VERISIGN, INC. AND SUBSIDIARIES PRO FORMA FINANCIAL STATEMENT INFORMATION (Unaudited)
Exhibit 99.1
VERISIGN, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENT INFORMATION
(Unaudited)
On August 24, 2009, VeriSign, Inc. (the “Company”) and certain of its foreign subsidiaries entered into an acquisition agreement (the “Agreement”) with Syniverse Holdings, Inc., a Delaware corporation (the “Purchaser”) for the sale of the Company’s Inter-Carrier Gateway, Premium Messaging Gateway, PictureMail/Integrated Multimedia Message Service (“MMS”) and Mobile Enterprise Solutions businesses (collectively, the “MMM Business,” and referred to in previous Current Report on Form 8-K filings as the VM3 Business) for a purchase price of $175.0 million, subject to fluctuations in working capital. On October 23, 2009 (the “Closing Date”), the Company completed the sale of the MMM Business to the Purchaser pursuant to the Agreement for cash proceeds of $174.5 million, after preliminary adjustments to reflect the parties’ current estimate of working capital associated with the MMM Business as of the Closing Date. The transaction will be subject to a final adjustment to reflect the actual working capital balance as of the Closing Date.
The unaudited Pro Forma Condensed Consolidated Balance Sheet Information as of December 31, 2008, set forth below has been presented after giving effect to the MMM Business divestiture transaction as if it had occurred on December 31, 2008. The Company has not presented the unaudited Pro Forma Condensed Consolidated Statement of Operations information as the MMM Business was reported as discontinued operations in the Company’s fiscal 2008 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 3, 2009.
The Company’s consolidated balances for the year ended December 31, 2008, were derived from the audited consolidated financial statements of the Company included in its fiscal 2008 Annual Report on Form 10-K, adjusted for retroactive adoption of FASB Staff Position (“FSP”) No. Accounting Principles Board (“APB”) 14-1 (“FSP APB 14-1”), “Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement),” codified into FASB ASC Subtopic 470-20, Debt with Conversion and Other Options and Statement of Financial Accounting Standard (“SFAS”) No. 160 (“SFAS 160”), “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51,” codified into FASB Accounting Standards Codification (“ASC”) 810, Consolidation, which were adopted effective January 1, 2009.
The unaudited pro forma financial statement information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the divestiture occurred as of the periods presented. In addition, the unaudited pro forma financial statement information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its fiscal 2008 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009.
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VERISIGN, INC. AND SUBSIDIARIES
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
(Unaudited)
| December 31, 2008 | ||||||||||||
| As Reported (1) | MMM Business (2) | Pro Forma | ||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 789,068 | $ | 174,503 | (3) | $ | 963,571 | |||||
| Accounts receivable, net of allowance for doubtful accounts of $1,208 at December 31, 2008 |
83,749 | — | 83,749 | |||||||||
| Prepaid expenses and other current assets |
268,178 | (510 | )(4) | 267,668 | ||||||||
| Assets held for sale |
483,840 | (113,999 | )(5) | 369,841 | ||||||||
| Total current assets |
1,624,835 | 59,994 | 1,684,829 | |||||||||
| Property and equipment, net |
385,498 | — | 385,498 | |||||||||
| Goodwill |
283,109 | — | 283,109 | |||||||||
| Other intangible assets, net |
35,312 | — | 35,312 | |||||||||
| Other assets |
38,118 | (137 | )(6) | 37,981 | ||||||||
| Total long-term assets |
742,037 | (137 | ) | 741,900 | ||||||||
| Total assets |
$ | 2,366,872 | $ | 59,857 | $ | 2,426,729 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable and accrued liabilities |
$ | 263,535 | $ | (7,444 | )(7) | $ | 256,091 | |||||
| Accrued restructuring costs |
28,920 | — | 28,920 | |||||||||
| Deferred revenues |
629,800 | — | 629,800 | |||||||||
| Other current liabilities |
5,463 | — | 5,463 | |||||||||
| Liabilities related to assets held for sale |
49,160 | (4,400 | )(8) | 44,760 | ||||||||
| Total current liabilities |
976,878 | (11,844 | ) | 965,034 | ||||||||
| Long-term deferred revenues |
215,281 | — | 215,281 | |||||||||
| Long-term accrued restructuring costs |
3,037 | — | 3,037 | |||||||||
| Convertible debentures, including contingent interest derivative |
568,712 | — | 568,712 | |||||||||
| Other long-term liabilities |
84,543 | — | 84,543 | |||||||||
| Total long-term liabilities |
871,573 | — | 871,573 | |||||||||
| Total liabilities |
1,848,451 | (11,844 | ) | 1,836,607 | ||||||||
| Commitments and contingencies |
||||||||||||
| Stockholders’ equity: |
||||||||||||
| Preferred stock—par value $.001 per share |
||||||||||||
| Authorized shares: 5,000,000 |
||||||||||||
| Issued and outstanding shares: none |
— | — | — | |||||||||
| Common stock—par value $.001 per share |
||||||||||||
| Authorized shares: 1,000,000,000 |
||||||||||||
| Issued and outstanding shares: 191,547,795 excluding 112,717,587 held in treasury, at December 31, 2008 |
304 | — | 304 | |||||||||
| Additional paid-in capital |
21,891,891 | — | 21,891,891 | |||||||||
| Accumulated deficit |
(21,439,988 | ) | 71,701 | (21,368,287 | ) | |||||||
| Accumulated other comprehensive income |
17,006 | — | 17,006 | |||||||||
| Total stockholders’ equity |
469,213 | 71,701 | 540,914 | |||||||||
| Noncontrolling interest in subsidiary |
49,208 | — | 49,208 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 2,366,872 | $ | 59,857 | $ | 2,426,729 | ||||||
| (1) | As reported balances were derived from the audited consolidated financial statements of the Company included in its fiscal 2008 Annual Report on Form 10-K, adjusted for retroactive adoption of FASB Staff Position (“FSP”) No. Accounting Principles Board (“APB”) 14-1 (“FSP APB 14-1”), “Accounting for Convertible Debt Instruments That May be Settled in Cash |
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| upon Conversion (Including Partial Cash Settlement),” codified into FASB ASC Subtopic 470-20, Debt with Conversion and Other Options and Statement of Financial Accounting Standard (“SFAS”) No. 160 (“SFAS 160”), “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51,” codified into FASB Accounting Standards Codification (“ASC”) 810, Consolidation, which were adopted effective January 1, 2009. See following table presented for the effects of the retroactive adjustments to the Company’s Condensed Consolidated Balance Sheet as of December 31, 2008, upon the adoption described above. |
| (2) | Represents balances pertaining to the MMM Business as of December 31, 2008, which would have been assumed by the Purchaser if the MMM Business was sold on December 31, 2008. |
| (3) | Represents cash proceeds received, less estimated transaction costs incurred in connection with the divestiture. |
| (4) | Represents balances pertaining to prepaid expenses and non-trade receivables that were not classified as assets held for sale as of December 31, 2008. These assets were assumed by the Purchaser as part of the Agreement. |
| (5) | Represents balances pertaining to accounts receivable, other current assets, long-lived assets and goodwill that were classified as assets held for sale as of December 31, 2008. These assets were assumed by the Purchaser as part of the Agreement. |
| (6) | Represents balances pertaining to long-term prepaid expenses and rent deposits that were not classified as assets held for sale as of December 31, 2008. These assets were assumed by the Purchaser as part of the Agreement. |
| (7) | Represents balances pertaining to accounts payable and accrued liabilities that were not classified as held for sale as of December 31, 2008. These liabilities were assumed by the Purchaser as part of the Agreement. |
| (8) | Represents balances pertaining to deferred revenues that were classified as held for sale as of December 31, 2008. These liabilities were assumed by the Purchaser as part of the Agreement. |
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The following table presents the effects of the retroactive adjustments to the Company’s Condensed Consolidated Balance Sheet as of December 31, 2008, upon the adoption of FSP APB 14-1 codified into FASB ASC Subtopic 470-20 and SFAS 160, codified into ASC 810.
| As Reported (1) | Adjustments | As Adjusted | ||||||||||
| (in thousands, except share and per share data) | ||||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 789,068 | $ | — | $ | 789,068 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $1,208 at December 31, 2008 |
83,749 | — | 83,749 | |||||||||
| Prepaid expenses and other current assets |
268,178 | — | 268,178 | |||||||||
| Assets held for sale |
483,840 | — | 483,840 | |||||||||
| Total current assets |
1,624,835 | — | 1,624,835 | |||||||||
| Property and equipment, net |
382,241 | 3,257 | (2) | 385,498 | ||||||||
| Goodwill |
283,109 | — | 283,109 | |||||||||
| Other intangible assets, net |
35,312 | — | 35,312 | |||||||||
| Other assets |
247,735 | (209,617 | )(3) | 38,118 | ||||||||
| Total long-term assets |
948,397 | (206,360 | ) | 742,037 | ||||||||
| Total assets |
$ | 2,573,232 | $ | (206,360 | ) | $ | 2,366,872 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable and accrued liabilities |
$ | 263,535 | $ | — | $ | 263,535 | ||||||
| Accrued restructuring costs |
28,920 | — | 28,920 | |||||||||
| Deferred revenues |
629,800 | — | 629,800 | |||||||||
| Other current liabilities |
5,463 | — | 5,463 | |||||||||
| Liabilities related to assets held for sale |
49,160 | — | 49,160 | |||||||||
| Total current liabilities |
976,878 | — | 976,878 | |||||||||
| Long-term deferred revenues |
215,281 | — | 215,281 | |||||||||
| Long-term accrued restructuring costs |
3,037 | — | 3,037 | |||||||||
| Convertible debentures |
1,261,655 | (692,943 | )(4) | 568,712 | ||||||||
| Other long-term liabilities |
16,378 | 68,165 | (5) | 84,543 | ||||||||
| Total long-term liabilities |
1,496,351 | (624,778 | ) | 871,573 | ||||||||
| Total liabilities |
2,473,229 | (624,778 | ) | 1,848,451 | ||||||||
| Commitments and contingencies |
||||||||||||
| Stockholders’ equity: |
||||||||||||
| VeriSign stockholders’ equity: |
||||||||||||
| Preferred stock—par value $.001 per share; Authorized shares: 5,000,000; Issued and outstanding shares: none |
— | — | — | |||||||||
| Common stock—par value $.001 per share; Authorized shares: 1,000,000,000; Issued and outstanding shares: 191,547,795 excluding 112,717,587 held in treasury, at December 31, 2008 |
304 | — | 304 | |||||||||
| Additional paid-in capital |
21,472,895 | 418,996 | (6) | 21,891,891 | ||||||||
| Accumulated deficit |
(21,439,410 | ) | (578 | ) | (21,439,988 | ) | ||||||
| Accumulated other comprehensive income |
17,006 | — | 17,006 | |||||||||
| Total VeriSign stockholders’ equity |
50,795 | 418,418 | 469,213 | |||||||||
| Noncontrolling interest in subsidiary |
49,208 | — | 49,208 | |||||||||
| Total stockholders’ equity |
100,003 | 418,418 | 518,421 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 2,573,232 | $ | (206,360 | ) | $ | 2,366,872 | |||||
| (1) | As reported in the Company’s 2008 Form 10-K, except Noncontrolling interest in subsidiary which has been retroactively presented as a separate component of Stockholders’ equity. |
| (2) | Property and equipment, net, as of December 31, 2008, increased by $3.3 million due to the retroactive capitalization of interest costs using the Company’s non-convertible debt borrowing rate of 8.39% as of the date of issuance. Prior to the adoption of FSP APB 14-1 codified into FASB ASC Subtopic 470-20, the Company was capitalizing its interest costs at the stated interest rate on the Convertible Debentures of 3.25%. |
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| (3) | Other assets as of December 31, 2008, decreased by $209.6 million due to a decrease to long-term deferred tax assets and a retroactive adjustment of debt issuance costs upon the adoption of FSP APB 14-1, codified into ASC Subtopic 470-20. Long-term deferred tax assets as of December 31, 2008, decreased by $195.7 million, and the Company reclassified $14.5 million of debt issuance costs from Other assets to Additional paid-in capital. The reclassification resulted in a cumulative decrease in amortization of debt issuance costs of $0.6 million as of December 31, 2008. |
| (4) | Convertible debentures, including contingent interest derivative, as of December 31, 2008, decreased by $692.9 million due to the reclassification of the $700.7 million equity component of the convertible debt to Stockholders’ equity offset by $7.8 million accretion of interest. |
| (5) | Long-term deferred tax liabilities as of December 31, 2008, increased by $68.2 million upon adoption of FSP APB 14-1, codified into ASC Subtopic 470-20. |
| (6) | Additional paid-in capital as of December 31, 2008 increased $419.0 million. The Company determined that the equity component of the Convertible Debentures was $700.7 million. This amount was reclassified from Convertible debentures, including contingent interest derivative, to Additional paid-in capital. The Company reclassified the equity component related debt issuance costs of $14.5 million from Other assets to Additional paid-in capital. The Company recorded long-term deferred tax liabilities of $267.2 million with a corresponding impact to Additional paid-in capital. |
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