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VERISIGN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited) December 31, December 31, 2012 2011 ------------- ------------- ASSETSCurrent assets: Cash and cash equivalents $ 130,736 $ 1,313,349 Marketable securities 1,425,700 32,860 Accounts receivable, net 11,477 14,974 Deferred tax assets 82,812 64,751 Prepaid expenses and other current assets 30,795 21,847 ------------- ------------- Total current assets 1,681,520 1,447,781 ------------- -------------Property and equipment, net 333,861 327,136Goodwill and other intangible assets, net 52,527 53,848Long-term deferred tax assets 7,299 2,758Other long-term assets 25,325 24,656 ------------- ------------- Total long-term assets 419,012 408,398 ------------- ------------- Total assets $ 2,100,532 $ 1,856,179 ============= ============= LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilities: Accounts payable and accrued liabilities $ 130,391 $ 156,385 Deferred revenues 564,627 502,538 Total current liabilities 695,018 658,923 ------------- -------------Long-term deferred revenues 247,955 226,033Convertible debentures, including contingent interest derivative 597,614 590,086Long-term debt 100,000 100,000Long-term deferred tax liabilities 424,970 325,527Other long-term tax liabilities 44,298 43,717 ------------- ------------- Total long-term liabilities 1,414,837 1,285,363 ------------- ------------- Total liabilities 2,109,855 1,944,286 ------------- -------------Commitments and contingenciesStockholders' deficit: Preferred stock--par value $.001 per share; Authorized shares: 5,000; Issued and outstanding shares: none -- -- Common stock--par value $.001 per share; Authorized shares: 1,000,000; Issued shares: 318,722 at December 31, 2012 and 316,781 at December 31, 2011; Outstanding shares: 153,392 at December 31, 2012 and 159,422 at December 31, 2011 319 317 Additional paid-in capital 19,891,291 20,135,237 Accumulated deficit (19,900,545) (20,220,577) Accumulated other comprehensive loss (388) (3,084) ------------- ------------- Total stockholders' deficit (9,323) (88,107) ------------- ------------- Total liabilities and stockholders' deficit $ 2,100,532 $ 1,856,179 ============= ============= VERISIGN, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 --------- --------- --------- ---------Revenues $ 230,196 $ 203,646 $ 873,592 $ 771,978 --------- --------- --------- ---------Costs and expenses: Cost of revenues 42,040 42,016 167,600 165,246 Sales and marketing 20,753 27,772 97,809 97,432 Research and development 16,059 13,121 61,694 53,277 General and administrative 16,024 24,512 89,927 111,122 Restructuring charges (35) 3,352 (765) 15,512 --------- --------- --------- --------- Total costs and expenses 94,841 110,773 416,265 442,589 --------- --------- --------- ---------Operating income 135,355 92,873 457,327 329,389Interest expense (12,657) (11,859) (50,196) (147,332)Non-operating income, net 8,596 (3,688) 5,564 11,530 --------- --------- --------- ---------Income from continuing operations before income taxes 131,294 77,326 412,695 193,587Income tax expense (30,205) (31,997) (100,210) (55,031) --------- --------- --------- ---------Income from continuing operations, net of tax 101,089 45,329 312,485 138,556Income from discontinued operations, net of tax 4,552 8,485 7,547 4,335 --------- --------- --------- ---------Net income 105,641 53,814 320,032 142,891 --------- --------- --------- --------- Foreign currency translation adjustments -- 112 -- 110 Increase (decrease) in unrealized gain on investments, net of tax 221 (15) 2,757 688 Realized (gain) loss on investments, net of tax, included in net income (6) 3 (61) (2,548) --------- --------- --------- ---------Other comprehensive income (loss) 215 100 2,696 (1,750) --------- --------- --------- ---------Comprehensive income $ 105,856 $ 53,714 $ 322,728 $ 141,141 ========= ========= ========= =========Basic income per share: Continuing operations $ 0.65 $ 0.28 $ 1.99 $ 0.84 Discontinued operations 0.03 0.06 0.05 0.03 --------- --------- --------- --------- Net income $ 0.68 $ 0.34 $ 2.04 $ 0.87 ========= ========= ========= =========Diluted income per share: Continuing operations $ 0.62 $ 0.28 $ 1.91 $ 0.83 Discontinued operations 0.03 0.06 0.04 0.03 --------- --------- --------- --------- Net income $ 0.65 $ 0.34 $ 1.95 $ 0.86 ========= ========= ========= =========Shares used to compute net income per share Basic 154,642 159,226 156,953 165,408 ========= ========= ========= ========= Diluted 162,034 160,087 163,909 166,887 ========= ========= ========= ========= VERISIGN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year Ended December 31, ------------------------ 2012 2011 ----------- -----------Cash flows from operating activities: Net income $ 320,032 $ 142,891 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment and amortization of other intangible assets 54,819 55,706 Stock-based compensation 33,362 43,272 Excess tax benefit associated with stock-based compensation (18,436) (13,420) Other, net 10,981 12,965 Changes in operating assets and liabilities Accounts receivable 3,327 (251) Prepaid expenses and other assets (31,946) 11,043 Accounts payable and accrued liabilities 81,480 18,162 Deferred revenues 84,011 65,533 ----------- ----------- Net cash provided by operating activities 537,630 335,901 ----------- -----------Cash flows from investing activities: Proceeds from maturities and sales of marketable securities 1,234,156 546,006 Purchases of marketable securities (2,622,898) (78,975) Purchases of property and equipment (53,023) (192,660) Other investing activities (588) (1,129) ----------- ----------- Net cash (used in) provided by investing activities (1,442,353) 273,242 ----------- -----------Cash flows from financing activities: Proceeds from issuance of common stock from option exercises and employee stock purchase plans 29,303 49,983 Repurchases of common stock (325,680) (550,097) Payment of dividends to stockholders -- (463,498) Excess tax benefit associated with stock-based compensation 18,436 13,420 Proceeds received from borrowings -- 100,000 Repayment of borrowings -- (1,067) Other financing activities 189 (939) ----------- ----------- Net cash used in financing activities (277,752) (852,198) ----------- -----------Effect of exchange rate changes on cash and cash equivalents (138) (3,224) ----------- -----------Net decrease in cash and cash equivalents (1,182,613) (246,279)Cash and cash equivalents at beginning of period 1,313,349 1,559,628 ----------- -----------Cash and cash equivalents at end of period $ 130,736 $ 1,313,349 =========== ===========Supplemental cash flow disclosures: Cash paid for interest, net of capitalized interest $ 41,276 $ 140,193 =========== =========== Cash paid for income taxes, net of refunds received $ 19,436 $ 6,567 =========== =========== VERISIGN, INC. STATEMENTS OF OPERATIONS RECONCILIATION (In thousands, except per share data) (Unaudited) Three Months Ended Three Months Ended December 31, 2012 December 31, 2011 ------------------- ------------------- Operating Net Operating Net Income Income Income Income --------- -------- --------- --------GAAP as reported $ 135,355 $105,641 $ 92,873 $ 53,814 Discontinued operations (4,552) (8,485) Adjustments: Stock-based compensation 6,971 6,971 7,165 7,165 Amortization of other intangible assets 533 533 325 325 Restructuring charges (35) (35) 3,352 3,352 Unrealized (gain)loss on contingent interest derivative on Convertible Debentures (7,549) 1,625 Non-cash interest expense 1,961 1,555 Tax adjustment (7,085) 4,593 --------- -------- --------- --------Non-GAAP as adjusted $ 142,824 $ 95,885 $ 103,715 $ 63,944 ========= ======== ========= ========Revenues $ 230,196 $ 203,646Non-GAAP operating margin 62.0% 50.9% ========= =========Diluted shares 162,034 160,087Per diluted share, non-GAAP as adjusted $ 0.59 $ 0.40 ======== ========
