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Debt And Interest Expense | 12 Months Ended
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Dec. 31, 2015
Debt Disclosure [Abstract] |
Debt And Interest Expense | Debt and Interest Expense Senior Notes due 2025 On March 27, 2015, the Company issued $500.0 million principal amount of 5.25% senior unsecured notes due April 1, 2025. The proceeds are being used for general corporate purposes, including, but not limited to, the repurchase of shares of its common stock under its share buyback program. In connection with the offering the Company incurred $6.5 million of issuance costs which are being amortized to Interest expense over the 10 year term of the notes. The Company pays interest on the notes semi-annually on April 1 and October 1. The Company may redeem the 2025 Senior Notes, in whole or in part, at any time at the Company’s option at specified redemption prices. Senior Notes due 2023 On April 16, 2013, the Company issued $750.0 million principal amount of 4.625% senior unsecured notes due May 1, 2023. In connection with the offering the Company incurred $12.0 million of issuance costs which are being amortized to Interest expense over the 10 year term of the Senior Notes. The Company pays interest on the notes semi-annually on May 1 and November 1. The Company may redeem the 2023 Senior Notes, in whole or in part, at any time at the Company’s option at specified redemption prices. The Indenture governing the 2023 Senior Notes contains covenants that limit the ability of the Company and/or its Restricted Subsidiaries, under certain circumstances, to, among other things: (i) pay dividends or make distributions on, or redeem or repurchase, its capital stock; (ii) make certain investments; (iii) create liens on assets; (iv) enter into sale/leaseback transactions and (v) merge or consolidate or sell all or substantially all of its assets. These covenants are subject to a number of important limitations and exceptions. The Indenture also provides for events of default, which, if any of them occurs, may permit or, in certain circumstances, require the principal, premium, if any, accrued and unpaid interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately. 2015 Credit Facility On March 31, 2015, the Company entered into a new credit agreement for a $200.0 million committed senior unsecured revolving credit facility (the “2015 Credit Facility”). The 2015 Credit Facility replaced the previous credit facility which was set to expire in November 2016, with substantially similar terms. The 2015 Credit Facility includes financial covenants requiring that the Company’s interest coverage ratio not be less than 3.0 to 1.0 for any period of four consecutive quarters and the Company’s leverage ratio not exceed 2.5 to 1.0. As of December 31, 2015, there were no borrowings outstanding under the facility and the Company was in compliance with the financial covenants. The 2015 Credit Facility expires on April 1, 2020 at which time any outstanding borrowings are due. Verisign may from time to time request lenders to agree on a discretionary basis to increase the commitment amount by up to an aggregate of $150.0 million. 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. The conversion rate will be subject to adjustment for certain events as outlined in the Indenture governing the Subordinated Convertible Debentures but will not be adjusted for accrued interest. As of December 31, 2015, approximately 36.4 million shares of common stock were reserved for issuance upon conversion or repurchase of the Subordinated Convertible Debentures. On or after August 15, 2017, the Company may redeem all or part of the Subordinated Convertible Debentures for the principal amount plus any accrued and unpaid interest if the closing price of the Company’s common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading-day period prior to the date on which the Company provides notice of redemption. The Company’s common stock price exceeded the current conversion price threshold trigger of $44.68 during the fourth quarter of 2015. Accordingly, the Subordinated Convertible Debentures were convertible at the option of each holder during the first quarter of 2016. 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, classified the debt component of the Subordinated Convertible Debentures, net of unamortized debt issuance costs and the embedded contingent interest derivative as a current liability, as of December 31, 2015. The determination of whether or not the Subordinated Convertible Debentures are convertible, and accordingly, the classification as long-term or current, must continue to be performed quarterly. As of December 31, 2015, the if-converted value of the Subordinated Convertible Debentures exceeded its principal amount. Based on the if-converted value of the Subordinated Convertible Debentures as of December 31, 2015, the conversion spread could have required the Company to issue up to an additional 22.1 million shares of common stock. The Company calculated the carrying value of the liability component at issuance as the present value of its cash flows using a discount rate of 8.5% (borrowing rate for similar non-convertible debt with no contingent payment options), adjusted for the fair value of the contingent interest feature, yielding an effective interest rate of 8.39%. The excess of the principal amount of the debt over the carrying value of the liability component is also referred to as the “debt discount” or “equity component” of the Subordinated Convertible Debentures. The debt discount is being amortized using the Company’s effective interest rate of 8.39% over the term of the Subordinated Convertible Debentures as a non-cash charge included in Interest expense. As of December 31, 2015, the remaining term of the Subordinated Convertible Debentures is 21.6 years. Interest is payable semiannually in arrears on August 15 and February 15. Proceeds upon issuance of the Subordinated Convertible Debentures were as follows (in thousands):
Principal value of Subordinated Convertible Debentures |  | $ | 1,250,000 |
Less: Issuance costs |  | (25,777 | )
Net proceeds, Subordinated Convertible Debentures |  | $ | 1,224,223 |
Amounts recognized at issuance: |  |
Subordinated Convertible Debentures, including contingent interest derivative (net of issuance costs of $11,328) |  | $ | 546,915 |
Additional paid-in capital |  | 418,996 |
Long-term deferred tax liabilities |  | 267,225 |
Non-operating loss |  | (8,913 | )
Net proceeds, Subordinated Convertible Debentures |  | $ | 1,224,223 |
The table below presents the carrying amounts of the liability and equity components:
| As of December 31,
| 2015 |  | 2014
| (In thousands)
Debt discount upon issuance (net of issuance costs of $14,449) | $ | 686,221 |  |  | $ | 686,221 |
Deferred taxes associated with the debt discount upon issuance | (267,225 | ) |  | (267,225 | )
Carrying amount of equity component | $ | 418,996 |  |  | $ | 418,996 |
Principal amount of Subordinated Convertible Debentures | $ | 1,250,000 |  |  | $ | 1,250,000 |
Unamortized discount of liability component | (635,378 | ) |  | (645,565 | )
Unamortized debt issuance costs associated with the liability component | (10,422 | ) |  | (10,570 | )
Carrying amount of liability component | 604,200 |  |  | 593,865 |
Contingent interest derivative | 30,126 |  |  | 26,755 |
Subordinated Convertible Debentures, including contingent interest derivative | $ | 634,326 |  |  | $ | 620,620 |
The following table presents the components of the Company’s interest expense:
| Year Ended December 31,
2015 |  | 2014 |  | 2013
| (In thousands)
Contractual interest on Subordinated Convertible Debentures | $ | 40,625 |  |  | $ | 40,625 |  |  | $ | 40,625 |
Contractual interest on Senior Notes | 54,667 |  |  | 34,688 |  |  | 24,570 |
Amortization of debt discount on the Subordinated Convertible Debentures | 10,218 |  |  | 9,412 |  |  | 8,670 |
Interest capitalized to Property and equipment, net | (586 | ) |  | (707 | ) |  | (1,218 | )
Credit facility and other interest expense | 2,707 |  |  | 1,976 |  |  | 2,114 |
Total interest expense | $ | 107,631 |  |  | $ | 85,994 |  |  | $ | 74,761 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 + Details
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