EXHIBIT 99.2
The following unaudited pro forma consolidated financial information is being filed herewith:
• | Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2005 |
• | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2005 |
• | Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2004 |
• | Notes to Unaudited Pro Forma Condensed Consolidated Financial Information. |
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2005 gives effect to the sale as if it had occurred as of September 30, 2005 and removes the assets sold and liabilities assumed of the payment gateway business of VeriSign.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended September 30, 2005, and the year ended December 31, 2004, give effect to the sale as if it had occurred at the beginning of each period presented. The Unaudited Pro Forma Condensed Consolidated Statements of Operations were prepared based on the Unaudited Condensed Consolidated Statements of Operations for the nine months ended September 30, 2005, and the Audited Consolidated Statements of Operations of VeriSign for the year ended December 31, 2004.
The unaudited pro forma condensed consolidated financial information is based on estimates and assumptions. These estimates and assumptions have been made solely for purposes of developing this pro forma information. Unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the consolidated financial position or results of operations of future periods or the results that actually would have been realized had the payment gateway business been sold during this period. This unaudited pro forma condensed consolidated financial information is based upon the historical consolidated financial statements of VeriSign, Inc.
VERISIGN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2005
(In thousands, except share data)
VeriSign, Inc. | Payment Services (1) | Adjustments | Pro Forma | ||||||||||||
ASSETS | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 309,944 | $ | 1,866 | $ | 370,000 | (2) | $ | 678,078 | ||||||
Short-term investments | 438,236 | — | — | 438,236 | |||||||||||
Accounts receivable, net | 271,210 | — | — | 271,210 | |||||||||||
Prepaid expenses and other current assets | 90,191 | — | — | 90,191 | |||||||||||
Deferred tax assets | 17,290 | — | — | 17,290 | |||||||||||
Total current assets | 1,126,871 | 1,866 | 370,000 | 1,495,005 | |||||||||||
Property and equipment, net | 528,291 | 4,546 | — | 523,745 | |||||||||||
Goodwill | 1,006,441 | — | — | 1,006,441 | |||||||||||
Other intangible assets, net | 224,981 | — | — | 224,981 | |||||||||||
Restricted cash | 50,972 | — | — | 50,972 | |||||||||||
Long-term note receivable | 25,800 | — | — | 25,800 | |||||||||||
Other assets, net | 15,782 | — | — | 15,782 | |||||||||||
Total long-term assets | 1,852,267 | 4,546 | — | 1,847,721 | |||||||||||
Total assets | $ | 2,979,138 | $ | 6,412 | $ | 370,000 | $ | 3,342,726 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable and accrued liabilities | $ | 476,151 | $ | 1,866 | $ | 9,566 | (3) | $ | 483,851 | ||||||
Accrued restructuring costs | 8,354 | — | — | 8,354 | |||||||||||
Deferred revenue | 369,689 | 10,869 | — | 358,820 | |||||||||||
Total current liabilities | 854,194 | 12,735 | 9,566 | 851,025 | |||||||||||
Long-term deferred revenue | 123,646 | 1,363 | — | 122,283 | |||||||||||
Long-term accrued restructuring costs | 11,837 | — | — | 11,837 | |||||||||||
Deferred tax liabilities | 20,942 | — | — | 20,942 | |||||||||||
Other long-term liabilities | 5,550 | — | — | 5,550 | |||||||||||
Total long-term liabilities | 161,975 | 1,363 | — | 160,612 | |||||||||||
Total liabilities | 1,016,169 | 14,098 | 9,566 | 1,011,637 | |||||||||||
Minority Interest | 39,495 | — | — | 39,495 | |||||||||||
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: 257,228,503 (excluding 16,296,427 shares held in treasury ) | 257 | — | — | 257 | |||||||||||
Additional paid-in capital | 23,362,993 | — | 136,336 | (4) | 23,499,329 | ||||||||||
Unearned compensation | (13,221 | ) | — | — | (13,221 | ) | |||||||||
Accumulated deficit | (21,418,785 | ) | — | 231,784 | (5) | (21,187,001 | ) | ||||||||
Accumulated other comprehensive loss | (7,770 | ) | — | — | (7,770 | ) | |||||||||
Total stockholders’ equity | 1,923,474 | — | 368,120 | 2,291,594 | |||||||||||
Total liabilities and stockholders’ equity | $ | 2,979,138 | $ | 14,098 | $ | 377,686 | $ | 3,342,726 | |||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
VERISIGN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(In thousands, except per share data)
VeriSign, Inc. | Payment Services (6) | Pro Forma | ||||||||||
Revenues | $ | 1,260,587 | $ | 43,206 | $ | 1,217,381 | ||||||
Costs and expenses: | ||||||||||||
Cost of revenues | 390,678 | 7,061 | 383,617 | |||||||||
Sales and marketing | 386,611 | 9,267 | 377,344 | |||||||||
Research and development | 76,451 | 6,376 | 70,075 | |||||||||
General and administrative | 142,205 | 789 | 141,416 | |||||||||
Restructuring and other reversals | (1,471 | ) | — | (1,471 | ) | |||||||
Amortization other intangible assets | 73,896 | — | 73,896 | |||||||||
Acquired in-process research and development | 6,100 | — | 6,100 | |||||||||
Total costs and expenses | 1,074,470 | 23,493 | 1,050,977 | |||||||||
Operating income | 186,117 | 19,713 | 166,404 | |||||||||
Other income, net | 40,383 | — | 40,383 | |||||||||
Income before income taxes | 226,500 | 19,713 | 206,787 | |||||||||
Income tax expense | 91,456 | 7,964 | (7) | 83,492 | ||||||||
Net income | $ | 135,044 | $ | 11,749 | $ | 123,295 | ||||||
Net income per share: | ||||||||||||
Basic | $ | 0.52 | $ | 0.48 | ||||||||
Diluted | $ | 0.51 | $ | 0.46 | ||||||||
Shares used in per share computation: | ||||||||||||
Basic | 259,254 | 259,254 | ||||||||||
Diluted | 267,045 | 267,045 | ||||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
VERISIGN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
(In thousands, except per share data)
VeriSign, Inc. | Payment Services (6) | Pro Forma | ||||||||
Revenues | $ | 1,166,455 | $ | 48,149 | $ | 1,118,306 | ||||
Costs and expenses: | ||||||||||
Cost of revenues | 444,759 | 8,743 | 436,016 | |||||||
Sales and marketing | 253,480 | 11,733 | 241,747 | |||||||
Research and development | 67,346 | 6,941 | 60,405 | |||||||
General and administrative | 164,922 | 893 | 164,029 | |||||||
Restructuring and other charges | 24,780 | — | 24,780 | |||||||
Amortization other intangible assets | 79,440 | — | 79,440 | |||||||
Total costs and expenses | 1,034,727 | 28,310 | 1,006,417 | |||||||
Operating income | 131,728 | 19,839 | 111,889 | |||||||
Other income, net | 82,077 | — | 82,077 | |||||||
Income before income taxes | 213,805 | 19,839 | 193,966 | |||||||
Income tax expense | 27,580 | 2,559 | (7) | 25,021 | ||||||
Net income | $ | 186,225 | $ | 17,280 | $ | 168,945 | ||||
Net income per share: | ||||||||||
Basic | $ | 0.74 | $ | 0.67 | ||||||
Diluted | $ | 0.72 | $ | 0.65 | ||||||
Shares used in per share computation: | ||||||||||
Basic | 250,564 | 250,564 | ||||||||
Diluted | 257,992 | 257,992 | ||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
VERISIGN, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(1) | Represents the removal of assets sold and liabilities assumed related to VeriSign’s sale of its payment gateway business as of September 30, 2005. |
(2) | Represents consideration for VeriSign’s sale of its payment gateway business to PayPal. VeriSign received approximately $370 million in cash. |
(3) | Represents the accrual of transaction costs related to VeriSign’s sale of its payment gateway business for investment banking fees, legal and accounting fees, plus additional taxes resulting from the sale. |
(4) | Represents the tax benefit resulting from the realization of previously unrecognized net operating loss carryforwards attributable to exercised stock options. |
(5) | Represents the estimated gain on VeriSign’s sale of its payment gateway business as if sold on September 30, 2005. |
(6) | Represents removal of results of operations of the payment gateway business for the respective periods. Payments Services costs were based on charges directly incurred by the business unit. |
(7) | Assumes an estimated tax rate of 40.4% for the nine months ended September 30, 2005 and 12.9% for the year ended December 31, 2004 for the payment gateway business. These rates are consistent with those used in the respective Forms 10-Q and 10-K. |