Debt and Interest Expense

Subordinated Convertible Debentures

In August 2007, Verisign issued $1.25 billion principal amount of 3.25% subordinated convertible debentures due August 15, 2037, in a private offering. The Subordinated Convertible Debentures are initially convertible, subject to certain conditions, into shares of the Company’s common stock at a conversion rate of 29.0968 shares of common stock per $1,000 principal amount of Subordinated Convertible Debentures, representing an initial effective conversion price of approximately $34.37 per share of common stock.

Holders of the debentures may convert their Subordinated Convertible Debentures at the applicable conversion rate, in multiples of $1,000 principal amount, only under the following circumstances:

•

during any fiscal quarter beginning after December 31, 2007, if the last reported sale price of the Company’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price in effect on the last trading day of such preceding fiscal quarter (the “Conversion Price Threshold Trigger”);


•	during the five business-day period after any 10 consecutive trading-day period in which the trading price per $1,000 principal amount of Subordinated Convertible Debentures for each day of that 10 consecutive trading-day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such day;


•	if the Company calls any or all of the Subordinated Convertible Debentures for redemption pursuant to the terms of the Indenture, at any time prior to the close of business on the trading day immediately preceding the redemption date;


•	upon the occurrence of any of several specified corporate transactions as specified in the Indenture governing the Subordinated Convertible Debentures; or


•	at any time on or after May 15, 2037, and prior to the maturity date.

The Company’s common stock price exceeded the Conversion Price Threshold Trigger in the first quarter of 2013. Accordingly, the Subordinated Convertible Debentures are convertible at the option of each holder through June 30, 2013. Further, in the event of conversion, the Company intends, and has the ability, to settle the principal amount of the Subordinated Convertible Debentures in cash, and therefore, has classified the debt component of the Subordinated Convertible Debentures and the embedded contingent interest derivative as current liabilities as of March 31, 2013. On a quarterly basis, the Company must make a determination of whether or not the Subordinated Convertible Debentures are convertible, and accordingly, assess the classification of the related liabilities and assets as long-term or current.

2011 Credit Facility

In April 2013, the Company repaid the $100.0 million of borrowings that were outstanding under the 2011 Credit Facility as of March 31, 2013 and also paid interest accrued through the repayment date, using proceeds from the issuance of the Company’s 4.625% Senior Notes due 2023 as described in Note 12, “Subsequent Events.” Accordingly, the $100.0 million balance outstanding as of March 31, 2013 remained classified in long-term liabilities as it was repaid using the proceeds from new long-term financing.

The following table presents the components of the Company’s interest expense:



	Three Months Ended March 31,
	2013			2012
	(In thousands)
Contractual interest on the Subordinated Convertible Debentures	$	10,156		$	10,156
Amortization of debt discount on the Subordinated Convertible Debentures	2,101			1,935
Interest capitalized to Property and equipment, net	(268		)	(388		)
Credit facility and other interest expense	607			637
Total interest expense	$	12,596		$	12,340