Form 8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): July 22, 2004

 


 

VERISIGN, INC.

(Exact name of Registrant as specified in its charter)

 


 

Delaware   0-23593   94-3221585

(State or Other Jurisdiction of

Incorporation or Organization)

  (Commission File Number)  

(IRS Employer

Identification No.)

 

487 East Middlefield Road, Mountain View, CA 94043

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code: (650) 961-7500

 



Item 7: Financial Statements and Exhibits.

 

  (c) Exhibits

 

99.1 Text of press release of VeriSign, Inc. issued on July 22, 2004.

 

Item 12 – Results of Operations and Financial Condition.

 

On July 22, 2004, VeriSign, Inc. (“VeriSign” or the “Company”) announced its financial results for the fiscal quarter ended June 30, 2004 and certain other information. A copy of this press release is attached hereto as Exhibit 99.1.

 

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Use of Non-GAAP Financial Information

 

VeriSign provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). Along with this information, we typically disclose and discuss certain non-GAAP financial information in our quarterly earnings releases, on investor conference calls and during investor conferences and related events. This non-GAAP financial information does not include the following types of financial measures that are included in GAAP: amortization and write-down of goodwill and intangible assets related to acquisitions, the net gain or loss on the sale of investments or the impairment of investments, restructuring and other charges, and stock-based compensation charges related to acquisitions.

 

Management believes that this non-GAAP financial data supplements our GAAP financial by providing investors with additional information which allows them to have a clearer picture of the company’s core recurring operations. The presentation of this additional information is not meant to be considered in isolation or 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.


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

   

VERISIGN, INC.

Date: July 22, 2004

 

By:

 

/s/ James M. Ulam


       

James M. Ulam

       

Senior Vice President, General Counsel

and Secretary


Exhibit Index

 

Exhibit No.

 

Description


Exhibit 99.1   Press release of VeriSign, Inc. dated July 22, 2004.
Press Release

Exhibit 99.1

 

LOGO

 

VeriSign Reports Second Quarter 2004 Results

 

MOUNTAIN VIEW, CA – July 22, 2004 – VeriSign, Inc. (Nasdaq: VRSN), the leading provider of intelligent infrastructure services for the Internet and telecommunications networks, today reported its results for the second quarter ended June 30, 2004.

 

VeriSign reported revenue of $256 million for the second quarter of 2004. The results for the second quarter include a partial quarter of contribution from the acquisition of Jamba!, which closed on June 3, 2004. Revenue for the second quarter of 2004, excluding Jamba!, would have been $243 million. On a GAAP basis, VeriSign reported net income of $22 million for the second quarter and earnings per share of $0.09 per fully-diluted share.

 

“Our second quarter results clearly benefited from continued worldwide momentum in Internet, e-commerce and wireless communications activity allowing us to achieve solid organic growth on a sequential basis,” said Stratton Sclavos, Chairman and Chief Executive Officer of VeriSign. “With an exciting new wireless data platform now in the fold and with a greatly expanded services portfolio in our security and communications businesses, we remain focused on serving the intelligent infrastructure needs of enterprises, merchants and carriers on a global basis.”

 

On a non-GAAP, after tax basis, using a 30% effective tax rate on non-GAAP pre-tax income of $55 million, earnings per share for the second quarter was $0.15 per fully-diluted share. Excluding Jamba!’s results, non-GAAP earnings per share would have been $0.15. These non-GAAP results exclude the following items, which are included under GAAP: amortization and write-down of goodwill and intangible assets related to acquisitions, the net gain or loss on the sale of investments or the impairment of investments, restructuring and other charges, and stock-based compensation charges related to acquisitions. A table reconciling the non-GAAP to GAAP numbers reported above is appended to this release.

 

“Our second quarter results reflect organic revenue growth of over 6% sequentially, leading to increased operating income and healthy operating cash flow of $98 million for the quarter,” said Dana Evan, Chief Financial Officer of VeriSign. “This strong operating performance gives us increasing confidence in our outlook for the second half of the year.”

 

During the quarter, VeriSign Security Services (VSS) extended its Intelligence and Control Service offering with the addition of its Email Security Service, which will help businesses of all sizes combat the threat of spam and email-borne viruses. VSS also introduced its Anti-Phishing Service, which is designed to protect enterprises from the increasingly prevalent fraud attack known as phishing through a solution that helps prevent, detect and respond to attacks, mitigating and eliminating identity theft and email fraud attempts. Also during the quarter, VeriSign acquired the remaining 49% interest in VeriSign Australia for approximately 250,000 shares of common stock making it a wholly-owned subsidiary of the company.


The most notable business development within VeriSign Communications Services (VCS) during the second quarter was the acquisition of Jamba!, a leading provider of wireless content services in Europe. The addition of Jamba!’s capabilities to VeriSign’s existing communication services platforms is expected to enable the company to offer carriers a comprehensive wireless data utility that covers all aspects of the mobile content value chain. Also during the quarter, VCS announced the introduction of MSO-IP ConnectTM, a new service that provides cable operators (MSOs) and VoIP carriers with end-to-end voice over IP routing

 

Additional Financial Information

 

  VeriSign ended the quarter with Cash, Cash Equivalents, Restricted Cash and Short-term Investments of $629 million. The decrease of $93 million from March 31, 2004 was primarily attributable to the Jamba! acquisition, which included a cash payment of $178 million.

 

  Net days sales outstanding (Net DSO), which takes into account the change in deferred revenue, was 40 days for Q2 up from 36 days for the first quarter. This increase in net DSO is primarily related to the Jamba! acquisition.

 

  Deferred revenue on the balance sheet was $392 million as of June 30, 2004, up $24 million or 7% over last quarter. Included in the deferred revenue balance for Q2 was approximately $2.6 million related to the previously announced acquisition of EuroTrust, which closed on April 2, 2004 and approximately $1.8 million related to the Jamba! acquisition.

 

  Cash flow from operations was $98 million for the second quarter.

 

  Capital expenditures for the second quarter of 2004 were approximately $20 million, up from $15 million in the first quarter of 2004.

 

Internet Services Group

 

  The Internet Services Group – which includes VeriSign’s Security, Payments, and Naming and Directory (NDS) Services – delivered $139 million of revenue in the second quarter of 2004.

 

  VeriSign’s Web site certificate business issued approximately 105,000 new and renewed certificates in Q2 ending the quarter with a base of more than 430,000 certificates, up from 414,000 at the end of Q1.

 

  VeriSign’s Payments business ended the second quarter with approximately 112,000 merchants under management, an increase of approximately 5,000 merchants over the first quarter of 2004. Further, the business processed approximately 101 million individual transactions with an aggregate value of $8.5 billion during the quarter.

 

  VeriSign’s NDS business ended the second quarter with 34.0 million active domain names in .com and .net, a net increase of approximately 1.7 million names, or 5%, from Q1.

 

Communications Services Group

 

  VeriSign’s Communications Services (VCS) Group – which provides intelligent connectivity, database, billing and network monitoring services to telecommunications carriers – delivered core revenue of $104 million in the second quarter of 2004, with Jamba! contributing an additional $13 million in revenue, bringing total VCS revenue for Q2 to $117 million.

 

  VeriSign’s Communications Services Group ended Q2 with a base of approximately 6.3 million wireless billing customer subscribers up from a Q1 base of 6.0 million.

 

  The VCS business supported 12.2 billion database queries in the quarter up from 10.1 billion queries for Q1.


Today’s Conference Call

 

VeriSign will be hosting a teleconference call today at 3:00 pm (PT) to review the second quarter results. The call will be accessible by direct dial at (800) 967-7134. A listen-only live webcast of the earnings call will also be available on the company’s website at www.verisign.com under the Investor Relations tab and at www.streetevents.com. A replay of the teleconference will be available by calling (888) 203-1112 (passcode: 532703) beginning at 6:00 pm (PT) today and will run through July 29th. This press release and the financial information discussed on today’s conference call are available on the company’s website at www.verisign.com under the Investor Relations tab.

 

About VeriSign

 

VeriSign, Inc. (Nasdaq: VRSN) delivers intelligent infrastructure services that make the Internet and telecommunications networks more reliable and secure. Every day VeriSign helps thousands of businesses and millions of consumers conduct commerce and communications with confidence. Additional news and information about the company is available at www.verisign.com.

 

###

 

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 and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties that could cause VeriSign’s actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, the uncertainty of future revenue and profitability and potential fluctuations in quarterly operating results due to such factors as increasing competition and pricing pressure from competing services offered at prices below our prices and market acceptance of our existing services, the inability of VeriSign to successfully develop and market new services and the uncertainty of whether new services as provided by VeriSign will achieve market acceptance or result in any revenues, the risk that the VeriSign and Jamba! businesses as well as other businesses will not be integrated successfully and unanticipated costs of such integration, and the loss of revenues due to VeriSign’s disposition of its Network Solutions domain name registrar business. More information about potential factors that could affect the company’s business and financial results is included in VeriSign’s filings with the Securities and Exchange Commission, including in the company’s Annual Report on Form 10-K for the year ended December 31, 2003 and quarterly reports on Form 10-Q. VeriSign undertakes no obligation to update any of the forward-looking statements after the date of this press release.


VERISIGN, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

    

June 30,

2004


   

December 31,

2003


 
     (unaudited)        
Assets                 

Current assets:

                

Cash and cash equivalents

   $ 326,272     $ 393,787  

Short-term investments

     247,513       329,899  

Accounts receivable, net

     147,946       100,120  

Prepaid expenses and other current assets

     63,683       45,935  

Deferred tax assets

     11,483       10,666  
    


 


Total current assets

     796,897       880,407  
    


 


Property and equipment, net

     504,657       520,219  

Goodwill

     727,871       401,371  

Other intangible assets, net

     289,496       216,665  

Cash subject to restriction

     55,169       18,371  

Long-term investments

     11,401       21,749  

Other assets, net

     43,596       41,435  
    


 


Total long-term assets

     1,632,190       1,219,810  
    


 


Total assets

   $ 2,429,087     $ 2,100,217  
    


 


Liabilities and Stockholders’ Equity                 

Current Liabilities:

                

Accounts payable and accrued liabilities

   $ 303,789     $ 290,587  

Accrued merger costs

     6,482       805  

Accrued restructuring costs

     12,747       18,331  

Deferred revenue

     290,793       245,483  
    


 


Total current liabilities

     613,811       555,206  
    


 


Long-term deferred revenue

     101,216       93,311  

Long-term restructuring

     19,998       30,240  

Other long-term liabilities

     7,919       8,978  

Deferred tax liability

     26,532       —    
    


 


Total long-term liabilities

     155,665       132,529  
    


 


Total liabilities

     769,476       687,735  
    


 


Minority interest in subsidiaries

     31,937       28,829  

Commitments and contingencies

                

Stockholders’ equity:

                

Preferred stock - par value $.001 per share Authorized shares: 5,000,000 Issued and outstanding shares: none

     —         —    

Common stock - par value $.001 per share Authorized shares: 1,000,000,000

                

Issued and outstanding shares: 254,082,202 and 241,979,274 (excluding 1,716,918 and 1,690,000 shares held in treasury at June 30, 2004 and December 31, 2003)

     253       242  

Additional paid-in capital

     23,345,840       23,128,095  

Unearned compensation

     (3,621 )     (2,628 )

Accumulated deficit

     (21,709,039 )     (21,740,054 )

Accumulated other comprehensive loss

     (5,759 )     (2,002 )
    


 


Total stockholders’ equity

     1,627,674       1,383,653  
    


 


Total liabilities and stockholders’ equity

   $ 2,429,087     $ 2,100,217  
    


 



VERISIGN, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

 

     Three Months Ended June 30,

    Six Months Ended June 30,

 
     2004

    2003

    2004

    2003

 

Revenues

   $ 256,045     $ 265,299     $ 485,158     $ 535,057  
    


 


 


 


Costs and expenses:

                                

Cost of revenues

     102,235       115,589       193,717       231,418  

Sales and marketing

     46,847       50,515       87,017       103,077  

Research and development

     15,253       13,253       31,960       27,030  

General and administrative

     38,595       42,255       73,834       89,120  

Restructuring and other charges

     (3,626 )     10,903       11,881       31,416  

Amortization and write-down of goodwill and other intangible assets

     18,223       177,139       33,333       232,041  
    


 


 


 


Total costs and expenses

     217,527       409,654       431,742       714,102  
    


 


 


 


Operating income (loss)

     38,518       (144,355 )     53,416       (179,045 )

Other income (expense), net

     1,538       1,989       2,569       (12,070 )

Minority interest in net (income) loss in subsidiary

     (836 )     327       (1,128 )     492  
    


 


 


 


Income (loss) before income taxes

     39,220       (142,039 )     54,857       (190,623 )

Income tax expense

     (17,275 )     (811 )     (23,842 )     (5,663 )
    


 


 


 


Net income (loss)

   $ 21,945     $ (142,850 )   $ 31,015     $ (196,286 )
    


 


 


 


Net income (loss) per share:

                                

Basic

   $ 0.09     $ (0.60 )   $ 0.13     $ (0.82 )
    


 


 


 


Diluted

   $ 0.09     $ (0.60 )   $ 0.12     $ (0.82 )
    


 


 


 


Shares used in per share computation:

                                

Basic

     249,357       238,898       246,859       238,555  
    


 


 


 


Diluted

     253,068       238,898       250,614       238,555  
    


 


 


 



VERISIGN, INC. AND SUBSIDIARIES

 

STATEMENT OF OPERATIONS RECONCILIATION

(unaudited)

 

     Three Months Ended June 30,

 
     2004

    2003

 

Statement of Operations Reconciliation

                

(in thousands)

                

Net income (loss) on a GAAP basis

   $ 21,945     $ (142,850 )

Amortization and write-down of intangible assets

     18,223       177,139  

Stock-based compensation expense resulting from acquisitions

     530       1,571  

Restructuring and other charges

     (3,626 )     10,903  

Net gain/loss on investments

     336       —    
    


 


Net income (loss) on a non-GAAP basis

   $ 37,408     $ 46,763  
    


 


Statement of Operations Reconciliation per Share

                

(in thousands, except per share data)

                

Diluted net income (loss) per share on a GAAP basis

   $ 0.09     $ (0.60 )

Amortization and write-down of intangible assets

     0.07       0.73  

Stock-based compensation expense resulting from acquisitions

     0.00       0.01  

Restructuring and other charges

     (0.01 )     0.05  

Net gain/loss on investments

     0.00       —    
    


 


Diluted net income (loss) per share on a non-GAAP basis

   $ 0.15     $ 0.19  
    


 


Shares used in calculation of net income (loss)—GAAP

     249,357       238,898  

Shares used in calculation of net income (loss)—non-GAAP

     253,068       241,696  

 

VeriSign provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). Along with this information, we typically disclose and discuss certain non-GAAP financial information in our quarterly earnings releases, on investor conference calls and during investor conferences and related events. This non-GAAP financial information does not include the following types of financial measures that are included in GAAP: amortization and write-down of goodwill and intangible assets related to acquisitions, the net gain or loss on the sale of investments or the impairment of investments, restructuring and other charges, and stock-based compensation charges related to acquisitions.

 

Management believes that this non-GAAP financial data supplements our GAAP financial by providing investors with additional information which allows them to have a clearer picture of the company’s core recurring operations. The presentation of this additional information is not meant to be considered in isolation or 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.


VERISIGN, INC. AND SUBSIDIARIES

 

STATEMENT OF OPERATIONS RECONCILIATION

(unaudited)

 

     Six Months Ended June 30,

 
     2004

   2003

 

Statement of Operations Reconciliation

               

(in thousands)

               

Net income (loss) on a GAAP basis

   $ 31,015    $ (196,286 )

Amortization and write-down of intangible assets

     33,333      232,041  

Stock-based compensation expense resulting from acquisitions

     928      5,829  

Restructuring and other charges

     11,881      31,416  

Net gain/loss on investments

     3,644      16,541  
    

  


Net income (loss) on a non-GAAP basis

   $ 80,801    $ 89,541  
    

  


Statement of Operations Reconciliation per Share

               

(in thousands, except per share data)

               

Diluted net income (loss) per share on a GAAP basis

   $ 0.12    $ (0.82 )

Amortization and write-down of intangible assets

     0.13      0.97  

Stock-based compensation expense resulting from acquisitions

     0.00      0.02  

Restructuring and other charges

     0.05      0.13  

Net gain/loss on investments

     0.02      0.07  
    

  


Diluted net income (loss) per share on a non-GAAP basis

   $ 0.32    $ 0.37  
    

  


Shares used in calculation of net income (loss)—GAAP

     246,859      238,555  

Shares used in calculation of net income (loss)—non-GAAP

     250,614      240,437  

 

VeriSign provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). Along with this information, we typically disclose and discuss certain non-GAAP financial information in our quarterly earnings releases, on investor conference calls and during investor conferences and related events. This non-GAAP financial information does not include the following types of financial measures that are included in GAAP: amortization and write-down of goodwill and intangible assets related to acquisitions, the net gain or loss on the sale of investments or the impairment of investments, restructuring and other charges, and stock-based compensation charges related to acquisitions.

 

Management believes that this non-GAAP financial data supplements our GAAP financial by providing investors with additional information which allows them to have a clearer picture of the company’s core recurring operations. The presentation of this additional information is not meant to be considered in isolation or 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.


VERISIGN, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

 

    

Three Months Ended

June 30, 2004


   

Three Months Ended

June 30, 2003


 
     Reported

    Non-GAAP
Entries


    Non-GAAP

    Reported

    Non-GAAP
Entries


    Non-GAAP

 

Revenues

   $ 256,045     $ —       $ 256,045     $ 265,299     $ —       $ 265,299  

Costs and expenses:

                                                

Cost of revenues

     102,235       (50 )(a)     102,185       115,589       (47 )(a)     115,542  

Sales and Marketing

     46,847       (58 )(a)     46,789       50,515       (1,187 )(a)     49,328  

Research and development

     15,253       (344 )(a)     14,909       13,253       (330 )(a)     12,923  

General and administrative

     38,595       (78 )(a)     38,517       42,255       (7 )(a)     42,248  

Restructuring and other charges

     (3,626 )     3,626 (b)     —         10,903       (10,903 )(b)     —    

Amortization and write-down of goodwill and other intangible assets

     18,223       (18,223 )(c)     —         177,139       (177,139 )(c)     —    
    


 


 


 


 


 


Total costs and expenses

     217,527       (15,127 )     202,400       409,654       (189,613 )     220,041  
    


 


 


 


 


 


Operating income (loss)

     38,518       15,127       53,645       (144,355 )     189,613       45,258  

Other income (expense), net

     1,538       336 (e)     1,874       1,989       —         1,989  

Minority interest in net (income) loss of subsidiary

     (836 )     —         (836 )     327       —         327  
    


 


 


 


 


 


Income (loss) before income taxes

     39,220       15,463       54,683       (142,039 )     189,613       47,574  

Income tax expense

     (17,275 )     —         (17,275 )     (811 )     —         (811 )
    


 


 


 


 


 


Net income (loss)

   $ 21,945     $ 15,463     $ 37,408     $ (142,850 )   $ 189,613     $ 46,763  
    


 


 


 


 


 


Net income (loss) per share:

                                                

Basic

   $ 0.09             $ 0.15     $ (0.60 )           $ 0.20  
    


         


 


         


Diluted

   $ 0.09             $ 0.15     $ (0.60 )           $ 0.19  
    


         


 


         


Shares used in per share computation:

                                                

Basic

     249,357               249,357       238,898               238,898  
    


         


 


         


Diluted

     253,068               253,068       238,898       2,798 (d)     241,696  
    


         


 


 


 



Notes:

(a) Stock-based compensation expense resulting from acquisitions
(b) Restructuring and other charges
(c) Amortization and write-down of acquired goodwill and intangible assets
(d) Dilutive stock options
(e) Net gain/loss on investments

 

Management believes that this pro forma financial data supplements our GAAP financial statements by providing investors with additional information which allows them to have a more clear picture of the company’s core recurring operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We believe that the pro forma information enhances the investors’ overall understanding of our financial performance and the comparability of the company’s operating results from period to period.


VERISIGN, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

 

    

Six Months Ended

June 30, 2004


   

Six Months Ended

June 30, 2003


 
     Reported

   

Non-GAAP

Entries


    Non-GAAP

    Reported

   

Non-GAAP

Entries


    Non-GAAP

 

Revenues

   $ 485,158     $ —       $ 485,158     $ 535,057     $ —       $ 535,057  

Costs and expenses:

                                                

Cost of revenues

     193,717       (69 )(a)     193,648       231,418       (94 )(a)     231,324  

Sales and Marketing

     87,017       (78 )(a)     86,939       103,077       (5,061 )(a)     98,016  

Research and development

     31,960       (679 )(a)     31,281       27,030       (660 )(a)     26,370  

General and administrative

     73,834       (102 )(a)     73,732       89,120       (14 )(a)     89,106  

Restructuring and other charges

     11,881       (11,881 )(b)     —         31,416       (31,416 )(b)     —    

Amortization and write-down of goodwill and other intangible assets

     33,333       (33,333 )(c)     —         232,041       (232,041 )(c)     —    
    


 


 


 


 


 


Total costs and expenses

     431,742       (46,142 )     385,600       714,102       (269,286 )     444,816  
    


 


 


 


 


 


Operating income (loss)

     53,416       46,142       99,558       (179,045 )     269,286       90,241  

Other income (expense), net

     2,569       3,644 (e)     6,213       (12,070 )     16,541 (e)     4,471  

Minority interest in net (income) loss of subsidiary

     (1,128 )     —         (1,128 )     492       —         492  
    


 


 


 


 


 


Income (loss) before income taxes

     54,857       49,786       104,643       (190,623 )     285,827       95,204  

Income tax expense

     (23,842 )     —         (23,842 )     (5,663 )     —         (5,663 )
    


 


 


 


 


 


Net income (loss)

   $ 31,015     $ 49,786     $ 80,801     $ (196,286 )   $ 285,827     $ 89,541  
    


 


 


 


 


 


Net income (loss) per share:

                                                

Basic

   $ 0.13             $ 0.33     $ (0.82 )           $ 0.38  
    


         


 


         


Diluted

   $ 0.12             $ 0.32     $ (0.82 )           $ 0.37  
    


         


 


         


Shares used in per share computation:

                                                

Basic

     246,859               246,859       238,555               238,555  
    


         


 


         


Diluted

     250,614               250,614       238,555       1,882 (d)     240,437  
    


         


 


 


 


 

Notes:

(a) Stock-based compensation expense resulting from acquisitions
(b) Restructuring and other charges
(c) Amortization and write-down of acquired goodwill and intangible assets
(d) Dilutive stock options
(e) Net gain/loss on investments

 

Management believes that this pro forma financial data supplements our GAAP financial statements by providing investors with additional information which allows them to have a more clear picture of the company’s core recurring operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We believe that the pro forma information enhances the investors’ overall understanding of our financial performance and the comparability of the company’s operating results from period to period.


VERISIGN, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

    

Six Months Ended

June 30,


 
     2004

    2003

 

Cash flow from operating activities:

                

Net income (loss)

   $ 31,015     $ (196,286 )

Adjustments to reconcile net loss to net cash provided by operating activities:

                

Depreciation and amortization of property and equipment

     42,977       59,185  

Amortization and impairment of other intangible assets and goodwill

     33,333       232,041  

Provision for doubtful accounts

     329       5,412  

Non-cash restructuring and other charges

     13,436       9,260  

Net loss on sale and impairment of investments

     3,667       16,541  

Minority interest in net income (loss) of subsidiary

     1,129       (492 )

Deferred income taxes

     25,345       3,334  

Amortization of stock-based compensation

     1,467       5,829  

Changes in operating assets and liablilities:

                

Accounts receivable

     (14,093 )     27,590  

Prepaid expenses and other current assets

     (3,303 )     (6,853 )

Accounts payable and accrued liabilities

     (37,254 )     7,609  

Deferred revenue

     47,857       17,953  
    


 


Net cash provided by operating activities

     145,905       181,123  
    


 


Cash flow from investing activities:

                

Purchases of investments

     (95,086 )     (163,207 )

Proceeds from maturities and sales of investments

     143,246       150,796  

Purchases of property and equipment

     (35,383 )     (50,098 )

Cash paid for business combinations, net of cash acquired

     (246,356 )     —    

Merger related costs

     (2,664 )     (4,925 )

Other assets

     (34 )     (1,500 )
    


 


Net cash used in investing activities

     (236,277 )     (68,934 )
    


 


Cash flow from financing activities:

                

Proceeds from issuance of common stock from option exercises and employee stock purchase plan

     25,910       10,853  

Proceeds from sale of stock into consolidated subsidiary

     778       —    

Repayment of debt

     (2,850 )     (4,915 )
    


 


Net cash provided by financing activities

     23,838       5,938  
    


 


Effect of exchange rate changes

     (981 )     (2,789 )
    


 


Net increase (decrease) in cash and cash equivalents

     (67,515 )     115,338  

Cash and cash equivalents at beginning of period

     393,787       282,288  
    


 


Cash and cash equivalents at end of period

   $ 326,272     $ 397,626