FINANCE

1. Q2 Policies Update • Treasury Update FINANCE

2. agenda • Q2 policies update • Authority matrix………………………………..4-10 • Petty cash ……………………………………..…11 • Software development cost capitalization ........12-20 • Activation of new supplier by finance ……….21-23 • Treasury policies training • Treasury policies ………………………………...25 • Bank accounts …………………………………...26 • Borrowing ……………………………………….27 • FX ……………………………………………28-30 • Monetary assets and liabilities accounts ………...31 • Currency gain/loss analysis for income statement 32

3. Q2 Policies Update

4. Authority matrix • The Authority Matrix covers the approval thresholds for: • Expenses, capital purchases and expense reports; • Inventory purchases; • Contracts, non-disclosure agreements, other contractual agreements and power of attorney; • Human resource activities; • VeriFone pricing authorizations; • Investments and disposition of assets; • Financing and central services; • Accounting, credit and other adjustments; and • Treasury activities and financial disbursements.

5. Authority matrix • The Board of Directors approves the Authority Matrix, you can find the current policy on VeriWeb: • http://vweb.verifone.com/Finance/Documents/Forms/Policies.aspx. • The Authority matrix was updated in April 2013. Key changes from the prior version were: • EVP/President/Chief Operations Officer can now approve up to $250k for expense Items and capital expenditures. For finance, CFO approval is still required for purchases above $10K. • Employment requisitions approved through a weekly “Staffing Strategy Call” covering both budgeted and unbudgeted positions. • Contractors and consultant spend follows “Expense Items” approval limits. • A template is provided for the “Business Justification/ROI” related to capital expenditures.

6. Authority matrix Expense, capital purchase and expense reports authority matrix.

7. Authority matrix Inventory purchases authority matrix.

8. Authority matrix Contracts, NDA’s, other contractual documents and power of attorney authority matrix.

9. Authority matrix Human resources activities authority matrix.

10. Authority matrix The authority matrix is not optional, it must be followed by all VeriFone staff. Finance staff should know the thresholds. We need to enforce approvals at all levels of finance.

11. Petty cash • VeriFone discourages the use of petty cash. If you need to establish a petty cash fund, you MUST send a request to the SVP, Corporate Controller for approval. See the policy at http://vweb.verifone.com/Finance/Documents/Forms/Policies.aspx • If you currently have petty cash for your entity, please email the following information to Elena_B1@VERIFONE.com: • 1) entity No; 2) currency of petty cash; 3) float amount (maximum amount of cash); 4) monthly spend (how much more cash you put in the petty cash); 5) who is the custodian; 6) copy of background check done on the custodian; 7) is the petty cash in a locked box or safe and who has the key or code; and 8) document the reasons why your country needs a petty cash. • Petty cash are only used to reimburse office, stationary and housekeeping supplies, cash on delivery for small repairs and maintenance, customs duty for imports express courier deliveries and travel expenses for local errands. The total amounts cannot exceed $US 75 a transaction (local managers can lower the limit), except for courier deliveries of equipment at the sites.

12. Software development cost capitalization • GAAP requires capitalization of two types of software development: • 1) Developed to be sold, leased or otherwise marketed and • 2) Developed for VeriFone’s own use. • VeriFone’s policy required that all software project’s with a total cost of less than $250KUSD will be expensed in R&D as incurred. The Corporate R&D Controller is responsible for evaluating the software development projects to determine whether those projects can be capitalized. • Account 192001 is used for • software to be use to generate revenue. • Account 175000 is used for • internal use software costs capitalization.

13. Software development cost capitalization • Software developed to be sold, leased or otherwise marketed shall follow the following rules: • Costs will be expensed in R&D until the project reaches technological feasibility; • Once a project reaches technological feasibility, costs are capitalized; • When the software is ready for general release to customers (Beta), all costs are expensed as incurred. • Costs include direct and indirect costs related to the project such as salaries, contractor costs, allocated facility costs and etc. If you purchase software that has no alternate use other than for this project then it can be included. However, the costs must be traceable to the project.

14. Software development cost capitalization • VeriFone considers the following software development projects to be generally qualified for ASC 985-20 capitalization: • Development of all new embedded software (including the Operating System (OS), Firmware, libraries, and applications for new hardware platforms). • Enhancement of existing embedded software to incorporate new features or hardware technology. The enhancement must significantly improve the marketability or extend the estimated useful life of the original product. • The following are examples of the software development projects that are not considered for ASC 985-20 capitalization: • Not used across multiple products and is not tied to a specific new product’s introduction (Only allows various hardware components to communicate with each other). • Developed for internal use. • Development for specific or small group of customers.

15. Software development cost capitalization VeriFone development milestone phases include: • Upon completion of the I/D phase and managements approval, the Program Manager needs submit each software project candidate to the Corporate R&D Controller for final approval to begin capitalization. The submittal should include the following: • I/D Program Review Slide (which should include): • Budget indicating FAS eligible costs meet $250k (USD) threshold, • Single software project name, uniquely identifiable and traceable in Oracle and Agile. • Approval Checklist

16. Software development cost capitalization • VeriFone projects shall have performed the activities outlined below as further evidence that technological feasibility has been established: • The product design and the detail program design have been completed, and the company has established that the necessary skills, hardware, and software technology are available to the enterprise to produce the product. • The completeness of the detail program design and its consistency with the product design is assured confirmed by documenting and tracing the detail program design to product specifications. • The detail program design has been reviewed for high-risk development issues (for example, novel, unique, unproven functions and features or technological innovations), and any uncertainties related to identified, high-risk development issues have been resolved through coding and testing. • A marketing analysis and marketing plan has been completed that indicates the product is viable. • For more details, please refer to the Capitalization of Software Development Policy.

17. Software development cost capitalization • Once the project is completed, the estimated useful life is determined and there has to be documentation of explanation and facts to support the useful life. This is communicated to Finance, who will start amortization. • If the actual sales of the software drops below forecast or the expected useful life changes, Finance must notify the Corporate R&D controller. This could trigger an impairment analysis. • Annual budget process: the eligible software development projects are highlighted in the annual budget cycle and are budgeted as a part of R&D costs in the P&L section of the Annual Operating Plan. The portion that represents the capitalized software is then reclassified and moved out to the balance sheet section of the plan as part of IDC.

18. Software development cost capitalization • Documentation required to capitalize any software development project must include, but is not limited to, the following: • Investigation to design plan Approval. • Cost analysis supporting total cost of $250k (USD) or greater. • Detail design document (PRD). • Marketing analysis and plan to support viability of product (Presentation Program Review Slides). • Product memo that describes the project being capitalized specifically referencing qualifications for ASC 985-20 treatment. • Project start and expected end date.

19. Software development cost capitalization • Internal Use Software • All costs are expensed until the application development stage and management with authority authorizes and commits to funding the project and it is probable that the software can be completed to meet the specifications. • Application development stage is generally when: • Software has been selected for use, • Made assessment that the functions of the software meets our requirement. • Project is approved by senior management that the software meets our needs and we have approval to start work. External cost of material and services, payroll and related costs for people directly working on the project and interest costs incurred is capitalized (no allocations) until the software is ready for use.

20. Software development cost capitalization • Capitalization stops once we have implemented the software, go live. Training costs and data conversion costs are all expensed as incurred. However, cost to develop software that allows access or conversion of old data by the new software shall be capitalized. • For details, see the Fixed Assets and Capitalization Policy http://vweb.verifone.com/Finance/Documents/Forms/Policies.aspx • Once the project goes live, the software development team needs to provide the estimated useful life of the software to finance, this needs to be supported by documentation of the reasons and facts. • We could capitalize upgrades and enhancements to existing software, that exceeds 250K, that result in additional functionality, that is, modifications to enable the software to perform tasks that it previously was not capable of performing. If we cannot separate internal costs on a reasonably cost effective basis between maintenance and relatively minor upgrades and enhancements should expense such costs as incurred.

21. ACTIVATION OF NEW SUPPLIER BY FINANCE • It is the responsibility of the global purchasing department to create all new suppliers in Oracle and to ensure that all required documentation for the vendor is attached to the vendor record. • It is the Finance’s responsibility to validate that the required documentation for the vendor has been provided and that the financial / payment related data in Oracle for the new supplier is complete and accurate.

22. ACTIVATION OF NEW SUPPLIER BY FINANCE • New suppliers are not activated until both processes have been completed. Activation occurs when an accounting user removes the “end-date” on the vendor record which is initially set to the vendor creation date. • The Director of Global Purchasing is responsible for assigning Buyers new supplier creation responsibilities in Oracle. • Local controllers are responsible for assigning new vendor activation (“AP Supplier”) responsibilities to members of their accounting staff. Individuals with AP supplier cannot also have AP entry or payments responsibilities per VeriFone Segregation of Duties policy.

23. ACTIVATION OF NEW SUPPLIER BY FINANCE • Once the GL Finance/Accounting users receive the alert, they must validate the following critical information (plus any local specific information as required): • Supplier Name • Supplier Address • Supplier Payment Term • Supplier Type • Supplier Payment Method • Organization Type (i.e. individual, corporation, etc.) • Supplier Pay Group (ex. MRP, Non MRP, Agent etc. • and update the tax code based on group) • Supplier ID number and tax register number for local suppliers - Example: In Israel, they obtain information from IRS web site (suppliers’ withholding tax and bookkeeper certificates expiry date) and update in Oracle. They also verify the supplier’s name in the Oracle system match to the name on the certificates. • Supplier bank details – Finance/Accounting users can update the bank details after receiving the signed bank forms from the suppliers. Please see link for New Supplier Form on Veriweb: http://veriweb2.verifone.com/procurement/docs/New_Supplier_Form.doc • Currency • Accounting tab

24. Treasury policies training

25. Treasury policies Treasury Policies include the following: • Bank Accounts • Electronic Funds Transfers • Investments • Borrowing • Foreign Exchange (FX) • Cash Conversion • FX Exposure Monitoring See Treasury policy documents and spreadsheet templates at http://vweb/Finance/Pages/Treasury.aspx

26. Bank accounts • Treasury approval needed for: • Opening or closing bank account • Changing signatories or on-line entitlements • Allowing direct debits by vendors • Requirements: • Account signers • At least two (2) of the following four (4) corporate individuals must be named on each bank account as signers unless prohibited by local law: Chief Financial Officer; VP, Financial Planning; VP, Corporate Controller; VP, Treasurer • Field finance employees holding the following job titles can generally be added as local account signers: Geographic or Regional Controller, Country Controller, Finance Manager • If an electronic banking platform allows disbursements to be made electronically from a bank account, the Treasurer must approve in writing all users who have the following on-line authority: • Administration (ability to establish users and their authority) • Initiation and/or Release of Payments, including amount limits • Remove signatories and on-line users who have left or changed roles within the Company as soon as practicable, with proposals for replacements submitted for Treasurer approval • See policy documents at http://vweb/Finance/Pages/Treasury.aspx • Send requests to i_Treasury e-mail distribution list (Doug Reed, Louann Pope, Rebecca Yu, I-Am Bauzon)

27. borrowing • “Borrowing” definition for purposes of this policy • Includes any new arrangement or extension of a prior arrangement (1) to borrow cash or other assets (“Advance of Assets”), or (2) that guarantees payment by another party, or incurs an obligation, contingent or otherwise, to reimburse another party such as under a letter of credit, bid bond or performance bond (“Guaranty”) • Does not include entering into leases for the use of assets such as office space or office equipment in the ordinary course of business • Treasury approval needed for: • Any intercompany borrowing and extension (also requires approval of VP Tax) • Any bank guarantees and letters of credit • Third-party borrowing proposals must be reviewed by the Treasurer and approved by the CFO • See policy documents at http://vweb/Finance/Pages/Treasury.aspx

28. Fx cash conversion • Converting money from one currency to another currency worth more than USD 200,000 must be approved by Treasury • We can arrange FX conversion for you at a good rate and adjust our hedges • Send request for conversion to i_Treasury e-mail distribution list • Include simple spreadsheet form that’s in the policy or we can provide • See policy documents and spreadsheet template at http://vweb/Finance/Pages/Treasury.aspx

29. FX exposure monitoring and fx gain/loss analysis • We monitor our company wide FX exposure to reduce fluctuations due to exchange rate changes • FX exposure analysis spreadsheets must be submitted to Treasury • For all legal entities, full currency analysis spreadsheet must be posted to SharePoint reconciliations folder at month end as part of monthly close process • In addition, for legal entities that are not yet on VeriFone’s Oracle system, FX exposures must be sent to Rebecca Yu and Louann Pope on 10th and 20th of each month • See policy documents and spreadsheet template at http://vweb/Finance/Pages/Treasury.aspx

30. Currency analysis spreadsheet • Currency Analysis Spreadsheet starts with FX Exposures Question: But what do we consider “FX Exposures”? Answer: Monetary assets and liabilities (see list on the following slide) denominated in currency other than the entity’s functional currency They create gains and losses that hit FX Gain/Loss within Other Income & Expense in the P&L, as they are revalued at the end of each month and when finally settled This includes intercompany loans in non-functional currency except if Treasury determines that they will not be repaid in the foreseeable future based on the borrower’s financial position and perceived operations (and this is then documented), in which case monthly revaluation gain/loss is booked to Cumulative Translation Adjustment (“CTA”) rather than the P&L. These “Loans Revalued to CTA” are designated as “Long-Term Investment Nature”.

31. Monetary assets & liabilities accounts

33. Thank You