Item 2.05 Costs Associated with Exit or Disposal Activities.
As previously announced, OneSpan Inc. (the "Company") began a review of its
operations while developing a new multi-year strategic plan (the "Plan") in
August 2021. On December 16, 2021, the board of directors of the Company (the
"Board") approved the first phase ("Phase One") of the Plan. Phase One was
designed to advance the Company's operating model, streamline its business, and
enhance its capital resources. Phase One began and was substantially completed
during the first quarter of 2022. As part of Phase One, the Company reduced
headcount by eliminating positions in certain areas and recorded $2.7 million of
charges during the first quarter of 2022. The cash payments associated with the
charges incurred in connection with Phase One are expected to be substantially
completed in 2022. Phase One is expected to result in approximately $10 million
to $12 million of annualized savings.
On May 12, 2022, the Board approved additional actions related to the Plan
through the year ending December 31, 2025 ("Phase Two"). Phase Two consists
solely of headcount-related actions and is designed to continue to advance the
Company's operating model, streamline its business, and enhance its capital
resources.
In connection with Phase Two, the Company expects to record total charges of
approximately $10 million to $17 million during the period covering the last
three quarters of 2022 through the year ending 2025. The charges will be
entirely for severance and related benefit costs associated with reduced
headcount. All such charges are expected to result in future cash expenditures.
Phase Two is expected to result in approximately $20 million to $25 million of
annualized savings. The Company believes the cost savings identified in Phase
One and Phase Two, which are included in its three-year plan, will provide
financial flexibility in its core products and advance its go-to-market
strategies. The Company further expects the actions taken under the Plan will
advance the Company's long-term goal of accelerating revenue growth in a
recurring revenue business model.
Item 8.01 Other Events.
On May 12, 2022, the Board terminated the stock repurchase program adopted by
the Board on June 10, 2020 and adopted a new stock repurchase program (the
"Repurchase Program") under which the Company is authorized to repurchase up to
$50 million of the Company's issued and outstanding shares of common stock,
exclusive of any fees, commissions, or other expenses related to such
repurchases, on or prior to May 11, 2024. The Repurchase Program does not
require the Company to acquire a specific number of shares, and the Repurchase
Program may be modified, suspended from time to time, or terminated.
Share purchases under Repurchase Program may take place in open market
transactions or in privately negotiated transactions and may be made from time
to time depending on market conditions, share price, trading volume, and other
factors. The timing of any repurchases and the amount of common stock
repurchased in any transaction is subject to the Company's sole discretion and
will depend upon market and business conditions, applicable legal and credit
requirements and other considerations that management considers relevant.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of applicable U.S. securities laws, including statements regarding the
expected effects of the Company's cost reduction actions, the anticipated amount
and timing of charges and cash expenditures associated with the Company's cost
reduction actions, the expected benefits of cost savings, and the Company's
capital allocation plans and potential repurchases of its common stock.
Forward-looking statements may be identified by words such as "seek," "believe,"
"plan," "estimate," "anticipate," "expect," "intend," "continue," "outlook,"
"may," "will," "should," "could," or "might," and other similar expressions.
Actual results, events, and circumstances may differ materially from those
expressed or implied by forward-looking statements. Forward-looking statements
are subject to risks, uncertainties, and assumptions, including risks such as,
without limitation: market acceptance of the Company's products and solutions
and competitors' offerings; the potential effects of technological changes; the
impact of the COVID-19 pandemic and actions taken to contain it; the Company's
ability to effectively manage acquisitions, divestitures, alliances, joint
ventures, and other portfolio actions; the execution of our transformative
strategy on a global scale; the increasing frequency and sophistication of
hacking attacks; claims that the Company has infringed the intellectual property
rights of others; changes in customer requirements; price competitive bidding;
changing laws, government regulations or policies; pressures on price levels;
investments in new products or businesses that may not achieve expected returns;
disruption in global transportation and supply chains; reliance on third parties
for certain products and data center services; impairment of goodwill or
amortizable intangible assets causing a significant charge to earnings; actions
of activist stockholders; and exposure to increased economic and operational
uncertainties from operating a global business; and those factors described in
the "Risk Factors" section of our Annual Report on Form 10-K most recently filed
with the Securities and Exchange Commission. The Company's filings with the
Securities and Exchange Commission and other important information can be found
in the Investor Relations section of the Company's website at
investors.onespan.com. The Company does not have any intent, and disclaims any
obligation, to update the forward-looking information to reflect events that
occur, circumstances that exist, or changes in the Company's expectations after
the date of this Current Report on Form 8-K, except as required by law.
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