UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 2008
VERISIGN, INC.
(Exact name of registrant as specified in its charter)
| 000-23593 | Delaware | 94-3221585 | ||
| (Commission File Number) |
(State or Other Jurisdiction of Incorporation) |
(IRS Employer Identification No.) |
| 487 East Middlefield Road, Mountain View, CA | 94043 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(650) 961-7500
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.01 | Completion of Acquisition or Disposition of Assets |
VeriSign, Inc. (the “Company”) entered into an acquisition agreement (the “Agreement”), effective as of April 30, 2008, to sell its broadband content distribution business, Kontiki, to a new entity, Kontiki, Inc. (the “Purchaser”), a Delaware corporation and majority-owned subsidiary of MK Capital SBIC, LP and MK Capital, LP. Pursuant to the terms of the Agreement, the Purchaser received specified assets associated with the Kontiki broadband content service business, including delivery, management, reporting and professional services centered around Kontiki’s media delivery management system platform and digital content utility. In exchange, the Company received total consideration of $1 million and 3,980,000 shares of the Purchaser’s Series A Preferred Stock. This transaction closed on April 30, 2008.
| Item 9.01. | Financial Statements and Exhibits. |
(b)(1) Pro forma financial information
The pro forma financial information required by this item is attached as Exhibit 99.1 to this report.
| (d) | Exhibits |
| Exhibit |
Description | |
| 99.1 | Pro forma financial information |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VERISIGN, INC. | ||||||
| Date: May 6, 2008 | By: | /s/ Richard H. Goshorn | ||||
| Name: | Richard H. Goshorn | |||||
| Title: | Senior Vice President, General Counsel and Secretary | |||||
3
Exhibit 99.1
VeriSign, Inc. and Subsidiaries
Pro Forma Financial Statement Information
(Unaudited)
On April 30, 2008, VeriSign, Inc. (the “Company”) agreed to sell its broadband content distribution business, Kontiki, to a new entity, Kontiki, Inc., a Delaware corporation and majority-owned subsidiary of MK Capital SBIC, LP and MK Capital, LP for cash proceeds of approximately $1.0 million and 3,980,000 shares of Kontiki, Inc. Series A Preferred Stock. The sale was completed on April 30, 2008. The Company will account for its equity interest using the equity method of accounting.
The unaudited Pro Forma Condensed Consolidated Balance Sheet Information as of December 31, 2007 set forth below has been presented after giving effect to the Kontiki divestiture as if it had occurred on December 31, 2007. The unaudited Pro Forma Condensed Consolidated Statement of Operations Information for the years ending December 31, 2007 and 2006 set forth below has been presented after giving effect to the divestiture as if it had occurred on March 14, 2006, the date Kontiki was acquired by the Company, and does not assume any interest income on cash proceeds. The Company has not presented unaudited Pro Forma Condensed Consolidated Statements of Operations Information for any periods prior to December 31, 2006, as the Company’s results of operations would have been unchanged.
The unaudited pro forma financial statement information has been derived primarily from the historical audited consolidated financial statements of the Company included in its Annual Reports on Form 10-K for the years ended December 31, 2007 and 2006. The unaudited pro forma financial statement information is based upon available information and assumptions that the Company believes are reasonable under the circumstances and were prepared to illustrate the estimated effects of the divestiture.
The unaudited pro forma financial statement information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the divestiture occurred as of the periods presented. In addition, the unaudited pro forma financial statement information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its Annual Reports on Form 10-K for the years ended December 31, 2007 and 2006.
VERISIGN, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations Information
For the Year Ended December 31, 2007
(In thousands, except per share amounts)
(Unaudited)
| As Reported (a) | Kontiki (b) | Pro Forma Adjustments (c) |
Pro Forma | |||||||||||||
| Revenues |
$ | 1,496,289 | $ | 6,184 | $ | 1,490,105 | ||||||||||
| Costs and expenses |
||||||||||||||||
| Cost of revenues |
596,517 | 2,961 | 593,556 | |||||||||||||
| Sales and marketing |
276,632 | 3,616 | 273,016 | |||||||||||||
| Research and development |
160,186 | 2,487 | 157,699 | |||||||||||||
| General and administrative |
276,130 | 1 | 276,129 | |||||||||||||
| Restructuring, impairments and other charges (reversals), net |
110,110 | 20,509 | 89,601 | |||||||||||||
| Impairment of goodwill |
182,151 | — | 182,151 | |||||||||||||
| Amortization of other intangible assets |
116,064 | 4,138 | 111,926 | |||||||||||||
| Acquired in-process research and development |
— | — | ||||||||||||||
| Total costs and expenses |
1,717,790 | 33,712 | — | 1,684,078 | ||||||||||||
| Operating loss |
(221,501 | ) | (27,528 | ) | (193,973 | ) | ||||||||||
| Other income, net |
93,759 | — | — | 93,759 | ||||||||||||
| Loss from continuing operations before income taxes, loss from unconsolidated entities and minority interest |
(127,742 | ) | (27,528 | ) | — | (100,214 | ) | |||||||||
| Income tax (expense) benefit |
(11,080 | ) | 2,253 | (13,333 | ) | |||||||||||
| Loss from unconsolidated entities, net of tax |
(2,018 | ) | $ | (6,879 | ) | (8,897 | ) | |||||||||
| Minority interest, net of tax |
(3,840 | ) | — | (3,840 | ) | |||||||||||
| Loss from continuing operations |
$ | (144,680 | ) | $ | (25,275 | ) | $ | (6,879 | ) | $ | (126,284 | ) | ||||
| Loss per share from continuing operations: |
||||||||||||||||
| Basic |
$ | (0.61 | ) | $ | (0.53 | ) | ||||||||||
| Diluted |
$ | (0.61 | ) | $ | (0.53 | ) | ||||||||||
| Shares used in per share computation: |
||||||||||||||||
| Basic |
237,707 | 237,707 | ||||||||||||||
| Diluted |
237,707 | 237,707 | ||||||||||||||
VERISIGN, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations Information
For the Year Ended December 31, 2006
(In thousands, except per share amounts)
(Unaudited)
| As Reported (a) | Kontiki (b) | Pro Forma Adjustments (c) |
Pro Forma | |||||||||||||
| Revenues |
$ | 1,562,998 | $ | 9,991 | $ | 1,553,007 | ||||||||||
| Costs and expenses |
||||||||||||||||
| Cost of revenues |
574,762 | 4,929 | 569,833 | |||||||||||||
| Sales and marketing |
376,508 | 4,246 | 372,262 | |||||||||||||
| Research and development |
129,256 | 2,746 | 126,510 | |||||||||||||
| General and administrative |
256,592 | 1,112 | 255,480 | |||||||||||||
| Restructuring, impairments and other charges (reversals), net |
(4,471 | ) | — | (4,471 | ) | |||||||||||
| Impairment of goodwill |
— | — | — | |||||||||||||
| Amortization of other intangible assets |
122,767 | 3,726 | 119,041 | |||||||||||||
| Acquired in-process research and development |
16,700 | 10,000 | 6,700 | |||||||||||||
| Total costs and expenses |
1,472,114 | 26,759 | — | 1,445,355 | ||||||||||||
| Operating income (loss) |
90,884 | (16,768 | ) | 107,652 | ||||||||||||
| Other income, net |
42,643 | — | — | 42,643 | ||||||||||||
| Income (loss) from continuing operations before income taxes, loss from unconsolidated entities and minority interest |
133,527 | (16,768 | ) | — | 150,295 | |||||||||||
| Income tax benefit |
243,648 | 2,758 | 240,890 | |||||||||||||
| Loss from unconsolidated entities, net of tax |
— | $ | (4,190 | ) | (4,190 | ) | ||||||||||
| Minority interest, net of tax |
(2,875 | ) | — | (2,875 | ) | |||||||||||
| Income (loss) from continuing operations |
$ | 374,300 | $ | (14,010 | ) | $ | (4,190 | ) | $ | 384,120 | ||||||
| Income per share from continuing operations: |
||||||||||||||||
| Basic |
$ | 1.53 | $ | 1.57 | ||||||||||||
| Diluted |
$ | 1.51 | $ | 1.55 | ||||||||||||
| Shares used in per share computation: |
||||||||||||||||
| Basic |
244,421 | 244,421 | ||||||||||||||
| Diluted |
247,073 | 247,073 | ||||||||||||||
VERISIGN, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet Information
At December 31, 2007
(In thousands, except per share amounts)
(Unaudited)
| As Reported (d) | Kontiki | Pro Forma | ||||||||
| ASSETS |
||||||||||
| Current assets: |
||||||||||
| Cash and cash equivalents |
$ | 1,376,722 | $ | 881 | (e) | $ | 1,377,603 | |||
| Short-term investments |
1,011 | 1,011 | ||||||||
| Accounts receivable, net of allowance for doubtful accounts |
208,799 | (4,510 | ) | 204,289 | ||||||
| Prepaid expenses and other current assets |
163,041 | (211 | ) | 162,830 | ||||||
| Total current assets |
1,749,573 | (3,840 | ) | 1,745,733 | ||||||
| Property and equipment, net |
621,917 | 621,917 | ||||||||
| Goodwill |
1,082,420 | 1,082,420 | ||||||||
| Other intangible assets, net |
121,792 | 121,792 | ||||||||
| Restricted cash and investments |
46,936 | 46,936 | ||||||||
| Other assets |
400,475 | (141 | ) | 400,334 | ||||||
| Total long-term assets |
2,273,540 | (141 | ) | 2,273,399 | ||||||
| Total assets |
$ | 4,023,113 | $ | (3,980 | ) | $ | 4,019,133 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||
| Current liabilities: |
||||||||||
| Accounts payable and accrued liabilities |
$ | 388,562 | $ | (2,752 | ) | $ | 385,810 | |||
| Deferred revenues |
552,070 | (3,427 | ) | 548,643 | ||||||
| Short-term debt |
— | — | ||||||||
| Other current liabilities |
5,510 | 5,510 | ||||||||
| Total current liabilities |
946,142 | (6,179 | ) | 939,963 | ||||||
| Long-term deferred revenues |
186,719 | 186,719 | ||||||||
| Convertible debentures |
1,265,296 | 1,265,296 | ||||||||
| Other long-term liabilities |
42,606 | 42,606 | ||||||||
| Total long-term liabilities |
1,494,621 | — | 1,494,621 | |||||||
| Total liabilities |
2,440,763 | (6,179 | ) | 2,434,584 | ||||||
| Minority interest in subsidiaries |
54,485 | 54,485 | ||||||||
| Total stockholders’ equity |
1,527,865 | 2,198 | 1,530,063 | |||||||
| Total liabilities and stockholders’ equity |
$ | 4,023,113 | $ | (3,980 | ) | $ | 4,019,133 | |||
VERISIGN, INC. AND SUBSIDIARIES
Notes to the Pro Forma Condensed Consolidated
Statements of Operations and Balance Sheet Information
(Unaudited)
| (a) | Represents Condensed Consolidated Statements of Operations information included in the Company’s 2007 Annual Report on Form 10-K for the respective periods presented. |
| (b) | Represents the operations of Kontiki while wholly owned by the Company. Tax effects have been determined based on the statutory rates in effect during each respective period. |
| (c) | Represents loss from our retained equity interest in Kontiki, Inc. under the equity method of accounting. |
| (d) | Represents Condensed Consolidated Balance Sheet information included in the Company’s 2007 Annual Report on Form 10-K for the respective period presented. |
| (e) | Represents cash proceeds received, less transaction costs connected with the divestiture. |