Attached files
| file | filename |
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| 8-K - FORM 8-K - VERISIGN INC/CA | d8k.htm |
EXHIBIT 99.1
VERISIGN, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENT INFORMATION
(Unaudited)
On May 19, 2010, VeriSign, Inc. (the “Company”) entered into an agreement (the “Agreement”) to sell its Authentication Services business, including outstanding shares of capital stock of its majority-owned subsidiary VeriSign Japan K.K. (“VeriSign Japan”), and trademarks and certain intellectual property used in the Authentication Services business (including the Company’s checkmark logo and the “Geotrust” and “thawte” brand names), to Symantec Corporation (the “Purchaser”) for approximately $1.28 billion in cash. Also included with the sale of the Authentication Services business, within the disposal group, are real and personal property owned by the Company at its Mountain View, California facility and other locations.
On August 9, 2010, the Company completed the sale of its Authentication Services business disposal group for cash consideration of $1.29 billion after preliminary adjustments of $7.7 million to reflect the parties’ estimate of working capital. The sale consideration will be subject to a final adjustment to reflect the actual working capital balance as of the closing date.
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2010, set forth below has been presented after giving effect to the sale of the Authentication Services business disposal group (the “Sale”) as if it had occurred on June 30, 2010. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 set forth below have been presented after giving effect to the Sale as if it had occurred on January 1, 2007, and does not assume any interest income on cash proceeds. The Company has not presented the unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 2010, as the results of operations of the Authentication Services business disposal group were reported as discontinued operations in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, filed with the Securities and Exchange Commission (the “SEC”) on August 3, 2010.
The unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 have been derived primarily from the audited Consolidated Financial Statements of the Company included in its fiscal 2009 Annual Report on Form 10-K. The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2010, has been derived primarily from the unaudited Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010. The unaudited pro forma financial statement information is based upon available information and assumptions that the Company believes are reasonable under the circumstance and were prepared to illustrate the estimated effects of the Sale.
The unaudited pro forma financial statement information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the Sale occurred as of the periods presented. In addition, the unaudited pro forma financial statement information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its fiscal 2009 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, and June 30, 2010, that we filed with the SEC in 2010.
VERISIGN, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
(Unaudited)
| June 30, 2010 | ||||||||||||
| As Reported (1) | Authentication Services Business Disposal Group |
Pro Forma | ||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 862,923 | $ | 1,287,748 | (2) | $ | 2,150,671 | |||||
| Marketable securities |
474,356 | 474,356 | ||||||||||
| Accounts receivable, net |
16,194 | 16,194 | ||||||||||
| Prepaid expenses and other current assets |
85,021 | 85,021 | ||||||||||
| Assets held for sale |
681,749 | (681,749 | )(3) | — | ||||||||
| Total current assets |
2,120,243 | 605,999 | 2,726,242 | |||||||||
| Property and equipment, net |
190,807 | 190,807 | ||||||||||
| Goodwill |
52,527 | 52,527 | ||||||||||
| Other intangible assets, net |
3,266 | 3,266 | ||||||||||
| Other assets |
25,122 | 25,122 | ||||||||||
| Total long-term assets |
271,722 | — | 271,722 | |||||||||
| Total assets |
$ | 2,391,965 | $ | 605,999 | $ | 2,997,964 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable and accrued liabilities |
$ | 165,043 | 8,823 | (4) | 173,866 | |||||||
| Deferred revenues |
437,288 | 437,288 | ||||||||||
| Liabilities related to assets held for sale |
340,515 | (340,515 | )(5) | — | ||||||||
| Total current liabilities |
942,846 | (331,692 | ) | 611,154 | ||||||||
| Long-term deferred revenues |
203,911 | 203,911 | ||||||||||
| Convertible debentures, including contingent interest derivative |
575,933 | 575,933 | ||||||||||
| Other long-term liabilities |
193,133 | 193,133 | ||||||||||
| Total long-term liabilities |
972,977 | — | 972,977 | |||||||||
| Total liabilities |
1,915,823 | (331,692 | ) | 1,584,131 | ||||||||
| Commitments and contingencies |
||||||||||||
| Stockholders’ equity: |
||||||||||||
| VeriSign, Inc. 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: 174,907,760 excluding 134,801,346 held in treasury, at June 30, 2010; and 183,299,463, excluding 124,434,684 held in treasury, at December 31, 2009 |
310 | 310 | ||||||||||
| Additional paid-in capital |
21,519,042 | 21,519,042 | ||||||||||
| Accumulated deficit |
(21,107,866 | ) | 1,003,517 | (6) | (20,104,349 | ) | ||||||
| Accumulated other comprehensive income |
12,404 | (13,574 | )(7) | (1,170 | ) | |||||||
| Total VeriSign, Inc. stockholders’ equity |
423,890 | 989,943 | 1,413,833 | |||||||||
| Noncontrolling interest in subsidiary |
52,252 | (52,252 | )(8) | — | ||||||||
| Total stockholders’ equity |
476,142 | 937,691 | 1,413,833 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 2,391,965 | $ | 605,999 | $ | 2,997,964 | ||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
VERISIGN, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share data)
(Unaudited)
| Year Ended December 31, 2009 | ||||||||||||
| As Reported (9) | Authentication Services Business (10) |
Pro Forma | ||||||||||
| Revenues |
$ | 1,030,619 | $ | 410,065 | $ | 620,554 | ||||||
| Costs and expenses |
||||||||||||
| Cost of revenues |
245,896 | 74,293 | 171,603 | |||||||||
| Sales and marketing |
177,029 | 100,902 | 76,127 | |||||||||
| Research and development |
83,560 | 30,788 | 52,772 | |||||||||
| General and administrative |
181,992 | 36,907 | 145,085 | |||||||||
| Restructuring, impairments and other charges, net |
16,216 | 1,955 | 14,261 | |||||||||
| Amortization of other intangible assets |
12,199 | 11,003 | 1,196 | |||||||||
| Total costs and expenses |
716,892 | 255,848 | 461,044 | |||||||||
| Operating income |
313,727 | 154,217 | 159,510 | |||||||||
| Other (loss) income, net |
(32,437 | ) | 873 | (33,310 | ) | |||||||
| Income from continuing operations before income taxes |
281,290 | 155,090 | 126,200 | |||||||||
| Income tax expense |
(80,105 | ) | (48,249 | ) | (31,856 | ) | ||||||
| Income from continuing operations, net of tax |
201,185 | 106,841 | 94,344 | |||||||||
| Less: Net income attributable to noncontrolling interest in subsidiary |
(3,686 | ) | (3,686 | ) | — | |||||||
| Net income from continuing operations attributable to VeriSign, Inc. and subsidiaries common stockholders |
$ | 197,499 | $ | 103,155 | $ | 94,344 | ||||||
| Income per share from continuing operations attributable to VeriSign, Inc. and subsidiaries common stockholders |
||||||||||||
| Basic |
$ | 1.03 | $ | 0.49 | ||||||||
| Diluted |
$ | 1.03 | $ | 0.49 | ||||||||
| Shares used to compute net income per share attributable to VeriSign, Inc. and subsidiaries common stockholders: |
||||||||||||
| Basic |
191,821 | 191,821 | ||||||||||
| Diluted |
192,575 | 192,575 | ||||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
VERISIGN, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share data)
(Unaudited)
| Year Ended December 31, 2008 | ||||||||||||
| As Reported (9) | Authentication Services Business (10) |
Pro Forma | ||||||||||
| Revenues |
$ | 964,748 | $ | 398,728 | $ | 566,020 | ||||||
| Costs and expenses |
||||||||||||
| Cost of revenues |
231,406 | 63,120 | 168,286 | |||||||||
| Sales and marketing |
172,206 | 86,298 | 85,908 | |||||||||
| Research and development |
88,948 | 26,417 | 62,531 | |||||||||
| General and administrative |
201,016 | 31,245 | 169,771 | |||||||||
| Restructuring, impairments and other charges, net |
196,419 | 78,365 | 118,054 | |||||||||
| Amortization of other intangible assets |
11,155 | 10,009 | 1,146 | |||||||||
| Total costs and expenses |
901,150 | 295,454 | 605,696 | |||||||||
| Operating income (loss) |
63,598 | 103,274 | (39,676 | ) | ||||||||
| Other income (loss), net |
48,809 | (630 | ) | 49,439 | ||||||||
| Income from continuing operations before income taxes and loss from unconsolidated entities |
112,407 | 102,644 | 9,763 | |||||||||
| Income tax (expense) benefit |
(39,197 | ) | (53,560 | ) | 14,363 | |||||||
| Loss from unconsolidated entities, net of tax |
(3,868 | ) | — | (3,868 | ) | |||||||
| Income from continuing operations, net of tax |
69,342 | 49,084 | 20,258 | |||||||||
| Less: Net loss attributable to noncontrolling interest in subsidiary |
16,009 | 16,009 | — | |||||||||
| Net income from continuing operations attributable to VeriSign, Inc. and subsidiaries common stockholders |
$ | 85,351 | $ | 65,093 | $ | 20,258 | ||||||
| Income per share from continuing operations attributable to VeriSign, Inc. and subsidiaries common stockholders |
||||||||||||
| Basic |
$ | 0.43 | $ | 0.10 | ||||||||
| Diluted |
$ | 0.43 | $ | 0.10 | ||||||||
| Shares used to compute net income per share attributable to VeriSign, Inc. and subsidiaries common stockholders: |
||||||||||||
| Basic |
197,201 | 197,201 | ||||||||||
| Diluted |
200,602 | 200,602 | ||||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
VERISIGN, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share data)
(Unaudited)
| Year Ended December 31, 2007 | ||||||||||||
| As Reported (9) | Authentication Services Business (10) |
Pro Forma | ||||||||||
| Revenues |
$ | 850,509 | $ | 348,456 | $ | 502,053 | ||||||
| Costs and expenses |
||||||||||||
| Cost of revenues |
240,119 | 54,830 | 185,289 | |||||||||
| Sales and marketing |
242,127 | 51,907 | 190,220 | |||||||||
| Research and development |
94,434 | 18,762 | 75,672 | |||||||||
| General and administrative |
248,037 | 15,281 | 232,756 | |||||||||
| Restructuring, impairments and other charges, net |
236,219 | 771 | 235,448 | |||||||||
| Amortization of other intangible assets |
21,091 | 9,906 | 11,185 | |||||||||
| Total costs and expenses |
1,082,027 | 151,457 | 930,570 | |||||||||
| Operating (loss) income |
(231,518 | ) | 196,999 | (428,517 | ) | |||||||
| Other income (loss), net |
94,407 | (717 | ) | 95,124 | ||||||||
| (Loss) income from continuing operations before income taxes and loss from unconsolidated entities |
(137,111 | ) | 196,282 | (333,393 | ) | |||||||
| Income tax benefit (expense) |
3,451 | (74,618 | ) | 78,069 | ||||||||
| Loss from unconsolidated entities, net of tax |
(2,018 | ) | — | (2,018 | ) | |||||||
| (Loss) income from continuing operations, net of tax |
(135,678 | ) | 121,664 | (257,342 | ) | |||||||
| Less: Net income attributable to noncontrolling interest in subsidiary |
(3,840 | ) | (3,840 | ) | — | |||||||
| Net (loss) income from continuing operations attributable to VeriSign, Inc. and subsidiaries common stockholders |
$ | (139,518 | ) | $ | 117,824 | $ | (257,342 | ) | ||||
| Loss per share from continuing operations attributable to VeriSign, Inc. and subsidiaries common stockholders |
||||||||||||
| Basic |
$ | (0.59 | ) | $ | (1.08 | ) | ||||||
| Diluted |
$ | (0.59 | ) | $ | (1.08 | ) | ||||||
| Shares used to compute net income per share attributable to VeriSign, Inc. and subsidiaries common stockholders: |
||||||||||||
| Basic |
237,707 | 237,707 | ||||||||||
| Diluted |
237,707 | 237,707 | ||||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
VERISIGN, INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| (1) | Represents balances as reported on the unaudited Condensed Consolidated Balance Sheet included in the Company’s Form 10-Q for the quarter ended June 30, 2010. |
| (2) | Represents cash proceeds received from the Purchaser on August 9, 2010. |
| (3) | Represents balances pertaining to cash and cash equivalents, marketable securities, accounts receivable, prepaid expenses and other assets, long-lived assets and goodwill that were classified as assets held for sale as of June 30, 2010. These amounts were acquired by the Purchaser pursuant to the Agreement. |
| (4) | Represents estimated transaction costs incurred in connection with the Sale. |
| (5) | Represents balances pertaining to accounts payable and accrued liabilities, deferred revenues and other liabilities that were classified as held for sale as of June 30, 2010. These amounts were assumed by the Purchaser pursuant to the Agreement. |
| (6) | Represents estimated pre-tax gain on the Sale. |
| (7) | Represents accumulated other comprehensive income related to the Authentication Services business disposal group. |
| (8) | Represents noncontrolling interest in VeriSign Japan. |
| (9) | Represents results of operations as reported on the audited Consolidated Statements of Operations included in the Company’s fiscal 2009 Annual Report on Form 10-K. |
| (10) | Represents results of operations of the Authentication Services business. Tax effects have been determined based on the statutory rates in effect during each respective period. |