Hypercom Corporation Annual Report - CiteSeer

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The Company’s cash and cash equivalents and short-term investments are maintained with major, high-quality international banks and financial institutions. Generally, these securities are traded in a highly liquid market, may be redeemed upon demand and bear minimal risk. Management regularly monitors the composition and maturities of these investments and the Company has not experienced any material loss on its investments. Cash and cash equivalents at times may exceed the FDIC limits. The Company believes that no significant concentration of credit risk exists with respect to these cash investments. The Company’s accounts receivable result primarily from credit sales to a broad customer base, both nationally and internationally, with a concentration generally existing among five to ten customers. The Company’s top five customers amounted to 19.0%, 22.1% and 21.3% of the Company’s total revenues for the years ended December 31, 2009, 2008 and 2007, respectively. These same five customers accounted for 14.2% and 17.4% of the Company’s net accounts receivable balance at December 31, 2009 and 2008, respectively. Sales to the Company’s largest customer totaled 5.2%, 6.2% and 5.3% of total revenues in 2009, 2008 and 2007, respectively. The Company routinely assesses the financial strength of its customers, requiring letters of credit from certain foreign customers, and provides an allowance for doubtful accounts as necessary. Inventories The Company’s entire inventory is purchased from third party manufacturers that are considered to be outside sources. The failure of any such third party manufacturer to meet its commitment on schedule could have a material adverse effect on the Company’s business, operating results and financial condition. If a sole-source supplier were to go out of business or otherwise become unable to meet its supply commitments, the process of locating and qualifying alternate sources could require up to several months, during which time the Company’s production could be delayed. Such delays could have a material adverse effect on the Company’s business, operating results and financial condition. All of the Company’s third party manufacturers are located in foreign jurisdictions and are subject to certain risks, including the imposition of tariffs and import and export controls, together with changes in governmental policies. The occurrence of any of these events could have a material adverse effect on the Company’s business, operating results and financial condition. The Company estimates inventory provisions for potentially excess and obsolete inventory on a part level basis based on forecasted demand and historical usage. Actual demand may differ from such anticipated demand and may have a material adverse effect on inventory valuation. International Operations The Company’s international business is an important contributor to the Company’s net revenues and operating results. However, a substantial portion of the Company’s international sales are denominated in the U.S. Dollar, and an increase in the value of the U.S. Dollar relative to foreign currencies could make products sold internationally less competitive. The operating expenses of the Company’s overseas offices are paid in local currencies and are subject to the effects of fluctuations in foreign currency exchange rates. The Company maintained significant accounts receivable balances outside of the U.S. comprising 78.3% and 72.0%, respectively, of the Company’s net accounts receivable balance at December 31, 2009 and 2008. These balances are subject to the economic risks inherent to those regions. 22. Segment, Geographic, and Customer Information During the fourth quarter of 2008, the Company initiated organizational changes and made enhancements to its internal management reporting and began to report information pertaining to its four business segments in 2009 as follows: (i) the Americas, (ii) NEMEA, (iii) SEMEA and (iv) Asia-Pacific. The Americas consist of the U.S., Canada, Mexico, the Caribbean, Central America, and South America. NEMEA consists of Germany, Austria, Scandinavia, and the Benelux countries. SEMEA consists of France, Spain, the United Kingdom, Ireland, Eastern Europe, Russia, the Middle East, and Africa. Asia-Pacific consists of China, India, Japan, Korea, Southeast Asia, Australia, and New Zealand. Prior year segment data has been restated for comparative purposes. The Company’s Chief Operating Decision Maker (“CODM”) is its CEO. The CODM has access to discrete financial information for each of its business segments regarding revenues, gross margins (using fully burdened manufacturing costs), direct local service costs, direct operating expenses consisting of expenses directly associated with the business segment, and indirect operating expenses consisting of global shared cost centers such as global R&D, marketing, corporate general and administrative - 81 -
expenses, and stock-based compensation. The Company operations are managed by the MDs for each business segment that report directly to the CEO and have responsibility for all business activities and combined operating results of their respective business segments. These individuals are compensated and evaluated based on the performance (Direct Trading Profit) of their business segment. Year Ended December 31, 2009 2008 2007 Net Revenue Americas $ 123,746 $ 160,038 $ 158,539 NEMEA 102,492 90,104 16,400 SEMEA 131,505 133,210 64,984 Asia-Pacific 49,160 50,890 49,604 $ 406,903 $ 434,242 $ 289,527 Year Ended December 31, 2009 2008 2007 Operating Income Americas $ 21,130 $ 16,278 $ 20,312 NEMEA 19,267 (6,060 ) 5,959 SEMEA 24,676 (8,490 ) 14,899 Asia-Pacific 9,049 4,368 11,386 Shared cost centers (71,002 ) (82,808 ) (63,300 ) Total segment profit (loss) $ 3,120 $ (76,712 ) $ (10,744 ) Interest income 296 1,466 3,954 Interest expense (10,990 ) (6,822 ) (122 ) Foreign currency loss 411 (1,821 ) (1,685 ) Other expense 390 191 (25 ) Income (loss) before income taxes and discontinued operations $ (6,773 ) $ (83,698 ) $ (8,622 ) December 31, December 31, 2009 2008 Total Assets Americas $ 55,858 $ 61,813 NEMEA 110,670 105,035 SEMEA 83,957 81,773 Asia-Pacific 26,597 35,840 Shared cost centers 29,806 21,839 $ 306,888 $ 306,300 The Company’s goodwill by business segment is as follows (dollars in thousands): - 82 - December 31, December 31, 2009 2008 NEMEA $ 17,715 $ 16,255 SEMEA 6,995 6,634 Asia-Pacific 3,826 3,826 $ 28,536 $ 26,715 The Company’s intangible assets by business segment are as follows (dollars in thousands): December 31, December 31, 2009 2008 Americas $ 1,453 $ 1,102 NEMEA 44,021 50,181 SEMEA 955 1,945 Asia-Pacific 3,150 4,083 $ 49,579 $ 57,311
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Hypercom Corporation Annual Report
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i. to our StoCkhoLderS, CuStomerS,
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iii. 2009 highLightS January - Febr
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v. iphone SeCure paymentS SoLutionS
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vii. SmartpaymentS wynid Server-baS
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iX. hyperCom Corporation End-to-End
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(This Page Left Blank Intentionally
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Yes � No � Indicate by check ma
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CAUTIONARY STATEMENT REGARDING FORW
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On April 1, 2008, we acquired all o
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solution against payment card fraud
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aggressively transitioning into the
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Trusted Transaction Services — Ou
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and biometric authentication and en
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Proprietary Rights We rely upon pat
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• the type, timing and size of or
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affecting our business. However, if
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Furthermore, we utilize contract ma
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economic climate, the credit market
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Our failure to properly comply with
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espect of the related indebtedness.
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Lisa Shipley v. Hypercom Corporatio
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(e) In September 2006, we completed
Page 48 and 49: of our stock grants and only recogn
Page 50 and 51: In 2009, we incurred employee sever
Page 52 and 53: Costs of Revenue and Gross Profit C
Page 54 and 55: Net Revenues Net revenues increased
Page 56 and 57: Our products revenues relate primar
Page 58 and 59: Changes in operating assets and lia
Page 60 and 61: significantly impacted by a 100 bas
Page 62 and 63: Report of Independent Registered Pu
Page 64 and 65: Item 13. Certain Relationships and
Page 66 and 67: REPORT OF INDEPENDENT REGISTERED PU
Page 68 and 69: HYPERCOM CORPORATION CONSOLIDATED S
Page 70 and 71: HYPERCOM CORPORATION CONSOLIDATED S
Page 72 and 73: Allowance for Doubtful Accounts Pay
Page 74 and 75: Revenue Recognition Revenue is reco
Page 76 and 77: The Company does not provide for fe
Page 78 and 79: The purchase price consisted of the
Page 80 and 81: and assuming no subsequent impairme
Page 82 and 83: Of the $2.9 million of costs incurr
Page 84 and 85: 7. Leases Sales-Type Leases The Com
Page 86 and 87: 12. Product Warranty Liability The
Page 88 and 89: Long-term debt, which approximates
Page 90 and 91: the issuance of non-qualified stock
Page 92 and 93: 17. Income Taxes Loss before income
Page 94 and 95: enefit obligations as of December 3
Page 96 and 97: In determining the asset allocation
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Page 102 and 103: First Second Third Fourth Fiscal Qu
Page 104 and 105: EXHIBIT INDEX Exhibit Number Descri
Page 106 and 107: Exhibit Number Description of Exhib
Page 108 and 109: I, Thomas B. Sabol, certify that: C
Page 110 and 111: (This Page Left Blank Intentionally
Page 112 and 113: NOTES HYPERCOM CORPORATION
Page 114 and 115: Xi. StoCk perFormanCe Chart The fol
Page 116: World Headquarters: hypercom Corpor
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