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Verisign Annual Report, Year Ended Dec 31, 2001

Filing Date
Filed March 19, 2002
Period End
December 31, 2001
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 19, 2002. Cited figures are marked; the original filing is the authoritative source.

VeriSign, Inc. reported a net loss of $13.36 billiona for 2001 on revenues of $983.6 million, up from $474.8 million in 2000.

The loss was driven mainly by $13.57 billionb of amortization and write-down of goodwill and other intangible assets, including a $9.9 billion non-cash impairment charge recorded in the second quarter of 2001 tied to acquisitions paid for with common stock. Operating loss was $13.41 billion. Revenue growth was primarily attributed to the June 2000 acquisition of Network Solutions, with Web presence and trust services contributing $555.1 million and managed security and network services plus registry and telecommunications services together contributing $428.5 million, of which registry and telecommunications rose to $130.5 million.

Balance sheet figures show total assets fell to $7.54 billionc from $19.20 billion, and stockholders' equity fell to $6.51 billion from $18.47 billion, reflecting the goodwill write-downs. Cash, cash equivalents and short-term investments totaled $726.7 million at year-end, and net cash from operating activities was $227.5 million. The company completed the Illuminet Holdings acquisition in December 2001 (about 30.6 million shares, purchase price of approximately $1.4 billion) and the H.O.

Systems acquisition in February 2002 for approximately $350 milliond in cash. The filing states that goodwill will no longer be amortized from January 1, 2002 under SFAS No. 142, reducing quarterly amortization of goodwill and intangibles from approximately $460 million to approximately $84 million, excluding H.O.

Systems. The company also faces ongoing litigation, including the Stambler patent suit and a class claim seeking approximately $1.7 billion in damages over domain name registration fees, and the Department of Justice closed its review of the THAWTE acquisition on March 11, 2002.

02—Key points

Key Highlights

  1. Net loss of $13.36 billion for 2001 versus $3.12 billion in 2000, driven by $13.57 billion of goodwill and intangible amortization and write-down.
  2. Includes a $9.9 billion non-cash goodwill impairment charge recorded in the second quarter of 2001.
  3. Revenues rose to $983.6 million in 2001 from $474.8 million in 2000, mainly reflecting a full year of Network Solutions operations.
  4. Web presence and trust services revenue was $555.1 million; enterprise and service provider revenue was $428.5 million.
  5. Total assets declined to $7.54 billion and stockholders' equity to $6.51 billion from year-end 2000 levels of $19.20 billion and $18.47 billion.
  6. Acquired Illuminet Holdings in December 2001 for about $1.4 billion in stock and H.O. Systems in February 2002 for about $350 million in cash.
  7. Goodwill amortization ceases January 1, 2002 under SFAS No. 142, cutting quarterly amortization from about $460 million to about $84 million.

03—Questions

Frequently Asked Questions

  1. Why was the 2001 net loss so large?

    The net loss of $13.36 billion was primarily due to amortization and write-down of goodwill and other intangible assets of $13.57 billion, which included a $9.9 billion impairment recorded in the second quarter of 2001. The filing states that most of the acquisitions were paid for with VeriSign common stock, so the impairment is described as a non-cash charge.

  2. What changes in accounting will affect future earnings?

    Under SFAS No. 142, effective January 1, 2002, goodwill is no longer amortized and is instead tested for impairment. The filing states that amortization will fall from approximately $460 million per quarter to approximately $84 million per quarter, excluding the impact of H.O. Systems and assuming no further acquisitions or impairments.

  3. What acquisitions did VeriSign complete recently?

    VeriSign completed its acquisition of Illuminet Holdings, Inc. on December 12, 2001, issuing about 30.6 million shares, with a total purchase price of approximately $1.4 billion. It completed the acquisition of H.O. Systems, Inc. in February 2002 for approximately $350 million in cash.

  4. What is the company's liquidity position?

    At December 31, 2001, cash, cash equivalents and short-term investments totaled $726.7 million, down from $1.03 billion a year earlier. Net cash provided by operating activities was $227.5 million in 2001. The filing states that existing cash and operating cash flows are expected to be sufficient for working capital and capital expenditure needs for at least the next 12 months, and that planned 2002 capital expenditures are about $140 million to $150 million.

  5. What are the major legal risks disclosed?

    The filing describes several suits, including the Stambler patent infringement complaint, a NetMoneyIN patent complaint, and a suit challenging domain name registration fees that seeks approximately $1.7 billion in damages. Management states it believes the claims are without merit and intends to defend them vigorously. The Department of Justice notified the company on March 11, 2002 that its review of the THAWTE acquisition was closed.

04—Continue

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