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 8, 2013
VERISIGN, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation)
000-23593 | 94-3221585 | |
(Commission File Number) | (IRS Employer Identification No.) | |
12061 Bluemont Way, Reston, VA | 20190 | |
(Address of Principal Executive Offices) | (Zip Code) | |
(703) 948-3200
(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:
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. |
The information set forth in Item 7.01 to this Current Report on Form 8-K is incorporated into this Item 2.02 by reference.
Item 7.01. | Regulation FD Disclosure. |
On April 8, 2013, VeriSign, Inc. (“Verisign”) announced a proposed offering ("the Offering") of $600 million aggregate principal amount of senior notes due 2023 (the “Notes”). A copy of this press release is attached hereto as Exhibit 99.1. In connection with the offering of the Notes, Verisign is disclosing its Adjusted EBITDA, Adjusted EBITDA from continuing operations and cash interest expense for the periods shown below.
“Adjusted EBITDA” and “Adjusted EBITDA from continuing operations” are non-GAAP financial measures. Adjusted EBITDA from continuing operations refers to net income (loss) attributable to Verisign stockholders before discontinued operations, interest, taxes, depreciation and amortization, stock-based compensation, unrealized loss (gain) on contingent interest derivative on Verisign's $1.25 billion principal amount of 3.25% convertible debentures due August 15, 2037 (" the Subordinated Convertible Debentures") and unrealized loss (gain) on hedging agreements. Adjusted EBITDA refers to net income adjusted for income tax expenses, depreciation and amortization, interest expense, stock-based compensation, unrealized loss (gain) on the contingent interest derivative on the Subordinated Convertible Debentures and unrealized loss (gain) on hedging agreements.
The following table reconciles net income (loss) attributable to Verisign stockholders for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 to Adjusted EBITDA from continuing operations (in millions):
Year Ended December 31, | ||||||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||
Net income (loss) attributable to Verisign stockholders | $ | 320 | $ | 143 | $ | 831 | $ | 246 | $ | (374 | ) | |||||||||||||
(Income) loss from discontinued operations attributable to Verisign stockholders, net of tax | (8 | ) | (4 | ) | (761 | ) | (154 | ) | 406 | |||||||||||||||
Interest expense | 50 | 147 | 158 | 47 | 44 | |||||||||||||||||||
Income tax expense (benefit) | 100 | 55 | 25 | 33 | (12 | ) | ||||||||||||||||||
Depreciation and amortization | 55 | 56 | 58 | 68 | 63 | |||||||||||||||||||
Stock-based compensation | 33 | 43 | 36 | 30 | 47 | |||||||||||||||||||
Unrealized loss (gain) on contingent interest derivative on Subordinated Convertible Debentures | — | 1 | 1 | (1 | ) | (4 | ) | |||||||||||||||||
Unrealized loss (gain) on hedging agreements | — | — | 1 | (2 | ) | 1 | ||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 550 | $ | 441 | $ | 349 | $ | 267 | $ | 171 | ||||||||||||||
The tables below reconcile quarterly net income for the two year period ended December 31, 2012 to Adjusted EBITDA from continuing operations (in millions):
Quarter Ended | Year Ended December 31, 2012 | |||||||||||||||||||||||
March 31, 2012 | June 30, 2012 | September 30, 2012 | December 31, 2012 | |||||||||||||||||||||
Net income | $ | 68 | $ | 68 | $ | 78 | $ | 106 | $ | 320 | ||||||||||||||
Income from discontinued operations, net of tax | (2 | ) | — | (1 | ) | (5 | ) | (8 | ) | |||||||||||||||
Interest expense | 12 | 13 | 13 | 12 | 50 | |||||||||||||||||||
Income tax expense | 21 | 24 | 25 | 30 | 100 | |||||||||||||||||||
Depreciation and amortization | 13 | 14 | 13 | 15 | 55 | |||||||||||||||||||
Stock-based compensation | 8 | 8 | 10 | 7 | 33 | |||||||||||||||||||
Unrealized loss (gain) on contingent interest derivative on Subordinated Convertible Debentures | 1 | 3 | 3 | (7 | ) | — | ||||||||||||||||||
Unrealized (gain) loss on hedging agreements | — | (1 | ) | — | 1 | — | ||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 121 | $ | 129 | $ | 141 | $ | 159 | $ | 550 | ||||||||||||||
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Quarter Ended | Year Ended December 31, 2011 | |||||||||||||||||||||||
March 31, 2011 | June 30, 2011 | September 30, 2011 | December 31, 2011 | |||||||||||||||||||||
Net income (loss) | $ | 41 | $ | (11 | ) | $ | 59 | $ | 54 | $ | 143 | |||||||||||||
Loss (income) from discontinued operations, net of tax | 1 | 3 | — | (8 | ) | (4 | ) | |||||||||||||||||
Interest expense | 12 | 112 | 11 | 12 | 147 | |||||||||||||||||||
Income tax expense (benefit) | 17 | (16 | ) | 22 | 32 | 55 | ||||||||||||||||||
Depreciation and amortization | 14 | 14 | 14 | 14 | 56 | |||||||||||||||||||
Stock-based compensation | 15 | 14 | 7 | 7 | 43 | |||||||||||||||||||
Unrealized (gain) loss on contingent interest derivative on Subordinated Convertible Debentures | — | (1 | ) | — | 2 | 1 | ||||||||||||||||||
Unrealized (gain) loss on hedging agreements | — | (1 | ) | — | 1 | — | ||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 100 | $ | 114 | $ | 113 | $ | 114 | $ | 441 | ||||||||||||||
The following table reconciles net income to Adjusted EBITDA for the year ended December 31, 2012 (in thousands):
Year Ended December 31, 2012 | ||||
Net income | $ | 320,032 | ||
Interest expense | 50,196 | |||
Income tax expense | 103,805 | |||
Depreciation and amortization | 54,819 | |||
Stock-based compensation | 33,362 | |||
Unrealized gain on contingent interest derivative on Subordinated Convertible Debentures | (422 | ) | ||
Unrealized loss on hedging agreements | 299 | |||
Adjusted EBITDA | $ | 562,091 | ||
Verisign's management believes that presenting Adjusted EBITDA and Adjusted EBITDA from continuing operations enhance the investors' overall understanding of Verisign's financial performance and the comparability of Verisign's operating results from period to period. However, Adjusted EBITDA and Adjusted EBITDA from continuing operations have important limitations as analytical tools. These limitations include, but are not limited to, the following:
• | Adjusted EBITDA and Adjusted EBITDA from continuing operations do not reflect Verisign's cash expenditures, or future requirements, for capital expenditures or contractual commitments; |
• | Adjusted EBITDA and Adjusted EBITDA from continuing operations do not reflect changes in, or cash requirements for, Verisign's working capital needs; |
• | Adjusted EBITDA and Adjusted EBITDA from continuing operations do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on Verisign's debts; |
• | 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 and Adjusted EBITDA from continuing operations do not reflect any cash requirements for such replacements; |
• | non-cash compensation is and will remain a key element of Verisign's overall long-term incentive compensation package, although Verisign excludes it as an expense when evaluating its ongoing operating performance for a particular period; and |
• | other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA from continuing operations differently than Verisign does, limiting their usefulness as comparative measures. |
Because of these limitations, Adjusted EBITDA and Adjusted EBITDA from continuing operations should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP.
“Cash interest expense” is also a non-GAAP financial measure. Cash interest expense refers to interest expense, computed in accordance with GAAP, plus interest or financing costs capitalized or deferred in the period, less contingent interest paid to holders of the Subordinated Convertible Debentures and amortization of debt discounts and issuance costs.
2
Verisign's management believes that presenting cash interest expense enhances the investors' overall understanding of Verisign's financial performance and the comparability of its operating results from period to period. However, cash interest expense has important limitations as an analytical tool and is not meant to be considered in isolation or as a substitute for measures prepared in accordance with GAAP. In addition, Verisign's use of cash interest expense may not be comparable to similarly titled measures of other companies.
The following table reconciles interest expense for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 to cash interest expense (in millions):
Year Ended December 31, | |||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||
Interest expense | $ | 50 | $ | 147 | $ | 158 | $ | 47 | $ | 44 | |||||||||
Interest or financing costs capitalized or deferred | 1 | 2 | 1 | 1 | 4 | ||||||||||||||
Amortization of debt issuance costs | — | — | (1 | ) | (1 | ) | (1 | ) | |||||||||||
Amortization of debt discount | (8 | ) | (7 | ) | (7 | ) | (6 | ) | (6 | ) | |||||||||
Contingent interest paid to holders of Subordinated Convertible Debentures (a) | — | (100 | ) | (109 | ) | — | — | ||||||||||||
Cash interest expense | $ | 43 | $ | 42 | $ | 42 | $ | 41 | $ | 41 | |||||||||
(a) The contingent interest payments made to holders of the Subordinated Convertible Debentures during 2011 and 2010 are excluded from the calculation of cash interest as that term is defined in the credit agreement governing Verisign's $200.0 million committed senior unsecured revolving credit facility. Future contingent interest payments, if any, will be included in cash interest expense.
Item 8.01. | Other Events. |
In connection with the Offering, Verisign issued a press release. A copy of this press release is attached hereto as Exhibit 99.1.
Item 9.01. | Financial Statements and Exhibits. |
The information in Item 2.02 and Item 7.01 of this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
(d) Exhibits
Exhibit Number | Description | |
99.1 | Text of press release of VeriSign, Inc. issued on April 8, 2013. | |
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SIGNATURES
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: April 8, 2013 | By: | /s/ Richard H. Goshorn | ||
Richard H. Goshorn | ||||
Senior Vice President, General Counsel and Secretary | ||||
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Exhibit Index
Exhibit No. | Description | |
Exhibit 99.1 | Text of press release of VeriSign, Inc. issued on April 8, 2013. | |
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Exhibit 99.1
Verisign Announces Proposed Offering of $600 Million
of Senior Unsecured Notes
RESTON, VA – April 8, 2013 – (NASDAQ: VRSN) VeriSign, Inc. (“Verisign” or the “Company”) today announced a proposed offering of $600 million aggregate principal amount of senior unsecured notes due 2023 (the “Notes”).
The timing, size and terms of the Notes are subject to market conditions and other factors. Verisign intends to use the proceeds from the offering to repay in full the outstanding indebtedness under its existing revolving credit facility and the remaining amounts for general corporate purposes, including, but not limited to, the repurchase of shares under its share repurchase program.
The Notes will be offered and sold in a private placement to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act.
The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration under, or an applicable exemption from, the registration requirements of the Securities Act and applicable state securities laws.
This announcement does not constitute an offer to sell or a solicitation of an offer to buy the Notes or any other security and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any persons to whom, such an offer, solicitation or sale would be unlawful. Any offers of the Notes will be made only by means of a private offering memorandum.
About Verisign
As the global leader in domain names, Verisign powers the invisible navigation that takes people to where they want to go on the Internet. For more than 15 years, Verisign has operated the infrastructure for a portfolio of top-level domains that today include .com, .net, .tv, .edu, .gov, .jobs, .name and .cc, as well as two of the world’s 13 Internet root servers. Verisign’s product suite also includes Distributed Denial of Service (DDoS) Protection Services, iDefense Security Intelligence Services and Managed DNS.
VRSNF
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Statements in this announcement other than historical data and information constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These statements involve risks and uncertainties that could cause Verisign's actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, the uncertainty of whether the U.S. Department of Commerce will approve any exercise by the Company of its right to increase the price per .com domain name, under certain
circumstances, the uncertainty of whether the Company will be able to demonstrate to the U.S. Department of Commerce that market conditions warrant removal of the pricing restrictions on .com domain names and the uncertainty of whether we will experience other negative changes to our pricing terms; the failure to renew key agreements on similar terms, or at all; the uncertainty of future revenue and profitability and potential fluctuations in quarterly operating results due to such factors as restrictions on increasing prices under the .com Registry Agreement, increasing competition, pricing pressure from competing services offered at prices below our prices and changes in marketing and advertising practices, including those of third-party registrars; changes in search engine algorithms and advertising payment practices; challenging global economic conditions; challenges to ongoing privatization of Internet administration; the outcome of legal or other challenges resulting from our activities or the activities of registrars or registrants, or litigation generally; new or existing governmental laws and regulations; changes in customer behavior, Internet platforms and web-browsing patterns; the uncertainty of whether Verisign will successfully develop and market new services; the uncertainty of whether our new services will achieve market acceptance or result in any revenues; system interruptions; security breaches; attacks on the Internet by hackers, viruses, or intentional acts of vandalism; whether Verisign will be able to continue to expand its infrastructure to meet demand; the uncertainty of the expense and timing of requests for indemnification, if any, relating to completed divestitures; and the impact of the introduction of new gTLDs, any delays in their introduction and whether our gTLD applications or the applicants' gTLD applications for which we have contracted to provide back-end registry services will be successful. More information about potential factors that could affect the Company's business and financial results is included in Verisign's filings with the SEC, including in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2012, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Verisign undertakes no obligation to update any of the forward-looking statements after the date of this announcement.
Contacts
Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643
Media Relations: Deana Alvy, dalvy@verisign.com, 703-948-4179
©2013 VeriSign, Inc. All rights reserved. VERISIGN, the VERISIGN logo, and other trademarks, service marks, and designs are registered or unregistered trademarks of VeriSign, Inc. and its subsidiaries in the United States and in foreign countries. All other trademarks are property of their respective owners.