VeriSign, Inc.
Apr 26, 2012
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Verisign Reports 13% Year-Over-Year Revenue Growth in First Quarter 2012

Company Names George E. Kilguss, III as Chief Financial Officer

RESTON, VA -- (Marketwire) -- 04/26/12 -- VeriSign, Inc. (NASDAQ: VRSN), the trusted provider of Internet infrastructure services for the networked world, today reported financial results for the first quarter ended March 31, 2012.

First Quarter GAAP Financial Results
VeriSign, Inc. and subsidiaries ("Verisign") reported revenue of $206 million for the first quarter of 2012, up 13% from the same quarter in 2011. Verisign reported net income of $68 million and diluted earnings per share (EPS) of $0.42 for the first quarter of 2012, compared to net income of $41 million and diluted EPS of $0.24 in the same quarter in 2011. The operating margin was 48.1% for the first quarter of 2012 compared to 36.1% for the same quarter in 2011.

First Quarter Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $68 million and diluted EPS of $0.42 for the first quarter of 2012, compared to net income of $55 million and diluted EPS of $0.32 for the same quarter in 2011. The non-GAAP operating margin was 51.9% for the first quarter of 2012 compared to 45.9% for the same quarter in 2011. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.

"The first quarter was another record in terms of new domain name registrations, reflecting the global growth in internet adoption and e-commerce," commented Jim Bidzos, executive chairman, president and chief executive officer. "We believe that the security and stability Verisign has provided spanning two decades, and continues to provide, is an important factor in that growth."

"Our first quarter results demonstrate our continued financial and operational discipline," said John Calys, interim chief financial officer of Verisign. "We remain committed to delivering shareholder value."

In addition, the company has appointed George E. Kilguss, III to the position of chief financial officer effective May 14, 2012. Kilguss will report directly to Jim Bidzos, and will have full responsibility for the company's financial operations. John Calys will remain with the company as vice president, controller.

Kilguss most recently served as chief financial officer of Internap Network Services and has significant financial management, operations, and development experience in publicly traded technology companies, as well as in the investment banking sector. In addition to Internap, Kilguss has served as chief financial officer of Towerstream Corporation and Stratos Global Corporation.

"We are very pleased to announce George Kilguss as Verisign's new Chief Financial Officer," said Bidzos. "With over 25 years of strategic and operational financial management experience, including as CFO of three public companies, George brings a broad wealth of knowledge and expertise to Verisign."

Financial Highlights

Business Highlights

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 Verisign stockholders is appended to this release. All non-GAAP figures for each period presented herein have been conformed to exclude the foregoing items under GAAP. Prior disclosures of non-GAAP figures do not exclude the same items and as such should not be used for comparison purposes.

Today's Conference Call
Verisign will host a live conference call today at 4:30 p.m. (ET) to review the first quarter 2012 results. The call will be accessible by direct dial at (888) 676-VRSN (US) or (913) 312-0960 (international). A listen-only live webcast and accompanying slide presentation of the first quarter 2012 earnings conference call will also be available at http://investor.verisign.com. A replay of this call will be available at (888) 203-1112 or (719) 457-0820 (passcode: 3993941) beginning at 8:00 p.m. (ET) on April 26, 2012, and will run through May 3, 2012, at 7:00 p.m. (ET). An audio archive of the call will be available at https://investor.verisign.com/events.cfm. This press release and the financial information discussed on today's conference call are available at http://investor.verisign.com.

About Verisign
VeriSign, Inc. (NASDAQ: VRSN) is the trusted provider of Internet infrastructure services for the networked world. Billions of times each day, Verisign helps companies and consumers all over the world connect between the dots. Additional news and information about the company is available at www.verisigninc.com.

VRSNF

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 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, pricing pressure from competing services offered at prices below our prices and changes in marketing practices including those of third-party registrars; challenging global economic conditions; challenges to ongoing privatization of Internet administration; the outcome of legal or other challenges resulting from our activities or the activities of registrars or registrants, or litigation generally; new or existing governmental laws and regulations; changes in customer behavior, Internet platforms and web-browsing patterns; the uncertainty of whether Verisign will successfully develop and market new services; the uncertainty of whether our new services will achieve market acceptance or result in any revenues; system interruptions; security breaches; attacks on the Internet by hackers, viruses, or intentional acts of vandalism; the uncertainty of the expense and duration of transition services and requests for indemnification relating to completed divestitures; the uncertainty of whether Project Apollo will achieve its stated objectives; the impact of the introduction of new gTLDs and whether our gTLD applications or the applicants' gTLD applications for which we have contracted to provide back-end registry services will be successful; and the uncertainty of whether the .com Registry Agreement renewal will occur on or before November 30, 2012, if at all. 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, 2011, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Verisign undertakes no obligation to update any of the forward-looking statements after the date of this announcement.

©2012 VeriSign, Inc. All rights reserved. VERISIGN, the VERISIGN logo, and other trademarks, service marks, and designs are registered or unregistered trademarks of VeriSign, Inc. and its subsidiaries in the United States and in foreign countries. All other trademarks are property of their respective owners.






                               VERISIGN, INC.

                    CONDENSED CONSOLIDATED BALANCE SHEETS

                      (In thousands, except par value)

                                 (Unaudited)



                                                   March 31,   December 31,

                                                     2012          2011

                                                 ------------  ------------

                     ASSETS

Current assets:

  Cash and cash equivalents                      $  1,353,040  $  1,313,349

  Marketable securities                                32,803        32,860

  Accounts receivable, net                             13,553        14,974

  Deferred tax assets and other current assets         74,287        86,598

                                                 ------------  ------------

    Total current assets                            1,473,683     1,447,781

                                                 ------------  ------------

Property and equipment, net                           328,474       327,136

Goodwill and other intangible assets, net              53,525        53,848

Other assets                                           27,078        27,414

                                                 ------------  ------------

    Total long-term assets                            409,077       408,398

                                                 ------------  ------------

    Total assets                                 $  1,882,760  $  1,856,179

                                                 ============  ============



      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

  Accounts payable and accrued liabilities       $     99,640  $    156,385

  Deferred revenues                                   542,976       502,538

                                                 ------------  ------------

    Total current liabilities                         642,616       658,923

                                                 ------------  ------------

Long-term deferred revenues                           240,314       226,033

Convertible debentures, including contingent

 interest derivative                                  592,821       590,086

Long-term debt                                        100,000       100,000

Long-term deferred tax liabilities                    333,181       325,527

Other long-term liabilities                            45,161        43,717

                                                 ------------  ------------

    Total long-term liabilities                     1,311,477     1,285,363

                                                 ------------  ------------

    Total liabilities                               1,954,093     1,944,286

                                                 ------------  ------------

Commitments and contingencies



Stockholders' 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:

 317,722 at March 31, 2012 and 316,781 at

 December 31, 2011; Outstanding shares: 158,352

 at March 31, 2012 and 159,422 at December 31,

 2011                                                     318           317

Additional paid-in capital                         20,084,011    20,135,237

Accumulated deficit                               (20,152,568)  (20,220,577)

Accumulated other comprehensive loss                   (3,094)       (3,084)

                                                 ------------  ------------

    Total stockholders' deficit                       (71,333)      (88,107)

                                                 ------------  ------------

    Total liabilities and stockholders' deficit  $  1,882,760  $  1,856,179

                                                 ============  ============







                               VERISIGN, INC.

  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

                   (In thousands, except per share data)

                                 (Unaudited)



                                                       Three Months Ended

                                                            March 31,

                                                     ----------------------

                                                        2012        2011

                                                     ----------  ----------



Revenues                                             $  205,726  $  181,523

                                                     ----------  ----------



Costs and expenses:

  Cost of revenues                                       41,256      40,869

  Sales and marketing                                    27,815      22,391

  Research and development                               14,765      13,594

  General and administrative                             23,508      33,629

  Restructuring charges                                    (548)      5,530

                                                     ----------  ----------

    Total costs and expenses                            106,796     116,013

                                                     ----------  ----------

Operating income                                         98,930      65,510

Interest expense                                        (12,340)    (11,820)

Non-operating income, net                                   807       5,478

                                                     ----------  ----------

Income from continuing operations before income

 taxes                                                   87,397      59,168

Income tax expense                                      (21,292)    (16,875)

                                                     ----------  ----------

Income from continuing operations, net of tax            66,105      42,293

Income (loss) from discontinued operations, net of

 tax                                                      1,904      (1,522)

                                                     ----------  ----------

Net income                                               68,009      40,771

                                                     ----------  ----------

  Foreign currency translation adjustments                    -          28

  Change in unrealized gain on investments, net of

   tax                                                       (5)       (458)

  Realized gain on investments, net of tax, included

   in net income                                             (5)        (27)

                                                     ----------  ----------

Other comprehensive loss                                    (10)       (457)

                                                     ----------  ----------

Comprehensive income                                 $   67,999  $   40,314

                                                     ==========  ==========



Basic income per share from:



  Continuing operations                              $     0.41  $     0.25

  Discontinued operations                                  0.02       (0.01)

                                                     ----------  ----------

  Net income                                         $     0.43  $     0.24

                                                     ==========  ==========



Diluted income per share from:



  Continuing operations                              $     0.41  $     0.25

  Discontinued operations                                  0.01       (0.01)

                                                     ----------  ----------

  Net income                                         $     0.42  $     0.24

                                                     ==========  ==========



Shares used to compute net income per share:



  Basic                                                 159,344     170,193

                                                     ==========  ==========

  Diluted                                               162,881     171,979

                                                     ==========  ==========







                               VERISIGN, INC.

              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (In thousands)

                                (Unaudited)



                                                       Three Months Ended

                                                            March 31,

                                                     ----------------------

                                                        2012        2011

                                                     ----------  ----------



Cash flows from operating activities:

  Net income                                         $   68,009  $   40,771

  Adjustments to reconcile net income to net cash

   provided by operating activities:

    Depreciation of property and equipment and

     amortization of other intangible assets             12,741      13,968

    Stock-based compensation                              8,130      14,950

    Excess tax benefit associated with stock-based

     compensation                                        (3,567)     (3,615)

    Other, net                                            1,006       2,129

    Changes in operating assets and liabilities:

      Accounts receivable                                 1,392        (985)

      Deferred tax assets and other assets               12,720       3,975

      Accounts payable and accrued liabilities          (44,872)    (16,814)

      Deferred revenues                                  54,719      35,908

                                                     ----------  ----------

        Net cash provided by operating activities       110,278      90,287

                                                     ----------  ----------

Cash flows from investing activities:

  Proceeds from maturities and sales of marketable

   securities and investments                             5,060      11,238

  Purchases of marketable securities and investments     (5,082)    (18,008)

  Purchases of property and equipment                   (12,917)    (15,565)

  Other investing activities                                  -      (1,181)

                                                     ----------  ----------

        Net cash used in investing activities           (12,939)    (23,516)

                                                     ----------  ----------



Cash flows from financing activities:

  Proceeds from issuance of common stock from option

   exercises and employee stock purchase plans           11,390      16,550

  Repurchases of common stock                           (75,149)   (207,428)

  Excess tax benefit associated with stock-based

   compensation                                           3,567       3,615

  Other financing activities                                189           -

                                                     ----------  ----------

        Net cash used in financing activities           (60,003)   (187,263)

                                                     ----------  ----------



Effect of exchange rate changes on cash and cash

 equivalents                                              2,355       1,690

                                                     ----------  ----------

Net increase (decrease) in cash and cash equivalents     39,691    (118,802)

Cash and cash equivalents at beginning of period      1,313,349   1,559,628

                                                     ----------  ----------

Cash and cash equivalents at end of period           $1,353,040  $1,440,826

                                                     ==========  ==========



Supplemental cash flow disclosures:

  Cash paid for interest, net of capitalized

   interest                                          $   20,036  $   20,062

                                                     ==========  ==========



  Cash paid for income taxes, net of refunds

   received                                          $   13,186  $    2,539

                                                     ==========  ==========





                               VERISIGN, INC.

                  STATEMENTS OF OPERATIONS RECONCILIATION

                   (In thousands, except per share data)

                                 (Unaudited)



                                  Three Months Ended    Three Months Ended

                                    March 31, 2012        March 31, 2011

                                 --------------------  --------------------

                                 Operating     Net     Operating     Net

                                   Income     Income     Income     Income

                                 ---------  ---------  ---------  ---------



GAAP as reported                 $  98,930  $  68,009  $  65,510  $  40,771

  Discontinued operations                      (1,904)                1,522

  Adjustments:

    Stock-based compensation         8,130      8,130     11,961     11,961

    Amortization of other

     intangible assets                 323        323        323        323

    Restructuring charges             (548)      (548)     5,530      5,530

    Unrealized loss on

     contingent interest

     derivative on Convertible

     Debentures                                   813                   450

    Non-cash interest expense                   1,620                 1,664

  Tax adjustment                               (8,028)               (6,854)

                                            ---------  ---------  ---------

Non-GAAP as adjusted             $ 106,835  $  68,415  $  83,324  $  55,367

                                 =========  =========  =========  =========



Revenues                         $ 205,726             $ 181,523

Non-GAAP operating margin             51.9%                 45.9%

                                 =========             =========

Diluted shares                                162,881               171,979

Per diluted share, non-GAAP as

 adjusted                                   $    0.42             $    0.32

                                            =========             =========





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 release, 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: 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. All non-GAAP figures for each period presented above have been conformed to exclude the foregoing items under GAAP. Prior disclosures of non-GAAP figures do not exclude the same items and as such should not be used for comparison purposes.

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

The following table presents the classification of stock-based compensation:

                                                         Three Months Ended

                                                       ---------------------

                                                        March 31,  March 31,

                                                          2012       2011

                                                       ---------- ----------

   Cost of revenues                                    $    1,537 $    1,990

   Sales and marketing                                      1,516      1,854

   Research and development                                 1,242      1,518

   General and administrative                               3,835      6,599

   Restructuring charges                                        -      2,989

                                                       ---------- ----------

Total stock-based compensation expense                 $    8,130 $   14,950

                                                       ========== ==========

Source: VeriSign, Inc.

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