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 8.01. | Other Events. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit Number | Description | |
99.1 | Text of press release of VeriSign, Inc. issued on February 9, 2017. |
VERISIGN, INC. | ||||
Date: February 9, 2017 | 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 February 9, 2017. |
• | Verisign ended 2016 with cash, cash equivalents and marketable securities of $1.8 billion, a decrease of $118 million from year-end 2015. |
• | Cash flow from operations was $195 million for the fourth quarter of 2016 and $668 million for the full year 2016 compared with $189 million for the same quarter in 2015 and $651 million for the full year 2015. |
• | Deferred revenues on Dec. 31, 2016, totaled $976 million, an increase of $14 million from year-end 2015. |
• | During the fourth quarter, Verisign repurchased 2.0 million shares of its common stock for $160 million. During the full year 2016, Verisign repurchased 7.8 million shares of its common stock for $637 million. |
• | Effective Feb. 9, 2017, the Board of Directors approved an additional authorization for share repurchases of approximately $641 million of common stock, which brings the total amount to $1 billion authorized and available under Verisign’s share repurchase program, which has no expiration. |
• | For purposes of calculating diluted EPS, the fourth quarter diluted share count included 20.6 million shares related to subordinated convertible debentures, compared with 21.4 million shares for the same quarter in 2015. These represent diluted shares and not shares that have been issued. |
• | Verisign ended the fourth quarter with 142.2 million .com and .net domain name registrations in the domain name base, a 1.7 percent increase from the end of the fourth quarter of 2015, and a net decrease of 1.9 million during the fourth quarter of 2016. |
• | In the fourth quarter, Verisign processed 8.8 million new domain name registrations for .com and .net, as compared to 12.2 million for the same quarter in 2015. |
• | The final .com and .net renewal rate for the third quarter of 2016 was 73.0 percent compared with 71.9 percent for the same quarter in 2015. Renewal rates are not fully measurable until 45 days after the end of the quarter. |
December 31, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 231,945 | $ | 228,659 | |||
Marketable securities | 1,565,962 | 1,686,771 | |||||
Accounts receivable, net | 13,051 | 12,638 | |||||
Other current assets | 31,384 | 39,856 | |||||
Total current assets | 1,842,342 | 1,967,924 | |||||
Property and equipment, net | 266,125 | 295,570 | |||||
Goodwill | 52,527 | 52,527 | |||||
Deferred tax assets | 9,385 | 17,361 | |||||
Deposits to acquire intangible assets | 145,000 | 2,000 | |||||
Other long-term assets | 19,193 | 22,355 | |||||
Total long-term assets | 492,230 | 389,813 | |||||
Total assets | $ | 2,334,572 | $ | 2,357,737 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 203,920 | $ | 188,171 | |||
Deferred revenues | 688,265 | 680,483 | |||||
Subordinated convertible debentures, including contingent interest derivative | 629,764 | 634,326 | |||||
Total current liabilities | 1,521,949 | 1,502,980 | |||||
Long-term deferred revenues | 287,424 | 280,859 | |||||
Senior notes | 1,237,189 | 1,235,354 | |||||
Deferred tax liabilities | 371,433 | 294,194 | |||||
Other long-term tax liabilities | 117,172 | 114,797 | |||||
Total long-term liabilities | 2,013,218 | 1,925,204 | |||||
Total liabilities | 3,535,167 | 3,428,184 | |||||
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: 324,118 at December 31, 2016 and 322,990 at December 31, 2015; Outstanding shares: 103,091 at December 31, 2016 and 110,072 at December 31, 2015 | 324 | 323 | |||||
Additional paid-in capital | 16,987,488 | 17,558,822 | |||||
Accumulated deficit | (18,184,954 | ) | (18,625,599 | ) | |||
Accumulated other comprehensive loss | (3,453 | ) | (3,993 | ) | |||
Total stockholders’ deficit | (1,200,595 | ) | (1,070,447 | ) | |||
Total liabilities and stockholders’ deficit | $ | 2,334,572 | $ | 2,357,737 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 286,271 | $ | 272,625 | $ | 1,142,167 | $ | 1,059,366 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenues | 49,100 | 48,996 | 198,242 | 192,788 | |||||||||||
Sales and marketing | 21,819 | 22,507 | 80,250 | 90,184 | |||||||||||
Research and development | 13,745 | 15,200 | 59,100 | 63,718 | |||||||||||
General and administrative | 32,845 | 27,640 | 118,003 | 106,730 | |||||||||||
Total costs and expenses | 117,509 | 114,343 | 455,595 | 453,420 | |||||||||||
Operating income | 168,762 | 158,282 | 686,572 | 605,946 | |||||||||||
Interest expense | (28,982 | ) | (28,567 | ) | (115,564 | ) | (107,631 | ) | |||||||
Non-operating income (loss), net | 2,073 | (4,336 | ) | 10,165 | (10,665 | ) | |||||||||
Income before income taxes | 141,853 | 125,379 | 581,173 | 487,650 | |||||||||||
Income tax expense | (36,301 | ) | (23,849 | ) | (140,528 | ) | (112,414 | ) | |||||||
Net income | 105,552 | 101,530 | 440,645 | 375,236 | |||||||||||
Realized foreign currency translation adjustments, included in net income | — | — | 85 | (291 | ) | ||||||||||
Unrealized (loss) gain on investments | (768 | ) | (1,318 | ) | 533 | (519 | ) | ||||||||
Realized gain on investments, included in net income | — | (86 | ) | (78 | ) | (185 | ) | ||||||||
Other comprehensive (loss) income | (768 | ) | (1,404 | ) | 540 | (995 | ) | ||||||||
Comprehensive income | $ | 104,784 | $ | 100,126 | $ | 441,185 | $ | 374,241 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.01 | $ | 0.92 | $ | 4.12 | $ | 3.29 | |||||||
Diluted | $ | 0.84 | $ | 0.76 | $ | 3.42 | $ | 2.82 | |||||||
Shares used to compute earnings per share | |||||||||||||||
Basic | 104,080 | 110,952 | 107,001 | 114,155 | |||||||||||
Diluted | 125,454 | 133,385 | 128,833 | 133,031 | |||||||||||
Year Ended December 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 440,645 | $ | 375,236 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of property and equipment | 58,167 | 61,491 | |||||
Stock-based compensation | 50,044 | 46,075 | |||||
Excess tax benefit associated with stock-based compensation | (25,058 | ) | (18,464 | ) | |||
Unrealized (gain) loss on contingent interest derivative on Subordinated Convertible Debentures | (2,402 | ) | 14,130 | ||||
Payment of contingent interest | (13,385 | ) | (10,759 | ) | |||
Amortization of debt discount and issuance costs | 13,411 | 12,292 | |||||
Other, net | (3,787 | ) | (1,781 | ) | |||
Changes in operating assets and liabilities | |||||||
Accounts receivable | (871 | ) | 661 | ||||
Prepaid expenses and other assets | 8,980 | (1,728 | ) | ||||
Accounts payable and accrued liabilities | 40,244 | 21,013 | |||||
Deferred revenues | 14,347 | 70,988 | |||||
Net deferred income taxes and other long-term tax liabilities | 87,614 | 82,328 | |||||
Net cash provided by operating activities | 667,949 | 651,482 | |||||
Cash flows from investing activities: | |||||||
Proceeds from maturities and sales of marketable securities and investments | 3,817,899 | 2,767,027 | |||||
Purchases of marketable securities | (3,691,057 | ) | (3,219,329 | ) | |||
Purchases of property and equipment | (26,574 | ) | (40,656 | ) | |||
Deposits to acquire intangible assets | (143,000 | ) | — | ||||
Other investing activities | 2,333 | (3,941 | ) | ||||
Net cash used in investing activities | (40,399 | ) | (496,899 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock from option exercises and employee stock purchase plans | 13,670 | 14,690 | |||||
Repurchases of common stock | (662,491 | ) | (643,169 | ) | |||
Proceeds from senior notes, net of issuance costs | — | 492,237 | |||||
Excess tax benefit associated with stock-based compensation | 25,058 | 18,464 | |||||
Net cash used in financing activities | (623,763 | ) | (117,778 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (501 | ) | 246 | ||||
Net increase in cash and cash equivalents | 3,286 | 37,051 | |||||
Cash and cash equivalents at beginning of period | 228,659 | 191,608 | |||||
Cash and cash equivalents at end of period | $ | 231,945 | $ | 228,659 | |||
Supplemental cash flow disclosures: | |||||||
Cash paid for interest | $ | 115,544 | $ | 99,473 | |||
Cash paid for income taxes, net of refunds received | $ | 14,303 | $ | 39,723 |
Three Months Ended December 31, | |||||||||||||||
2016 | 2015 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 168,762 | $ | 105,552 | $ | 158,282 | $ | 101,530 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 14,299 | 14,299 | 11,724 | 11,724 | |||||||||||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | 9 | 5,072 | |||||||||||||
Non-cash interest expense | 3,440 | 3,091 | |||||||||||||
Contingent interest payable on subordinated convertible debentures | (3,859 | ) | (3,272 | ) | |||||||||||
Tax adjustment | (4,192 | ) | (13,070 | ) | |||||||||||
Non-GAAP | $ | 183,061 | $ | 115,249 | $ | 170,006 | $ | 105,075 | |||||||
Revenues | $ | 286,271 | $ | 272,625 | |||||||||||
Non-GAAP operating margin | 63.9 | % | 62.4 | % | |||||||||||
Diluted shares | 125,454 | 133,385 | |||||||||||||
Diluted EPS, non-GAAP | $ | 0.92 | $ | 0.79 |
Year Ended December 31, | |||||||||||||||
2016 | 2015 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 686,572 | $ | 440,645 | $ | 605,946 | $ | 375,236 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 50,044 | 50,044 | 46,075 | 46,075 | |||||||||||
Unrealized (gain) loss on contingent interest derivative on the subordinated convertible debentures | (2,402 | ) | 14,130 | ||||||||||||
Non-cash interest expense | 13,411 | 11,746 | |||||||||||||
Contingent interest payable on subordinated convertible debentures | (14,265 | ) | (11,749 | ) | |||||||||||
Tax adjustment | (22,742 | ) | (30,028 | ) | |||||||||||
Non-GAAP | $ | 736,616 | $ | 464,691 | $ | 652,021 | $ | 405,410 | |||||||
Revenues | $ | 1,142,167 | $ | 1,059,366 | |||||||||||
Non-GAAP operating margin | 64.5 | % | 61.5 | % | |||||||||||
Diluted shares | 128,833 | 133,031 | |||||||||||||
Diluted EPS, non-GAAP | $ | 3.61 | $ | 3.05 |
Three Months Ended December 31, | |||||||
2016 | 2015 | ||||||
Net Income | $ | 105,552 | $ | 101,530 | |||
Interest expense | 28,982 | 28,567 | |||||
Income tax expense | 36,301 | 23,849 | |||||
Depreciation and amortization | 14,053 | 14,937 | |||||
Stock-based compensation | 14,299 | 11,724 | |||||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | 9 | 5,072 | |||||
Unrealized (gain) loss on hedging agreements | (115 | ) | 84 | ||||
Non-GAAP Adjusted EBITDA | $ | 199,081 | $ | 185,763 |
Year Ended December 31, 2016 | |||
Net Income | $ | 440,645 | |
Interest expense | 115,564 | ||
Income tax expense | 140,528 | ||
Depreciation and amortization | 58,167 | ||
Stock-based compensation | 50,044 | ||
Unrealized gain on contingent interest derivative on the subordinated convertible debentures | (2,402 | ) | |
Unrealized gain on hedging agreements | (89 | ) | |
Non-GAAP Adjusted EBITDA | $ | 802,457 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Cost of revenues | $ | 1,886 | $ | 1,807 | $ | 7,253 | $ | 7,009 | |||||||
Sales and marketing | 1,518 | 1,963 | 5,738 | 6,763 | |||||||||||
Research and development | 1,773 | 1,598 | 6,739 | 6,488 | |||||||||||
General and administrative | 9,122 | 6,356 | 30,314 | 25,815 | |||||||||||
Total stock-based compensation expense | $ | 14,299 | $ | 11,724 | $ | 50,044 | $ | 46,075 |