Verisign Reports 13% Year-Over-Year Revenue Growth in 2011
Fourth Quarter GAAP Financial Results
Fourth Quarter Non-GAAP Financial Results
"In a year that saw strong growth in global internet adoption, increased demand on our DNS infrastructure, and a growing need for network security services,
2011 GAAP Financial Results
For the year ended
2011 Non-GAAP Financial Results
"In 2011, operating discipline, focus, and the completion of our restructuring yielded solid results for the business, and we completed the return of divestiture proceeds to our shareholders," said
Financial Highlights
Verisign ended the fourth quarter of 2011 with Cash, Cash Equivalents,Marketable Securities and Restricted Cash of$1.35 billion , an increase of$111 million from the prior quarter and a decrease of$714 million from the same quarter in 2010.- Cash flow from operations on a consolidated basis was
$124 million for the fourth quarter and$336 million for the full year. Excess tax benefits of$13 million for the full year that are associated with stock-based compensation were classified as financing cash flows. - Deferred revenues ended the fourth quarter of 2011 totaling
$729 million , an increase of$6 million from the prior quarter and$66 million from the same quarter in 2010. - Capital expenditures, on a consolidated basis, were
$129 million in the fourth quarter and$193 million for the full year. Capital expenditures included$106 million during the fourth quarter and$118 million for the full year for the purchase of theReston headquarters building. - On
Nov. 22, 2011 ,Verisign entered into a new$200 million unsecured revolving credit facility and borrowed$100 million of this facility onNov. 28, 2011 in part to finance the purchase of theReston building.
Business and Corporate Highlights
- Verisign Registry Services ended the quarter with approximately 113.8 million active domain names in the adjusted zone for .com and .net, representing an 8% increase year-over-year.
- In the fourth quarter,
Verisign added 7.9 million new domain name registrations, representing a 4% increase year-over-year. - During the fourth quarter,
Verisign completed the move of its corporate headquarters toReston, VA .
Non-GAAP Items
Non-GAAP financial results exclude the following items that are included under GAAP: discontinued operations, stock-based compensation, amortization of other intangible assets, impairments of goodwill and other intangible assets, restructuring charges, contingent interest payments to holders of our Convertible Debentures, unrealized gain/loss on contingent interest derivative on Convertible Debentures, and non-cash interest expense. Non-GAAP financial information is also adjusted for a 30% tax rate which differs from the GAAP tax rate. A table reconciling the GAAP to non-GAAP operating income and net income attributable to
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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
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VERISIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
December 31, December 31,
2011 2010
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,313,349 $ 1,559,628
Marketable securities 32,860 501,238
Accounts receivable, net 14,974 14,874
Deferred tax assets and other current assets 86,598 102,217
------------- -------------
Total current assets 1,447,781 2,177,957
------------- -------------
Property and equipment, net 327,136 190,319
Goodwill and other intangible assets, net 53,848 55,146
Other assets 27,414 20,584
------------- -------------
Total long-term assets 408,398 266,049
------------- -------------
Total assets $ 1,856,179 $ 2,444,006
============= =============
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 156,385 $ 195,235
Deferred revenues 502,538 457,478
------------- -------------
Total current liabilities 658,923 652,713
------------- -------------
Long-term deferred revenues 226,033 205,560
Convertible debentures, including contingent
interest derivative 590,086 581,626
Long-term debt 100,000 -
Long-term deferred tax liabilities 325,527 309,696
Other long-term liabilities 43,717 17,981
------------- -------------
Total long-term liabilities 1,285,363 1,114,863
------------- -------------
Total liabilities 1,944,286 1,767,576
------------- -------------
Commitments and contingencies - -
Stockholders' (deficit) equity:
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: 316,781 at December 31, 2011 and
313,313 at December 31, 2010 ; Outstanding
shares: 159,422 at December 31, 2011 and
172,736 at December 31, 2010 317 313
Additional paid-in capital 20,135,237 21,040,919
Accumulated deficit (20,220,577) (20,363,468)
Accumulated other comprehensive loss (3,084) (1,334)
------------- -------------
Total stockholders' (deficit) equity (88,107) 676,430
------------- -------------
Total liabilities and stockholders'
(deficit) equity $ 1,856,179 $ 2,444,006
============= =============
VERISIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended December
December 31, 31,
---------------------- ----------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
Revenues $ 203,646 $ 178,829 $ 771,978 $ 680,578
---------- ---------- ---------- ----------
Costs and expenses:
Cost of revenues 42,016 38,265 165,246 156,676
Sales and marketing 27,772 20,529 97,432 83,390
Research and development 13,121 13,181 53,277 53,664
General and administrative 24,512 36,549 111,122 137,704
Restructuring charges 3,352 2,819 15,512 16,861
---------- ---------- ---------- ----------
Total costs and expenses 110,773 111,343 442,589 448,295
---------- ---------- ---------- ----------
Operating income 92,873 67,486 329,389 232,283
Interest expense (11,859) (121,564) (147,332) (157,667)
Non-operating (loss) income,
net (3,688) 7,420 11,530 20,738
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before income taxes 77,326 (46,658) 193,587 95,354
Income tax (expense) benefit (31,997) 14,991 (55,031) (25,322)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations, net
of tax 45,329 (31,667) 138,556 70,032
Income (loss) from
discontinued operations,
net of tax 8,485 (8,838) 4,335 763,822
---------- ---------- ---------- ----------
Net income (loss) 53,814 (40,505) 142,891 833,854
Less: Net income from
discontinued operations,
net of tax, attributable to
noncontrolling interest in
subsidiary - - - (2,887)
---------- ---------- ---------- ----------
Net income (loss)
attributable to Verisign
stockholders $ 53,814 $ (40,505) $ 142,891 $ 830,967
========== ========== ========== ==========
Basic income (loss) per share
attributable to Verisign stockholders
from:
Continuing operations $ 0.28 $ (0.18) $ 0.84 $ 0.39
Discontinued operations 0.06 (0.05) 0.03 4.29
---------- ---------- ---------- ----------
Net income (loss) $ 0.34 $ (0.23) $ 0.87 $ 4.68
========== ========== ========== ==========
Diluted income (loss) per share
attributable to Verisign stockholders
from:
Continuing operations $ 0.28 $ (0.18) $ 0.83 $ 0.39
Discontinued operations 0.06 (0.05) 0.03 4.25
---------- ---------- ---------- ----------
Net income (loss) $ 0.34 $ (0.23) $ 0.86 $ 4.64
========== ========== ========== ==========
Shares used to compute net income per
share attributable to Verisign
stockholders:
Basic 159,226 172,472 165,408 177,534
========== ========== ========== ==========
Diluted 160,087 172,472 166,887 178,965
========== ========== ========== ==========
Amounts attributable to
Verisign stockholders:
Income (loss) from
continuing operations,
net of tax $ 45,329 $ (31,667) $ 138,556 $ 70,032
Income (loss) from
discontinued operations,
net of tax 8,485 (8,838) 4,335 760,935
---------- ---------- ---------- ----------
Net income (loss)
attributable to Verisign
stockholders $ 53,814 $ (40,505) $ 142,891 $ 830,967
========== ========== ========== ==========
The following table presents the classification of stock-based compensation:
Cost of revenues $ 1,376 $ 1,217 $ 6,655 $ 4,473
Sales and marketing 1,206 1,454 6,062 4,419
Research and development 961 1,178 4,926 4,989
General and
administrative 3,622 4,707 19,928 20,136
Restructuring charges - 1,277 5,701 2,321
---------- ---------- ---------- ----------
Stock-based compensation
for continuing operations 7,165 9,833 43,272 36,338
Discontinued operations - 144 - 15,840
---------- ---------- ---------- ----------
Total stock-based
compensation expense $ 7,165 $ 9,977 $ 43,272 $ 52,178
========== ========== ========== ==========
VERISIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended December 31,
----------------------------
2011 2010
------------- -------------
Cash flows from operating activities:
Net income $ 142,891 $ 833,854
Adjustments to reconcile net income to net
cash provided by operating activities:
Net gain on sale of discontinued
operations, net of tax - (725,254)
Depreciation and amortization 55,706 67,655
Stock-based compensation 43,272 52,178
Excess tax benefit associated with stock-
based compensation (13,420) (131,926)
Other, net 12,965 9,474
Changes in operating assets and
liabilities, excluding the effects of
acquisitions and divestitures:
Accounts receivable (251) 13,147
Deferred tax assets and other assets 11,043 (19,105)
Accounts payable and accrued liabilities 18,162 34,952
Deferred revenues 65,533 80,231
------------- -------------
Net cash provided by operating
activities 335,901 215,206
------------- -------------
Cash flows from investing activities:
Proceeds received from divestiture of
businesses, net of cash contributed and
transaction costs - 1,162,306
Proceeds from maturities and sales of
marketable securities and investments 546,006 313,817
Purchases of marketable securities and
investments (78,975) (787,718)
Purchases of property and equipment (192,660) (80,527)
Other investing activities (1,129) (4,788)
------------- -------------
Net cash provided by investing
activities 273,242 603,090
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock from
option exercises and employee stock
purchase plans 49,983 92,510
Repurchases of common stock (550,097) (449,749)
Payment of dividends to stockholders (463,498) (518,217)
Excess tax benefit associated with stock-
based compensation 13,420 131,926
Proceeds received from borrowings 100,000 -
Repayment of borrowings (1,067) (1,004)
Other financing activities (939) (740)
------------- -------------
Net cash used in financing activities (852,198) (745,274)
------------- -------------
Effect of exchange rate changes on cash and
cash equivalents (3,224) 9,440
------------- -------------
Net (decrease) increase in cash and cash
equivalents (246,279) 82,462
Cash and cash equivalents at beginning of
period 1,559,628 1,477,166
------------- -------------
Cash and cash equivalents at end of period $ 1,313,349 $ 1,559,628
============= =============
Supplemental cash flow disclosures:
Cash paid for interest, net of capitalized
interest $ 140,193 $ 148,870
============= =============
Cash paid for income taxes, net of refunds
received $ 6,567 $ 8,502
============= =============
Payable to purchaser of divested business $ - $ (4,250)
============= =============
VERISIGN, INC.
STATEMENTS OF OPERATIONS RECONCILIATION
(In thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
December 31, 2011 December 31, 2010
--------------------- ----------------------
Operating Operating Net (Loss)
Income Net Income Income Income
---------- ---------- ---------- -----------
GAAP as reported $ 92,873 $ 53,814 $ 67,486 $ (40,505)
Discontinued operations (8,485) 8,838
Adjustments:
Stock-based compensation 7,165 7,165 8,556 8,556
Amortization of other
intangible assets 325 325 324 324
Restructuring charges 3,352 3,352 2,819 2,819
Contingent interest
payment to holders of
Convertible Debentures 109,113
Unrealized loss on
contingent interest
derivative on
Convertible Debentures 1,625 1,625
Non-cash interest expense 1,555 2,294
Tax adjustment 4,593 (38,412)
---------- ---------- ---------- -----------
Non-GAAP as adjusted $ 103,715 $ 63,944 $ 79,185 $ 54,652
========== ========== ========== ===========
Diluted shares 160,087 174,014
Per diluted share, non-GAAP
as adjusted $ 0.40 $ 0.31
========== ===========
Management believes that this non-GAAP financial data supplements our GAAP financial data by providing investors with additional information that allows them to have a clearer picture of the Company's operations. The presentation of this additional information is not meant to be considered in isolation nor as a substitute for results prepared in accordance with GAAP. We believe that the non-GAAP information enhances the investors' overall understanding of our financial performance and the comparability of the Company's operating results from period to period. Above, we have provided a reconciliation of the non-GAAP financial information that we provide each quarter with the comparable financial information reported in accordance with GAAP for the given period.
SUPPLEMENTAL FINANCIAL INFORMATION
Three Months Ended
-----------------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
------------- ------------- ----------- ----------- -------------
Revenues $ 203,646 $ 196,965 $ 189,844 $ 181,523 $ 178,829
============= ============= =========== =========== =============
VERISIGN, INC.
STATEMENTS OF OPERATIONS RECONCILIATION
(In thousands, except per share data)
(Unaudited)
Year Ended Year Ended
December 31, 2011 December 31, 2010
--------------------- ------------------------
Net Income
Attributable
Operating Operating to Verisign
Income Net Income Income Stockholders
---------- ---------- ---------- -------------
GAAP as reported $ 329,389 $ 142,891 $ 232,283 $ 830,967
Discontinued operations (4,335) (760,935)
Adjustments:
Stock-based
compensation 37,571 37,571 34,017 34,017
Amortization of other
intangible assets 1,293 1,293 1,293 1,293
Restructuring charges 15,512 15,512 16,861 16,861
Contingent interest
payment to holders of
Convertible Debentures 100,020 109,113
Unrealized loss on
contingent interest
derivative on
Convertible Debentures 1,125 500
Non-cash interest
expense 6,540 7,929
Tax adjustment (51,663) (54,198)
---------- ---------- ---------- -------------
Non-GAAP as adjusted $ 383,765 $ 248,954 $ 284,454 $ 185,547
========== ========== ========== =============
Diluted shares 166,887 178,965
Per diluted share, non-GAAP
as adjusted $ 1.49 $ 1.04
========== =============
Management believes that this non-GAAP financial data supplements our GAAP financial data by providing investors with additional information that allows them to have a clearer picture of the Company's operations. The presentation of this additional information is not meant to be considered in isolation nor as a substitute for results prepared in accordance with GAAP. We believe that the non-GAAP information enhances the investors' overall understanding of our financial performance and the comparability of the Company's operating results from period to period. Above, we have provided a reconciliation of the non-GAAP financial information that we provide each quarter with the comparable financial information reported in accordance with GAAP for the given period.
SUPPLEMENTAL FINANCIAL INFORMATION
Year Ended
---------------------------
December 31, December 31,
2011 2010
------------- -------------
Revenues $ 771,978 $ 680,578
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