[2] Network Solutions Announces Record 1999 Fourth Quarter and Annual Revenue and Earnings.Business Editors HERNDON, Va.--(BUSINESS WIRE)--Feb. 10, 2000 Financial Highlights Fourth Quarter 1999 Full Year 1999 Net new registrations 1.6 million 5.0 million International net new registrations 539,000 1.5 million Net revenue $75.9 million $220.8 million Cash from operations $90.3 million $198.6 million Net income $9.0 million $26.9 million Earnings per share $0.25 per share $0.77 per share Network Solutions, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : NSOL) today reported record net revenue of $75.9 million for the three months ended December 31, 1999, up 143 percent from $31.3 million in the quarter one year ago. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 160 percent to $11.8 million in the quarter versus $4.5 million for the fourth quarter of 1998. Net income increased 142 percent to a record $9.0 million or $0.25 per share on a diluted basis, compared to $3.7 million or $0.11 per share for the same quarter last year. Net revenue was $220.8 million in 1999 versus $93.7 million last year, an increase of 136 percent. Operating income grew 171 percent to $35.7 million from $13.2 million in 1998. For 1999, net income increased 139 percent to $26.9 million or $0.77 per share on a diluted basis, compared to $11.2 million or $0.34 per share last year. Network Solutions' Registrar (NSI See Network Solutions. NSI - Network Solutions, Inc. Registrar) registered a record 1.6 million net new domain names in the fourth quarter of 1999, up 161 percent from the fourth quarter 1998 total of 621,000 names and up 23 percent from the third quarter 1999 total of 1.3 million. For 1999, the NSI Registrar registered 5.0 million net new domain names versus 1.9 million in 1998. Network Solutions' cumulative total of net registrations grew 140 percent from nearly 3.4 million at December 31, 1998 to over 8.1 million at December 31, 1999. In the fourth quarter of 1999, the number of the NSI Registrar's net new international registrations in .com, .net and .org totaled 539,000, up 220 percent from the fourth quarter 1998 total of 168,000. For 1999, the NSI Registrar registered more than 1.5 million net new international registrations versus 532,000 in 1998. Non-NSI Registrars registered an additional 890,000 names with Network Solutions' Registry in 1999. Currently, 26 additional registrars are operational and registering domain names in .com, .net and .org. &uot;In the fourth quarter, we began to see the tremendous untapped potential for Internet identities worldwide as new registrations grew 50 percent from the previous quarter,&uot; said Jim Rutt, chief executive officer, Network Solutions. &uot;In addition to growth in new registrations, we sold value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. services to approximately 17 percent of our Registrar's 1.6 million registrations in the quarter.&uot; &uot;Cash from operations grew 213 percent to $199 million in 1999, of which $90 million was in the fourth quarter alone,&uot; said Robert Korzeniewski, chief financial officer, Network Solutions. &uot;Upon the completion of our latest common stock offering and based on our most recent balance sheet, we will have cash and investments of approximately $850 million, which is a powerful war chest for strategic investments and acquisitions during the year. We also enter 2000 with a balance sheet that has never been stronger with $362 million of deferred revenue.&uot; 1999 and recent highlights include: -- NSI, DoC and ICANN (Internet Corporation for Assigned Names and Numbers, www.icann.org) A non-profit, international association founded in 1998 and incorporated in the U.S. It is the successor to IANA (Internet Assigned Numbers Authority), which manages Internet addresses, domain names and the huge number Agreements - In November 1999, Network Solutions, the U.S. Department of Commerce (DoC) and the Internet Corporation for Assigned Names and Numbers See ICANN. (body, networking) Internet Corporation for Assigned Names and Numbers - (ICANN) The non-profit corporation that was formed to assume responsibility for IP address allocation, protocol parameter assignment, domain name system management, and root server system (ICANN) entered into a series of wide-ranging agreements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the future of the Internet's domain name system. Under the terms of the agreements, Network Solutions was made an accredited registrar An accredited registrar, also called an Accredited Certification Body (CB), is an organisation accredited by a recognised accrediting body to issue certification confirming that an organisation meets the requirements of a standard (e.g. ISO 9001). through November 2004 with a right to renew indefinitely, and will also operate the registry for .com, .net and .org for at least four years. If the ownership of NSI's registrar and registry operations is separated by May 2001 in accordance with the agreement, the term of the registry agreement will extend an additional four years to November 2007. -- NSI Registry Multiyear Offering - On January 15, 2000, NSI's Registry began offering all registrars the ability to register domain names in one-year increments from 1 to 10 years. For its role in the domain name registration process, the NSI Registry collects $6 per registration per year, unless increased to cover higher registry costs. -- Strategic Marketing Agreements - Network Solutions expanded its worldwide distribution channel programs with small business, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and technology leaders, entering into agreements with Yupi.com, Yahoo! (NASDAQ: YHOO YHOO Yahoo! Inc. (NASDAQ symbol) ), UPS (NYSE NYSE See: New York Stock Exchange : UPS), Netscape, Microsoft (NASDAQ: MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ), Looksmart (NASDAQ: LOOK), InfoSpace (NASDAQ: INSP INSP Inspection INSP Inspector INSP Inspect INSP Inspirational Network INSP Institut des Nanosciences de Paris (French) INSP International Nuclear Safety Program INSP International Network on Strategic Philanthropy ), IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) (NYSE: IBM), Hewlett Packard (NYSE: HWP HWP Height (and) Weight Proportionate HWP Half-Wave Plate HWP Highway Patrol HWP Height Weight Proportional HWP Hewlett-Packard Corporation (stock symbol) HWP Hydrolyzed Whey Peptides ), GTE GTE General Telephone & Electronics GTE Génie Thermique et Énergie (French) GTE Gas Turbine Engine GTE Global Tropospheric Experiment GTE Geothermal Energy GTE Gas Turbine Efficiency plc (Sweden & USA) SuperPages.com(R), Go2Net, Inc. (NASDAQ: GNET GNET Global Network of Environment and Technology GNET General Information Network GNET Gigabit Network ), eFax (NASDAQ: EFAX), AltaVista and American Express American Express (NYSE: AXP), sometimes known as "AmEx" or "Amex", is a diversified global financial services company, headquartered in New York City. The company is best known for its credit card, charge card and traveler's cheque businesses. (NYSE: AXP The brand name Digital gave to its first family of Alpha-based computers. In 1998, Digital was acquired by Compaq. See Alpha. ), among others. -- NSI Registrar Alliance, Premier and Affiliate Channels - Network Solutions expanded its relationships with some of the world's leading Internet Service Providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. and Web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. companies, enhancing its affiliations with its key Alliance partners EarthLink (NASDAQ: ELNK ELNK EarthLink, Inc. (stock symbol) ELNK Ethernet Link ), Interliant, Inc. (NASDAQ: INIT) and Interland. The NSI Registrar signed agreements with over 150 new channel partners in 1999 for a total of 240 partners. Among them are global telecommunications providers including British Telecom The telephone and communications carrier that provides services in Great Britain and Northern Ireland. It used to be a division of the British Post Office, but was privatized in 1984 under Margaret Thatcher's administration. (NYSE: BTY BTY Battery BTY Betty BTY Back To You BTY Better Than You BTY Blessings to You ), Telecom Italia Telecom Italia is formerly a partially state-owned Italian telco. It was once known as SIP, and it has the largest user base in Italy. Telecom Italia also owns shares in Telecom Argentina and Telecom Personal, fixed and cellular networks in Argentina. (NYSE: TI), KPN KPN Koninklijke PTT Nederland (Royal Dutch Telecom) KPN Konfederacja Polski Niepodleglej (Polish conservative party) Telecom (NYSE: KPN), China Telecom (NYSE: CHL CHL crown-heel length. ), Korea Telecom KT (formerly, Korea Telecom, Korean: 한국통신, NYSE: KT) is South Korea's top integrated wired/wireless telecommunication service provider. KT has been Korea's leader in the development of the information & communications business for the last 25 years (NYSE: KTC KTC Kentucky Transportation Cabinet KTC Kentucky Transportation Center KTC Knoxville Track Club KTC Kosovo Transitional Council KTC Kadamba Transport Corporation (Goa, India) KTC Key Translation Center ), Singapore Telecom, and Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. Telecom. The NSI Registrar also added over 30,000 Affiliate members during 1999 for a current total of 41,000 Affiliates. -- New Product Offerings - In 1999, Network Solutions launched the dot com dot com - com directoryTM, the Company's find engine for online businesses. Since launch, Network Solutions has logged 20 million impressions. In addition, to serve the large number of small businesses coming online, Network Solutions introduced the dot com essentials(TM) service in 1999, a turnkey package that gives small businesses and individuals tools they need to establish a professional online presence including a Web address, a dot com mail(TM) e-mail service See Internet e-mail service. , a dot com biz card(TM) one-page Web site, and a listing in the dot com directory. IdNames(TM) announced additional corporate services Activities that combine or consolidate certain enterprise-wide needed support services, provided based on specialized knowledge, best practices, and technology to serve internal (and sometimes external) customers and business partners. to meet the growing needs of global companies including anonymous registrations and maintenance services. Through its acquisition of ImageCafe, Network Solutions allows small businesses to design professional Web sites. -- Legal and Regulatory Decisions - Recently, the United States Supreme Court United States Supreme Court: see Supreme Court, United States. declined to hear a petition by William Thomas William Thomas or Bill Thomas may refer to:
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ), in the NameSpace A collection of names for a particular purpose. Typically, each name is unique. For example, tables in a relational database must all have unique names. A Windows workgroup that uses the original NetBIOS naming system requires a different "made-up" name for each computer and printer in (formerly PG Media) decision, to be immune from antitrust liability with respect to its refusal to add new generic Top Level Domains (gTLDs) to the root zone file under the direction of the National Science Foundation. In addition, the United States Department of Justice's Antitrust Division and the European Commission recently closed their respective investigations of Network Solutions, in each case without any enforcement action. About Network Solutions Founded in 1979, Network Solutions, Inc. (NASDAQ: NSOL) pioneered the development of registering Web addresses ending in .com, .net, .org and .edu and is the world's leading Registrar with more than 8.1 million net registrations. Separately, Network Solutions plays a critical role in the infrastructure of the Internet through its Registry business. Network Solutions' Registry customers include all the Registrars of domain names ending in .com, .net and .org. Network Solutions also provides Internet Technology Services that assist large commercial organizations in the evolution and management of their Internet technologies. For more information, see the www.netsol.com/nsi Web site. Statements in this announcement other than historical data and information constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, increased competition, including price competition, in the domain name registration business, customer acceptance of new products and services offered by the company in addition to or as enhancements of its registration services, risks associated with acquisitions and investments, risks associated with the company's international business, potential volatility in the company's stock price, uncertainty of Internet privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned , uncertainty of future revenue and profitability and fluctuations in its quarterly operating results. More information about potential factors that could affect the company's business and financial results is included in the company's filings with the Securities and Exchange Commission, especially in the company's Registration Statement on Form S-3 filed on December 22, 1999, as amended, and previous Securities and Exchange filings.
Network Solutions, Inc.
Statements of Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1999 1998 1999
Net revenue $31,257,000 $75,926,000 $93,652,000 $220,811,000
Cost of revenue 12,079,000 27,566,000 38,530,000 81,606,000
Gross profit 19,178,000 48,360,000 55,122,000 139,205,000
Research and
development
expenses 1,928,000 3,624,000 4,821,000 10,989,000
Selling, general
and administrative
expenses 12,706,000 32,936,000 37,144,000 92,517,000
Interest
income (1,880,000) (3,616,000) (6,303,000) (9,928,000)
Other expenses 23,000 7,000 116,000 52,000
Income before
income taxes 6,401,000 15,409,000 19,344,000 45,575,000
Provision for
income taxes 2,683,000 6,394,000 8,109,000 18,689,000
Net income $3,718,000 $9,015,000 $11,235,000 $26,886,000
Earnings per common share:
Basic $0.11 $0.27 $0.35 $0.81
Diluted $0.11 $0.25 $0.34 $0.77
Shares used in computing
earnings per common share
Basic 32,498,000 33,598,000 31,958,000 33,338,000
Diluted 34,312,000 35,627,000 33,396,000 34,953,000
Network Solutions, Inc.
Statements of Financial Position
December 31, December 31,
1998 1999
ASSETS
Current assets:
Cash and cash equivalents $12,862,000 $196,589,000
Short-term investments 118,808,000 112,523,000
Accounts receivable, net 22,628,000 31,916,000
Income taxes receivable - 16,193,000
Prepaids and other assets 4,001,000 8,809,000
Deferred tax asset 40,508,000 102,563,000
Total current assets 198,807,000 468,593,000
Furniture and equipment, net 16,005,000 57,406,000
Long-term investments 13,590,000 62,475,000
Deferred tax asset 14,831,000 28,197,000
Goodwill, net 634,000 6,379,000
Total assets $243,867,000 $623,050,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $28,287,000 $52,957,000
Due to SAIC 4,766,000 30,177,000
Income taxes payable 5,409,000 1,045,000
Current portion of
capital lease obligations 834,000 247,000
Deferred revenue, net 93,720,000 255,307,000
Total current liabilities 133,016,000 339,733,000
Capital lease obligations 247,000 -
Long-term deferred revenue, net 35,474,000 106,332,000
Other long-term liabilities - 639,000
Total liabilities 168,737,000 446,704,000
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $.001 par value,
authorized 10,000,000
shares; none issued and
outstanding in 1998 and 1999 - -
Common stock, $.001 par value;
authorized 210,000,000
shares; 33,882,000 issued and
outstanding in 1999 - 34,000
Class A common stock, $.001 par value;
authorized 100,000,000 shares
in 1998; 9,140,000 issued
and outstanding in 1998 9,000 -
Class B common stock, $.001 par value;
Authorized 30,000,000 shares
in 1998; 23,850,000 issued and
outstanding in 1998 24,000 -
Additional paid-in capital 72,331,000 117,289,000
Retained earnings 2,407,000 29,293,000
Accumulated other
comprehensive income 359,000 29,730,000
Total stockholders' equity 75,130,000 176,346,000
Total liabilities
and stockholders' equity $243,867,000 $623,050,000
Network Solutions, Inc.
Statements of Cash Flows
Twelve Months Ended Twelve Months Ended
December 31, December 31,
1998 1999
Cash flows from operating activities:
Net income $11,235,000 $26,886,000
Adjustments to reconcile
net income to net cash provided
by operating activities:
Depreciation and amortization 3,754,000 12,223,000
Provision for uncollectible
accounts receivable 2,247,000 -
Deferred income taxes (27,317,000) (95,823,000)
Tax benefit associated with
stock options 5,607,000 34,843,000
Change in operating assets and
liabilities:
Increase in accounts
receivable (19,083,000) (9,288,000)
Increase in income taxes
receivable - (16,193,000)
Increase in prepaid and
other assets (2,996,000) (4,808,000)
Increase in accounts payable
and accrued liabilities 21,861,000 22,655,000
Increase (decrease)
in income
taxes payable 367,000 (4,364,000)
Increase in deferred revenue 67,743,000 232,445,000
Net cash provided by operating
activities 63,418,000 198,576,000
Cash flows from investing activities:
Purchase of furniture and
equipment (13,070,000) (52,778,000)
Acquisition of businesses, net
of cash acquired - (3,936,000)
Redemption (purchase) of short-term
investments (77,990,000) 9,479,000
Purchase of long-term
investments, net (13,590,000) (11,656,000)
Proceeds from maturity of
long-term investments - 9,350,000
Net cash used in investing
activities (104,650,000) (49,541,000)
Cash flows from financing activities:
Net transactions with SAIC 3,516,000 25,411,000
Repayment of capital lease
obligations (842,000) (834,000)
Issuance of common stock
pursuant to stock plans 10,274,000 10,115,000
Net cash provided by
financing activities 12,948,000 34,692,000
Net increase (decrease) in cash and
cash equivalents (28,284,000) 183,727,000
Cash and cash equivalents,
beginning of period 41,146,000 12,862,000
Cash and cash equivalents,
end of period $12,862,000 $196,589,000
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