Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Dec. 31, 2008 |
Current assets: | ||
Cash and cash equivalents | $1,432,306 | $789,068 |
Accounts receivable, net of allowance for doubtful accounts of $668 at September 30, 2009 and $1,208 at December 31, 2008 | 73,247 | 83,749 |
Prepaid expenses and other current assets | 151,003 | 268,178 |
Assets held for sale | 240,202 | 483,840 |
Total current assets | 1,896,758 | 1,624,835 |
Property and equipment, net | 372,413 | 385,498 |
Goodwill | 290,214 | 283,109 |
Other intangible assets, net | 24,681 | 35,312 |
Other assets | 37,397 | 38,118 |
Total long-term assets | 724,705 | 742,037 |
Total assets | 2,621,463 | 2,366,872 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 246,592 | 263,535 |
Accrued restructuring costs | 5,980 | 28,920 |
Deferred revenues | 656,751 | 629,800 |
Liabilities related to assets held for sale | 41,455 | 49,160 |
Other current liabilities | 2,712 | 5,463 |
Total current liabilities | 953,490 | 976,878 |
Long-term deferred revenues | 224,541 | 215,281 |
Long-term accrued restructuring costs | 3,114 | 3,037 |
Convertible debentures, including contingent interest derivative | 571,526 | 568,712 |
Other long-term liabilities | 86,692 | 84,543 |
Total long-term liabilities | 885,873 | 871,573 |
Total liabilities | 1,839,363 | 1,848,451 |
Commitments and contingencies | - | - |
VeriSign, Inc. and subsidiaries stockholders' equity: | ||
Preferred stock-par value $.001 per share; Authorized shares: 5,000,000; Issued and outstanding shares: none | 0 | 0 |
Common stock-par value $.001 per share; Authorized shares: 1,000,000,000; Issued and outstanding shares: 192,271,949 excluding 115,079,736 held in treasury, at September 30, 2009; and 191,547,795 excluding 112,717,587 held in treasury, at December 31, 2008 | 307 | 304 |
Additional paid-in capital | 22,009,195 | 21,891,786 |
Accumulated deficit | (21,286,483) | (21,439,988) |
Accumulated other comprehensive income | 9,039 | 17,111 |
Total VeriSign, Inc. and subsidiaries stockholders' equity | 732,058 | 469,213 |
Noncontrolling interest in subsidiary | 50,042 | 49,208 |
Total stockholders' equity | 782,100 | 518,421 |
Total liabilities and stockholders' equity | $2,621,463 | $2,366,872 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Thousands, except Share data | Sep. 30, 2009
| Dec. 31, 2008
|
Accounts receivable, allowance for doubtful accounts | $668 | $1,208 |
Preferred stock, par value | 0.001 | 0.001 |
Preferred stock, Authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, Issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | 0.001 | 0.001 |
Common stock, Authorized shares | 1,000,000,000 | 1,000,000,000 |
Common stock, Issued and outstanding shares | 192,271,949 | 191,547,795 |
Common stock, held in treasury | 115,079,736 | 112,717,587 |
Statement Of Income Alternative
Statement Of Income Alternative (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Revenues | $257,995 | $245,934 | $769,609 | $723,232 |
Costs and expenses: | ||||
Cost of revenues | 56,736 | 57,265 | 174,520 | 172,498 |
Sales and marketing | 45,015 | 41,646 | 128,341 | 133,779 |
Research and development | 24,940 | 21,764 | 72,976 | 70,528 |
General and administrative | 42,634 | 49,677 | 134,721 | 152,742 |
Restructuring, impairments and other charges | 10,428 | 5,909 | 15,673 | 107,293 |
Amortization of other intangible assets | 3,112 | 2,500 | 9,394 | 7,675 |
Total costs and expenses | 182,865 | 178,761 | 535,625 | 644,515 |
Operating income | 75,130 | 67,173 | 233,984 | 78,717 |
Other loss, net | (8,669) | (13,450) | (23,228) | (22,308) |
Income from continuing operations before income taxes and loss from unconsolidated entities | 66,461 | 53,723 | 210,756 | 56,409 |
Income tax expense | 18,111 | 8,876 | 71,213 | 7,466 |
Loss from unconsolidated entities, net of tax | 0 | (2,509) | 0 | (3,099) |
Income from continuing operations, net of tax | 48,350 | 42,338 | 139,543 | 45,844 |
Income (loss) from discontinued operations, net of tax | 6,249 | (242,613) | 16,343 | (321,463) |
Net income (loss) | 54,599 | (200,275) | 155,886 | (275,619) |
Less: Net income attributable to noncontrolling interest in subsidiary | (988) | (815) | (2,381) | (2,710) |
Net income (loss) attributable to VeriSign, Inc. and subsidiaries common stockholders | 53,611 | (201,090) | 153,505 | (278,329) |
Basic income (loss) per share attributable to VeriSign, Inc. and subsidiaries common stockholders from: | ||||
Continuing operations | 0.25 | 0.21 | 0.71 | 0.22 |
Discontinued operations | 0.03 | -1.25 | 0.09 | -1.62 |
Net income (loss) | 0.28 | -1.04 | 0.8 | -1.4 |
Diluted income (loss) per share attributable to VeriSign, Inc. and subsidiaries common stockholders from: | ||||
Continuing operations | 0.24 | 0.21 | 0.71 | 0.21 |
Discontinued operations | 0.04 | -1.24 | 0.08 | -1.58 |
Net income (loss) | 0.28 | -1.03 | 0.79 | -1.37 |
Shares used to compute net income (loss) per share attributable to VeriSign, Inc. and subsidiaries common stockholders: | ||||
Basic | 192,619 | 193,853 | 192,527 | 198,622 |
Diluted | 193,472 | 195,930 | 193,235 | 202,951 |
Amounts attributable to VeriSign, Inc. and subsidiaries common stockholders: | ||||
Income from continuing operations, net of tax | 47,362 | 41,523 | 137,162 | 43,134 |
Income (loss) from discontinued operations, net of tax | 6,249 | (242,613) | 16,343 | (321,463) |
Net income (loss) attributable to VeriSign, Inc. and subsidiaries common stockholders | $53,611 | ($201,090) | $153,505 | ($278,329) |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | |
In Thousands | Total
|
Beginning Balance Adjusted at Dec. 31, 2008 | $518,421 |
Beginning Balance at Dec. 31, 2008 | 50,795 |
Cumulative adjustment to beginning balance upon adoption of FSP APB 14-1, codified into FASB ASC Subtopic 470-20 (Note 1) | 418,418 |
Cumulative adjustment to beginning balance upon adoption of FAS 160, codified into ASC 810 (Note 1) | 49,208 |
Comprehensive income: | |
Net income | 155,886 |
Other comprehensive income: | |
Foreign currency translation adjustments | (9,039) |
Change in unrealized gain on investments, net of tax | 207 |
Total comprehensive income | 147,054 |
Issuance of common stock under stock plans | 32,906 |
Stock-based compensation | 41,449 |
Dividend declared to noncontrolling interest in subsidiary | (807) |
Income tax associated with stock options | 94,759 |
Repurchase of common stock | (51,682) |
Ending Balance at Sep. 30, 2009 | $782,100 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Cash flows from operating activities: | ||
Net income (loss) | $155,886 | ($275,619) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Loss (gain) on divestiture of businesses, net of tax | 46,000 | (32,853) |
Depreciation of property and equipment | 52,321 | 85,593 |
Amortization of other intangible assets | 9,394 | 22,758 |
Estimated (reversals) losses on assets held for sale | (33,293) | 308,765 |
Stock-based compensation | 39,405 | 75,368 |
Loss on sale and impairment of long-lived assets | 14,237 | 80,534 |
Impairment of goodwill | 0 | 45,793 |
Excess tax benefit associated with stock-based compensation | (100,583) | (7,094) |
Other, net | (5,951) | 5,846 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 14,519 | 30,547 |
Prepaid expenses and other assets | (7,271) | 12,093 |
Accounts payable and accrued liabilities | 28,209 | (116,273) |
Accrued restructuring costs | (22,841) | 29,752 |
Deferred revenues | 32,010 | 97,830 |
Net cash provided by operating activities | 222,042 | 363,040 |
Cash flows from investing activities: | ||
Proceeds from maturities and sales of investments | 117,901 | 1,440 |
Proceeds from sale of property and equipment | 0 | 48,843 |
Purchases of property and equipment | (66,067) | (88,093) |
Reclassification of cash equivalents to short-term investments | 0 | (248,403) |
Proceeds received from divestiture of businesses, net of cash provided | 282,178 | 60,613 |
Investment in unconsolidated entities | 0 | (15,679) |
Cash received from trust, previously restricted | 0 | 45,000 |
Other investing activities | (3,300) | 5,697 |
Net cash provided by (used in) investing activities | 330,712 | (190,582) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock from option exercises and employee stock purchase plan | 32,906 | 120,591 |
Repurchases of common stock | (51,682) | (1,276,683) |
Proceeds from credit facility | 0 | 200,000 |
Repayment of short-term debt related to credit facility | 0 | (200,000) |
Excess tax benefit associated with stock-based compensation | 100,583 | 7,094 |
Dividend paid to noncontrolling interest in subsidiary | (113) | (741) |
Net cash provided by (used in) financing activities | 81,694 | (1,149,739) |
Effect of exchange rate changes on cash and cash equivalents | 8,790 | 4,084 |
Net increase (decrease) in cash and cash equivalents | 643,238 | (973,197) |
Cash and cash equivalents at beginning of period | 789,068 | 1,376,722 |
Cash and cash equivalents at end of period | 1,432,306 | 403,525 |
Supplemental cash flow disclosures: | ||
Cash paid for interest, net of capitalized interest | 39,256 | 35,677 |
Dividend payable to noncontrolling interest in subsidiary | $694 | $0 |
Note 1. Basis of Presentation
Note 1. Basis of Presentation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 1. Basis of Presentation | Note1. Basis of Presentation Interim Financial Statements The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by VeriSign, Inc. and its subsidiaries (collectively, VeriSign or the Company) in accordance with the instructions to Form10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, do not include all information and notes normally provided in audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and other adjustments) considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of, nor comparable to, the results of operations for any other interim period or for a full fiscal year. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes contained in VeriSigns fiscal 2008 Annual Report on Form10-K (the 2008 Form 10-K) filed with the SEC on March3, 2009. The Company evaluated subsequent events through November6, 2009, the date this Quarterly Report on Form10-Q was filed with the SEC. Reclassifications The Condensed Consolidated Statements of Operations have been reclassified for all periods presented to reflect current discontinued operations treatment. Unless noted otherwise, discussions in the Notes to Condensed Consolidated Financial Statements pertain to continuing operations. During the first quarter of 2009, the Company disaggregated its Enterprise and Security Services (ESS) disposal group held for sale, into the following three businesses: (i)Global Security Consulting (GSC), (ii)iDefense Security Intelligence Services (iDefense) and (iii)Managed Security Services (MSS). The Company decided to retain its iDefense business and, accordingly, reclassified the assets and liabilities related to iDefense as held and used in 2009. The Company also reclassified the historical results of operations of iDefense from discontinued operations to continuing operations for all periods presented. Recent Accounting Pronouncements In October 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.2009-13Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangementsa consensus of the FASB Emerging Issues Task Force (ASU 2009-13). ASU 2009-13 addresses how to measure and allocate arrangement consideration to one or more units of accounting within a multiple-deliverable arrangement. ASU 2009-13 modifies the requirements for determining whether a deliverable can be treated as a separate unit of accounting by removing the criteria that objective evidence of fair value exist for the undelivered elements in order to account for those undelivered elements as a single unit of accounting. ASU 2009-13 is effective for the Company prospectively for revenue arrangements entered into or materially modified beginning January1, 2011. Early adoption is permitted. Currently, the Company is evaluating the impact adoption will have on its financial condition and resu |
Note 2. Stock-Based Compensatio
Note 2. Stock-Based Compensation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 2. Stock-Based Compensation | Note2. Stock-Based Compensation Stock-based compensation is classified in the Condensed Consolidated Statements of Operations in the same expense line items as cash compensation. The following table presents the classification of stock-based compensation: ThreeMonthsEnded September30, NineMonthsEnded September30, 2009 2008 2009 2008 (In thousands) Cost of revenues $ 1,886 $ 1,721 $ 5,349 $ 6,231 Sales and marketing 2,350 712 7,496 6,931 Research and development 1,789 1,499 4,798 5,803 General and administrative 4,080 4,568 15,048 21,193 Restructuring and other charges 137 3,151 935 8,323 Stock-based compensation for continuing operations 10,242 11,651 33,626 48,481 Stock-based compensation for discontinued operations 1,067 7,386 5,779 26,887 Total consolidated stock-based compensation $ 11,309 $ 19,037 $ 39,405 $ 75,368 VeriSign currently uses the Black-Scholes option pricing model to determine the fair value of stock options and employee stock purchase plan awards. The determination of the fair value of stock-based payment awards using an option-pricing model is affected by the Companys stock price as well as assumptions regarding a number of complex and subjective variables. The following table sets forth the weighted-average assumptions used to estimate the fair value of the stock options and employee stock purchase plan awards: ThreeMonthsEnded September30, NineMonthsEnded September30, 2009 2008 2009 2008 Stock options: Volatility 40 % 35 % 46 % 35 % Risk-free interest rate 2.07 % 2.87 % 1.56 % 2.77 % Expected term 3.29 3.41 3.67 3.29 Dividend yield Zero Zero Zero Zero Employee stock purchase plan awards: Volatility 44 % 36 % 50 % 36 % Risk-free interest rate 0.54 % 2.28 % 0.50 % 2.31 % Expected term 1.25 1.25 1.25 1.25 Dividend yield Zero Zero Zero Zero VeriSigns expected volatility is based on the average of the historical volatility over the period commensurate with the expected term of the options and the mean historical implied volatility of traded options. The risk-free interest rates are derived from the average United States (U.S.) Treasury constant maturity rates during the respective periods commensurate with the expected term. The expected terms are based on an analysis of the observed and expected time to post-vesting exercise and/or cancellation of options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option and |
Note 3. Assets Held for Sale an
Note 3. Assets Held for Sale and Discontinued Operations | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 3. Assets Held for Sale and Discontinued Operations | Note 3. Assets Held for Sale and Discontinued Operations In 2007, VeriSign announced a change to its business strategy to allow management to focus its attention on its core competencies and to make additional resources available to invest in its core businesses. This strategy calls for the divesture or winding down of the following remaining non-core businesses in the Companys portfolio as of September30, 2009: GSC (sold in October 2009), Messaging Services, and Pre-Pay billing and payment (Pre-Pay) Services. The Messaging Services business is comprised of Messaging and Mobile Media (MMM) Services (sold in October 2009), Content Portal Services (CPS), and Mobile Delivery Gateway (MDG) Services. All of the remaining non-core businesses in the Companys portfolio, except for the Pre-Pay Services business, which the Company is currently in the process of winding down, are classified as disposal groups held for sale as of September30, 2009, and their results of operations have been classified as discontinued operations for all periods presented. During the first quarter of 2009, the Company disaggregated its ESS disposal group held for sale into the following three businesses: (i)GSC, (ii)iDefense and (iii)MSS. The Company decided to retain its iDefense business and, accordingly, reclassified the assets and liabilities related to iDefense as held and used in 2009. The Company also reclassified the historical results of operations of iDefense from discontinued operations to continuing operations as part of Naming Services for all periods presented. Completed Divestitures during 2009 On July6, 2009, the Company sold its MSS business which enables enterprises to effectively monitor and manage their network security infrastructure 24 hours per day, every day of the year, while reducing the associated time, expense, and personnel commitments by relying on the MSS Business security platform and experienced security staff for a net cash consideration of $42.9 million. During the nine months ended September30, 2009, the Company recorded a loss on sale of $5.3 million, net of an income tax expense of $12.9 million, and reversal of estimated losses on disposal recorded prior to sale. On May5, 2009, the Company sold its Real-Time Publisher (RTP) Services business which allows organizations to obtain access to and organize large amounts of constantly updated content, and distribute it, in real time, to enterprises, Web-portal developers, application developers and consumers. During the nine months ended September30, 2009, the Company recorded a gain on sale of $7.2 million, net of an income tax benefit of $5.2 million, and reversal of estimated losses on disposal recorded prior to sale. On May1, 2009, the Company sold its Communications Services business which provides Billing and Commerce Services, Connectivity and Interoperability Services, and Intelligent Database Services to Transaction Network Services, Inc. (TNS) for cash consideration of $226.2 million. During the nine months ended September30, 2009, the Company recorded a loss on sale of $57.3 million, net of an income tax expense of $55.3 million, and estimated losses on disposa |
Note 4. Restructuring, Impairme
Note 4. Restructuring, Impairments and Other Charges | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 4. Restructuring, Impairments and Other Charges | Note4. Restructuring, Impairments and Other Charges A comparison of restructuring, impairments and other charges is presented below: ThreeMonthsEnded September30, NineMonthsEnded September30, 2009 2008 2009 2008 (In thousands) Restructuring charges for continuing operations $ 744 $ 5,895 $ 5,927 $ 28,210 Impairments for continuing operations 9,684 9,684 Other charges for continuing operations 14 62 79,083 Total restructuring, impairments and other charges for continuing operations 10,428 5,909 15,673 107,293 Restructuring charges for discontinued operations 2,046 7,058 4,959 30,422 Impairments for discontinued operations 45,793 Total restructuring charges and impairments for discontinued operations 2,046 7,058 4,959 76,215 Total consolidated restructuring, impairments and other charges $ 12,474 $ 12,967 $ 20,632 $ 183,508 Restructuring Charges As part of its divestiture strategy, VeriSign initiated a restructuring plan in the first quarter of 2008 (the 2008 Restructuring Plan) which includes workforce reductions, abandonment of excess facilities and other exit costs. The restructuring charges in the table above are substantially related to the 2008 Restructuring Plan. Through September30, 2009, VeriSign recorded a total of $80.5 million in restructuring charges, inclusive of amounts for discontinued operations, under its 2008 Restructuring Plan. The following table presents the nature of the restructuring charges: ThreeMonthsEnded September30, NineMonthsEnded September30, 2009 2008 2009 2008 (In thousands) Continuing operations: Workforce reductionseverance and benefits $ 467 $ 1,408 $ 3,598 $ 17,161 Workforce reductionstock-based compensation 138 3,762 936 8,324 Total workforce reduction 605 5,170 4,534 25,485 Excess facilities 139 979 1,393 1,267 Other exit costs (254 ) 1,458 Total restructuring charges for continuing operations $ 744 $ 5,895 $ 5,927 $ 28,210 Discontinued operations: Workforce reductionseverance and benefits $ 1,585 $ 3,621 $ 3,768 $ 22,705 Workforce reductionstock-based compensation 458 3,437 1,049 7,717 Total workforce reduction 2,043 7,058 4,817 30,422 Excess facilities 3 142 Other exit costs Total restructuring charges for discontinued operations $ 2,046 $ 7,058 $ 4,959 $ 30,422 Consolidated: Workforce reductionseverance and benefits $ 2,052 $ 5,029 $ 7,366 $ 39 |
Note 5. Goodwill and Other Inta
Note 5. Goodwill and Other Intangible Assets | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 5. Goodwill and Other Intangible Assets | Note5. Goodwill and Other Intangible Assets The following table summarizes the changes in the carrying amount of goodwill during the nine months ended September30, 2009. (Inthousands) Balance at December31, 2008 $ 283,109 Reclassification from assets held for sale 7,000 Other adjustments (1) 105 Balance at September30, 2009 $ 290,214 (1) Other adjustments consist of foreign exchange fluctuations. During the first quarter of 2009, the Company disaggregated its ESS disposal group held for sale, into the following three businesses: (i)GSC, (ii)iDefense, and (iii)MSS. The Company decided to retain its iDefense business and, accordingly, reclassified goodwill of $7.0 million allocated to iDefense as held and used in 2009. The Company performs its annual impairment review of goodwill pertaining to its Naming Services, Authentication Services and VeriSign Japan reporting units, during the second quarter. During our 2009 annual impairment test, the Company determined that each of the reporting units had a fair value in excess of its carrying value and no further analysis was required. Due to a strategic change in the planned use of our indefinite-lived .name gTLD intangible asset during the third quarter of 2009, the Company performed an impairment assessment. The Company considered both the market and the income approaches. Based on the income approach using market participant assumptions, which was determined to be the highest and best use of this asset, the Company has concluded that the fair value of the .name gTLD intangible asset has been reduced below its carrying value. The estimated fair value of the intangible asset related to the Companys .name gTLD intangible asset was computed to be $2.0 million, and as a result the Company recorded an impairment charge of $9.7 million during the quarter ended September30, 2009. The Company also determined that the intangible asset has a finite life for which amortization costs will be recorded over its estimated useful life on a straight-line basis. During the second quarter of 2008, the Company recorded a goodwill impairment charge of $45.8 million in discontinued operations relating to its divested Post-Pay reporting unit. All impairment charges are recorded to Restructuring, impairments and other charges within our condensed consolidated statements of operations. |
Note 6. Other Balance Sheet Ite
Note 6. Other Balance Sheet Items | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 6. Other Balance Sheet Items | Note6. Other Balance Sheet Items Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: September30, 2009 December31, 2008 (In thousands) Prepaid expenses $ 25,068 $ 22,775 Deferred tax assets 70,454 64,482 Non-trade receivables 15,165 13,054 Receivables from buyers 6,233 14,899 Funds held by the Reserve 32,445 150,346 Other 1,638 2,622 Total prepaid expenses and other current assets $ 151,003 $ 268,178 As of September30, 2009, the Company had an aggregate of $32.4 million held by The Reserves Primary Fund (the Primary Fund) and The Reserve International Liquidity Fund, Ltd. (the International Fund), classified as Prepaid expenses and other current assets due to the lack of an active market for these investments. During the nine months ended September30, 2009, the Company received distributions of $13.9 million and $104.0 million from the Primary Fund and the International Fund, respectively. During October 2009, the Company received a distribution of $2.4 million from the Primary Fund. As of September30, 2009, Receivables from buyers consists of receivables related to sale consideration of $2.5 million and receivables for payments made on behalf of buyers under transition services agreements of $3.7 million for certain divested businesses. Property and Equipment, Net The following table presents the detail of Property and equipment, net: September30, 2009 December31, 2008 (In thousands) Land $ 133,746 $ 133,746 Buildings 130,748 135,242 Computer equipment and software 333,775 342,470 Capital work in progress 16,937 16,595 Office equipment, furniture and fixtures 15,005 15,491 Leasehold improvements 53,296 52,690 Total cost 683,507 696,234 Less: accumulated depreciation and amortization (311,094 ) (310,736 ) Total property and equipment, net $ 372,413 $ 385,498 Other Assets Other assets consist of the following: September30, 2009 December31, 2008 (In thousands) Long-term deferred tax assets $ 4,990 $ 2,562 Long-term investments 6,746 5,996 Debt issuance costs 12,545 13,233 Long-term restricted cash 1,895 1,858 Security deposits and other 11,221 14,469 Total other assets $ 37,397 $ 38,118 Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consist of the following: September30, 2009 December31, 2008 (In thousands) Accounts payable $ 23,661 $ 30,690 Accrued employee compensation 74,019 109,958 Customer deposits, net 22,314 30,432 Taxes payable and other tax liabilities 51,463 18,173 Other accrued liabilities 75,135 74,282 Total accounts payable and accrued liabiliti |
Note 7. Stockholders' Equity
Note 7. Stockholders' Equity | |
1/1/2009 - 9/30/2009
USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 7. Stockholders' Equity | Note7. Stockholders Equity Comprehensive Income (Loss) Comprehensive income (loss) consists of Net income (loss) adjusted for unrealized gains and losses on marketable securities classified as available-for-sale and foreign currency translation adjustments. The following table presents the components of Comprehensive income (loss): Three Months Ended September30, Nine Months Ended September30, 2009 2008 2009 2008 (In thousands) Net income (loss) $ 54,599 $ (200,275 ) $ 155,886 $ (275,619 ) Foreign currency translation adjustments 5,820 284 (9,039 ) 9,401 Change in unrealized (loss) gain on investments, net of tax (82 ) (91 ) 207 (407 ) Comprehensive income (loss) 60,337 (200,082 ) 147,054 (266,625 ) Less: Comprehensive income attributable to noncontrolling interest in subsidiary 3,645 1,225 1,621 6,383 Comprehensive income (loss) attributable to VeriSign Inc. common stockholders $ 56,692 $ (201,307 ) $ 145,433 $ (273,008 ) Repurchase of Common Stock In 2006, the Board of Directors authorized a stock repurchase program (the 2006 Stock Repurchase Program) with no expiration date to repurchase up to $1.0 billion of its common stock.In January 2008, theBoard of Directors authorized additional repurchasesof up to $600.0 million of the Companys common stock to be conductedthrough an accelerated share repurchase agreement and the repurchase of $600.0 million of the Companys common stock was completed in February 2008.In August 2008, the Board of Directors authorized the repurchase ofup to an additional $680.0 million ofthe Companyscommon stock with no expiration date in addition to the $320.0 million of the Companys common stockavailable for repurchase under the2006 Stock Repurchase Program (collectively, the 2008 Share Buyback Program).During the three months ended September30, 2009, VeriSign repurchased approximately 1.2million shares of its common stock at an average stock price of $21.54 for an aggregate of $25.0 million under the 2008 Share BuybackProgram. During the nine months ended September30, 2009, VeriSign repurchased approximately 2.0million shares of its common stock at an average stock price of $22.23 for an aggregate of $45.0 million under the 2008 StockBuyback Program. As of September30, 2009, approximately $905.0 million is available under the 2008 Share Buyback Program. |
Note 8. Calculation of Net Inco
Note 8. Calculation of Net Income (Loss) Per Share Attributable to VeriSign Common Stockholders | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 8. Calculation of Net Income (Loss) Per Share Attributable to VeriSign Common Stockholders | Note8. Calculation of Net Income (Loss) Per Share Attributable to VeriSign Common Stockholders The Company computes basic net income (loss) per share attributable to VeriSign common stockholders by dividing net income (loss) attributable to VeriSign common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share attributable to VeriSign common stockholders gives effect to dilutive potential common shares, including unvested stock options, unvested restricted stock units, employee stock purchases and the conversion spread relating to the Convertible Debentures using the treasury stock method. The following table presents the computation of basic and diluted net income (loss) per share attributable to VeriSign common stockholders: Three Months Ended September30, Nine Months Ended September30, 2009 2008 2009 2008 (In thousands, except per share data) Income (loss) attributable to VeriSign common stockholders: Income from continuing operations, net of tax $ 47,362 $ 41,523 $ 137,162 $ 43,134 Income (loss) from discontinued operations, net of tax 6,249 (242,613 ) 16,343 (321,463 ) Net income (loss) attributable to VeriSign common stockholders $ 53,611 $ (201,090 ) $ 153,505 $ (278,329 ) Weighted-average shares: Weighted-average shares of common stock outstanding 192,619 193,853 192,527 198,622 Weighted-average potential shares of common stock outstanding: Stock options 266 1,154 269 1,805 Unvested restricted stock awards 587 923 439 1,111 Conversion spread related to Convertible Debentures 1,103 Employee stock purchase plans 310 Shares used to compute diluted net income (loss) per share attributable to VeriSign common stockholders 193,472 195,930 193,235 202,951 Income (loss) per share attributable to VeriSign common stockholders: Basic: Continuing operations $ 0.25 $ 0.21 $ 0.71 $ 0.22 Discontinued operations 0.03 (1.25 ) 0.09 (1.62 ) Net income (loss) $ 0.28 $ (1.04 ) $ 0.80 $ (1.40 ) Diluted: Continuing operations $ 0.24 $ 0.21 $ 0.71 $ 0.21 Discontinued operations 0.04 (1.24 ) 0.08 (1.58 ) Net income (loss) $ 0.28 $ (1.03 ) $ 0.79 $ (1.37 ) Weighted-average potential shares of common stock do not include stock options with an exercise price that exceeded the average fair market value of VeriSigns common stock for the periods presented. The following table sets forth the weighted-average potential shares of common stock that were excluded from the above |
Note 9. Junior Subordinated Con
Note 9. Junior Subordinated Convertible Debentures | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 9. Junior Subordinated Convertible Debentures | Note 9.Junior Subordinated Convertible Debentures In 2007, the Company issued $1.25 billion principal amount of 3.25% convertible debentures due August15, 2037, to an initial purchaser in a private offering. The Convertible Debentures are subordinated in right of payment to the Companys existing and future senior debt and to the other liabilities of the Companys subsidiaries. The Convertible Debentures are initially convertible, subject to certain conditions, into shares of the Companys common stock at a conversion rate of 29.0968 shares of common stock per $1,000 principal amount of Convertible Debentures, representing an initial effective conversion price of approximately $34.37 per share of common stock. The conversion rate will be subject to adjustment for certain events as outlined in the Indenture governing the Convertible Debentures but will not be adjusted for accrued interest. As of September30, 2009, the if-converted value of the Convertible Debentures does not exceed its principal amount. Effective January1, 2009, the Company retroactively adopted FSP APB 14-1, codified in ASC 470-20, Debt with Conversion and Other Options. The standard specifies that issuers of convertible debt instruments should separately account for the liability (debt) and equity (conversion option) components of such instruments in a manner that reflects the borrowing rate for a similar non-convertible debt. The Company calculated the carrying value of the liability component at issuance as the present value of its cash flows using a discount rate of 8.5% (borrowing rate for similar non-convertible debt with no contingent payment options), adjusted for the fair value of the contingent interest feature, yielding an effective interest rate of 8.39%. The carrying value of the liability component was determined to be $550.5 million. The excess of the principal amount of the debt over the carrying value of the liability component is also called debt discount or equity component of the Convertible Debentures. The equity component of the Convertible Debentures on the date of issuance was $700.7 million. The debt discount will be amortized using the Companys effective interest rate of 8.39% over the term of the Convertible Debentures as a non-cash charge to interest expense included in Other loss, net. As of September30, 2009, the remaining term of the Convertible Debentures is 27.9 years. The table below presents the carrying amounts of the liability and equity components: September30, 2009 December31, 2008 (In thousands) Carrying amount of equity component (net of issuance costs of $14,449) $ 686,221 $ 686,221 Principal amount of Convertible Debentures $ 1,250,000 $ 1,250,000 Unamortized discount of liability component (687,224 ) (691,837 ) Carrying amount of liability component 562,776 558,163 Contingent interest derivative 8,750 10,549 Convertible debentures, including contingent interest derivative $ 571,526 $ 568,712 The table below presents the interest expense for th |
Note 10. Segment Information
Note 10. Segment Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 10. Segment Information | Note10. Segment Information Description of segments The Company has the following two reportable segments: (1) 3IS and (2) Other Services. The 3IS segment consists of Naming Services and Authentication Services. Naming Services is the authoritative directory provider of all .com, .net, .cc, .tv, .name and .jobs domain names. Authentication Services is comprised of Business Authentication Services, formerly known as Secure Socket Layer (SSL) Certificate Services; and User Authentication Services, formerly known as Identity and Authentication Services. Business Authentication Services enable enterprises and Internet merchants to implement and operate secure networks and websites that utilize SSL protocol. Business Authentication Services provide customers the means to authenticate themselves to their end users and website visitors and to encrypt communications between client browsers and Web servers. User Authentication Services include identity protection services, fraud detection services, managed public key infrastructure (PKI) services, and unified authentication services. User Authentication Services are intended to help enterprises secure intranets, extranets and other applications and devices, and provide authentication credentials. The Other Services segment consists of the continuing operations of the Companys non-core business and legacy products and services from divested businesses. The Company is in the process of winding down the operations of its Pre-Pay Services business. The segments were determined based on how the chief operating decision maker (CODM) views and evaluates VeriSigns operations. VeriSigns Chief Executive Officer has been identified as the CODM. Other factors, including customer base, homogeneity of products, technology and delivery channels, were also considered in determining the reportable segments. The following tables present the results of VeriSigns reportable segments: Three months ended September30, 2009 Three months ended September30, 2008 3IS Other Services Total Segments 3IS Other Services Total Segments (In thousands) (In thousands) Revenues: Naming Services $ 155,480 $ $ 155,480 $ 141,838 $ $ 141,838 Authentication Services 101,428 101,428 99,484 99,484 Other Services 1,087 1,087 4,612 4,612 Total revenues 256,908 1,087 257,995 241,322 4,612 245,934 Cost of revenues 47,574 515 48,089 41,415 2,098 43,513 $ 209,334 $ 572 $ 209,906 $ 199,907 $ 2,514 $ 202,421 Nine months ended September30, 2009 Nine months ended September30, 2008 3IS Other Services Total Segments 3IS Other Services Total Segments (In thousands) (In thousands) Revenues: Naming Services $ 457,206 $ $ 457,206 $ 403,034 $ $ 403,034 Authentication Services 307,162 |
Note 11. Other Loss, Net
Note 11. Other Loss, Net | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 11. Other Loss, Net | Note11. Other Loss, Net The following table presents the components of Other loss, net: Three MonthsEnded September30, Nine MonthsEnded September30, 2009 2008 2009 2008 (In thousands) Interest income $ 791 $ 3,981 $ 3,359 $ 15,004 Interest expense (11,867 ) (11,045 ) (35,477 ) (32,790 ) Net gain (loss) on sale and impairment of investments 5 (6,829 ) (41 ) (6,571 ) Net gain on divestiture of businesses 909 1,564 Unrealized gain (loss) on contingent interest derivative on convertible debentures 750 (420 ) 1,799 1,664 Income from transition services agreements 1,230 1,224 3,069 2,590 Other, net 422 (361 ) 3,154 (3,769 ) Total other loss, net $ (8,669 ) $ (13,450 ) $ (23,228 ) $ (22,308 ) Interest income is earned principally from the investment of VeriSigns surplus cash balances. Interest expense is derived principally from interest on VeriSigns Convertible Debentures. During the nine months ended September30, 2009, Other, net, primarily consists of $3.3 million received from Certicom Corporation (Certicom) due to the termination of the acquisition agreement entered into with Certicom during the three months ended March31, 2009. During the nine months ended September30, 2008, Other, net, primarily consists of net foreign exchange rate losses. During the three months ended September30, 2009 and 2008, Other, net, primarily consists of net foreign exchange rate gains and losses, respectively. |
Note 12. Income Taxes
Note 12. Income Taxes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 12. Income Taxes | Note12. Income Taxes During the three and nine months ended September30, 2009, the Company recorded income tax expense for continuing operations of $18.1 million and $71.2 million, respectively. During the three and nine months ended September30, 2008, the Company recorded income tax expense for continuing operations of $8.9 million and $7.5 million, respectively. On February20, 2009, the State of California enacted changes in tax laws that are expected to have a beneficial impact on the Companys effective tax rate beginning in 2011. As a result, the Company revalued certain state deferred tax assets and liabilities that are expected to reverse after the effective date of the change, and recognized a discrete income tax benefit adjustment of $4.1 million during the ninemonths endedSeptember 30, 2009. The Company applies a valuation allowance to certain deferred tax assets when management does not believe that it is more likely than not that they will be realized. These deferred tax assets consist primarily of investments with differing book and tax bases and net operating losses related to certain foreign operations. As of September30, 2009, and December31, 2008, the Company had gross unrecognized tax benefits for income taxes associated with uncertain tax positions of $28.2 million and $31.9 million, respectively. During the three and nine months ended September30, 2009, the Company recorded a reduction in unrecognized tax benefits of $5.3 million and $3.7 million, respectively. Of the decrease of $5.3 million for the three months ended September 30, 2009, $3.0 million was related to lapses in the applicable statute of limitations, $2.0 million was related to tax positions taken during a prior period, and $0.3 million was related to current period activities. Of the decrease of $3.7 million for the nine months ended September 30, 2009, $3.0 million was related to lapses in the applicable statute of limitations, $2.0 million was related to tax positions taken during a prior period, and an increase of $1.3 million was related to tax positions taken during the current year. As of September30, 2009 and December31, 2008, $28.8 million and $31.7 million, respectively, of unrecognized tax benefits, including penalties and interest, would affect the Companys effective tax rate if realized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of Income tax expense. During the three and nine months ended September30, 2009, the Company expensed $0.1 million and $0.7 million, respectively, for interest and penalties related to income tax liabilities through Income tax expense. During the three and nine months ended September30, 2008, the Company expensed $0.4 million and $1.3 million, respectively, for interest and penalties related to income tax liabilities through Income tax expense. The Companys major taxing jurisdictions are the Internal Revenue Service, the California Franchise Tax Board, the Japan National Tax Agency and the State of Virginia Department of Revenue. The Company is not currently under examination by the Internal Revenue Service or the Virginia Department of Revenu |
Note 13. Fair Value of Financia
Note 13. Fair Value of Financial Instruments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 13. Fair Value of Financial Instruments | Note13. Fair Value of Financial Instruments Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis as of September30, 2009: TotalFairValue asofSeptember30, 2009 Fair Value Measurement Using QuotedPricesin Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (Inthousands) Assets: Investments in money market funds and time deposits $ 1,342,689 $ 1,342,689 $ $ Equity investments 338 338 Foreign currency forward contracts 19 19 Total $ 1,343,046 $ 1,343,027 $ 19 $ Liabilities: Contingent interest derivative on Convertible Debentures 8,750 $ $ 8,750 Total $ 8,750 $ $ $ 8,750 The fair value of the Companys investments in certain money market funds and time deposits approximates their face value. Such instruments are classified as Level 1 and are included in Cash and cash equivalents. The fair value of the Companys foreign currency forward contracts is based on foreign currency rates quoted by banks or foreign currency dealers and other public data sources. The Company recorded unrealized gains and losses related to changes in the fair value of its foreign currency forward contracts in Other loss, net. The Company recorded an unrealized gain of $0.5 million and an unrealizedloss of $0.3 million during thethree months ended September30, 2009 and 2008, respectively, related to changes in the fair value of its foreign currency forward contracts. The Company recorded an unrealized gain of $1.2 million and an unrealized loss of $1.7 million during the nine months ended September30, 2009 and 2008, respectively, related to changes in the fair value of its foreign currency forward contracts. Equity investments relate to the Companys investments in the securities of other public companies. The fair value of these investments is based on the quoted market prices of the underlying shares. Such investments are included in Prepaid expenses and other current assets. The Companys Convertible Debentures have contingent interest payments that are considered to be an embedded derivative. The Company accounts for the embedded derivative separately from the Convertible Debentures at fair value, with gains and losses reported in Other loss, net. The Company has utilized a valuation model based on simulations of stock prices, interest rates, credit ratings and bond prices to estimate the value of the embedded derivative. The inputs to the model include risk adjusted interest rates, volatility and average yield curve observations and stock price. As several significant inputs are not observable, the overall fair value measurement of the embedded derivative is classified as Level 3. The following table summarizes the change in the fair value of the |
Note 14. Contingencies
Note 14. Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 14. Contingencies | Note 14. Contingencies Legal Proceedings On September7, 2001, NetMoneyIN, an Arizona corporation, filed a complaint alleging patent infringement against VeriSign and several other previously-named defendants in the U.S. District Court for the District of Arizona asserting infringement of certain patents. The complaint alleged that VeriSigns Payflow payment products and services directly infringe certain claims of NetMoneyINs three patents and requested the Court to enter judgment in favor of NetMoneyIN, a permanent injunction against the defendants alleged infringing activities, an order requiring defendants to provide an accounting for NetMoneyINs damages, to pay NetMoneyIN such damages and three times that amount for any willful infringers, and an order awarding NetMoneyIN attorney fees and costs. NetMoneyIN has withdrawn its allegations of infringement of one of the patents and the Court has dismissed with prejudice all claims of infringement of such patent. In its ruling on the claim construction issues, the Court found some of the claims asserted against VeriSign to be valid. NetMoneyIN may file an appeal after a final judgment seeking to overturn this ruling. Only one claim remains in the case. On July13, 2007, the Court issued an order granting summary judgment in favor of VeriSign based on the Courts finding that such claim is invalid, and denying all other pending dispositive motions. On August29, 2007, plaintiff filed a Notice of Appeal. On September19, 2007, the U.S. Court of Appeals for the Federal Circuit docketed the appeal. On October20, 2008, the appellate court issued a decision that affirmed in part and reversed in part the summary judgment order and remanded the case for further proceedings in the trial court. VeriSign and NetMoney entered into a settlement agreement in July 2009. The case against VeriSign has been dismissed. On July6, 2006, a stockholder derivative complaint(Parnes v. Bidzos, et al., and VeriSign) was filed against VeriSign in the U.S. District Court for the Northern District of California, as a nominal defendant,and certain of its current and former directors and executive officersrelated tocertain historical stock option grants.The complaint seeks unspecified damages on behalf of VeriSign, constructive trust and other equitable relief. Two other derivative actions were filed, one in the U.S. District Court for the Northern District of California (Port Authority v. Bidzos, et al., and VeriSign), and one in the Superior Court of the State of California, Santa Clara County (Port Authority v. Bidzos, et al., and VeriSign) on August14, 2006. The state court derivative action is stayed pending resolution of the federal actions. The current directors and officers named in this state action are D. James Bidzos, William L. Chenevich, Roger H. Moore and Louis A. Simpson. The Company is named as a nominal defendant in these actions.The federal actions have been consolidated and plaintiffs filed a consolidated complaint on November20, 2006. The current directors and officers named in this consolidated federal action are D. James Bidzos, William L. Chenevich, Roger H. Moore, Louis A. Simpson and Timothy To |
Note 15. Subsequent Events
Note 15. Subsequent Events | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 15. Subsequent Events | Note15. Subsequent Events On October1, 2009, the Company sold its GSC business for cash consideration of $4.9M subject to certain adjustments related to employees compensation. On October23, 2009, the Company sold its MMM Services business, for cash consideration of $174.5 million after preliminary adjustments to reflect the parties estimate of working capital. The divestiture transaction will be subject to a final adjustment to reflect the actual working capital balance as of the closing date. During October 2009, the Company received a distribution of $2.4 million from the Primary Fund. During October 2009, the Company decided to wind down the operations of the CPS business after termination of active negotiations with a potential buyer. The Company expects the wind-down to be completed no later than the end of 2010. |
Document Information
Document Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-09-30 |
Entity Information
Entity Information (USD $) | ||
9 Months Ended
Sep. 30, 2009 | Oct. 31, 2009
| |
Entity [Text Block] | ||
Trading Symbol | VRSN | |
Entity Registrant Name | VERISIGN INC/CA | |
Entity Central Index Key | 0001014473 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 192,345,267 |