VeriSign (VRSN)

Net cash provided by operating activities

Our largest source of operating cash flows is cash collections from our customers. Our primary uses of cash from operating activities are for personnel related expenditures, and other general operating expenses, as well as payments related to taxes and facilities.

2008 compared to 2007:    Cash provided by operations increased primarily due to an increase in revenues in 2008 coupled with an increase in cash collections from customers due to an improved collection process implemented in 2008. The increase in cash receipts was partially offset by payments for interest on our Convertible Debentures, and a decrease in interest income received due to lower average cash balances and lower interest rates in 2008.

2007 compared to 2006:    Cash provided by operations decreased marginally primarily due to a decrease in cash received from customers resulting from the divestiture of our majority interest in Jamba, coupled with the timing of receipts from customers. The decrease in cash receipts was partially offset by a decrease in cash

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payments to suppliers and employees primarily resulting from lower headcount, an increase in cash received for interest income due to higher average cash balances in 2007 and a decrease in cash payments for income taxes due to lower pre-tax income in 2007.

Net cash provided by operating activities

Our largest source of operating cash flows is cash collections from our customers. Our primary uses of cash from operating activities are for personnel related expenditures, and other general operating expenses, as well as payments related to taxes and facilities.

2007 compared to 2006:    Net cash provided by operating activities decreased primarily due to $139.5 million in net loss adjusted for non-cash items and changes in operating assets and liabilities. The non-cash items contributing to the increase primarily included an increase in restructuring, impairments and other charges (reversals), net, primarily associated with our 2007 restructuring plan, an increase in stock-based compensation expense primarily due to acceleration of stock options and awards related to the separation of our former Chief Executive Officer, a charge for impairment of goodwill, realized and unrealized losses on our embedded

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derivative associated with our issuance of convertible debentures and a change in deferred income taxes primarily due to a release of the valuation allowance on deferred tax assets in 2006. The non-cash items partially offsetting the increase included gain from our divestiture of our majority ownership interest in Jamba, gains from the divestitures of certain other business units and an unrealized gain on joint venture call options. The changes in operating assets and liabilities were primarily due to timing of receipts, purchases and payments.

2006 compared to 2005:    Net cash provided by operating activities decreased primarily due to a decrease in net income adjusted for non-cash items and changes in operating assets and liabilities. The non-cash items contributing to the decrease included a change in deferred income taxes primarily due to a release of the valuation allowance on deferred tax assets, partially offset by an increase in stock-based compensation expense as a result of the adoption of SFAS 123R. The changes in operating assets and liabilities were primarily due to timing of receipts, purchases and payments.

Net cash provided by operating activities

Net cash provided by operating activities of approximately $155.0 million for the six months ended June 30, 2007 consisted of net income of $57.0 million plus non-cash items totaling $107.7 million, which primarily included depreciation

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of property and equipment of approximately $55.6 million, amortization of other intangible assets of approximately $61.5 million, restructuring, impairments and other charges of approximately $42.2 million, stock-based compensation and other of $42.0 million, primarily offset by a gain on the divestiture of majority stake in Jamba of approximately $75.0 million, a $3.8 million unrealized gain on joint venture call options, income from unconsolidated entities of $2.2 million and deferred income taxes of approximately $11.5 million. Changes in operating assets and liabilities decreased operating cash flow by $9.7 million.

Net cash provided by operating activities

Net cash provided by operating activities of approximately $44.0 million for the three months ended March 31, 2007 consisted of net income of $61.8 million plus non-cash items totaling $32.0 million, which primarily included depreciation of property and equipment of approximately $28.2 million, amortization of other intangible assets of approximately $31.8 million, restructuring charges of approximately $27.0 million, stock-based compensation of $16.7 million, and deferred income taxes of approximately $5.1 million, primarily offset by a gain on the divestiture of majority stake in Jamba of approximately $75.0 million. Changes in operating assets and liabilities decreased operating cash flow by $49.7 million.

Net cash provided by operating activities

Net cash provided by operating activities was $474.8 million in 2006 primarily due to $379.0 million in net income and $55.5 million in adjustments for non-cash charges such as depreciation of property plant and equipment, amortization of other intangible assets, stock-based compensation and deferred income taxes. Additionally, cash flows from changes in operating assets and liabilities activities increased $40.3 million in 2006 primarily due to increase in deferred revenues of $103.8 million and a decrease in receivables of $32.4 million, offset by an increase of $80.5 million in prepaid and other current assets and a decrease in liabilities in payables and accrued liabilities of $15.4 million.

Net cash provided by operating activities was $481.1 million in 2005 primarily due $429.0 million in net income and $244.9 million in adjustments in non-cash charges such as depreciation of property plant and equipment, amortization of other intangible assets, stock-based compensation and deferred income taxes mostly offset by a $250.6 million gain from the sale of our payment gateway business. Additionally, cash flows from changes in operating assets and liabilities activities increased $57.8 million in 2005 primarily due to increase in deferred revenues of $74.2 million and an increase in payables and accrued liabilities of $75.5 million, partially offset by a decrease in receivables of $67.5 million and an increase of $24.4 million in prepaid and other current assets.

Net cash provided by operating activities was $365.3 million in 2004 primarily due to $152.8 million in net income and $164.0 in adjustments in non-cash charges such as depreciation of property plant and equipment, amortization of other intangible assets, stock-based compensation and deferred income taxes. Additionally, cash flows from changes in operating assets and liabilities activities increased $48.5 million in 2004 primarily due to increase in deferred revenues of $71.1 million, an increase in payables and accrued liabilities of $37.6 million and an increase in prepaid and other current assets partially offset by a decrease in receivables of $70.0 million.

Net cash provided by operating activities

Net cash provided by operating activities of approximately $238.3 million for the six months ended June 30, 2006 consisted of net income of $393.3 million adjusted for non-cash items totaling $161.1 million, including depreciation of property and equipment of approximately $49.9 million, amortization of other intangible assets of approximately $59.8 million, acquired in-process research and development charges of approximately $15.5 million, stock-based compensation and other of $32.8 million, restructuring, impairment and other reversals, net of $4.2 million, gain on sale of investments of approximately $21.2 million, deferred income taxes of approximately $295.8 million, and approximately $6.1 million provided by changes in operating assets and liabilities.

Net cash provided by operating activities

Net cash provided by operating activities of approximately $331.1 million for the nine months ended September 30, 2006 consisted of net income of $408.5 million less non-cash items totaling $86.2 million, which included depreciation of property and equipment of approximately $78.3 million, amortization of other intangible assets of approximately $90.8 million, acquired in-process research and development charges of approximately $16.7 million, stock-based compensation and other of $49.0 million, mostly offset by a gain on sale of investments of approximately $21.3 million, deferred income taxes of approximately $299.1 million. Changes in operating assets and liabilities reduced operating cash flow by $8.7 million.

Net cash provided by operating activities

Net cash provided by operating activities of approximately $93.7 million for the three months ended March 31, 2006 consisted of net income of $19.8 million adjusted for non-cash items totaling $55.9 million, including depreciation and amortization of property and equipment of approximately $24.4 million, amortization of other intangible assets of approximately $28.0 million, impairment of other intangible assets of $2.0 million, acquired in-process research and development charges of approximately $10.9 million, stock-based compensation of $15.1 million, gain on sale of investments of approximately $21.3 million, and approximately $18.1 million provided by changes in operating assets and liabilities.

Net cash provided by operating activities

Net cash provided by operating activities was $510.8 million in 2005 primarily due to an overall increase in net income after adjustments for non-cash items such as amortization of intangible assets and the depreciation of property and equipment. Additionally, cash flows from operating activities increased in 2005 as compared to 2004 due to an increase in deferred revenues of $72.8 million and an increase in accounts payable and accrued liabilities of $100.3 million, partially offset by an increase in accounts receivable of $63.8 million.

Net cash provided by operating activities was $365.3 million in 2004 primarily due to an overall increase in net income after adjustments for non-cash items such as amortization of intangible assets and the depreciation of property and equipment. Additionally, cash flows from operating activities increased during 2004 as compared to 2003 due to an increase in deferred revenues of $69.3 million and an increase in accounts payable and accrued liabilities of $44.9 million, partially offset by an increase in accounts receivable of $65.8 million.

Net cash provided by operating activities was $358.4 million in 2003 primarily as a result of an increase in accounts payable of $38.1 million, a decrease in accounts receivable of $28.0 million, an increase in deferred revenue of $25.5 million and a decrease in prepaid expenses and other current assets of $12.8 million after accounting for the sale of our Network Solutions business.