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Verisign Annual Report, Year Ended Dec 31, 2000

Filing Date
Filed March 28, 2001
Period End
December 31, 2000
Security
VRSN
In the record · 2016–202610-K1110-Q338-K94

VRSN filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 94 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Oct ’16Oct ’16
  2. FY2018 annual report10-K · Feb ’19Feb ’19
  3. Leadership change8-K · Jun ’21Jun ’21
  4. Leadership change8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed March 28, 2001. Cited figures are marked; the original filing is the authoritative source.

VeriSign, Inc. reported a fiscal 2000 net loss of $3.12 billiona, or $(19.57) per share, on revenues of $474.8 million, compared with revenues of $84.8 million in 1999 and net income of $4.0 million.

The loss was driven mainly by $3.19 billionb of amortization of goodwill and other intangible assets from acquisitions, including Network Solutions, Inc., acquired in June 2000 for aggregate consideration of approximately $19.6 billion. Operating costs were $3.68 billion in total, and the company states it had an accumulated deficit of approximately $3.2 billion at December 31, 2000. The balance sheet is dominated by intangibles: goodwill and other intangible assets, net, were $17.66 billion, against stockholders' equity of $18.47 billion and total assets of $19.20 billion.

Cash, cash equivalents and short-term investments were $1.03 billionc, and net cash provided by operating activities was $192.0 million in 2000. The company expects goodwill and intangible amortization of up to $1.4 billion per quarter until those balances are fully amortized, which it currently anticipates ending in 2004. Planned 2001 capital expenditures are approximately $135 million to $145 million.

Revenue is split across Web presence services ($282.6 milliond), enterprise services, net ($138.3 million) and Internet technology consulting ($53.8 million). Key risks disclosed include the Network Solutions domain registry and registrar arrangements with ICANN and the Department of Commerce, a patent infringement suit filed by Leon Stambler, a purported class action seeking approximately $1.7 billion in damages over registration fees, and a Department of Justice review of the THAWTE acquisition.

Mr. James P. Rutt, President of the Mass Markets Division, resigned effective April 1, 2001.

02—Key points

Key Highlights

  1. Revenue rose to $474.8 million in 2000 from $84.8 million in 1999, primarily due to the THAWTE, Signio and Network Solutions acquisitions.
  2. Net loss of $3.12 billion, or $(19.57) per share, was driven by $3.19 billion of goodwill and intangible amortization; the company had net income of $4.0 million in 1999.
  3. Network Solutions acquisition (June 8, 2000) carried a total purchase price of approximately $19.6 billion, with approximately 78.3 million VeriSign shares issued.
  4. Goodwill and other intangible assets, net, totaled $17.66 billion at December 31, 2000, out of total assets of $19.20 billion.
  5. Cash, cash equivalents and short-term investments were $1.03 billion; operating cash flow was $192.0 million in 2000.
  6. Expected amortization of up to $1.4 billion per quarter continues until acquired intangibles are fully amortized, which the company anticipates ending in 2004.
  7. Pending legal matters include a patent suit by Leon Stambler, a Hoefer suit seeking approximately $1.7 billion in damages, and a Department of Justice review of the THAWTE acquisition.

03—Questions

Frequently Asked Questions

  1. Why did VeriSign report such a large net loss in 2000?

    The net loss of $3.12 billion was mainly caused by $3.19 billion of amortization of goodwill and other intangible assets from acquisitions made in 2000, along with a $54 million write-off of acquired in-process research and development related to Network Solutions. The company states it expects to continue reporting losses as acquired intangibles are amortized.

  2. How large is the company's exposure to acquisition-related intangibles?

    Goodwill and other intangible assets, net, were $17.66 billion at December 31, 2000, compared with stockholders' equity of $18.47 billion. The company expects to recognize amortization of up to $1.4 billion per quarter until these balances are fully amortized, which it currently anticipates ending in 2004. It also notes that it may write off a portion of these assets if market conditions change or acquisitions do not provide the expected benefits.

  3. What are the main sources of revenue?

    In 2000, Web presence services contributed $282.6 million, enterprise services, net contributed $138.3 million, and Internet technology consulting services contributed $53.8 million. Domain name registration revenues are recognized ratably over the registration term, generally one to two years.

  4. What is the company's liquidity position and planned spending?

    At December 31, 2000, cash, cash equivalents and short-term investments totaled $1.03 billion, and the company also held $209.1 million of long-term equity and debt investments. The company believes these resources and operating cash flow will be sufficient for at least the next 12 months. Planned capital expenditures for 2001 are approximately $135 million to $145 million.

  5. What significant legal and regulatory risks does the company face?

    The company faces a patent infringement complaint filed by Leon Stambler on February 2, 2001, which targets its Secure Site and Payflow products, and a suit seeking approximately $1.7 billion in damages over domain name registration fees collected from September 1995 to November 1999. The Department of Justice has also reviewed the THAWTE acquisition and may still raise an objection. The company intends to vigorously defend itself in these matters and states that it cannot predict their outcomes.

04—Continue

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