Item 2.05 Costs Associated with Exit or Disposal Activities.
In August 2021, OneSpan Inc. (the "Company") began a review of its operations
while developing a new multi-year strategic plan. On December 16, 2021, the
board of directors of the Company (the "Board") approved a plan (the "Plan")
designed to advance the Company's operating model, streamline its business, and
enhance its capital resources. The Plan is the first of two phases constituting
the multi-year strategic plan. The Company expects to provide additional details
regarding the multi-year strategic plan in the second quarter of 2022, at which
time any updates to the Plan will also be provided, to the extent appropriate.
As a result of the business review undertaken since August 2021, the Company
began taking certain cost reduction actions in August 2021, and on December 16,
2021, the Board approved additional actions that, combined with the prior
actions, should achieve initial annual, pre-tax cost savings of approximately
$10-$12 million for fiscal year 2022. These savings are primarily derived from
headcount reductions (including the elimination of positions), decreased leased
office spaces, and other external spend rationalization.
In connection with the Plan, the Company expects to record total charges of
approximately $3-4 million, all in the first quarter of 2022. The Company
expects that approximately $2.75-$3.75 million of these charges will be
severance and related benefit costs and approximately $250,000 of these charges
will be related to decreased leased office spaces. The cash payments associated
with these charges are expected to be substantially completed in 2022.
Additionally, the Company believes that these identified cost savings provide
financial flexibility to invest in its core products and advance its
go-to-market strategies. The Company further expects that the actions taken
under the Plan should benefit the Company's long-term goal of accelerating
revenue growth in a recurring revenue business model.
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
anticipated timing of the announcement of additional details regarding the
multi-year strategic plan and any updates to the Plan, the expected effects of
the Company's cost reduction actions, anticipated charges and cash expenditures
associated with these actions and the expected benefits of the cost savings.
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.
These forward-looking statements involve risks and uncertainties, as well as
assumptions that, if they do not fully materialize or prove incorrect, could
cause our results to differ materially from those expressed or implied by such
forward-looking statements. Factors that could materially affect the Company's
business and financial results include, but are not limited to: 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, as well as those factors described in the
"Risk Factors" section of our Annual Report on Form 10-K and Quarterly Report on
Form 10-Q 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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