VeriSign (VRSN)

2008 Financial Results

On a GAAP basis, for the year ended December 31, 2008, VeriSign reported revenue of $962 million from continuing operations. On a GAAP basis, VeriSign reported a consolidated net loss of $240 million for 2008

and a loss per share of $1.20 on a fully-diluted basis. These full-year GAAP results reflect a $413 million non-cash impairment charge for certain long-lived assets, loss on sale of discontinued operations, and estimated losses on certain assets held for sale, of which $355 million is recorded in discontinued operations. Also recorded were restructuring charges of $150 million, $39 million of which is recorded in discontinued operations related to assets held for sale. As noted above, our tax provision for fiscal year 2008 is preliminary, and therefore GAAP net income/loss and GAAP earnings/loss per share are also preliminary.

On a GAAP basis, for 2008, VeriSign reported segment revenue for Internet Infrastructure and Identity Services (3IS), or the “core businesses,” of $936 million, up 20% year-over-year.

On a non-GAAP basis for its core businesses, VeriSign reported net income of $193 million for 2008 and fully-diluted earnings per share of $0.96. A table reconciling the GAAP to the non-GAAP results reported above is appended to this release.

“We’re very pleased with our performance this year, especially in light of the weakening economy,” said Brian Robins, acting chief financial officer of VeriSign. “In addition to reporting solid revenue and earnings for the year, we generated approximately $475 million in cash flow from operations in 2008, ending the year with nearly $800 million in cash and equivalents. Furthermore, we believe that our divide and focus approach to managing our businesses has paid off as our execution this quarter continued to be strong.”

2007 Financial Results

For the year ended December 31, 2007, VeriSign reported total revenue of $1.5 billion, excluding $12 million from discontinued operations.

On a GAAP basis, VeriSign reported a net loss of $120 million for 2007 and loss per share of $0.50.

On a non-GAAP basis (which excludes the items described below), VeriSign reported net income excluding Jamba and Jamba Services of $251 million for 2007 and earnings per share of $1.03 per fully-diluted share.

“We met our financial goals for the fourth quarter, closing out a solid year as non-GAAP operating margin excluding Jamba improved over 650 basis points from year ago results,” said Bert Clement, chief financial officer of VeriSign. “The combination of a strong business model and operational rigor resulted in healthy operating cash flow of over $450 million and notable improvements in our balance sheet as we ended the year with strong cash and record deferred revenue.”

Non-GAAP results exclude the following items which are included under GAAP: amortization of intangible assets, impairment of goodwill, acquired in-process R&D, stock-based compensation, former CEO severance, non-recurring costs and settlements, restructuring, impairments and other charges (reversals), net gain or loss on the sale or impairment of investments, gain or loss on the sale of a subsidiary, unrealized gain on Jamba JV call option, realized and unrealized gains and losses on embedded derivative, and stock option investigation costs. A table reconciling the GAAP to non-GAAP net income is appended to this release.

2006 Financial Results

For the year ended December 31, 2006, VeriSign reported total revenue of $1.58 billion, compared to $1.61 billion for 2005. The year over year decrease reflects a decline in mobile content revenues in the first half of the year.

“We enter 2007 with a strong portfolio of services that advances our mission of being in the center of the world’s networked interactions,” said Stratton Sclavos, Chairman and Chief Executive Officer of VeriSign. “We are now focused on addressing the needs of our global customer base as they transform their businesses to a next generation digital world.”

“We faced some challenges to top line growth in 2006, namely the divestiture of the payment gateway business and some instability in the mobile content business in the first half of the year,” said Dana Evan, Chief Financial Officer of VeriSign. “Overall, we are pleased with our results and are well-positioned for 2007 with a strong balance sheet, excellent operating cash flows and nearly $750 million in cash and short-term investments.”

VeriSign is not providing detailed GAAP or non-GAAP financials for the quarter and year ended December 31, 2006 due to the previously announced review and analysis of VeriSign’s historical stock option grants being conducted by an ad hoc group of independent Directors. The ad hoc group’s review and analysis has been substantially completed. The review did not find intentional wrongdoing by any current member of the senior management team.

VeriSign has determined that it must restate its historical financial statements for the years and interim periods from 2002-2005 and for the first quarter of 2006 to record additional non-cash, stock-based compensation expense related to past stock option grants. Based on the findings to date, VeriSign believes the non-cash charges to the financial statements for the periods 2002-2005 will be less than $200 million. VeriSign expects to complete its restatement of financial statements for all affected periods in the near future.

During the fourth quarter, VeriSign announced that the Department of Commerce gave final approval to the .com agreement between VeriSign and the Internet Corporation for Assigned Names and Numbers

(ICANN). The agreement outlines rules and processes for introducing new services while promoting the security and safety of the Internet and providing for continued investment in the infrastructure.

VeriSign also announced the issuance of Extended Validation (EV) SSL Certificates. These new certificates support Microsoft’s IE7 and Vista operating system and help to increase consumer confidence when visiting Web sites by providing a visual cue, a green browser bar, that these sites are who they claim to be and that online transactions with these sites are secured by encryption.

In December, VeriSign announced that UK television broadcaster, Channel 4, integrated VeriSign’s peer-to-peer solution to power its new Internet video on-demand service, making Channel 4 one of the first major broadcasters and the third large network customer for this solution in the UK. VeriSign’s peer-to-peer broadband technology enables the secure delivery of Internet video, reduces the time it takes to download video content and produces a superior user experience.

Additional highlights from the quarter include the acquisition in November of inCode Wireless for approximately $52 million in cash and assumed debt. With a focus on next generation mobility solutions, inCode provides strategy consulting services to major wireless, wire line, cable operator and telecom equipment manufacturers, as well as leading enterprises.

Additional Financial Information

Internet Services Group

2005 Financial Results

For the year ended December 31, 2005, VeriSign reported total revenue of $1.66 billion, a 42% increase over 2004. These revenues include $52 million related to the payment gateway business through November 18, 2005. A table reconciling the discontinued operations revenue is appended to this release.

On a GAAP basis, VeriSign reported net income of $406 million for 2005 with earnings per share for the year of $1.54 per diluted share. On a non-GAAP basis, using a 30% effective tax rate on non-GAAP pre-tax income of $396 million, earnings per share for 2005 was $1.05 per diluted share. These non-GAAP results exclude the following items, which are included under GAAP: amortization of intangible assets, acquired in-process research and development, stock-based compensation charges, litigation settlements, restructuring and other charges, the net gain on the sale of the payment gateway business, the net gain on the sale of investments and income tax expense. These non-GAAP results include net income from the payment gateway business for the year through November 18, 2005. A table reconciling the non-GAAP to GAAP net income reported above is appended to this release.

“2005 marked a significant year in terms of strong results, improved financial metrics, and continued investment in the future for VeriSign,” said Dana Evan, Chief Financial Officer of VeriSign. “Although the mobile content business continues to be challenging, we are pleased with the company’s performance for Q4 and 2005 particularly in terms of operating cash flow which reached a record $141 million in Q4 and $480 million for the full year.”

During the fourth quarter, VeriSign completed the sale of its payment gateway business to PayPal, an eBay company, for $370 million in cash. VeriSign will also provide eBay and PayPal with a suite of security services that includes the deployment of two-factor authentication, a security system that gives customers a one-time password or digital certificate to help protect against online identity theft. Under the three-year security technology agreement, eBay will purchase up to one million two-factor authentication tokens.

The VeriSign Naming and Directory Services (VNDS) business has changed its name to VeriSign Information Services (VIS) to highlight and address its movement into new business areas. The new name more accurately characterizes the expanded focus of the business to provide relevant, real-time information that enables intelligent network interactions. In 2005, the acquisitions of R4 Global Systems and Retail Solutions International, Inc. (RSI) broadened the business into supply chain services and the acquisitions of Moreover and Weblogs launched VeriSign into real-time publisher services.

Also during the Q4, VeriSign Communications Services (VCS) announced the launch of a new Jamster brand campaign in the United States and the United Kingdom (U.K.), that represents the first of several important steps in a global Jamba / Jamster brand roll-out strategy designed to improve the customer experience. The new campaign launched with a new Jamster logo, simplified subscription plans, improved advertising, and a redesigned Jamster Web site that promotes easier navigation for consumers. Taking the lead in providing parents with control over family usage by giving them the ability to block content downloads to specific phone numbers, VeriSign also launched the Jamster Guardian service in the U.S. and U.K. Roll-out of these programs to other countries is scheduled for this year.

On January 24, 2006, VeriSign completed its acquisition of Seattle-based CallVision, a leading provider of online call analysis applications for $30 million net of acquired cash. The acquisition will enable VeriSign’s VCS business to deliver converged electronic bill presentment, payment and customer self-care applications to mobile operators, Tier 1 carriers, broadband companies and consumer-branded MVNOs worldwide. In addition, on January 25, 2006, VeriSign completed its acquisition of Soltrus Inc., a reseller of VeriSign services based in Toronto, Canada, for approximately $11 million in cash. Neither of these transactions is expected to have a material impact to 2006 financial results.

2004 Financial Results

For the year ended December 31, 2004, VeriSign reported revenue of $1.17 billion. On a GAAP basis, VeriSign reported net income of $186 million with earnings per share for year of $0.72 per fully-diluted share.

On a non-GAAP, after tax basis, using a 30% effective tax rate on non-GAAP pre-tax income of $252 million, earnings per share for 2004 were $0.68 per fully diluted share. These non-GAAP results exclude the following items, which are included under GAAP: amortization and write-down of goodwill and intangible assets related to acquisitions, the net gain on the sale of VeriSign Japan stock, the net gain or loss on the sale of other investments, the impairment of investments, restructuring and other charges, and stock-based compensation charges related to acquisitions. A table reconciling the non-GAAP to GAAP numbers reported above is appended to this release.

“We are very pleased with the continued strength in our Internet and Communications lines of business,” said Dana Evan, Chief Financial Officer of VeriSign. “Our strong sequential revenue growth in the fourth quarter, coupled with ongoing operational leverage, led to significant margin and earnings expansion. This execution also yielded record operating income and operating cash flow in the quarter.”

During the fourth quarter, the VeriSign Security Services (VSS) business unit continued the expansion of its Unified Authentication Platform announcing a strategic alliance with US Bancorp to supply next generation tokens to secure transactions with commercial banking customers.

Also, VeriSign’s Naming and Directory Services (VNDS) business unit saw continued momentum for its RFID initiatives in Asia and Australia that extend the availability of the VeriSign EPC Starter Service^™. These relationships support VeriSign’s strategy to work closely with regional supply-chain ecosystems to drive adoption of Electronic Product Codes and the EPCglobal Network^™.

In the fourth quarter, VeriSign’s Communications Services (VCS) group announced its Digital Content Services platform. As part of this strategy, VeriSign and Thomson also announced plans to create an on-demand authentication and authorization service bureau to support the secure delivery of electronic entertainment over digital networks.

Subsequent to the close of the quarter, VeriSign announced that it had signed a definitive agreement to acquire Santa Cruz, California-based LightSurf Technologies Inc. for $270 million in VeriSign stock. LightSurf is a global leader in multimedia messaging and interoperability solutions for the wireless market. Subject to regulatory approvals, the transaction is expected to close by the end of the first quarter of 2005.