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 April 24, 2014. |
VERISIGN, INC. | ||||
Date: April 24, 2014 | By: | /s/ Richard H. Goshorn | ||
Richard H. Goshorn | ||||
Senior Vice President, General Counsel and Secretary |
Exhibit No. | Description | |
Exhibit 99.1 | Text of press release of VeriSign, Inc. issued on April 24, 2014. |
• | Verisign ended the first quarter with cash, cash equivalents and marketable securities of $1.7 billion, flat as compared with year-end 2013. |
• | Cash flow from operations was $142 million for the first quarter compared with $151 million for the same quarter in 2013. |
• | Deferred revenues on March 31, 2014, totaled $886 million, an increase of $30 million from year-end 2013. |
• | Capital expenditures were $11 million in the first quarter of 2014. |
• | During the first quarter, Verisign repurchased 2.4 million shares of its common stock for $132 million. At March 31, 2014, $868 million remained available and authorized under the current share repurchase program. |
• | Verisign expects to complete in the second quarter of 2014 the intended repatriation of approximately $700 million to $800 million of cash held by foreign subsidiaries as described in the fourth quarter 2013 earnings release. |
• | For purposes of calculating diluted EPS, the first quarter diluted share count included 14.3 million shares related to subordinated convertible debentures, compared with 7.9 million shares in the same quarter in 2013. These represent diluted shares and not shares that have been issued. |
• | Verisign Registry Services added 1.28 million net new names during the first quarter, ending with 128.5 million active domain names in the zone for .com and .net, which represents a 4 percent increase over the zone at the end of the first quarter in 2013. |
• | In the first quarter, Verisign processed 8.6 million new domain name registrations for .com and .net as compared to 8.8 million for the same period in 2013. |
• | The final .com and .net renewal rate for the fourth quarter of 2013 was 72.2 percent compared with 72.9 percent for the same quarter in 2012. Renewal rates are not fully measurable until 45 days after the end of the quarter. |
March 31, 2014 | December 31, 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 267,053 | $ | 339,223 | |||
Marketable securities | 1,450,155 | 1,384,062 | |||||
Accounts receivable, net | 15,437 | 13,631 | |||||
Income tax receivables and other current assets | 57,553 | 66,283 | |||||
Total current assets | 1,790,198 | 1,803,199 | |||||
Property and equipment, net | 329,711 | 339,653 | |||||
Goodwill | 52,527 | 52,527 | |||||
Long-term deferred tax assets | 409,616 | 437,643 | |||||
Other long-term assets | 27,297 | 27,745 | |||||
Total long-term assets | 819,151 | 857,568 | |||||
Total assets | $ | 2,609,349 | $ | 2,660,767 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 108,994 | $ | 149,276 | |||
Deferred revenues | 620,593 | 595,221 | |||||
Subordinated convertible debentures, including contingent interest derivative | 621,061 | 624,056 | |||||
Deferred tax liabilities | 693,149 | 660,633 | |||||
Total current liabilities | 2,043,797 | 2,029,186 | |||||
Long-term deferred revenues | 265,627 | 260,615 | |||||
Senior notes | 750,000 | 750,000 | |||||
Other long-term tax liabilities | 7,544 | 44,524 | |||||
Total long-term liabilities | 1,023,171 | 1,055,139 | |||||
Total liabilities | 3,066,968 | 3,084,325 | |||||
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: 321,301 at March 31, 2014 and 320,358 at December 31, 2013; Outstanding shares: 131,994 at March 31, 2014 and 133,724 at December 31, 2013 | 321 | 320 | |||||
Additional paid-in capital | 18,806,804 | 18,935,302 | |||||
Accumulated deficit | (19,261,672 | ) | (19,356,095 | ) | |||
Accumulated other comprehensive loss | (3,072 | ) | (3,085 | ) | |||
Total stockholders’ deficit | (457,619 | ) | (423,558 | ) | |||
Total liabilities and stockholders’ deficit | $ | 2,609,349 | $ | 2,660,767 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Revenues | $ | 248,796 | $ | 236,447 | |||
Costs and expenses: | |||||||
Cost of revenues | 48,026 | 47,254 | |||||
Sales and marketing | 20,289 | 18,104 | |||||
Research and development | 18,439 | 18,176 | |||||
General and administrative | 22,457 | 19,649 | |||||
Total costs and expenses | 109,211 | 103,183 | |||||
Operating income | 139,585 | 133,264 | |||||
Interest expense | (21,385 | ) | (12,596 | ) | |||
Non-operating income (loss), net | 6,516 | (5,777 | ) | ||||
Income before income taxes | 124,716 | 114,891 | |||||
Income tax expense | (30,293 | ) | (30,378 | ) | |||
Net income | 94,423 | 84,513 | |||||
Unrealized gain (loss) on investments, net of tax | 8 | (267 | ) | ||||
Realized loss (gain) on investments, net of tax, included in net income | 5 | (20 | ) | ||||
Other comprehensive income (loss) | 13 | (287 | ) | ||||
Comprehensive income | $ | 94,436 | $ | 84,226 | |||
Income per share: | |||||||
Basic | $ | 0.71 | $ | 0.55 | |||
Diluted | $ | 0.64 | $ | 0.52 | |||
Shares used to compute net income per share | |||||||
Basic | 133,417 | 152,543 | |||||
Diluted | 148,600 | 161,346 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 94,423 | $ | 84,513 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of property and equipment and amortization of other intangible assets | 16,008 | 15,118 | |||||
Stock-based compensation | 9,993 | 7,594 | |||||
Excess tax benefit associated with stock-based compensation | — | (11,808 | ) | ||||
Deferred income taxes | 22,179 | 4,787 | |||||
Unrealized (gain) loss on contingent interest derivative on Subordinated Convertible Debentures | (5,269 | ) | 6,433 | ||||
Other, net | 2,371 | 4,309 | |||||
Changes in operating assets and liabilities | |||||||
Accounts receivable | (1,806 | ) | (2,280 | ) | |||
Prepaid expenses and other assets | 7,925 | 3,210 | |||||
Accounts payable and accrued liabilities | (34,579 | ) | 4,549 | ||||
Deferred revenues | 30,384 | 34,212 | |||||
Net cash provided by operating activities | 141,629 | 150,637 | |||||
Cash flows from investing activities: | |||||||
Proceeds from maturities and sales of marketable securities | 718,177 | 706,244 | |||||
Purchases of marketable securities | (784,090 | ) | (764,268 | ) | |||
Purchases of property and equipment | (11,262 | ) | (17,115 | ) | |||
Other investing activities | 34 | (3,426 | ) | ||||
Net cash used in investing activities | (77,141 | ) | (78,565 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock from option exercises and employee stock purchase plans | 8,668 | 8,733 | |||||
Repurchases of common stock | (145,556 | ) | (142,892 | ) | |||
Excess tax benefit associated with stock-based compensation | — | 11,808 | |||||
Net cash used in financing activities | (136,888 | ) | (122,351 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 230 | (1,837 | ) | ||||
Net decrease in cash and cash equivalents | (72,170 | ) | (52,116 | ) | |||
Cash and cash equivalents at beginning of period | 339,223 | 130,736 | |||||
Cash and cash equivalents at end of period | $ | 267,053 | $ | 78,620 | |||
Supplemental cash flow disclosures: | |||||||
Cash paid for interest, net of capitalized interest | $ | 20,209 | $ | 20,393 | |||
Cash paid for income taxes, net of refunds received | $ | 7,651 | $ | 729 |
Three Months Ended March 31, | |||||||||||||||
2014 | 2013 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 139,585 | $ | 94,423 | $ | 133,264 | $ | 84,513 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 9,993 | 9,993 | 7,594 | 7,594 | |||||||||||
Unrealized (gain) loss on contingent interest derivative on the subordinated convertible debentures | — | (5,269 | ) | — | 6,433 | ||||||||||
Non-cash interest expense | — | 2,443 | — | 1,914 | |||||||||||
Tax adjustment | — | (6,634 | ) | — | (6,255 | ) | |||||||||
Non-GAAP | $ | 149,578 | $ | 94,956 | $ | 140,858 | $ | 94,199 | |||||||
Revenues | $ | 248,796 | $ | 236,447 | |||||||||||
Non-GAAP operating margin | 60.1 | % | 59.6 | % | |||||||||||
Diluted shares | 148,600 | 161,346 | |||||||||||||
Per diluted share, non-GAAP | $ | 0.64 | $ | 0.58 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Cost of revenues | $ | 1,598 | $ | 1,540 | |||
Sales and marketing | 1,848 | 1,487 | |||||
Research and development | 1,872 | 1,895 | |||||
General and administrative | 4,675 | 2,672 | |||||
Total stock-based compensation expense | $ | 9,993 | $ | 7,594 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net Income | $ | 94,423 | $ | 84,513 | |||
Interest expense | 21,385 | 12,596 | |||||
Income tax expense | 30,293 | 30,378 | |||||
Depreciation and amortization | 16,008 | 15,118 | |||||
Stock-based compensation | 9,993 | 7,594 | |||||
Unrealized (gain) loss on contingent interest derivative on the subordinated convertible debentures | (5,269 | ) | 6,433 | ||||
Unrealized loss (gain) on hedging agreements | 135 | (894 | ) | ||||
Adjusted EBITDA | $ | 166,968 | $ | 155,738 |
Four Quarters Ended March 31, 2014 | |||
Net Income | $ | 554,360 | |
Interest expense | 83,551 | ||
Income tax benefit | (87,765 | ) | |
Depreciation and amortization | 61,545 | ||
Stock-based compensation | 39,048 | ||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | 6,099 | ||
Unrealized loss on hedging agreements | 327 | ||
Adjusted EBITDA | $ | 657,165 |
• | Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; |
• | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; |
• | non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating its ongoing operating performance for a particular period; and |
• | other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |