intangible assets:
|
|
|
|
|
|
|
||
Developed technology
|
|
11,300
|
|
|
9,743
|
|
||
Customer relationships
|
|
15,400
|
|
|
7,040
|
|
||
Trademarks and trade names
|
|
1,700
|
|
|
1,350
|
|
||
In-process research and development assets
|
|
—
|
|
|
2,500
|
|
||
Other identifiable intangible assets
|
|
—
|
|
|
1,421
|
|
||
Total identifiable intangible assets
|
|
28,400
|
|
|
22,054
|
|
||
Goodwill
|
|
41,502
|
|
|
30,537
|
|
||
Total purchase price
|
|
$
|
66,103
|
|
|
$
|
55,155
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
(in thousands)
|
|
July 31, 2011
|
||||||
Revenue
|
|
$
|
199,803
|
|
|
$
|
379,512
|
|
Net income (loss) attributable to Verint Systems Inc. common shares
|
|
$
|
1,875
|
|
|
$
|
(8,918
|
)
|
4.
|
INTANGIBLE ASSETS AND GOODWILL
|
|
|
July 31, 2012
|
||||||||||
(in thousands)
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|||
Customer relationships
|
|
$
|
224,687
|
|
|
$
|
(106,300
|
)
|
|
$
|
118,387
|
|
Acquired technology
|
|
92,862
|
|
|
(56,840
|
)
|
|
36,022
|
|
|||
Trade names
|
|
12,667
|
|
|
(10,144
|
)
|
|
2,523
|
|
|||
Non-competition agreements
|
|
5,762
|
|
|
(4,057
|
)
|
|
1,705
|
|
|||
Distribution network
|
|
2,440
|
|
|
(1,474
|
)
|
|
966
|
|
|||
Backlog
|
|
843
|
|
|
(48
|
)
|
|
795
|
|
|||
Total intangible assets with finite lives
|
|
339,261
|
|
|
(178,863
|
)
|
|
160,398
|
|
|||
In-process research and development, with indefinite lives
|
|
2,500
|
|
|
—
|
|
|
2,500
|
|
|||
Total
|
|
$
|
341,761
|
|
|
$
|
(178,863
|
)
|
|
$
|
162,898
|
|
|
|
January 31, 2012
|
||||||||||
(in thousands)
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|||
Customer relationships
|
|
$
|
225,554
|
|
|
$
|
(95,173
|
)
|
|
$
|
130,381
|
|
Acquired technology
|
|
94,027
|
|
|
(49,732
|
)
|
|
44,295
|
|
|||
Trade names
|
|
12,824
|
|
|
(9,805
|
)
|
|
3,019
|
|
|||
Non-competition agreements
|
|
5,779
|
|
|
(3,656
|
)
|
|
2,123
|
|
|||
Distribution network
|
|
2,440
|
|
|
(1,352
|
)
|
|
1,088
|
|
|||
Backlog
|
|
843
|
|
|
(19
|
)
|
|
824
|
|
|||
Total intangible assets with finite lives
|
|
341,467
|
|
|
(159,737
|
)
|
|
181,730
|
|
|||
In-process research and development, with indefinite lives
|
|
2,500
|
|
|
—
|
|
|
2,500
|
|
|||
Total
|
|
$
|
343,967
|
|
|
$
|
(159,737
|
)
|
|
$
|
184,230
|
|
(in thousands)
|
|
July 31,
2012 |
|
January 31,
2012 |
||||
Enterprise Intelligence
|
|
$
|
142,761
|
|
|
$
|
160,258
|
|
Video Intelligence
|
|
4,469
|
|
|
5,059
|
|
||
Communications Intelligence
|
|
15,668
|
|
|
18,913
|
|
||
Total
|
|
$
|
162,898
|
|
|
$
|
184,230
|
|
(in thousands)
|
|
|
|
|
Years Ending January 31,
|
|
Amount
|
||
2013 (Remainder of year)
|
|
$
|
19,661
|
|
2014
|
|
34,183
|
|
|
2015
|
|
30,696
|
|
|
2016
|
|
29,321
|
|
|
2017
|
|
26,650
|
|
|
2018 and thereafter
|
|
19,887
|
|
|
Total
|
|
$
|
160,398
|
|
|
|
|
|
Reportable Segment
|
||||||||||||
(in thousands)
|
|
Total
|
|
Enterprise
Intelligence
|
|
Video
Intelligence
|
|
Communications
Intelligence
|
||||||||
Goodwill, gross, at January 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As previously reported
|
|
$
|
898,552
|
|
|
$
|
770,532
|
|
|
$
|
76,214
|
|
|
$
|
51,806
|
|
Measurement period adjustments identified during the three months ended April 30, 2012
|
|
(2,929
|
)
|
|
(234
|
)
|
|
—
|
|
|
(2,695
|
)
|
||||
As retrospectively adjusted
|
|
895,623
|
|
|
770,298
|
|
|
76,214
|
|
|
49,111
|
|
||||
Accumulated impairment losses through January 31, 2012
|
|
(66,865
|
)
|
|
(30,791
|
)
|
|
(36,074
|
)
|
|
—
|
|
||||
Goodwill, net, at January 31, 2012
|
|
828,758
|
|
|
739,507
|
|
|
40,140
|
|
|
49,111
|
|
||||
Foreign currency translation and other
|
|
(3,689
|
)
|
|
(1,715
|
)
|
|
(911
|
)
|
|
(1,063
|
)
|
||||
Goodwill, net, at July 31, 2012
|
|
$
|
825,069
|
|
|
$
|
737,792
|
|
|
$
|
39,229
|
|
|
$
|
48,048
|
|
Balance at July 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill, gross, at July 31, 2012
|
|
$
|
891,934
|
|
|
$
|
768,583
|
|
|
$
|
75,303
|
|
|
$
|
48,048
|
|
Accumulated impairment losses through July 31, 2012
|
|
(66,865
|
)
|
|
(30,791
|
)
|
|
(36,074
|
)
|
|
—
|
|
||||
Goodwill, net, at July 31, 2012
|
|
$
|
825,069
|
|
|
$
|
737,792
|
|
|
$
|
39,229
|
|
|
$
|
48,048
|
|
5.
|
LONG-TERM DEBT
|
(in thousands)
|
|
July 31,
2012 |
|
January 31,
2012 |
||||
Term loan facility:
|
|
|
|
|
|
|
||
Gross borrowings
|
|
$
|
594,000
|
|
|
$
|
597,000
|
|
Unamortized debt discount
|
|
(2,474
|
)
|
|
(2,685
|
)
|
||
Other debt
|
|
2,441
|
|
|
3,064
|
|
||
Total debt
|
|
593,967
|
|
|
597,379
|
|
||
Less: current maturities
|
|
6,292
|
|
|
6,228
|
|
||
Long-term debt
|
|
$
|
587,675
|
|
|
$
|
591,151
|
|
6.
|
SUPPLEMENTAL CONDENSED CONSOLIDATED FINANCIAL STATEMENT INFORMATION
|
(in thousands)
|
|
July 31,
2012 |
|
January 31,
2012 |
||||
Raw materials
|
|
$
|
4,658
|
|
|
$
|
4,959
|
|
Work-in-process
|
|
2,102
|
|
|
5,777
|
|
||
Finished goods
|
|
3,240
|
|
|
3,678
|
|
||
Total inventories
|
|
$
|
10,000
|
|
|
$
|
14,414
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 31,
|
|
July 31,
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Foreign currency gains (losses), net
|
|
$
|
(711
|
)
|
|
$
|
796
|
|
|
$
|
123
|
|
|
$
|
3,787
|
|
Gains (losses) on derivative financial instruments, net
|
|
271
|
|
|
26
|
|
|
131
|
|
|
(1,907
|
)
|
||||
Other, net
|
|
(43
|
)
|
|
(84
|
)
|
|
(103
|
)
|
|
(130
|
)
|
||||
Total other income (expense), net
|
|
$
|
(483
|
)
|
|
$
|
738
|
|
|
$
|
151
|
|
|
$
|
1,750
|
|
|
|
Six Months Ended
|
||||||
|
|
July 31,
|
||||||
(in thousands)
|
|
2012
|
|
2011
|
||||
Cash paid for interest
|
|
$
|
13,659
|
|
|
$
|
15,427
|
|
Cash paid for income taxes, net of refunds received
|
|
$
|
11,360
|
|
|
$
|
7,780
|
|
Non-cash investing and financing transactions:
|
|
|
|
|
|
|||
Accrued but unpaid purchases of property and equipment
|
|
$
|
1,858
|
|
|
$
|
659
|
|
Inventory transfers to property and equipment
|
|
$
|
326
|
|
|
$
|
332
|
|
Liabilities for contingent consideration in business combinations
|
|
$
|
—
|
|
|
$
|
904
|
|
Stock options exercised, proceeds received subsequent to period end
|
|
$
|
1
|
|
|
$
|
17
|
|
Accrued but unpaid debt issuance and other debt related costs
|
|
$
|
58
|
|
|
$
|
—
|
|
Leasehold improvements funded by lease incentive
|
|
$
|
2,406
|
|
|
$
|
—
|
|
7.
|
CONVERTIBLE PREFERRED STOCK
|
8.
|
STOCKHOLDERS’ EQUITY
|
(in thousands)
|
|
July 31,
2012 |
|
January 31,
2012 |
||||
Foreign currency translation losses, net
|
|
$
|
(52,832
|
)
|
|
$
|
(48,402
|
)
|
Unrealized gains (losses) on derivative financial instruments, net
|
|
(2,346
|
)
|
|
666
|
|
||
Total accumulated other comprehensive loss
|
|
$
|
(55,178
|
)
|
|
$
|
(47,736
|
)
|
9.
|
INCOME TAXES
|
10.
|
FAIR VALUE MEASUREMENTS
|
•
|
Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
|
•
|
Level 3: unobservable inputs that are supported by little or no market activity.
|
|
|
July 31, 2012
|
||||||||||
|
|
Fair Value Hierarchy Category
|
||||||||||
(in thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|||
Money market funds
|
|
$
|
34,619
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
—
|
|
|
241
|
|
|
—
|
|
|||
Total assets
|
|
$
|
34,619
|
|
|
$
|
241
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
2,732
|
|
|
$
|
—
|
|
Contingent consideration - business combinations
|
|
—
|
|
|
—
|
|
|
25,204
|
|
|||
Total liabilities
|
|
$
|
—
|
|
|
$
|
2,732
|
|
|
$
|
25,204
|
|
|
|
January 31, 2012
|
||||||||||
|
|
Fair Value Hierarchy Category
|
||||||||||
(in thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|||
Money market funds
|
|
$
|
44,494
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
—
|
|
|
978
|
|
|
—
|
|
|||
Total assets
|
|
$
|
44,494
|
|
|
$
|
978
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
530
|
|
|
$
|
—
|
|
Contingent consideration - business combinations
|
|
—
|
|
|
—
|
|
|
38,646
|
|
|||
Total liabilities
|
|
$
|
—
|
|
|
$
|
530
|
|
|
$
|
38,646
|
|
|
|
Six Months Ended
|
||||||
|
|
July 31,
|
||||||
(in thousands)
|
|
2012
|
|
2011
|
||||
Fair value measurement at beginning of period
|
|
$
|
38,646
|
|
|
$
|
3,686
|
|
Contingent consideration liabilities recorded for business combinations
|
|
—
|
|
|
904
|
|
||
Changes in fair values, recorded in operating expenses
|
|
(7,540
|
)
|
|
1,881
|
|
||
Payments of contingent consideration
|
|
(5,902
|
)
|
|
(4,107
|
)
|
||
Fair value measurement at end of period
|
|
$
|
25,204
|
|
|
$
|
2,364
|
|
11.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
|
|
July 31, 2012
|
||||||||||
|
|
Assets
|
|
Liabilities
|
||||||||
(in thousands)
|
|
Balance Sheet
Classification
|
|
Fair Value
|
|
Balance Sheet
Classification
|
|
Fair Value
|
||||
Derivative financial instruments designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
144
|
|
|
Accrued expenses and other liabilities
|
|
$
|
2,732
|
|
Total derivative financial instruments designated as hedging instruments
|
|
|
|
$
|
144
|
|
|
|
|
$
|
2,732
|
|
Derivative financial instruments not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
97
|
|
|
Accrued expenses and other liabilities
|
|
$
|
—
|
|
Total derivative financial instruments not designated as hedging instruments
|
|
|
|
$
|
97
|
|
|
|
|
$
|
—
|
|
|
|
January 31, 2012
|
||||||||||
|
|
Assets
|
|
Liabilities
|
||||||||
(in thousands)
|
|
Balance Sheet
Classification
|
|
Fair Value
|
|
Balance Sheet
Classification
|
|
Fair Value
|
||||
Derivative financial instruments designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
978
|
|
|
Accrued expenses and other liabilities
|
|
$
|
227
|
|
Total derivative financial instruments designated as hedging instruments
|
|
|
|
$
|
978
|
|
|
|
|
$
|
227
|
|
Derivative financial instruments not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign currency forward contracts
|
|
—
|
|
$
|
—
|
|
|
Accrued expenses and other liabilities
|
|
$
|
303
|
|
Total derivative financial instruments not designated as hedging instruments
|
|
|
|
$
|
—
|
|
|
|
|
$
|
303
|
|
|
|
Net Gains (Losses)Recognized in
Accumulated Other
Comprehensive Loss
|
|
Classification of Net Gains (Losses) Reclassified from Other Comprehensive Loss
into the Condensed Consolidated
|
|
Net Gains (Losses) Reclassified
from Other Comprehensive Loss
into the Condensed Consolidated
Statements of Operations
|
||||||||||||||||||||
|
|
July 31,
|
|
January 31,
|
|
Statements of
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||||||
(in thousands)
|
|
2012
|
|
2012
|
|
Operations
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||||||
Foreign currency forward contracts
|
|
$
|
(2,346
|
)
|
|
$
|
666
|
|
|
Operating Expenses
|
|
$
|
(559
|
)
|
|
$
|
979
|
|
|
$
|
(765
|
)
|
|
$
|
1,786
|
|
|
|
Classification in Condensed Consolidated Statements of Operations
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
July 31,
|
|
July 31,
|
|||||||||||||
(in thousands)
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|||||||||
Foreign currency forward contracts
|
|
Other income (expense), net
|
|
$
|
271
|
|
|
$
|
26
|
|
|
$
|
131
|
|
|
$
|
(1,907
|
)
|
Total
|
|
|
|
$
|
271
|
|
|
$
|
26
|
|
|
$
|
131
|
|
|
$
|
(1,907
|
)
|
12.
|
STOCK-BASED COMPENSATION
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 31,
|
|
July 31,
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Cost of revenue - product
|
|
$
|
192
|
|
|
$
|
179
|
|
|
$
|
326
|
|
|
$
|
440
|
|
Cost of revenue - service and support
|
|
377
|
|
|
448
|
|
|
967
|
|
|
1,156
|
|
||||
Research and development, net
|
|
642
|
|
|
737
|
|
|
1,137
|
|
|
1,586
|
|
||||
Selling, general and administrative
|
|
4,711
|
|
|
5,277
|
|
|
9,203
|
|
|
11,009
|
|
||||
Total stock-based compensation expense
|
|
$
|
5,922
|
|
|
$
|
6,641
|
|
|
$
|
11,633
|
|
|
$
|
14,191
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 31,
|
|
July 31,
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Equity-classified awards
|
|
$
|
5,486
|
|
|
$
|
5,855
|
|
|
$
|
10,472
|
|
|
$
|
11,640
|
|
Stock bonus program
|
|
246
|
|
|
—
|
|
|
522
|
|
|
—
|
|
||||
Total equity-settled awards
|
|
5,732
|
|
|
5,855
|
|
|
10,994
|
|
|
11,640
|
|
||||
Other liability-classified awards
|
|
190
|
|
|
786
|
|
|
639
|
|
|
2,551
|
|
||||
Total stock-based compensation expense
|
|
$
|
5,922
|
|
|
$
|
6,641
|
|
|
$
|
11,633
|
|
|
$
|
14,191
|
|
13.
|
RELATED PARTY TRANSACTIONS
|
14.
|
LEGAL PROCEEDINGS
|
15.
|
SEGMENT INFORMATION
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 31,
|
|
July 31,
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||
Enterprise Intelligence
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment revenue
|
|
$
|
117,634
|
|
|
$
|
105,654
|
|
|
$
|
229,414
|
|
|
$
|
202,923
|
|
Revenue adjustments
|
|
(1,259
|
)
|
|
—
|
|
|
(3,212
|
)
|
|
—
|
|
||||
|
|
116,375
|
|
|
105,654
|
|
|
226,202
|
|
|
202,923
|
|
||||
Video Intelligence
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment revenue
|
|
38,871
|
|
|
40,666
|
|
|
68,329
|
|
|
70,936
|
|
||||
Revenue adjustments
|
|
(712
|
)
|
|
(727
|
)
|
|
(1,492
|
)
|
|
(962
|
)
|
||||
|
|
38,159
|
|
|
39,939
|
|
|
66,837
|
|
|
69,974
|
|
||||
Communications Intelligence
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment revenue
|
|
58,563
|
|
|
49,366
|
|
|
117,564
|
|
|
98,394
|
|
||||
Revenue adjustments
|
|
(671
|
)
|
|
—
|
|
|
(1,542
|
)
|
|
—
|
|
||||
|
|
57,892
|
|
|
49,366
|
|
|
116,022
|
|
|
98,394
|
|
||||
Total revenue
|
|
$
|
212,426
|
|
|
$
|
194,959
|
|
|
$
|
409,061
|
|
|
$
|
371,291
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment contribution:
|
|
|
|
|
|
|
|
|
|
|
||||||
Enterprise Intelligence
|
|
$
|
47,860
|
|
|
$
|
46,159
|
|
|
$
|
94,963
|
|
|
$
|
89,135
|
|
Video Intelligence
|
|
12,230
|
|
|
10,779
|
|
|
19,035
|
|
|
18,350
|
|
||||
Communications Intelligence
|
|
14,318
|
|
|
14,218
|
|
|
31,133
|
|
|
33,463
|
|
||||
Total segment contribution
|
|
74,408
|
|
|
71,156
|
|
|
145,131
|
|
|
140,948
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Unallocated expenses, net:
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of acquired intangible assets
|
|
9,679
|
|
|
8,100
|
|
|
19,661
|
|
|
16,296
|
|
||||
Stock-based compensation
|
|
5,922
|
|
|
6,641
|
|
|
11,633
|
|
|
14,191
|
|
||||
Other unallocated expenses
|
|
32,544
|
|
|
35,005
|
|
|
66,591
|
|
|
70,217
|
|
||||
Total unallocated expenses, net
|
|
48,145
|
|
|
49,746
|
|
|
97,885
|
|
|
100,704
|
|
||||
Operating income
|
|
26,263
|
|
|
21,410
|
|
|
47,246
|
|
|
40,244
|
|
||||
Other expense, net
|
|
(8,226
|
)
|
|
(6,973
|
)
|
|
(15,180
|
)
|
|
(22,743
|
)
|
||||
Income before provision for income taxes
|
|
$
|
18,037
|
|
|
$
|
14,437
|
|
|
$
|
32,066
|
|
|
$
|
17,501
|
|
16.
|
SUBSEQUENT EVENTS
|
•
|
Specifics regarding the composition of our board of directors, including the requirement that certain CTI nominees to our board of directors (as designated by Cadian Capital Management, LLC under the Cadian Letter Agreement (as defined below)) qualify as independent;
|
•
|
Certain restrictions upon CTI acquiring additional beneficial ownership of any of our outstanding voting securities, other than shares of our common stock pursuant to CTI's conversion of its Preferred Stock holdings (the "Standstill");
|
•
|
Obligations on how CTI will vote its holdings of our voting securities on certain matters at any time that our board of directors is not comprised of a majority of independent directors;
|
•
|
The right (which right may only be exercised once) for us to purchase shares (the “Option Shares”) of Preferred Stock (or, if necessary, shares of our common stock) owned by CTI to reduce CTI's beneficial ownership of our voting securities to less than
50%
but not less than
49.5%
(on an as-exercised and fully diluted basis) (the “Call Option”). The purchase price of the Option Shares upon our exercise of the Call Option would equal the sum of (1) the liquidation preference of the Preferred Stock to be purchased, plus (2) the market value (as defined in the agreement) of any of our common stock to be purchased, plus (3) a pro rata portion of
$5.0 million
based on the number of Option Shares to be purchased relative to the total number of outstanding shares of the Preferred Stock, and
|
•
|
The right (which right may only be exercised once) for CTI to cause us to purchase the Option Shares (the “Put Option” and, together with the Call Option, the “Options”) in the event the Merger Agreement is terminated because of the failure, following CTI shareholder approval, of the CNS share distribution or a CNS disposition to occur by April 30, 2013. The purchase price of the Option Shares upon CTI's exercise of the Put Option would be equal to the lesser of (1) the sum of (a) the liquidation preference of the Preferred Stock to be purchased plus (b) the market value (as defined in the agreement) of our common stock to be purchased, if any, and (2) the sum of (a) the aggregate market value (as defined in the agreement) for the Option Shares (on an as-converted basis) plus (b)
$25.0 million
.
|
•
|
Revenue recognition;
|
•
|
Accounting for business combinations;
|
•
|
Impairment of goodwill and other intangible assets;
|
•
|
Accounting for income taxes;
|
•
|
Contingencies;
|
•
|
Accounting for stock-based compensation; and
|
•
|
Allowance for doubtful accounts.
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||
(in thousands, except per share data)
|
|
2012
|
2011
|
|
2012
|
2011
|
||||||||
Revenue
|
|
$
|
212,426
|
|
$
|
194,959
|
|
|
$
|
409,061
|
|
$
|
371,291
|
|
Operating income
|
|
$
|
26,263
|
|
$
|
21,410
|
|
|
$
|
47,246
|
|
$
|
40,244
|
|
Net income attributable to Verint Systems Inc. common shares
|
|
$
|
8,739
|
|
$
|
6,768
|
|
|
$
|
15,030
|
|
$
|
3,107
|
|
Net income per share attributable to Verint Systems Inc.:
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.22
|
|
$
|
0.18
|
|
|
$
|
0.38
|
|
$
|
0.08
|
|
Diluted
|
|
$
|
0.22
|
|
$
|
0.17
|
|
|
$
|
0.38
|
|
$
|
0.08
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Enterprise Intelligence
|
|
$
|
116,375
|
|
|
$
|
105,654
|
|
|
10%
|
|
$
|
226,202
|
|
|
$
|
202,923
|
|
|
11%
|
Video Intelligence
|
|
38,159
|
|
|
39,939
|
|
|
(4)%
|
|
66,837
|
|
|
69,974
|
|
|
(4)%
|
||||
Communications Intelligence
|
|
57,892
|
|
|
49,366
|
|
|
17%
|
|
116,022
|
|
|
98,394
|
|
|
18%
|
||||
Total revenue
|
|
$
|
212,426
|
|
|
$
|
194,959
|
|
|
9%
|
|
$
|
409,061
|
|
|
$
|
371,291
|
|
|
10%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Product revenue
|
|
$
|
101,990
|
|
|
$
|
100,423
|
|
|
2%
|
|
$
|
193,989
|
|
|
$
|
183,701
|
|
|
6%
|
Service and support revenue
|
|
110,436
|
|
|
94,536
|
|
|
17%
|
|
215,072
|
|
|
187,590
|
|
|
15%
|
||||
Total revenue
|
|
$
|
212,426
|
|
|
$
|
194,959
|
|
|
9%
|
|
$
|
409,061
|
|
|
$
|
371,291
|
|
|
10%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Cost of product revenue
|
|
$
|
36,382
|
|
|
$
|
33,214
|
|
|
10%
|
|
$
|
67,274
|
|
|
$
|
55,745
|
|
|
21%
|
Cost of service and support revenue
|
|
35,954
|
|
|
33,210
|
|
|
8%
|
|
69,606
|
|
|
63,378
|
|
|
10%
|
||||
Amortization of acquired technology and backlog
|
|
3,644
|
|
|
2,685
|
|
|
36%
|
|
7,428
|
|
|
5,335
|
|
|
39%
|
||||
Total cost of revenue
|
|
$
|
75,980
|
|
|
$
|
69,109
|
|
|
10%
|
|
$
|
144,308
|
|
|
$
|
124,458
|
|
|
16%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Research and development, net
|
|
$
|
30,195
|
|
|
$
|
26,808
|
|
|
13%
|
|
$
|
58,598
|
|
|
$
|
53,176
|
|
|
10%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Selling, general and administrative
|
|
$
|
73,953
|
|
|
$
|
72,217
|
|
|
2%
|
|
$
|
146,676
|
|
|
$
|
142,452
|
|
|
3%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Amortization of other acquired intangible assets
|
|
$
|
6,035
|
|
|
$
|
5,415
|
|
|
11%
|
|
$
|
12,233
|
|
|
$
|
10,961
|
|
|
12%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Interest income
|
|
$
|
124
|
|
|
$
|
146
|
|
|
(15)%
|
|
$
|
254
|
|
|
$
|
294
|
|
|
(14)%
|
Interest expense
|
|
(7,867
|
)
|
|
(7,857
|
)
|
|
—%
|
|
(15,585
|
)
|
|
(16,651
|
)
|
|
(6)%
|
||||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
*
|
|
—
|
|
|
(8,136
|
)
|
|
*
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency gains (losses)
|
|
(711
|
)
|
|
796
|
|
|
(189)%
|
|
123
|
|
|
3,787
|
|
|
(97)%
|
||||
Gains (losses) on derivatives
|
|
271
|
|
|
26
|
|
|
942%
|
|
131
|
|
|
(1,907
|
)
|
|
(107)%
|
||||
Other, net
|
|
(43
|
)
|
|
(84
|
)
|
|
(49)%
|
|
(103
|
)
|
|
(130
|
)
|
|
(21)%
|
||||
Total other income (expense)
|
|
(483
|
)
|
|
738
|
|
|
(165)%
|
|
151
|
|
|
1,750
|
|
|
(91)%
|
||||
Total other expense, net
|
|
$
|
(8,226
|
)
|
|
$
|
(6,973
|
)
|
|
18%
|
|
$
|
(15,180
|
)
|
|
$
|
(22,743
|
)
|
|
(33)%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
July 31,
|
|
% Change
|
|
July 31,
|
|
% Change
|
||||||||||||
(in thousands)
|
|
2012
|
|
2011
|
|
2012 - 2011
|
|
2012
|
|
2011
|
|
2012 - 2011
|
||||||||
Provision for income taxes
|
|
$
|
4,772
|
|
|
$
|
3,163
|
|
|
51%
|
|
$
|
7,171
|
|
|
$
|
4,672
|
|
|
53%
|
(in thousands)
|
|
July 31,
2012 |
|
January 31,
2012 |
||||
Cash and cash equivalents
|
|
$
|
173,250
|
|
|
$
|
150,662
|
|
Preferred Stock (at carrying value)
|
|
$
|
285,542
|
|
|
$
|
285,542
|
|
Long-term debt
|
|
$
|
587,675
|
|
|
$
|
591,151
|
|
|
|
Six Months Ended
|
||||||
|
|
July 31,
|
||||||
(in thousands)
|
|
2012
|
|
2011
|
||||
Net cash provided by operating activities
|
|
$
|
39,251
|
|
|
$
|
27,838
|
|
Net cash used in investing activities
|
|
(7,593
|
)
|
|
(24,626
|
)
|
||
Net cash provided by (used in) financing activities
|
|
(8,005
|
)
|
|
4,065
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(1,065
|
)
|
|
1,964
|
|
||
Net increase in cash and cash equivalents
|
|
$
|
22,588
|
|
|
$
|
9,241
|
|
·
|
a majority of the board of directors consist of independent directors;
|
·
|
compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee comprised solely of independent directors; and
|
·
|
director nominees be selected or recommended to the board of directors by a majority of its independent directors or by a nominating committee that is composed entirely of independent directors.
|
Period
|
|
(a) Total
Number of
Shares (or Units)
Purchased (1)
|
|
|
(b) Average
Price Paid
per Share(or
Unit) (2)
|
|
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced Plans
or Programs
|
|
(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May Yet
Be Purchased Under the Plans or
Programs
|
|||||
May 1 – May 31, 2012
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
June 1 – June 30, 2012
|
|
8,729
|
|
(3)
|
|
$
|
28.27
|
|
|
—
|
|
|
—
|
|
July 1 – July 31, 2012
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
8,729
|
|
|
|
$
|
28.27
|
|
|
—
|
|
|
—
|
|
(1)
|
These shares were purchased in-open market transactions. None of these shares were purchased as a part of a publicly announced stock repurchase plan or program.
|
(2)
|
Represents the approximate weighted-average price paid per share.
|
(3)
|
The securities disclosed in the table were withheld from directors and executives in connection with the vesting of restricted stock units during a company-imposed trading blackout to facilitate required income tax withholding by us or the payment of required income taxes by such holders.
|
|
Year Ended January 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Net income
|
$
|
40,625
|
|
|
$
|
28,585
|
|
|
$
|
17,100
|
|
Other comprehensive income, before income taxes and net of reclassification adjustments:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(6,685
|
)
|
|
1,684
|
|
|
15,277
|
|
|||
Net unrealized gains (losses) on derivative financial instruments designated as hedges, and other
|
1,055
|
|
|
(410
|
)
|
|
(11
|
)
|
|||
Other comprehensive income, before provision for income taxes
|
34,995
|
|
|
29,859
|
|
|
32,366
|
|
|||
Provision for (benefit from) income taxes, related to items of other comprehensive income
|
149
|
|
|
(59
|
)
|
|
(50
|
)
|
|||
Comprehensive income
|
34,846
|
|
|
29,918
|
|
|
32,416
|
|
|||
Comprehensive income attributable to noncontrolling interest
|
3,520
|
|
|
3,272
|
|
|
1,529
|
|
|||
Comprehensive income attributable to Verint Systems Inc.
|
$
|
31,326
|
|
|
$
|
26,646
|
|
|
$
|
30,887
|
|
Number
|
|
Description
|
|
Filed Herewith /
Incorporated by
Reference from
|
|
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Designation, Preferences and Rights of the Series A Perpetual Preferred Stock of Verint Systems Inc.
|
|
Filed Herewith
|
10.1
|
|
Agreement and Plan of Merger, dated August 12, 2012, by and among Comverse Technology, Inc., Verint Systems Inc. and Victory Acquisition I LLC.
|
|
Form 8-K filed on August 13, 2012
|
10.2
|
|
Voting Agreement, dated August 12, 2012, among Comverse Technology, Inc., Verint Systems Inc. and Victory Acquisition I LLC.
|
|
Form 8-K filed on August 13, 2012
|
10.3
|
|
Governance and Repurchase Rights Agreement, dated August 12, 2012, by and between Comverse Technology, Inc. and Verint Systems Inc.
|
|
Form 8-K filed on August 13, 2012
|
10.4 *
|
|
Amendment No. 1 to Verint Systems Inc. 2010 Long Term Stock Incentive Plan.
|
|
Form 8-K filed on June 19, 2012
|
31.1
|
|
Certification of Dan Bodner, Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed Herewith
|
31.2
|
|
Certification of Douglas E. Robinson, Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed Herewith
|
32.1
|
|
Certification of the Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350 (1)
|
|
Filed Herewith
|
32.2
|
|
Certification of the Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350 (1)
|
|
Filed Herewith
|
101.INS**
|
|
XBRL Instance Document
|
|
Filed Herewith
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed Herewith
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed Herewith
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed Herewith
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed Herewith
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed Herewith
|
|
VERINT SYSTEMS INC.
|
|
|
|
|
September 5, 2012
|
/s/ Dan Bodner
|
|
Dan Bodner
|
|
President and Chief Executive Officer
|
|
|
|
|
September 5, 2012
|
/s/ Douglas E. Robinson
|
|
Douglas E. Robinson
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
Section 1.
|
Series A Convertible Preferred Stock
|
Section 2.
|
Dividend Rights
|
Section 3.
|
Liquidation Preference
.
|
Section 4.
|
Voting Rights
.
|
•
|
150% of the Conversion Price, if the conversion occurs on or after the second anniversary of the Issue Date but prior to the third anniversary of the Issue Date;
|
•
|
140% of the Conversion Price, if the conversion occurs on or after the third anniversary of the Issue Date but prior to the fourth anniversary of the Issue Date; and
|
•
|
135% of the Conversion Price, if the conversion occurs on or after the fourth anniversary of the Issue Date.
|
|
Capped make-whole table: Additional shares per $1,000
|
|
|
|
|
|||||||
|
Acquisition Stock Price
|
||||||||||
|
$30.00
|
$31
|
$32
|
$33
|
$34
|
$35
|
$40
|
$45
|
$50
|
$55
|
$60
|
Effective Date
|
|
|
|
|
|
|
|
|
|
|
|
May 25, 2007
|
3.70
|
3.39
|
3.10
|
2.83
|
2.59
|
2.37
|
1.54
|
1.03
|
0.73
|
0.54
|
0.00
|
May 23, 2008
|
3.70
|
3.35
|
3.02
|
2.72
|
2.44
|
2.18
|
1.18
|
0.56
|
0.22
|
0.05
|
0.00
|
May 25, 2009
|
3.70
|
3.32
|
2.97
|
2.64
|
2.34
|
2.06
|
0.92
|
0.09
|
0.00
|
0.00
|
0.00
|
May 25, 2010
|
3.70
|
3.30
|
2.93
|
2.59
|
2.26
|
1.96
|
0.71
|
0.00
|
0.00
|
0.00
|
0.00
|
May 25, 2011
|
3.70
|
3.30
|
2.92
|
2.56
|
2.22
|
1.91
|
0.56
|
0.00
|
0.00
|
0.00
|
0.00
|
May 25, 2012
|
3.70
|
3.30
|
2.92
|
2.55
|
2.22
|
1.90
|
0.55
|
0.00
|
0.00
|
0.00
|
0.00
|
May 24, 2013
|
3.70
|
3.29
|
2.92
|
2.56
|
2.22
|
1.90
|
0.55
|
0.00
|
0.00
|
0.00
|
0.00
|
May 23, 2014
|
3.70
|
3.30
|
2.91
|
2.56
|
2.22
|
1.90
|
0.55
|
0.00
|
0.00
|
0.00
|
0.00
|
May 25, 2015
|
3.70
|
3.29
|
2.91
|
2.55
|
2.22
|
1.90
|
0.55
|
0.00
|
0.00
|
0.00
|
0.00
|
May 25, 2016
|
3.70
|
3.30
|
2.91
|
2.56
|
2.22
|
1.90
|
0.55
|
0.00
|
0.00
|
0.00
|
0.00
|
May 25, 2017
|
3.70
|
3.30
|
2.91
|
2.56
|
2.22
|
1.90
|
0.55
|
0.00
|
0.00
|
0.00
|
0.00
|
Dated: September 5, 2012
|
|
By:
|
/s/ Dan Bodner
|
|
|
|
Dan Bodner
|
|
|
|
President and Chief Executive Officer
|
|
|
|
Principal Executive Officer
|
Dated: September 5, 2012
|
|
By:
|
/s/ Douglas E. Robinson
|
|
|
|
Douglas E. Robinson
|
|
|
|
Chief Financial Officer
|
|
|
|
Principal Financial Officer
|
Dated: September 5, 2012
|
/s/ Dan Bodner
|
|
Dan Bodner
|
|
President and Chief Executive Officer
|
|
Principal Executive Officer
|
Dated: September 5, 2012
|
/s/ Douglas E. Robinson
|
|
Douglas E. Robinson
|
|
Chief Financial Officer
|
|
Principal Financial Officer
|