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VERISIGN.COM worldwide UNITED STATES: AUSTRALIA: Corporate Headquarters Level 5, 6-10 O’Connell Street 487 East Middlefield Road Sydney, New South Wales, 2000 Mountain View, CA 94043 Australia USA Phone: +612-9236-0509 Phone: +1-650-961-7500 Fax: +612-9236-0532 Fax: +1-650-961-7300 www.VeriSign.com.au www.VeriSign.com INDIA: 21345 Ridgetop Circle VeriSign Services India Pvt Ltd., Dulles, VA 20166 80 Feet Road Koramangala Phone: +1-703-948-3200 Koramangala, Bangalore - 560 034 Karnataka, 2008 EUROPE: India 8 Chemin de Blandonnet Phone: +91-80-42565656 annual CH-1214 Vernier, Geneva www.VeriSign.in Switzerland SOUTH AFRICA: Phone: +41-22-545-0200 report Tygerberg Hills Office Park Fax: +41-22-545-0300 163 Hendrik Verwoerd Drive annual report www.VeriSign.ch Plattekloof 7500 Waterfront, Chancellors Road South Africa Hammersmith, W6 9XR London Phone: +27-21-937-8900 United Kingdom Fax: +27-21-937-8965 Phone: +44-(0)-1784-89-5014 www.thawte.com Fax: +44-(0)-1784-89-5114 www.VeriSign.co.uk JAPAN: Nittobo Bldg. 13F 8-1 Yaesu, 2-chome, Chuo-ku Tokyo 104-0028 Japan Phone: +81-3-3271-7011 Fax: +81-3-3271-7027 www.VeriSign.co.jp VERISIGN.COM ® 08 Cert no. SCS-COC-00648 board of directors executive officers investor info ® D. James Bidzos D. James Bidzos Quarterly earnings releases, corporate Executive Chairman of the Board Executive Chairman of the Board news releases, and Securities and Exchange and Chief Executive Officer and Chief Executive Officer Commission filings are available by on an interim basis, on an interim basis contacting VeriSign Investor Relations or VeriSign, Inc. through our Web site at http://investor. Mark D. McLaughlin verisign.com. A copy of VeriSign’s Annual William L. Chenevich President and Report on Form 10-K for the fiscal year Vice Chairman of Technology Chief Operating Officer ended December 31, 2008, containing and Operations, additional information of possible interest Brian G. Robins U.S. Bancorp to stockholders, will be sent without charge Senior Vice President, Finance, to any stockholder who requests it. Please Kathleen A. Cote and Acting Chief Financial Officer direct your request to VeriSign Investor Former Chief Executive Officer, Relations at the address below. Richard H. Goshorn Worldport Communications Company Senior Vice President, Roger H. Moore General Counsel, and Secretary STOCK EXCHANGE LISTING Consultant to VeriSign, Inc. Russell S. Lewis NASDAQ Stock Market and Former Chief Executive Officer, Ticker Symbol: VRSN Illuminet Holdings, Inc. Executive Vice President, Strategy and Technical Operations John D. Roach Kevin A. Werner VERISIGN INVESTOR RELATIONS Chairman and Chief Executive Officer, Stonegate International Senior Vice President, 487 East Middlefield Road Corporate Development and Strategy Mountain View, CA 94043 Louis A. Simpson USA President and Chief Executive Officer, Phone: +1-800-922-4917 Capital Operations, GEICO Corporation Email: [email protected] http://investor.verisign.com Timothy Tomlinson Of Counsel, Greenberg Traurig, LLP INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 500 East Middlefield Road Mountain View, California 94043 USA TRANSFER AGENT If you have questions concerning stock certificates, change of address, consolidation of accounts, transfer of ownership, or other stock account matters, please contact VeriSign’s transfer agent: BNY Mellon Shareowner Services P.O. Box 358015 Pittsburgh, PA 15252-8015 USA Phone: +1-877-255-1918 financial In 2008, VeriSign recognized revenue of $962 million from continuing operations as compared to $847 million highlights in 2007. On a GAAP basis, the company reported a consolidated net loss of $375 million for 2008 and loss per LETTER TO OUR share of $1.90 as compared to a 2007 consolidated net loss of $149 million and loss per share of $0.63. On a GAAP basis, VeriSign reported segment revenue for Internet Infrastructure and Identity Services (3IS), or the “core businesses,” of $936 million, up 20 percent year-over-year. On a non-GAAP basis for the core SHAREHOLDERS businesses, VeriSign reported a net income of $193 million for 2008 and earnings per share of $0.96.1 The company continued to show strong improvement in its operating efficiency during the year, reporting a non-GAAP core operating margin for the full year of 33.6 percent, and exiting the year above 35 percent.2 This margin improvement was accomplished despite not having completed all of the divestitures and despite the Just over a year ago, we put into action our plan to work toward making economic downturn. VeriSign, Inc. a leaner, faster growing, and more profitable company. We Our businesses generated positive cash flow from operations of $482 million, and we repurchased planned to accomplish this by divesting non-core assets that had been approximately 39 million shares of common stock in 2008, exceeding the number of shares repurchased in 2007. Since June of 2007, we have reduced the common shares outstanding by 31 percent. acquired over the preceding years, and by focusing on our core businesses. We also continued to strengthen our balance sheet, ending the year with nearly $800 million in cash and equivalents. This includes more than $300 million in proceeds from the sale of seven of the 12 non-core In 2008, those core businesses grew 20 percent year-over-year, producing businesses as well as our interest in the Jamba joint venture. $936 million in revenue, and net income of $193 million, or $0.96 per share, all on a non-GAAP basis.1 We believe that these results demonstrate our plan is the right one for creating long-term shareholder value. While we are making our VeriSign’s Internet infrastructure services consist of two core businesses: Naming and Authentication services. some course corrections, mainly due to the ever-changing economic services The Authentication business unit is comprised of SSL certificate services, which we call business authentication, and VeriSign’s IAS, which we call user authentication. These businesses are fundamentally strong and growing, situation, we intend to continue executing on this plan in 2009. and we are satisfied with their performance in a depressed economy. We have sold seven of 12 non-core businesses, along with our interest in the Our Naming services business is the authoritative directory provider of all .com, .net, .cc, .tv, .name, and .jobs domain names. As of December 31, 2008, VeriSign manages more than 90 million domain names, an increase Jamba joint venture, for more than $300 million. We are actively working of 12 percent compared to year-end 2007. We continue to see growth, albeit at a reduced pace, in this business, with potential buyers to complete the sale of the remaining businesses. These with new names and the renewal of existing names being driven by global Internet adoption and growth. efforts are particularly challenging, as the global economic crisis has made One factor affecting the growth rate of domain names was the decline in names registered and renewed for online advertising purposes. Previously a growth segment, these names now account for approximately 7 transactions of this type extremely difficult to finance. percent of the adjusted zone of domain names. The decline in these names affected the overall growth rate of domain names, although non-advertising names of the adjusted zone grew 16 percent year-over-year. Our remaining non-core businesses performed well and made solid In October 2008, we implemented a second fee increase of 7 percent for .com and 10 percent for .net domain contributions to our consolidated results for 2008, thanks to the hard work of names. We have the right to make two additional fee increases in .com prior to 2012 and three additional their management and employees. Helpful, too, was our “divide and focus” increases in .net prior to 2011. The timing of these increases is discretionary. With respect to potential fee increases, we will consider many factors and ultimately act in the best interests of the company. strategy, allowing core and non-core businesses to operate as independently The Authentication business is what the company was founded on in 1995. This infrastructure allows any Web as possible. site that has purchased an SSL digital certificate to be recognized by the hundreds of millions of browser users worldwide. Each day, the VeriSign Secured® Seal is seen more than 150 million times, as our SSL certificates In 2008, we began a re-alignment from a centralized organization to one provide the means to establish trusted, encrypted communications for online banking, Internet retail, and other consisting of several business units, a structure that has allowed us to realize e-commerce uses. Built on 19 years of reliable service, the VeriSign brand has become virtually synonymous with trust on the Internet. operating and expense efficiencies even before the completion of the In 2008, we continued to see solid growth in the installed base of SSL certificates, which grew 13 percent year- divestitures. More importantly, each business unit can better address its own over-year with growth in VeriSign, thawte, and GeoTrust brands. In particular, we saw higher growth in GeoTrust unique challenges and opportunities. certificates. VeriSign certificates also showed good growth, but given our leadership at the high end of the market, unit growth was somewhat lower. New services and initiatives also saw their start this year. We extended our While still a small piece of our SSL business, Extended Validation (EV) SSL certificate sales continued to be strong as we more than doubled the units sold a year ago and maintained our EV SSL market leadership. Web site validation service to China through a major partner, and we moved However, we did see signs that customers were deferring adoption as a result of the weakening economy. This to beta testing with VIDN, a network protection service developed in-house suggests the mainstream adoption of premium-priced EV certificates will be pushed out as customers await to protect our own operations.