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 |
VERISIGN, INC. | ||||
Date: July 26, 2018 | By: | /s/ Thomas C. Indelicarto | ||
Thomas C. Indelicarto | ||||
Executive Vice President, General Counsel and Secretary |
Exhibit No. | Description | |
Exhibit 99.1 |
• | On May 1, 2018, Verisign settled the conversion/redemption of all of its outstanding subordinated convertible debentures by payment of $1.25 billion in cash and the issuance of 26.1 million shares of Verisign’s common stock. |
• | Verisign ended the second quarter with cash, cash equivalents and marketable securities of $1.17 billion, a decrease of $1.24 billion from year-end 2017. |
• | Cash flow from operating activities was $202 million for the second quarter of 2018, compared with $181 million for the same quarter in 2017. |
• | Deferred revenues on June 30, 2018, totaled $1.03 billion, an increase of $27 million from year-end 2017. |
• | During the second quarter, Verisign repurchased 1.0 million shares of its common stock for $125 million. At June 30, 2018, $813 million remained available and authorized under the current share repurchase program which has no expiration. |
• | Verisign ended the second quarter with 149.7 million .com and .net domain name registrations in the domain name base, a 3.7 percent increase from the end of the second quarter of 2017, and a net increase of 1.39 million during the second quarter of 2018. |
• | In the second quarter, Verisign processed 9.6 million new domain name registrations for .com and .net, compared to 9.2 million for the same quarter in 2017. |
• | The final .com and .net renewal rate for the first quarter of 2018 was 75.3 percent compared with 72.5 percent for the same quarter in 2017. Renewal rates are not fully measurable until 45 days after the end of the quarter. |
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 256,396 | $ | 465,851 | |||
Marketable securities | 914,879 | 1,948,900 | |||||
Other current assets | 57,640 | 31,402 | |||||
Total current assets | 1,228,915 | 2,446,153 | |||||
Property and equipment, net | 256,064 | 263,513 | |||||
Goodwill | 52,527 | 52,527 | |||||
Deferred tax assets | 201,900 | 15,392 | |||||
Deposits to acquire intangible assets | 145,000 | 145,000 | |||||
Other long-term assets | 27,179 | 18,603 | |||||
Total long-term assets | 682,670 | 495,035 | |||||
Total assets | $ | 1,911,585 | $ | 2,941,188 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 183,521 | $ | 219,603 | |||
Deferred revenues | 737,706 | 713,309 | |||||
Subordinated convertible debentures | — | 627,616 | |||||
Total current liabilities | 921,227 | 1,560,528 | |||||
Long-term deferred revenues | 288,996 | 286,097 | |||||
Senior notes | 1,783,788 | 1,782,529 | |||||
Deferred tax liabilities | — | 444,108 | |||||
Other long-term tax liabilities | 298,563 | 128,197 | |||||
Total long-term liabilities | 2,371,347 | 2,640,931 | |||||
Total liabilities | 3,292,574 | 4,201,459 | |||||
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: 352,120 at June 30, 2018 and 325,218 at December 31, 2017; Outstanding shares: 122,189 at June 30, 2018 and 97,591 at December 31, 2017 | 352 | 325 | |||||
Additional paid-in capital | 16,031,004 | 16,437,135 | |||||
Accumulated deficit | (17,409,664 | ) | (17,694,790 | ) | |||
Accumulated other comprehensive loss | (2,681 | ) | (2,941 | ) | |||
Total stockholders’ deficit | (1,380,989 | ) | (1,260,271 | ) | |||
Total liabilities and stockholders’ deficit | $ | 1,911,585 | $ | 2,941,188 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | $ | 302,452 | $ | 288,552 | $ | 601,740 | $ | 577,166 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenues | 47,365 | 47,644 | 95,517 | 98,313 | |||||||||||
Sales and marketing | 16,569 | 19,474 | 33,844 | 37,796 | |||||||||||
Research and development | 13,755 | 13,510 | 29,130 | 26,854 | |||||||||||
General and administrative | 31,753 | 32,964 | 64,820 | 63,972 | |||||||||||
Total costs and expenses | 109,442 | 113,592 | 223,311 | 226,935 | |||||||||||
Operating income | 193,010 | 174,960 | 378,429 | 350,231 | |||||||||||
Interest expense | (28,792 | ) | (29,090 | ) | (69,580 | ) | (58,113 | ) | |||||||
Non-operating income, net | 660 | 14,002 | 8,464 | 15,303 | |||||||||||
Income before income taxes | 164,878 | 159,872 | 317,313 | 307,421 | |||||||||||
Income tax expense | (36,527 | ) | (36,772 | ) | (54,699 | ) | (67,909 | ) | |||||||
Net income | 128,351 | 123,100 | 262,614 | 239,512 | |||||||||||
Other comprehensive income | 17 | 217 | 260 | 563 | |||||||||||
Comprehensive income | $ | 128,368 | $ | 123,317 | $ | 262,874 | $ | 240,075 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.13 | $ | 1.22 | $ | 2.49 | $ | 2.35 | |||||||
Diluted | $ | 1.04 | $ | 0.99 | $ | 2.13 | $ | 1.93 | |||||||
Shares used to compute earnings per share | |||||||||||||||
Basic | 113,936 | 101,060 | 105,639 | 101,759 | |||||||||||
Diluted | 123,200 | 123,980 | 123,399 | 124,218 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 262,614 | $ | 239,512 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of property and equipment | 24,195 | 25,172 | |||||
Stock-based compensation | 26,276 | 25,938 | |||||
Loss on debt extinguishment | 6,554 | — | |||||
Gain on sale of business | — | (10,607 | ) | ||||
Amortization of debt discount and issuance costs | 5,719 | 7,048 | |||||
Amortization of discount on investments in debt securities | (7,686 | ) | (4,587 | ) | |||
Other, net | 1,179 | 261 | |||||
Changes in operating assets and liabilities: | |||||||
Other assets | (7,605 | ) | 8,310 | ||||
Accounts payable and accrued liabilities | (20,892 | ) | (38,285 | ) | |||
Deferred revenues | 27,296 | 34,246 | |||||
Net deferred income taxes and other long-term tax liabilities | (25,844 | ) | 41,889 | ||||
Net cash provided by operating activities | 291,806 | 328,897 | |||||
Cash flows from investing activities: | |||||||
Proceeds from maturities and sales of marketable securities | 2,634,376 | 2,356,948 | |||||
Purchases of marketable securities | (1,592,403 | ) | (2,351,738 | ) | |||
Purchases of property and equipment | (18,669 | ) | (18,974 | ) | |||
Other investing activities | (160 | ) | 11,748 | ||||
Net cash provided by (used in) investing activities | 1,023,144 | (2,016 | ) | ||||
Cash flows from financing activities: | |||||||
Repayment of principal on subordinated convertible debentures | (1,250,009 | ) | — | ||||
Proceeds from employee stock purchase plan | 7,811 | 7,997 | |||||
Repurchases of common stock | (281,597 | ) | (325,759 | ) | |||
Net cash used in financing activities | (1,523,795 | ) | (317,762 | ) | |||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (590 | ) | 1,002 | ||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (209,435 | ) | 10,121 | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 475,139 | 241,581 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 265,704 | $ | 251,702 | |||
Supplemental cash flow disclosures: | |||||||
Cash paid for interest | $ | 73,971 | $ | 58,797 | |||
Cash paid for income taxes, net of refunds received | $ | 85,597 | $ | 23,662 |
Three Months Ended June 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 193,010 | $ | 128,351 | $ | 174,960 | $ | 123,100 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 13,298 | 13,298 | 13,375 | 13,375 | |||||||||||
Non-cash interest expense | 1,801 | 3,554 | |||||||||||||
Contingent interest payable on subordinated convertible debentures | — | (3,757 | ) | ||||||||||||
Loss on debt extinguishment | 6,554 | — | |||||||||||||
Tax adjustment | (4,510 | ) | (6,489 | ) | |||||||||||
Non-GAAP | $ | 206,308 | $ | 145,494 | $ | 188,335 | $ | 129,783 | |||||||
Revenues | $ | 302,452 | $ | 288,552 | |||||||||||
Non-GAAP operating margin | 68.2 | % | 65.3 | % | |||||||||||
Diluted shares | 123,200 | 123,980 | |||||||||||||
Diluted EPS, non-GAAP | $ | 1.18 | $ | 1.05 |
Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 378,429 | $ | 262,614 | $ | 350,231 | $ | 239,512 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 26,276 | 26,276 | 25,938 | 25,938 | |||||||||||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | — | 893 | |||||||||||||
Non-cash interest expense | 5,719 | 7,048 | |||||||||||||
Contingent interest payable on subordinated convertible debentures | — | (7,566 | ) | ||||||||||||
Loss on debt extinguishment | 6,554 | — | |||||||||||||
Tax adjustment | (23,591 | ) | (17,131 | ) | |||||||||||
Non-GAAP | $ | 404,705 | $ | 277,572 | $ | 376,169 | $ | 248,694 | |||||||
Revenues | $ | 601,740 | $ | 577,166 | |||||||||||
Non-GAAP operating margin | 67.3 | % | 65.2 | % | |||||||||||
Diluted shares | 123,399 | 124,218 | |||||||||||||
Diluted EPS, non-GAAP | $ | 2.25 | $ | 2.00 |
Three Months Ended June 30, | Four Quarters Ended June 30, | ||||||||||
2018 | 2017 | 2018 | |||||||||
Net Income | $ | 128,351 | $ | 123,100 | $ | 480,350 | |||||
Interest expense | 28,792 | 29,090 | 147,803 | ||||||||
Income tax expense | 36,527 | 36,772 | 128,554 | ||||||||
Depreciation and amortization | 12,077 | 12,070 | 48,900 | ||||||||
Stock-based compensation | 13,298 | 13,375 | 53,245 | ||||||||
Unrealized gain on hedging agreements | (227 | ) | (289 | ) | (293 | ) | |||||
Gain (loss) on sale of business | — | (10,607 | ) | 186 | |||||||
Loss on debt extinguishment | 6,554 | — | 6,554 | ||||||||
Non-GAAP Adjusted EBITDA | $ | 225,372 | $ | 203,511 | $ | 865,299 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenues | $ | 1,818 | $ | 1,802 | $ | 3,428 | $ | 3,537 | |||||||
Sales and marketing | 1,494 | 1,457 | 2,942 | 2,886 | |||||||||||
Research and development | 1,688 | 1,482 | 3,409 | 2,978 | |||||||||||
General and administrative | 8,298 | 8,634 | 16,497 | 16,537 | |||||||||||
Total stock-based compensation expense | $ | 13,298 | $ | 13,375 | $ | 26,276 | $ | 25,938 |
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