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Verisign Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 31, 2003
Period End
December 31, 2002
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 31, 2003. Cited figures are marked; the original filing is the authoritative source.

VeriSign, Inc. reported 2002 revenues of $1.22 billiona, up from $983.6 million in 2001, but posted a net loss of $4.96 billion for 2002, driven mainly by a $4.6 billion impairment charge for goodwill and other intangible assets recorded in the second quarter of 2002.

Revenue growth was driven by the acquisitions of Illuminet Holdings (December 2001) and H.O. Systems (February 2002), which lifted Telecommunication-related revenues; Mass Markets Division revenues fell 26% to $412.1 millionb as deferred revenue recognized from prior-year domain name sales declined and fewer names were under management at Network Solutions (9.3 million at year-end 2002 versus 13.6 million at year-end 2001). The balance sheet shrank sharply: total assets were $2.39 billion at December 31, 2002, down from $7.54 billion, and stockholders' equity fell to $1.58 billion from $6.51 billion.

Cash, cash equivalents and short-term investments declined to $403.9 millionc, and working capital turned negative at $(61.0) million. Operating cash flow was $240.1 million in 2002. Management expects restructuring-related savings of approximately $56 million in 2003 and planned 2003 capital expenditures of $120 million to $130 million.

The filing also details significant legal exposure, including a securities class action consolidated in the Northern District of California, a patent suit by NetMoneyIN, and an FTC Civil Investigative Demand relating to a direct mail offer by the registrar business. The company stated that a patent case brought by Leon Stambler ended in a jury verdict for VeriSign and RSA Security on March 7, 2003.

02—Key points

Key Highlights

  1. Revenues rose to $1,221.7 million in 2002 from $983.6 million in 2001, with the Enterprise and Service Provider Division up 89% and the Mass Markets Division down 26%.
  2. Net loss of $4,961.3 million in 2002, including a $4.6 billion impairment of goodwill and other intangible assets in the second quarter of 2002.
  3. Total assets fell to $2,391.3 million from $7,537.5 million, and stockholders' equity fell to $1,579.4 million from $6,506.1 million.
  4. Cash, cash equivalents and short-term investments were $403.9 million at December 31, 2002, versus $726.7 million a year earlier, and working capital was $(61.0) million.
  5. Restructuring program announced in April 2002 produced $88.6 million of charges in 2002, with estimated cost savings of $52 million in 2002 and $56 million in 2003.
  6. Investment write-downs totaled $170.9 million in 2002, and the company held investments of $158.4 million at year-end.
  7. Multiple litigation matters are pending, including a consolidated securities class action and a patent suit by NetMoneyIN, and the FTC issued a Civil Investigative Demand in July 2002 regarding its domain name registration business.

03—Questions

Frequently Asked Questions

  1. Why did VeriSign report such a large net loss in 2002?

    The net loss of $4,961.3 million was driven primarily by amortization and write-downs of goodwill and other intangible assets totaling $4,894.7 million, which included a $4.6 billion impairment charge recorded in the second quarter of 2002 after market conditions deteriorated. The company also recorded $170.9 million of investment write-downs and $88.6 million of restructuring and other charges.

  2. What drove revenue growth in 2002 and where did it weaken?

    Revenue growth came mainly from the Enterprise and Service Provider Division, which rose to $809.6 million from $428.5 million, reflecting the full-year inclusion of Illuminet Holdings and the February 2002 acquisition of H.O. Systems. Mass Markets Division revenues declined to $412.1 million from $555.1 million, primarily because less deferred revenue from prior-year domain name sales was recognized and fewer names were under management.

  3. What is the company's liquidity position?

    At December 31, 2002, cash, cash equivalents and short-term investments totaled $403.9 million, down from $726.7 million, and working capital was negative $61.0 million. Operating cash flow was $240.1 million, and management stated its existing resources should be sufficient for at least the next 12 months. The company also had a $15 million capital expenditure loan facility with $720,000 outstanding.

  4. What are the main legal risks disclosed?

    The company disclosed a consolidated securities class action in the Northern District of California covering purchasers of its stock from January 25, 2001 through April 25, 2002, along with related derivative actions. It also faces a NetMoneyIN patent infringement complaint, which it believes is without merit, and an FTC Civil Investigative Demand from July 31, 2002 concerning its domain name registration business. A patent suit by Leon Stambler ended in a jury verdict for VeriSign and RSA Security on March 7, 2003.

  5. What does the company expect for 2003?

    Management expects general and administrative expenses to decrease in absolute dollars in 2003, and expects research and development and sales and marketing expenses to rise modestly. It anticipates additional restructuring charges of approximately $10 to $15 million in the first quarter of 2003 and planned capital expenditures of $120 million to $130 million. It also expects international revenues to increase modestly while revenues from VeriSign Affiliates likely decline.

04—Continue

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