Verint Reacts to Preliminary Conclusions of Comverse Technology Special Committee; Delays 10-K Filing
April 17 2006 - 8:15AM
Business Wire
Verint Systems Inc. (NASDAQ: VRNT) today announced that, as a
result of the ongoing review by Comverse Technology, Inc., the 57%
stockholder of Verint, relating to Comverse's stock option grants,
and the uncertainty of the impact of such review on Verint's
historical financial statements, Verint will be filing a Form
12b-25 with the Securities and Exchange Commission indicating that
its Annual Report on Form 10-K for the fiscal year ended January
31, 2006 will not be filed on its due date of April 17, 2006.
Verint intends to file the Annual Report as soon as practicable
after the determination of whether any restatement of Verint's
previously issued financial statements is required. Verint did not
seek a 15-day filing extension because it does not believe it could
file the Annual Report by the end of the extension period. Prior to
Verint's initial public offering in May 2002, Verint was a
wholly-owned subsidiary of Comverse and, as a result, during that
period certain Verint employees received from Comverse options to
purchase Comverse common stock. Since May 2002 (other than the
repricing of stock options initiated by Comverse in June 2002), no
Verint employee received compensatory awards from Comverse. As
previously announced on March 14, 2006, the Board of Directors of
Comverse has created a special committee (the "Comverse Special
Committee"), composed of outside directors, to review matters
relating to Comverse's stock option grants, including the accuracy
of the stated dates of Comverse option grants and whether Comverse
followed all proper corporate procedures. The final outcome of the
Comverse Special Committee's review of its stock option practices
may require Verint to incur additional charges for Comverse stock
option related expenses with regard to Comverse grants of Comverse
options to Verint employees when Verint was wholly-owned by
Comverse. While Verint does not participate in, and is not privy
to, the substance of the Comverse Special Committee's review,
Verint has been informed that, although the Comverse Special
Committee has not yet completed its work or reached final
conclusions, it has reached a preliminary conclusion that the
actual dates of measurement for certain past Comverse stock option
grants for accounting purposes differed from the recorded grant
dates for such awards. Although Verint is unable to determine the
full effect of these matters, including whether any restatement of
its historical financial statements is required, until the Comverse
Special Committee completes its review, based on the Comverse
Special Committee's preliminary conclusion, Verint will be filing a
Current Report on Form 8-K with the SEC to the effect that Verint
has concluded that its historical financial statements for each of
the fiscal years ended January 31, 2005, 2004, 2003, 2002 and 2001
and for the first three quarters of the fiscal year ended January
31, 2006, and any related reports of its independent registered
public accounting firm, should no longer be relied upon. Verint
believes that the review by the Comverse Special Committee will
have no impact on Verint's historical GAAP revenue and pro forma
results, including pro forma net income. Pro forma net income is a
measurement that Verint management typically discloses in its
quarterly earnings releases and excludes, among other things,
stock-based compensation. Verint cautions that investors should not
make assumptions about the cost of sales, gross margin, operating
expenses, income from operations, net income, earnings per share or
other financial statement items that may be affected by stock
option related expenses. On April 14, 2006, Verint notified The
Nasdaq Stock Market that, as a result of its inability to file its
Annual Report on Form 10-K when due, it will continue to be in
noncompliance with the NASDAQ requirements for continued listing
under NASDAQ Marketplace Rules that require Verint to make on a
timely basis all required filings with the SEC. Verint may receive
a Staff Determination letter from The Nasdaq Stock Market
indicating that, due to its noncompliance with NASDAQ Marketplace
Rules, its common stock will be delisted unless it requests a
hearing in accordance with the Nasdaq Marketplace Rules. If Verint
receives such a Staff Determination Letter, it intends to request a
hearing before the NASDAQ Listing Qualifications Panel to review
the Staff Determination. Under NASDAQ Marketplace Rules, a request
for a hearing stays the delisting action pending the issuance of a
written determination by the NASDAQ Listing Qualification Panel.
About Verint Systems Inc. Verint(R) Systems Inc., headquartered in
Melville, New York, is a leading provider of analytic
software-based solutions for security and business intelligence.
Verint software, which is used by over 1,000 organizations in over
50 countries worldwide, generates actionable intelligence through
the collection, retention and analysis of voice, fax, video, email,
Internet and data transmissions from multiple communications
networks. Verint is a subsidiary of Comverse Technology, Inc.
(NASDAQ: CMVT). Visit us at our website www.verint.com. Note:
Certain statements concerning Verint's future revenues, earnings
per share, results or prospects are "forward-looking statements"
under the Private Securities Litigation Reform Act of 1995. There
can be no assurances that forward-looking statements will be
achieved, and actual results could differ materially from forecasts
and estimates. Important risks, uncertainties and other important
factors that could cause actual results to differ materially
include, among others: potential impact on Verint's financial
results related to Comverse's creation of a special committee of
the Board of Directors of Comverse to review matters relating to
grants of Comverse stock options, including but not limited to, the
accuracy of the stated dates of Comverse option grants and whether
Comverse followed all of its proper corporate procedures and the
results of the Comverse special committee's review; the effect of
Verint's failure to timely file all required reports under the
Securities Exchange Act of 1934, and the resultant potential
delisting of Verint's common stock on NASDAQ; introducing quality
products on a timely basis that satisfy customer requirements and
achieve market acceptance; lengthy and variable sales cycles create
difficulty in forecasting the timing of revenue; integrating the
business and personnel of CM Insight; risks associated with
significant foreign operations, including fluctuations in foreign
currency exchange rates; aggressive competition in all of Verint's
markets, which creates pricing pressure; integrating the business
and personnel of MultiVision, including implementation of adequate
internal controls; managing our expansion in the Asia Pacific
region; risks that Verint's intellectual property rights may not be
adequate to protect its business or that others may claim that
Verint infringes upon their intellectual property rights; risks
associated with integrating the business and employees of Opus and
RP Sicherheissysteme GMBH; risks associated with Verint's ability
to retain existing personnel and recruit and retain qualified
personnel in all geographies in which Verint operates; decline in
information technology spending; changes in the demand for Verint's
products; challenges in increasing gross margins; risks associated
with changes in the competitive or regulatory environment in which
Verint operates; dependence on government contracts; expected
increase in Verint's effective tax rate; perception that Verint
improperly handles sensitive or confidential information; inability
to maintain relationships with value added resellers and systems
integrators; difficulty of improving Verint's infrastructure in
order to be able to continue to grow; risks associated with
Comverse Technology, Inc. controlling Verint's business and
affairs; and other risks described in filings with the Securities
and Exchange Commission. All documents are available through the
SEC's Electronic Data Gathering Analysis and Retrieval system
(EDGAR) at www.sec.gov or from Verint's website at www.verint.com.
Verint makes no commitment to revise or update any forward-looking
statements except as otherwise required by law. Verint, the Verint
word mark, Actionable Intelligence, Powering Actionable
Intelligence, STAR-GATE, RELIANT, NEXTIVA, LORONIX, SmartSight,
Lanex and ULTRA are trademarks of Verint Systems Inc. Other names
may be trademarks of their respective owners.
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