000-23593 | 94-3221585 | |
(Commission File Number) | (IRS Employer Identification No.) |
12061 Bluemont Way, Reston, VA | 20190 | |
(Address of Principal Executive Offices) | (Zip Code) |
c | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
c | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
c | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
c | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit Number | Description | |
99.1 | Text of press release of VeriSign, Inc. issued on October 22, 2015. |
VERISIGN, INC. | ||||
Date: October 22, 2015 | By: | /s/ Thomas C. Indelicarto | ||
Thomas C. Indelicarto | ||||
Senior Vice President, General Counsel and Secretary |
Exhibit No. | Description | |
Exhibit 99.1 | Text of press release of VeriSign, Inc. issued on October 22, 2015. |
• | Verisign ended the third quarter with cash, cash equivalents and marketable securities of $1.9 billion, an increase of $466 million as compared with year-end 2014. |
• | Cash flow from operations was $155 million for the third quarter of 2015, compared with $168 million for the same quarter in 2014. |
• | Deferred revenues on Sept. 30, 2015, totaled $940 million, an increase of $50 million from year-end 2014. |
• | Capital expenditures were $7 million in the third quarter of 2015. |
• | During the third quarter, Verisign repurchased 2.3 million shares of its common stock for $156 million. At Sept. 30, 2015, $605 million remained available and authorized under the current share repurchase program which has no expiration. |
• | For purposes of calculating diluted EPS, the third quarter diluted share count included 18.0 million shares related to subordinated convertible debentures, compared with 13.2 million shares for the same quarter in 2014. These represent diluted shares and not shares that have been issued. |
• | Verisign Registry Services added 1.68 million net new names during the third quarter, ending with 135.2 million .com and .net domain names in the domain name base, which represents a 3.4 percent increase over the base at the end of the third quarter in 2014, as calculated including domain names on hold for both periods. |
• | In the third quarter, Verisign processed 9.2 million new domain name registrations for .com and .net, as compared to 8.7 million for the same quarter in 2014. |
• | The final .com and .net renewal rate for the second quarter of 2015 was 72.7 percent compared with 71.8 percent for the same quarter in 2014. Renewal rates are not fully measurable until 45 days after the end of the quarter. |
September 30, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 177,871 | $ | 191,608 | |||
Marketable securities | 1,713,087 | 1,233,076 | |||||
Accounts receivable, net | 14,714 | 13,448 | |||||
Other current assets | 35,468 | 41,905 | |||||
Total current assets | 1,941,140 | 1,480,037 | |||||
Property and equipment, net | 297,299 | 319,028 | |||||
Goodwill | 52,527 | 52,527 | |||||
Long-term deferred tax assets | 262,243 | 266,954 | |||||
Other long-term assets | 24,096 | 15,918 | |||||
Total long-term assets | 636,165 | 654,427 | |||||
Total assets | $ | 2,577,305 | $ | 2,134,464 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 180,106 | $ | 190,278 | |||
Deferred revenues | 660,417 | 621,307 | |||||
Subordinated convertible debentures, including contingent interest derivative | 626,590 | 620,620 | |||||
Deferred tax liabilities | 512,779 | 477,781 | |||||
Total current liabilities | 1,979,892 | 1,909,986 | |||||
Long-term deferred revenues | 279,724 | 269,047 | |||||
Senior notes | 1,234,890 | 740,175 | |||||
Other long-term tax liabilities | 114,209 | 98,722 | |||||
Total long-term liabilities | 1,628,823 | 1,107,944 | |||||
Total liabilities | 3,608,715 | 3,017,930 | |||||
Commitments and contingencies | |||||||
Stockholders’ deficit: | |||||||
Preferred stock—par value $.001 per share; Authorized shares: 5,000; Issued and outstanding shares: none | — | — | |||||
Common stock—par value $.001 per share; Authorized shares: 1,000,000; Issued shares:322,968 at September 30, 2015 and 321,699 at December 31, 2014; Outstanding shares:111,891 at September 30, 2015 and 118,452 at December 31, 2014 | 323 | 322 | |||||
Additional paid-in capital | 17,697,985 | 18,120,045 | |||||
Accumulated deficit | (18,727,129 | ) | (19,000,835 | ) | |||
Accumulated other comprehensive loss | (2,589 | ) | (2,998 | ) | |||
Total stockholders’ deficit | (1,031,410 | ) | (883,466 | ) | |||
Total liabilities and stockholders’ deficit | $ | 2,577,305 | $ | 2,134,464 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | $ | 265,780 | $ | 255,022 | $ | 786,741 | $ | 754,200 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenues | 47,218 | 46,933 | 143,792 | 140,948 | |||||||||||
Sales and marketing | 20,966 | 24,304 | 67,677 | 68,244 | |||||||||||
Research and development | 15,019 | 16,320 | 48,518 | 50,453 | |||||||||||
General and administrative | 28,115 | 27,965 | 79,090 | 72,349 | |||||||||||
Total costs and expenses | 111,318 | 115,522 | 339,077 | 331,994 | |||||||||||
Operating income | 154,462 | 139,500 | 447,664 | 422,206 | |||||||||||
Interest expense | (28,544 | ) | (21,533 | ) | (79,064 | ) | (64,408 | ) | |||||||
Non-operating (loss) income, net | (3,975 | ) | (6,473 | ) | (6,329 | ) | 5,037 | ||||||||
Income before income taxes | 121,943 | 111,494 | 362,271 | 362,835 | |||||||||||
Income tax expense | (29,486 | ) | (16,305 | ) | (88,565 | ) | (73,047 | ) | |||||||
Net income | 92,457 | 95,189 | 273,706 | 289,788 | |||||||||||
Realized foreign currency translation adjustments, included in net income | — | — | (291 | ) | — | ||||||||||
Unrealized gain on investments | 565 | 59 | 799 | 34 | |||||||||||
Realized (gain) loss on investments, included in net income | (26 | ) | (1 | ) | (99 | ) | 2 | ||||||||
Other comprehensive income | 539 | 58 | 409 | 36 | |||||||||||
Comprehensive income | $ | 92,996 | $ | 95,247 | $ | 274,115 | $ | 289,824 | |||||||
Income per share: | |||||||||||||||
Basic | $ | 0.82 | $ | 0.77 | $ | 2.38 | $ | 2.25 | |||||||
Diluted | $ | 0.70 | $ | 0.69 | $ | 2.06 | $ | 2.03 | |||||||
Shares used to compute net income per share: | |||||||||||||||
Basic | 112,955 | 124,109 | 115,235 | 128,924 | |||||||||||
Diluted | 131,721 | 138,112 | 132,925 | 142,584 |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 273,706 | $ | 289,788 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of property and equipment | 46,554 | 47,924 | |||||
Stock-based compensation | 34,351 | 34,281 | |||||
Excess tax benefit associated with stock-based compensation | (19,420 | ) | (8,566 | ) | |||
Unrealized loss (gain) on contingent interest derivative on Subordinated Convertible Debentures | 9,058 | (3,953 | ) | ||||
Payment of Contingent interest | (10,759 | ) | — | ||||
Other, net | 8,161 | 7,470 | |||||
Changes in operating assets and liabilities | |||||||
Accounts receivable | (1,319 | ) | (2,550 | ) | |||
Prepaid expenses and other assets | 2,967 | 31,349 | |||||
Accounts payable and accrued liabilities | 14,658 | (2,540 | ) | ||||
Deferred revenues | 49,787 | 37,237 | |||||
Net deferred income taxes and other long-term tax liabilities | 55,203 | 36 | |||||
Net cash provided by operating activities | 462,947 | 430,476 | |||||
Cash flows from investing activities: | |||||||
Proceeds from maturities and sales of marketable securities | 1,965,767 | 2,425,259 | |||||
Purchases of marketable securities | (2,443,865 | ) | (2,281,523 | ) | |||
Purchases of property and equipment | (28,659 | ) | (30,058 | ) | |||
Other investing activities | (3,666 | ) | 351 | ||||
Net cash (used in) provided by investing activities | (510,423 | ) | 114,029 | ||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock from option exercises and employee stock purchase plans | 14,690 | 15,816 | |||||
Repurchases of common stock | (492,575 | ) | (673,540 | ) | |||
Proceeds from borrowings, net of issuance costs | 492,237 | — | |||||
Excess tax benefit associated with stock-based compensation | 19,420 | 8,566 | |||||
Net cash provided by (used in) financing activities | 33,772 | (649,158 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (33 | ) | (621 | ) | |||
Net decrease in cash and cash equivalents | (13,737 | ) | (105,274 | ) | |||
Cash and cash equivalents at beginning of period | 191,608 | 339,223 | |||||
Cash and cash equivalents at end of period | $ | 177,871 | $ | 233,949 | |||
Supplemental cash flow disclosures: | |||||||
Cash paid for interest, net of capitalized interest | $ | 68,678 | $ | 57,767 | |||
Cash paid for income taxes, net of refunds received | $ | 13,289 | $ | 34,937 |
Three Months Ended September 30, | |||||||||||||||
2015 | 2014 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 154,462 | $ | 92,457 | $ | 139,500 | $ | 95,189 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 12,222 | 12,222 | 14,916 | 14,916 | |||||||||||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | 4,747 | 6,562 | |||||||||||||
Non-cash interest expense | 2,994 | 2,588 | |||||||||||||
Contingent interest payable on subordinated convertible debentures | (3,020 | ) | (1,306 | ) | |||||||||||
Tax adjustment | (6,625 | ) | (21,285 | ) | |||||||||||
Non-GAAP | $ | 166,684 | $ | 102,775 | $ | 154,416 | $ | 96,664 | |||||||
Revenues | $ | 265,780 | $ | 255,022 | |||||||||||
Non-GAAP operating margin | 62.7 | % | 60.6 | % | |||||||||||
Diluted shares | 131,721 | 138,112 | |||||||||||||
Per diluted share, non-GAAP | $ | 0.78 | $ | 0.70 |
Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 447,664 | $ | 273,706 | $ | 422,206 | $ | 289,788 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 34,351 | 34,351 | 34,281 | 34,281 | |||||||||||
Unrealized loss (gain) on contingent interest derivative on the subordinated convertible debentures | 9,058 | (3,953 | ) | ||||||||||||
Non-cash interest expense | 8,656 | 7,581 | |||||||||||||
Contingent interest payable on subordinated convertible debentures | (8,477 | ) | (1,306 | ) | |||||||||||
Tax adjustment | (16,959 | ) | (38,796 | ) | |||||||||||
Non-GAAP | $ | 482,015 | $ | 300,335 | $ | 456,487 | $ | 287,595 | |||||||
Revenues | $ | 786,741 | $ | 754,200 | |||||||||||
Non-GAAP operating margin | 61.3 | % | 60.5 | % | |||||||||||
Diluted shares | 132,925 | 142,584 | |||||||||||||
Per diluted share, non-GAAP | $ | 2.26 | $ | 2.02 |
Three Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Net Income | $ | 92,457 | $ | 95,189 | |||
Interest expense | 28,544 | 21,533 | |||||
Income tax expense | 29,486 | 16,305 | |||||
Depreciation and amortization | 14,934 | 15,809 | |||||
Stock-based compensation | 12,222 | 14,916 | |||||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | 4,747 | 6,562 | |||||
Unrealized (gain) loss on hedging agreements | (479 | ) | 128 | ||||
Non-GAAP Adjusted EBITDA | $ | 181,911 | $ | 170,442 |
Four Quarters Ended September 30, 2015 | |||
Net income | 339,179 | ||
Interest expense | 100,651 | ||
Income tax expense | 143,569 | ||
Depreciation and amortization | 62,322 | ||
Stock-based compensation | 44,047 | ||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | 10,761 | ||
Unrealized gain on hedging agreements | (256 | ) | |
Non-GAAP Adjusted EBITDA | $ | 700,273 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cost of revenues | $ | 1,722 | $ | 1,618 | $ | 5,202 | $ | 4,748 | |||||||
Sales and marketing | 1,683 | 2,234 | 4,800 | 5,902 | |||||||||||
Research and development | 1,478 | 1,678 | 4,890 | 5,189 | |||||||||||
General and administrative | 7,339 | 9,386 | 19,459 | 18,442 | |||||||||||
Total stock-based compensation expense | $ | 12,222 | $ | 14,916 | $ | 34,351 | $ | 34,281 |