VRSN

VeriSign, Inc. (VRSN)

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VeriSign (VRSN)

Q4 2011 Earnings Call

January 26, 2012 4:30 pm ET

Executives

John Calys - Interim Chief Financial Officer, Vice President and Controller

D. James Bidzos - Founder, Executive Chairman, Chief Executive officer and President

David Atchley - Corporate Treasurer

David Atchley -

Patrick S. Kane - Senior Vice President and General Manager of Naming Services

Analysts

Jaimin Soni

Daniel T. Cummins - ThinkEquity LLC, Research Division

Gregg Moskowitz - Cowen and Company, LLC, Research Division

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

Rob D. Owens - Pacific Crest Securities, Inc., Research Division

Sterling P. Auty - JP Morgan Chase & Co, Research Division

Philip Winslow - Crédit Suisse AG, Research Division

Scott H. Kessler - S&P Equity Research

Walter H. Pritchard - Citigroup Inc, Research Division

Presentation

Operator

Good day, everyone, and welcome to the fourth quarter 2011 earnings call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Mr. David Atchley. Please go ahead, sir.

David Atchley

Thank you, operator. Good afternoon, everyone, and thank you for joining us for VeriSign's Fourth Quarter and Full Year 2011 Earnings Conference Call. I am David Atchley, Corporate Treasurer and Director of Investor Relations, and I'm here today with Jim Bidzos, Executive Chairman, President and CEO; and John Calys, Vice President, Interim CFO and Controller.

Please note that this call and accompanying slide presentation are being webcast from the Investor Relations section of our corporate website, www.verisigninc.com. Please refer to that website for important information, including the Q4 and full year 2011 earnings press release. A replay of this call will be available on the website within a few hours. Today's slide presentation will also be available for download after the call.

Financial results in today's press release are unaudited, and the matters we will be discussing today include forward-looking statements, and as such, are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent report on Form 10-K and 10-Q and any applicable amendments, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

I would like to remind you that in light of Regulation FD, VeriSign retains its long-standing policy to not comment on financial performance or guidance during the quarter, unless it is done through a public disclosure. The financial results in today's press release and the matters we will be discussing today include non-GAAP measures used by VeriSign. GAAP to non-GAAP reconciliation information is appended to our press release and slide presentation as applicable, each of which can be found on the Investor Relations section of our website.

In a moment, Jim and John will provide some prepared remarks, and afterward, we will open up the call for your questions. Unauthorized recording of this conference call is not permitted.

With that, I would like to turn the call over to Jim. Jim?

D. James Bidzos

Thanks, David, and good afternoon, everyone. The fourth quarter capped a year of solid growth, execution, financial performance and shareholder returns for VeriSign. During the past year, we completed a 4-year board-directed restructuring plan, which included divesting non-core businesses, the sale of our Authentication Services business and relocating our headquarters. This restructuring has resulted in a more efficient and more focused VeriSign that we believe is better prepared for the opportunities ahead. We delivered both for the global community of Internet users that increasingly rely on us and for our shareholders.

As stewards of critical elements of Internet infrastructure, both what we do and how we do it are important for the secure and reliable operation of the global Internet, upon which billions of people worldwide depend.

In 2011, we continued to demonstrate our commitment to shareholders by completing the return of divestiture proceeds. In May, we paid a special dividend of $463 million to shareholders and $100 million in contingent interest to bondholders. We also continued our share repurchase program during the year, with 16.3 million shares repurchased, returning $535 million during 2011.

On our last earnings call, we described several pending cash activities. These included the full payment for the rest of the building purchased, potential financing scenarios and the pending repatriation of previously taxed offshore cash. We mentioned this repatriation in our last call but did not state the amount, which is $86 million. All of these items will resolve as expected by December 31. As these activities were pending during the fourth quarter, we took a conservative approach, and for this reason alone, we did not make share repurchases.

Security and stability are paramount for the way we run our business, and this extends to the way we manage our liquidity. So, on December 31, with all the pending cash activity successfully concluded, we held $225 million in domestic cash and $1,125,000,000 in offshore cash. We have $831 million remaining under our current share repurchase authorization. We continually evaluate the overall cash and investing needs of the business and consider the best use for our cash, including potential share repurchases. John will discuss our cash balance in more detail in a few minutes.

During the fourth quarter, we completed the move to our new corporate headquarters in Reston, Virginia. We are excited about this new facility as it brings our main corporate functions under one roof. We're already seeing efficiencies and enhanced collaboration among our teams in the new building.

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