VeriSign (VRSN)

Other Income, Net

Other income, net, consists primarily of interest earned on our cash, cash equivalents, and investments, interest expense related to our borrowings, net gains or losses on the sale and impairment of investments, net gains or losses on the divestiture of businesses, realized and unrealized gains and losses on the contingent interest derivative on the Convertible Debentures, income from transition services agreements, and the net effect of foreign currency gains and losses. The net effect of foreign currency gains and losses is included in Other, net, in the table below.

A comparison of other income, net, is presented below:

2008 compared to 2007:    Other income, net, decreased $42.1 million in 2008. Interest income decreased $30.7 million due to lower average invested balances, primarily resulting from stock repurchase activity in 2008, as well as lower average interest rates. Interest expense increased $22.8 million primarily due to interest expense on our Convertible Debentures issued in August 2007. In 2008, we recognized a gain of $77.9 million upon the divestiture of our remaining 49% ownership interest in the Jamba joint ventures, compared to a gain of $68.2 million recognized in 2007 upon the divestiture of our majority ownership interest in Jamba. In 2008, we

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recorded a charge of $8.2 million for an other-than-temporary impairment of funds held by the Primary Fund and the International Fund as a result of management’s assessment of our investment portfolio with consideration to the economic market conditions at the time. In 2008, we recorded $3.6 million of unrealized gains on the contingent interest derivative on our Convertible Debentures compared to $15.3 million of realized and unrealized losses on the contingent interest derivative on Convertible Debentures in 2007. Since we are required to mark-to-market the fair value of the contingent interest derivative on our Convertible Debentures at each reporting period, such revaluation could result in further gains and losses. We have entered into certain transition services agreements with the purchasers of certain divested businesses. The income received from such agreements was $3.6 million in 2008.

2007 compared to 2006:    Other income, net, increased $51.5 million in 2007. Interest income increased $20.0 million due to higher average cash balances throughout the year, primarily resulting from the issuance of our Convertible Debentures as well as the lack of cash outlays on acquisitions in 2007. Interest expense increased $10.4 million primarily due to interest expense related to our Convertible Debentures issued in August 2007. We recognized a gain of approximately $68.2 million upon the divestiture of our majority ownership interest in Jamba. We recorded $10.9 million of unrealized gain on the joint venture call options and $15.3 million of realized and unrealized losses on the contingent interest derivative on our Convertible Debentures. Other activity during 2007 included a $1.8 million net loss on the sale of investments and a $3.0 million gain on the divestiture of a business unit.

Note 19.    Other Income, Net

The following table presents the components of other income, net:

Interest income is earned principally from the investment of VeriSign’s surplus cash balances. Interest expense is principally incurred on Convertible Debentures and the Facility. Income from transition services agreements includes fees generated from services provided to the purchasers of the divested businesses for a certain period of time to ensure and facilitate the transfer of business operations for those businesses. Other, net, primarily consists of foreign exchange rate gains and losses.

Note 18.    Other Income, Net

The following table presents the components of other income, net:

Interest income is earned principally from the investment of VeriSign’s surplus cash balances. Interest expense is derived principally from interest on VeriSign’s long-term debt. In 2007, VeriSign recorded a $68.2 million gain from the divestiture of its majority ownership interest in Jamba. In 2006, VeriSign recorded a $21.7 million gain on the sale of its remaining equity ownership interest in Network Solutions.

Other, net, primarily consists of foreign exchange rate gains and losses, and in 2005, it includes approximately $6.0 million of other income related to a litigation settlement with a telecommunication carrier.

Note 18. Other Income, net

The following table presents the components of other income, net for periods presented:

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Interest income is derived principally from the investment of VeriSign’s surplus cash balances. Interest expense is derived principally from interest payments for VeriSign’s outstanding balance from its credit facility. During 2006, VeriSign recorded a $21.7 million gain on the sale of the remaining equity stake in Network Solutions. During 2005, VeriSign recognized a gain of $8.2 million on the sale of an equity investment that was previously impaired. During 2004, VeriSign sold 18,000 ordinary shares of its Tokyo-based, majority owned consolidated subsidiary, VeriSign Japan K.K., representing a gain of approximately $74.9 million related to the sale. Other, net primarily consists of foreign exchange rate gains and losses and in 2005 it includes approximately $6.0 million of other income related to a litigation settlement with a telecommunication carrier.

Other income, net

Other income, net, consists primarily of interest earned on our cash, cash equivalents, and investments, interest expense related to our borrowings, gains and losses on the sale or impairment of equity investments, gains and losses on divestiture of subsidiary, unrealized gains and losses on joint venture call options and the net effect of foreign currency gains and losses.

A comparison of other income is presented below:

Other income, net, increased approximately $5.9 million and $58.6 million for the three and six months ended June 30, 2007, respectively, as compared to the same periods last year. Interest income increased approximately $1.5 million and $2.5 million during the three and six months ended June 30, 2007, respectively, primarily as a result of higher cash balances as compared to the same periods last year. Interest expense decreased approximately $1.5 million for the three months ended June 30, 2007, as compared to the same period last year, primarily due to reduced interest expense related to our borrowings under the credit facility as described in Note 9, “Credit Facility”, of the Notes to Condensed Consolidated Financial Statements. During the three months ended June 30, 2007, we recorded a $3.8 million unrealized gain on joint venture call options as described in Note 3, “Joint Ventures”, of the Notes to the Condensed Consolidated Financial Statements. Due to the fact that we are required to mark-to-market the fair value of these call options at each reporting period, such revaluation could result in a gain or loss.

Other income, net

Other income, net consists primarily of interest earned on our cash, cash equivalents, and investments, interest expense related to our borrowings, gains and losses on the sale or impairment of equity investments, gains and losses on divestiture of subsidiary, and the net effect of foreign currency gains and losses.

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A comparison of other income, net, is presented below:

Other income, net, increased approximately $52.7 million during the three months ended March 31, 2007 as compared to the same period last year. Interest income increased approximately $1.0 million during the three months ended March 31, 2007 primarily as a result of higher cash balances as compared to the same period last year. Interest expense increased approximately $2.3 million for the three months ended March 31, 2007 due to interest related to our borrowings under the credit facility as described in Note 10, “Credit Facility”, of the Notes to Condensed Consolidated Financial Statements. During the three months ended March 31, 2007, we recorded a gain of $75.0 million upon the divestiture of majority stake in our wholly owned subsidiary, Jamba. The net gain on sale of investments for the three months ended March 31, 2006 included approximately $21.3 million of gain on sale of our remaining equity stake in Network Solutions that was previously written off.

Other income, net

Other income, net consists primarily of interest earned on our cash, cash equivalents, and investments, interest expense related to our borrowings, and gains and losses on the sale or impairment of equity investments.

A comparison of other income, net for the three and six months ended June 30, 2006 and 2005 is presented below:

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Other income, net decreased approximately $8.6 million for the three months ended June 30, 2006 and increased approximately $5.2 million for the six months ended June 30, 2006, as compared to the same periods last year. Net gain on sale of investments increased approximately $21.3 million for the six months ended June 30, 2006 primarily due to a gain on sale of our remaining equity stake in Network Solutions. Interest expense increased approximately $1.8 million for both the three and six months ended June 30, 2006, as compared to the same periods last year, due to interest related to our borrowings under our credit facility as described in Note 11 of our Notes to Condensed Consolidated Financial Statements. Interest income decreased approximately $2.0 million and $1.3 million for the three and six months ended June 30, 2006, respectively, primarily as a result of lower cash balances, as compared to the same periods last year. For the six months ended June 30, 2005, we recorded approximately $6.0 million of other income related to a litigation settlement with a telecommunications carrier and approximately $5.3 million of net foreign currency transaction gain.