VeriSign (VRSN)

Note 13. Other (Loss) Income, Net

The following table presents the components of other (loss) 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 Convertible Debentures. Income from transition services agreements includes income 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.

Other (loss) income, net

Other (loss) 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 and impairment of equity investments, gains and losses on divestiture of businesses, realized and unrealized gains and losses on the contingent interest derivative on convertible debentures, income from transition services agreements, and the net effect of foreign currency gains and losses.

A comparison of other (loss) income, net, is presented below:

Other (loss) income, net, decreased approximately $17.1 million and $101.0 million during the three and six months ended June 30, 2008, respectively, as compared to the same periods last year. Interest income during the three and six months ended June 30, 2008, decreased primarily due to lower average invested balances, resulting from stock repurchase activity during the third quarter of 2007 and the first quarter of 2008 partially offset by cash proceeds received from convertible debentures during the third quarter of 2007, as well as lower average interest rates compared to the same periods last year. Interest expense increased during the three and six months ended June 30, 2008, as compared to the same periods last year, primarily due to the additional interest expense related to our convertible debentures issued during the third quarter of 2007. We recorded a pre-tax gain of $2.1 million on the sale of our CDN business during the second quarter of 2008. We recorded a $0.2 million and $2.1 million unrealized gain on the contingent interest derivative on convertible debentures during the three and six months ended June 30, 2008, respectively. Due to the fact that we are required to mark-to-market the fair value of the contingent interest derivative on convertible debentures at each reporting period, such revaluations could result in further gains or losses. We entered into certain transition services agreements with the purchasers of certain divested businesses. The income received from such agreements was $1.4 million during the second quarter of 2008.

Other (loss) income, net

Other (loss) 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 businesses, realized and unrealized gains and losses on the contingent interest derivative on convertible debentures, and the net effect of foreign currency gains and losses.

A comparison of other (loss) income, net, is presented below:

Other (loss) income, net, decreased approximately $83.1 million during the three months ended March 31, 2008, as compared to the same period last year. We recorded a gain of $75.0 million upon the divestiture of our majority ownership interest in Jamba during the three months ended March 31, 2007. Interest expense increased approximately $7.6 million during the three months ended March 31, 2008, as compared to the same period last year, primarily due to the additional interest expense related to our convertible debentures issued during the third quarter of 2007. We recorded a $1.8 million unrealized gain on the contingent interest derivative on convertible debentures during the three months ended March 31, 2008. Due to the fact that we are required to mark-to-market the fair value of the contingent interest derivative on convertible debentures at each reporting period, such revaluations could result in further gains or losses.

Other (loss) income, net

Other (loss) 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, realized and unrealized gains and losses on embedded derivative, and the net effect of foreign currency gains and losses.

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A comparison of other (loss) income is presented below:

Other (loss) income, net, decreased approximately $10.8 million for the three months ended September 30, 2007, as compared to the same period last year and increased $47.8 million for the nine months ended September 30, 2007, as compared to the same period last year. Interest income increased approximately $5.4 million and $7.9 million for the three and nine months ended September 30, 2007, respectively, primarily as a result of higher cash balances as compared to the same periods last year. Interest expense increased approximately $2.6 million and $3.3 million for the three and nine months ended September 30, 2007, respectively, as compared to the same periods last year, primarily due to the additional interest expense related to our convertible debentures issued during the three months ended September 30, 2007. During the three and nine months ended September 30, 2007, we recorded $4.0 million and $7.7 million, respectively, for unrealized gain on joint venture call options as described in Note 3, “Joint Ventures,” of the Notes to Condensed Consolidated Financial Statements. During the three months ended September 30, 2007, we recorded $12.6 million realized and unrealized loss on the embedded derivative associated with our convertible debt. Due to the fact that we are required to mark-to-market the fair value of these call options and the embedded derivative at each reporting period, such revaluations could result in gains or losses. During the three months ended September 30, 2007, we recorded an other-than-temporary impairment loss of $4.4 million for an equity investment.