UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One) |_| Form 10-K |_| Form 20-F |_| Form 11-K |X| Form 10-Q
|_| Form 10-D |_| Form N-SAR |_| Form N-CSR
For Period Ended: October 31, 2008
|_| Transition Report on Form 10-K
|_| Transition Report on Form 20-F
|_| Transition Report on Form 11-K
|_| Transition Report on Form 10-Q
|_| Transition Report on Form N-SAR
For the Transition Period Ended:
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Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
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If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I -- REGISTRANT INFORMATION
Verint Systems Inc.
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Full Name of Registrant
N/A
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Former Name if Applicable
330 South Service Road
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Address of Principal Executive Office (Street and Number)
Melville, New York 11747
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City, State and Zip Code
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PART II -- RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate.) |_|
(a) The reasons described in reasonable detail in Part III of this form could
not be eliminated without unreasonable effort or expense;
(b) The subject annual report, semi-annual report, transition report on Form
10-K, Form 20-F, Form 11-K, Form N-SAR, or Form N-CSR, or portion thereof,
will be filed on or before the fifteenth calendar day following the
prescribed due date; or the subject quarterly report or transition report
on Form 10-Q or subject distribution report on Form 10-D, or portion
thereof, will be filed on or before the fifth calendar day following the
prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule 12b-25(c) has
been attached if applicable.
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PART III -- NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
10-D, N-SAR, N-CSR, or the transition report or portion thereof, could not be
filed within the prescribed time period. (Attach extra sheets if needed.)
Verint Systems Inc. ("Verint" or the "Company") plans to file its Quarterly
Report on Form 10-Q for the fiscal quarter ended October 31, 2008 as soon as
practicable, but does not currently expect that it will be filed on or before
the fifth calendar day following the required filing date as prescribed in Rule
12b-25.
Prior to Verint's initial public offering in May 2002, Verint was a
wholly-owned subsidiary of Comverse Technology, Inc. ("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 June
2002 repricing of stock options by Comverse), no Verint employee received
compensatory awards from Comverse. As previously announced, the Board of
Directors of Comverse, now the 64% stockholder of Verint on a fully diluted
basis, 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. Comverse also
announced that its Special Committee expanded its investigation into certain
non-options related accounting matters, including possible revenue recognition
errors, errors in recording of certain deferred tax assets, expense
misclassification, misuse of accounting reserves, and understatement of backlog.
On January 29, 2008, Comverse announced that the Comverse Special Committee had
completed its investigation and disclosed a summary of the Special Committee's
findings including with respect to the backdating of Comverse stock options.
As a result of the backdating of the Comverse stock options granted to
Verint employees, and as previously disclosed by Verint on February 23, 2007,
Verint expects to record additional non-cash stock-based compensation expense in
prior periods. For the five fiscal years ended January 31, 2008, 2007, 2006,
2005 and 2004, the Company expects this charge to be approximately $0, $0,
$28,000, $46,000 and $105,000, respectively, and less than $20 million in the
aggregate for all periods. These figures exclude any tax expense or related
payments, which have not yet been fully determined but are not expected to
exceed $2.0 million. Additionally, the Company expects to record in April 2006 a
non-cash stock-based compensation charge of approximately $6.3 million related
to the modification of Verint stock options extending their life during the
period the Company has not been current in its periodic filings with the SEC and
of approximately $750,000 related to the modification by Comverse of Comverse
stock options held by Verint employees extending their life during the period
Comverse has not been current in its periodic filings with the SEC.
Although there were no allegations or evidence suggesting that measurement
dates for options to acquire Verint common stock differed from the recorded
grant dates, following the announcement of the Comverse Special Committee
investigation, Verint voluntarily conducted an internal review of its own stock
option grant practices to determine whether backdating had occurred. No such
conduct was uncovered at Verint. In addition, no evidence of option backdating
at Verint was discovered by the Audit Committee as part of its independent
investigation described below.
Following the expansion of the Comverse Special Committee investigation
into non-options related accounting matters, Verint commenced its own internal
investigation into certain non-option accounting matters, including accounting
reserves, income statement expense reclassification, and revenue recognition.
On March 20, 2008, Verint announced that the Audit Committee of the Board
of Directors of Verint had completed its independent investigation. As a result
of this investigation, the Audit Committee has proposed adjustments to the
historical accounting recorded by the Company which will be reflected in a
restatement of the Company's historical financial statements. The restatement
related to reserves is expected to affect periods during which reserves were
overstated and subsequent periods in which overstated reserves were reduced.
In connection with the audit of the Company's open and prior periods by
Verint's independent registered public accountants, the Company is also
conducting a review of its accounting treatment for revenue recognition under
complex contractual arrangements under AICPA Statement of Position (SOP) 97-2,
Software Revenue Recognition ("SOP 97-2") and other accounting regulations and
pronouncements. In connection with this examination, Verint has been performing
a comprehensive review of its license and sale agreements, as well as
re-performing technical calculations associated with the establishment of vendor
specific objective evidence ("VSOE"). VSOE calculations involve making
determinations regarding the fair value of the company's maintenance,
professional and implementation services, as well as the application of the
relative fair value method to allocate revenue to each element of the company's
bundled hardware and software arrangements. If the Company for accounting
purposes is unable to determine the fair value of an undelivered element within
a multiple element arrangement, as defined by VSOE, revenue for the entire
arrangement is generally deferred until all elements have been delivered.
The restatement as a result of the Audit Committee's independent
investigation described above is also expected to include adjustments relating
to the Company's historical application of SOP 97-2 and possibly other revenue
recognition rules. Verint is continuing to examine the SOP 97-2 matters
described above, as well as other revenue recognition and accounting issues that
may arise during the completion of the audit of open and prior periods. There
can be no assurance that Verint will not discover additional accounting errors
or issues or that such errors or issues, if they exist, will not be material.
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The Company expects the restatement to have a material impact on the
Company's historical financial statements, including on reserves, accruals,
income, revenue recognition and stock option expense. Nevertheless, based on
currently available information, Verint believes that its restatement is not
expected to impact the existence of Verint's aggregate revenues, including
deferred revenue, or the validity of the transactions underlying the Company's
revenue. Further, except for the impact of any tax expense or related payments
in connection with the recognition of stock option expense, the restatement is
not expected to impact historically reported cash balances and cash flows.
Because of the uncertainty regarding how long the Company's revenue
recognition review and the Company's audit generally will take, as well as the
impact, if any, on the Company's timetable resulting from a similar revenue
recognition review and audit process occurring at Comverse, the Company can not
currently provide a timeline by when it expects to become current with its SEC
filings.
Note: Certain statements and information in this Form 12b-25 that involve
expectations, plans, intentions or strategies regarding the future are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. They are often identified by words such as
"will," "anticipates," "expects," "intends," "plans," "believes," "estimates"
and similar expressions and statements about present trends and conditions that
may extend into the future. These statements are not facts and are based upon
information available to the Company as of the date of this document. The
Company assumes no obligation to revise or update any such forward-looking
statement except as otherwise required by law. Forward-looking statements
believed true when made may ultimately prove to be incorrect. These statements
are not guarantees of future performance and are subject to risks, uncertainties
and other factors, some of which are beyond our control and may cause actual
results to differ materially from our current expectations. Some of the factors
that could cause actual future results or conditions to differ materially from
current expectations include the impact of general economic conditions,
particularly in information technology spending, on Verint's business,
operations, and financial condition; risk that customers or partners are unable
to honor contractual commitments due to liquidity issues or otherwise; risk of
liquidity or working capital issues at Verint and related risk that financing
sources will be unavailable on reasonable terms or at all; risk that Verint's
financial performance or restatement or both will cause it not to be compliant
with requirements of its debt facility; the impact on Verint's business and/or
financial statements as a result of Verint's review of certain accounting
matters, including revenue recognition, the audit of Verint's financial results
by its independent registered public accountants, and the amount of time needed
to complete the same; risk of possible future restatements; the impact on
Verint's business and/or financial statements of the Comverse Special
Committee's review of certain stock option and accounting matters, Comverse's
revenue recognition review, and any accounting issues or errors that may be
discovered as part of Comverse's audit process, and the amount of time needed to
complete the same; the impact of governmental inquiries arising out of or
related to option grants and practices and/or other accounting areas such as
reserves investigated by Comverse and Verint and the risk of regulatory action
or private litigation relating to the same; the effect of Verint's failure to
timely file all required reports under the Securities Exchange Act of 1934 and
the ability of Verint to stay current with required filings in the future;
Verint's ability to have its common stock relisted on a national securities
exchange, such as The NASDAQ Global Market; customer and partner concern and
potential transaction deferrals or losses as a result of the foregoing risks;
exposure to fluctuations in foreign currency exchange rates, particularly the
U.S. dollar to the Israeli shekel; changes in the demand for Verint's products;
business model changes resulting from Verint's revenue recognition review and
customer reaction to the same; implementation and maintenance of adequate
systems and internal controls for our current and future operations and
reporting needs; risks associated with Verint's ability to retain existing
personnel and recruit and retain qualified personnel in all geographies in which
Verint operates; lengthy and variable revenue cycles create difficulty in
forecasting the timing of revenue; on-going revenue recognition review creates
difficulty in forecasting revenue and related expense management; the ability to
recognize the expected benefits of the Witness merger; continuing challenges in
integrating Witness' business and systems; risks relating to current and
potential future litigation or regulatory inquiries or actions inherited in
connection with the merger; integrating the business, systems, and personnel of
Verint's other acquisitions; introducing quality products on a timely basis that
satisfy customer requirements and achieve market acceptance; risks associated
with significant foreign operations; aggressive competition in all of Verint's
markets, which creates pricing pressure; managing expansion in the Asia Pacific
and Central and South American regions; risks that Verint's intellectual
property rights may not be adequate to protect its business or that others may
claim that Verint or its subsidiaries infringe upon their intellectual property
rights; 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; risk
that Verint improperly handles sensitive or confidential information or risk of
misperception of such mishandling; inability to maintain relationships with
value added resellers and systems integrators; difficulty of improving Verint's
infrastructure to support growth; risks associated with Comverse Technology,
Inc. controlling Verint's business and affairs; and other risks described in
filings with the Securities and Exchange Commission, including Verint's Current
Report on Form 8-K filed September 10, 2007, as supplemented by the Current
Reports on Form 8-K filed on November 5, 2007, January 16, 2008 and April 9,
2008. 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.
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PART IV -- OTHER INFORMATION
1. Name and telephone number of person to contact in regard to this
notification
Peter Fante 631 962-9600
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(Name) (Area Code) (Telephone Number)
2. Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s). |_| Yes |X| No
Verint did not file its Current Report on Form 8-K/A, which would have
amended the Current Report on Form 8-K dated January 9, 2006 to include the
financial information required by Form 8-K in connection with the January
9, 2006 acquisition by the Company of MultiVision Intelligence Surveillance
Limited's networked video security business.
Verint did not file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2006.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2006.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2006.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended October 31, 2006.
Verint did not file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2007.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2007.
Verint did not file its Current Report on Form 8-K/A, which would have
amended the Current Report on Form 8-K dated May 29, 2007 to include the
financial information required by Form 8-K in connection with the May 25,
2007 acquisition by the Company of Witness Systems, Inc.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2007.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended October 31, 2007.
Verint did not file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2008.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2008.
Verint did not file its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2008.
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3. Is it anticipated that any significant change in results of operations for
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion
thereof? |X| Yes |_| No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
Because of the revenue recognition review described above that is underway
but not yet completed, and the ongoing audit of the Company's financial
statements for open and prior periods, the Company cannot complete its
procedures for the quarter ended October 31, 2008 and therefore cannot at this
time provide a reasonable estimate and comparison of the results of its
operations for the fiscal quarter ended October 31, 2008 compared to the
corresponding period for the last fiscal year.
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Verint Systems Inc.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
VERINT SYSTEMS INC.
Date: December 10, 2008 By: /s/ Peter Fante
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Name: Peter Fante
Title: Chief Legal Officer
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