What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-17 compared with 2022-02-18 · 115 added, 135 removed, 634 unchanged (28% of the section changed)

33 unchanged sentences

As discussed in Notes 1 and 10 to the consolidated financial statements, the Company recognized $234.6 million of deferred tax assets, net as of December 31, 2022.

The Company’s income tax benefit was $2.6 million for the year ended December 31, 2021.

The Company’s income tax expense was $206.4 million for the year ended December 31, 2022.

The Company conducts business globally and consequently is subject to U.S.

5 unchanged sentences

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s income tax process, including controls related to the application of complex tax regulations in the Company’s various tax jurisdictions and the impact on

the Company’s U.S.

federal, state, and foreign income tax provision.

We involved domestic and international tax professionals with specialized skills and knowledge in various tax jurisdictions who assisted in evaluating the Company’s analyses over the application of complex tax regulations in those jurisdictions.

We involved domestic and international tax

professionals with specialized skills and knowledge in various tax jurisdictions who assisted in evaluating the Company’s analyses over the application of complex tax regulations in those jurisdictions.

We have served as the Company’s auditor since 1995.

30 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(In millions, except par value)

2022 December 31,

40 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(In millions, except per share data)

Year Ended December 31,

3 unchanged sentences

Cost of revenues 200.7 191.9 180.2

Sales and marketing 39,877 36,790 46,637

Research and development 85.7 80.5 74.7

General and administrative 148,434 149,213 137,625

Selling, general and administrative 195.4 188.4 186.0

Total costs and expenses 481.8 460.8 440.9

1 unchanged sentence

Interest expense ( 75.3 ) ( 83.3 ) ( 90.2 )

Non-operating (loss) income, net ( 1,329 ) 16,187 43,260

Non-operating income (loss), net 12.4 ( 1.3 ) 16.2

Income before income taxes 880.2 782.2 750.2

Income tax benefit (expense) 2,611 64,644 ( 146,477 )

Income tax (expense) benefit ( 206.4 ) 2.6 64.7

Net income 673.8 784.8 814.9

Other comprehensive (loss) income ( 29 ) ( 135 ) 190

Other comprehensive income (loss) 0.1 — ( 0.1 )

Comprehensive income $ 673.9 $ 784.8 $ 814.8

8 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In thousands)

(In millions)

Year Ended December 31,

13 unchanged sentences

Beginning balance ( 2.8 ) ( 2.8 ) ( 2.7 )

Other comprehensive (loss) income ( 29 ) ( 135 ) 190

Other comprehensive income (loss) 0.1 — ( 0.1 )

Balance, end of period ( 2.7 ) ( 2.8 ) ( 2.8 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(In millions)

Year Ended December 31,

16 unchanged sentences

Purchases of property and equipment ( 27.4 ) ( 53.0 ) ( 43.4 )

Proceeds (payments) from sale of business — 20,810 ( 9,872 )

Net cash (used in) provided by investing activities ( 269,246 ) ( 72,258 ) 167,195

Proceeds from sale of business — — 20.8

Net cash provided by (used in) investing activities 355.7 ( 269.2 ) ( 72.3 )

Cash flows from financing activities:

Repayment of borrowings ( 750,000 ) — —

Proceeds from borrowings, net of issuance costs 741,053 — —

Repurchases of common stock ( 1,048.1 ) ( 722.6 ) ( 777.5 )

Proceeds from employee stock purchase plan 12.3 12.4 12.6

Other financing activities — — ( 872 )

Repayment of borrowings — ( 750.0 ) —

Proceeds from borrowings, net of issuance costs — 741.1 —

Net cash used in financing activities ( 1,035.8 ) ( 719.1 ) ( 764.9 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 0.8 ) ( 0.7 ) —

Net (decrease) increase in cash, cash equivalents and restricted cash ( 181,785 ) ( 107,000 ) 150,848

Net increase (decrease) in cash, cash equivalents and restricted cash 150.2 ( 181.8 ) ( 107.0 )

Cash, cash equivalents, and restricted cash at beginning of period 228.8 410.6 517.6

59 unchanged sentences

The Company’s subsidiaries’ financial statements are remeasured into U.S.

dollars using a combination of current and historical exchange rates and any remeasurement gains and losses are included in Non-operating (loss) income, net.

dollars using a combination of current and historical exchange rates and any remeasurement gains and losses are included in Non-operating income (loss), net.

Remeasurement gains and losses were not significant in each of the last three years.

4 unchanged sentences

These foreign currency forward contracts are derivatives and are recorded at fair market value.

The Company records gains and losses on foreign currency forward contracts in Non-operating (loss) income, net.

The Company records gains and losses on foreign currency forward contracts in Non-operating income (loss), net.

Gains and losses related to foreign currency forward contracts were not significant in each of the last three years.

3 unchanged sentences

Revenues primarily arise from fixed fees charged to registrars for the initial registration or renewal of .com , .net , and other domain names.

Individual customers, called registrants, contract directly with registrars or their resellers, and the registrars, who are our direct customers, in turn register the domain names with Verisign.

Fees for domain name registrations and renewals are generally due at the time of registration or renewal.

7 unchanged sentences

Each domain name registration or renewal is considered a separate optional purchase and represents a single performance obligation, which is to allow its registration and maintain that registration (by allowing updates, Domain Name System (“DNS”) resolution and Whois services, which allow users to find information about registered domain names) through the registration term.

These services are provided continuously throughout each registration term, and as such, revenues from the initial registration or renewal of domain names are deferred and recognized ratably over the registration term.

These services are provided continuously throughout each registration term, and as such, revenues

VERISIGN, INC.

1 unchanged sentence

DECEMBER 31, 2022, 2021 AND 2020

renewals and advance extensions to the existing term are deferred until the new incremental period commences.

These fees are then recognized ratably over the renewal term.

from the initial registration or renewal of domain names are deferred and recognized ratably over the registration term.

Fees for renewals and advance extensions to the existing term are deferred until the new incremental period commences.

These fees are then recognized ratably over the renewal or extension term.

Costs Incurred to Obtain a Contract

1 unchanged sentence

These assets are included in Other current assets and Other long-term assets.

Advertising Expenses

Advertising costs are expensed as incurred and are included in Sales and marketing expenses.

Advertising expenses were $ 6.0 million, $ 7.5 million, and $ 12.8 million in 2021, 2020, and 2019, respectively.

Verisign uses the asset and liability method to account for income taxes.

25 unchanged sentences

The determination of the fair value of stock-based payment awards using the Monte Carlo simulation model or the Black-Scholes option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

Earnings per Share

1 unchanged sentence

Diluted earnings per share gives effect to dilutive potential common shares, including unvested RSUs and ESPP offerings, using the treasury stock method.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

Fair Value of Financial Instruments

9 unchanged sentences

Verisign is involved in various investigations, claims and lawsuits arising in the normal conduct of its business, none of which, in its opinion, will have a material adverse effect on its financial condition, results of operations, or cash flows.

The Company cannot assure you that it will prevail in any litigation.

The Company can provide no assurance that it will prevail in any litigation.

Regardless of the outcome, any litigation may require the Company to incur significant litigation expense and may result in significant diversion of management attention.

4 unchanged sentences

The Company does not believe that any such matter currently being reviewed will have a material adverse effect on its financial condition, results of operations, or cash flows.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

Financial Instruments

2 unchanged sentences

As of December 31,

(In thousands)

(In millions)

Cash $ 27.0 $ 25.8

9 unchanged sentences

Total $ 985.8 $ 1,211.1

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

The gross and net unrealized gains and losses included in the fair value of the debt securities were not significant for the periods presented.

6 unchanged sentences

As of December 31, 2022, the Company’s other financial instruments include cash, accounts receivable, restricted cash, and accounts payable whose carrying values approximated their fair values.

The fair values of the Company’s senior notes due 2025 (the “2025 Senior Notes”), the senior notes due 2027 (the “2027 Senior Notes”), and the senior notes due 2031 (the “2031 Senior Notes”) were $ 552.3 million, $ 573.9 million, and $ 755.5 million, respectively, as of December 31, 2021.

The aggregate fair value of the Company’s senior notes is $ 1.65 billion and $ 1.88 billion as of December 31, 2022 and December 31, 2021, respectively.

The fair values of these debt instruments are based on available market information from public data sources and are classified as Level 2.

3 unchanged sentences

As of December 31,

(In thousands)

(In millions)

Prepaid expenses $ 24.5 $ 24.8

Prepaid registry fees 24.3 24.2

Taxes receivable 7,669 3,572

Accounts receivable, net 6.2 5.3

Taxes receivable 1.9 7.7

Other 1.4 0.9

Total other current assets $ 58.3 $ 62.9

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

Property and Equipment, Net

1 unchanged sentence

As of December 31,

(In thousands)

(In millions)

Computer equipment and software $ 402.7 $ 400.6

9 unchanged sentences

for both periods presented.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

The following table presents the detail of goodwill:

As of December 31,

(In thousands)

(In millions)

Goodwill, gross $ 1,537.8 $ 1,537.8

8 unchanged sentences

As of December 31,

(In thousands)

Long-term prepaid expenses $ 10,976 $ 7,105

(In millions)

Long-term prepaid registry fees $ 9.1 $ 8.7

Operating lease right-of-use asset 7.2 8.4

Long-term prepaid expenses 6.6 11.0

Restricted cash 5.4 5.3

1 unchanged sentence

Total other long-term assets $ 30.6 $ 35.7

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

The prepaid registry fees in the tables above relate to the fees the Company pays to ICANN for each annual term of .

1 unchanged sentence

The amount of prepaid registry fees as of December 31, 2022 reflects amortization of $ 39.5 million during 2022 which was recorded in Cost of Revenues.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

Accounts Payable and Accrued Liabilities

1 unchanged sentence

As of December 31,

(In thousands)

(In millions)

Accounts payable and accrued expenses $ 9.8 $ 9.0

3 unchanged sentences

Interest payable 19.5 19.5

Customer incentives payable 13,297 12,556

Accrued registry fees 12.7 12.9

Customer incentives payable 7.1 13.3

Other accrued liabilities 9.0 9.3

3 unchanged sentences

As of December 31,

(In thousands)

(In millions)

Long-term tax liabilities $ 60.5 $ 76.1

6 unchanged sentences

As of December 31,

(in thousands except interest rates)

Senior notes due 2023 April 16, 2013 May 1, 2023 4.625 % $ — $ 750,000

(in millions except interest rates)

Senior notes due 2025 March 27, 2015 April 1, 2025 5.25 % $ 500.0 $ 500.0

7 unchanged sentences

DECEMBER 31, 2022, 2021 AND 2020

On June 8, 2021, the Company issued $ 750.0 million of 2.700 % senior unsecured notes due 2031.

The 2031 Notes were issued at 99.712 % of par value.

The total discount and issuance costs of $ 8.9 million are presented on the balance sheet as a reduction of the debt obligation and are being amortized to Interest expense over the 10-year term of the notes.

The 2025 and 2027 notes were issued at par and all outstanding senior notes are senior unsecured obligations of the Company.

1 unchanged sentence

Each of the senior notes issuances is redeemable, in whole or in part, at the Company’s option at times and redemption prices specified in the indentures.

On June 23, 2021, the Company used the net proceeds from the 2031 Notes and cash on hand, to redeem all of its $ 750.0 million aggregate principal amount of outstanding 4.625 % senior notes due 2023 (“2023 Notes”).

The redemption of the 2023 Notes resulted in a loss on debt extinguishment of $ 2.1 million related to the unamortized debt issuance costs on the notes.

The loss on extinguishment is included in Non-operating loss (income), net in 2021.

2019 Credit Facility

1 unchanged sentence

The 2019 Credit Facility includes a financial covenant requiring that the Company’s leverage ratio not exceed 4.0 to 1.0.

As of December 31, 2021, there were no borrowings outstanding under the facility and the Company was in compliance with the financial covenants.

As of December 31, 2022, there were no borrowings outstanding under the 2019 Credit Facility and the Company was in compliance with the financial covenants.

The 2019 Credit Facility was amended in December 2021 to address the LIBOR transition.

5 unchanged sentences

Treasury stock includes shares repurchased under stock repurchase programs and shares withheld in lieu of the tax withholding due upon vesting of RSUs.

Effective February 11, 2021, the Company’s Board of Directors (“Board”) authorized the repurchase of its common stock in the amount of approximately $ 747.0 million, in addition to the $ 253.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $ 1.0 billion under the program.

Effective February 10, 2022, the Company’s Board of Directors (“Board”) authorized the repurchase of its common stock in the amount of approximately $ 705.4 million, in addition to the $ 294.6 million that remained available for repurchases under the share repurchase program.

Effective October 27, 2022, our Board of Directors authorized the repurchase of our common stock in the amount of $ 803.0 million, in addition to the $ 197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $ 1.00 billion under the program.

The program has no expiration date.

1 unchanged sentence

As of December 31, 2022 there was approximately $ 858.8 million remaining available for repurchases under the program.

Effective February 10, 2022, the Company’s Board authorized the repurchase of its common stock in the amount of $ 705.4 million, in addition to the $ 294.6 million that remained available for repurchases under the program, for a total repurchase authorization of up to $ 1.0 billion under the program.

The summary of the Company’s common stock repurchases for 2022, 2021 and 2020 are as follows:

1 unchanged sentence

Shares Average Price Shares Average Price Shares Average Price

(In thousands, except average price amounts)

(In millions, except average price amounts)

Total repurchases under the repurchase plans 5.5 $ 187.07 3.3 $ 215.16 3.7 $ 200.06

3 unchanged sentences

Since inception, the Company has repurchased 249.3 million shares of its common stock for an aggregate cost of $ 12.75 billion, which is recorded as a reduction of Additional paid-in capital.

Accumulated Other Comprehensive Loss

The Accumulated other comprehensive loss balances as of December 31, 2022 and 2021 primarily consists of foreign currency translation adjustment losses.

There were no significant changes to accumulated other comprehensive loss balances for the periods presented.

VERISIGN, INC.

1 unchanged sentence

DECEMBER 31, 2022, 2021 AND 2020

Accumulated Other Comprehensive Loss

The following table summarizes the changes in the components of Accumulated other comprehensive loss for 2021 and 2020:

Foreign Currency Translation Adjustments Loss Unrealized Gain (Loss) On Investments Total Accumulated Other Comprehensive Loss

(In thousands)

Balance, December 31, 2019 $ ( 2,836 ) $ 215 $ ( 2,621 )

Changes — ( 135 ) ( 135 )

Balance, December 31, 2020 ( 2,836 ) 80 ( 2,756 )

Changes — ( 29 ) ( 29 )

Balance, December 31, 2021 $ ( 2,836 ) $ 51 $ ( 2,785 )

Calculation of Earnings per Share

2 unchanged sentences

2022 2021 2020

(In thousands)

(In millions)

Weighted-average shares of common stock outstanding 107.9 112.0 115.1

6 unchanged sentences

Europe, the Middle East and Africa (“EMEA”);

and certain other countries, including, but not limited to Canada, Australia, and Japan.

and certain other countries, including, but not limited to Canada, Japan and Singapore.

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

1 unchanged sentence

2022 2021 2020

(In thousands)

(In millions)

U.S $ 937.6 $ 851.3 $ 804.7

7 unchanged sentences

Revenues for each region may also be impacted by registrars domiciled in one region, registering domain names in another region.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

Major Customers

4 unchanged sentences

The increase in the deferred revenues balance in 2022 is primarily driven by amounts billed in 2022 for domain name registrations and renewals to be recognized as revenues in future periods, offset by refunds for domain name renewals deleted during the 45-day grace period, and $ 818.4 million of revenues recognized that were included in the deferred revenues balance at December 31, 2021.

The higher deferred revenue balance as of December 31, 2021 also reflects an increase in the volume of early renewal transactions that occurred before the .

com price increase became effective on September 1, 2021.

The balance of deferred revenues as of December 31, 2022 represents our aggregate remaining performance obligations.

1 unchanged sentence

The long-term deferred revenues amounts will be recognized in revenues over several years and in some cases up to ten years.

The Company transitioned the operation of the .

tv registry to a new operator in November 2022.

Upon completion of the transition, the Company had no remaining performance obligations related

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

As a result, the Company recognized the remaining $ 8.4 million of deferred revenues in the fourth quarter of 2022.

Employee Benefits and Stock-based Compensation

21 unchanged sentences

As of December 31, 2022, 2.9 million shares of the Company’s common stock remain reserved for future issuance under this plan.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

Stock-based Compensation

3 unchanged sentences

2022 2021 2020

(In thousands)

(In millions)

Cost of revenues $ 7.2 $ 6.5 $ 6.3

Sales and marketing 4,312 3,453 3,755

Research and development 9.5 8.3 7.1

General and administrative 34,319 31,332 33,762

Selling, general and administrative 41.9 38.6 34.8

Stock-based compensation expense 58.6 53.4 48.2

1 unchanged sentence

Total stock-based compensation $ 60.2 $ 55.1 $ 50.0

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

The following table presents the nature of the Company’s total stock-based compensation:

1 unchanged sentence

2022 2021 2020

(In thousands)

(In millions)

RSUs $ 43.8 $ 41.5 $ 38.2

2 unchanged sentences

Total stock-based compensation $ 60.2 $ 55.1 $ 50.0

The income tax benefit that was included within Income tax benefit (expense) related to these stock-based compensation expenses for 2021, 2020, and 2019 was $ 12.4 million, $ 11.0 million, and $ 11.7 million, respectively.

The income tax benefit that was included within Income tax (expense) benefit related to these stock-based compensation expenses for 2022, 2021, and 2020 was $ 13.8 million, $ 12.4 million, and $ 11.0 million, respectively.

RSUs Information

1 unchanged sentence

Shares Weighted-Average Grant-Date Fair Value

(Shares in thousands)

(Shares in millions)

Unvested at beginning of period 0.6 $ 192.88

Granted 0.3 $ 210.94

PSU achievement adjustment ( 10 ) $ 110.57

Vested and settled ( 0.3 ) $ 184.74

Forfeited ( 30 ) $ 185.99

The RSUs in the table above include PSUs.

The unvested RSUs as of December 31, 2021 include less than 0.2 million PSUs.

The number of shares received upon vesting of these PSUs may range from zero to 0.3 million depending on the level of performance achieved and whether any market conditions are satisfied.

The unvested RSUs as of December 31, 2022 include 0.2 million PSUs.

The number of shares received upon vesting of these PSUs may range from less than 0.1 million to 0.4 million depending on the level of performance achieved and whether any market conditions are satisfied.

The closing price of Verisign’s stock was $ 205.44 on December 31, 2022.

3 unchanged sentences

As of December 31, 2022, total unrecognized compensation cost related to unvested RSUs was $ 91.4 million which is expected to be recognized over a weighted-average period of 2.4 years.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

Non-operating (Loss) Income, Net

The following table presents the components of Non-operating income, net:

Non-operating Income (Loss), Net

The following table presents the components of Non-operating income (loss), net:

Year Ended December 31,

2022 2021 2020

(In thousands)

Loss on extinguishment of debt $ ( 2,149 ) $ — $ —

(In millions)

Interest income $ 14.9 $ 0.6 $ 7.8

Loss on extinguishment of debt — ( 2.1 ) —

Gain on sale of business — — 6.4

1 unchanged sentence

Other, net ( 2.5 ) 0.2 ( 0.1 )

Total non-operating (loss) income, net $ ( 1,329 ) $ 16,187 $ 43,260

The redemption of the 2023 Notes resulted in a loss on debt extinguishment of $ 2.1 million related to the unamortized debt issuance costs on the notes.

Total non-operating income (loss), net $ 12.4 $ ( 1.3 ) $ 16.2

Interest income is earned principally from the Company’s surplus cash balances and marketable securities.

The lower interest income in 2021 and 2020 reflects a decline in interest rates on our investments in debt securities.

Gain on sale of business and transition services income in 2020 and 2019 relate to the sale of our security services customer contracts.

The increase in interest income in 2022 reflects higher interest rates on our investments in debt securities.

The redemption of the 2023 senior notes in 2021 resulted in a loss on debt extinguishment of $ 2.1 million related to the unamortized debt issuance costs on the notes.

Gain on sale of business and transition services income in 2020 relates to the sale of the Company’s security services customer contracts.

Other, net in 2022 includes primarily foreign currency related losses.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

Income before income taxes is categorized geographically as follows:

1 unchanged sentence

2022 2021 2020

(In thousands)

(In millions)

United States $ 558.5 $ 489.4 $ 457.8

4 unchanged sentences

2022 2021 2020

(In thousands)

(In millions)

Current expense (benefit):

8 unchanged sentences

( 6.7 ) ( 162.1 ) 19.6

Total income tax (benefit) expense $ ( 2,611 ) $ ( 64,644 ) $ 146,477

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

The difference between income tax (benefit) expense and the amount resulting from applying the federal statutory rate of 21 % to Income before income taxes is attributable to the following:

Total income tax expense (benefit) $ 206.4 $ ( 2.6 ) $ ( 64.7 )

The difference between income tax expense (benefit) and the amount resulting from applying the federal statutory rate of 21 % to Income before income taxes is attributable to the following:

Year Ended December 31,

2022 2021 2020

(In thousands)

(In millions)

Income tax expense at federal statutory rate $ 184.8 $ 164.3 $ 157.6

2 unchanged sentences

operations ( 9.5 ) ( 23.3 ) ( 27.7 )

Stock-based compensation 4.7 1.3 ( 8.6 )

Remeasurement of unrecognized tax benefits ( 1.5 ) ( 5.1 ) ( 204.7 )

Intercompany non-U.S.

intellectual property transfer — ( 165.5 ) —

Remeasurement of unrecognized tax benefits ( 5,095 ) ( 204,673 ) 7,365

Stock-based compensation 1,333 ( 8,643 ) ( 9,204 )

Other ( 1.3 ) 0.2 ( 4.5 )

Total income tax (benefit) expense $ ( 2,611 ) $ ( 64,644 ) $ 146,477

Total income tax expense (benefit)

$ 206.4 $ ( 2.6 ) $ ( 64.7 )

During the fourth quarter of 2021, as part of a legal entity reorganization, the Company completed an internal transfer of certain of its non-U.S.

3 unchanged sentences

The majority of these income tax benefits related to the worthless stock deduction taken in 2013.

These remeasurements were based on written confirmations from the IRS, indicating no examination adjustments would be proposed related to the worthless stock deduction or certain other matters reviewed as part of the audit of the Company’s federal income tax returns for 2010 through 2014, and the lapse of statutes of limitations related to other unrecognized income tax benefits.

Notwithstanding these written confirmations, the Company’s U.S.

federal income tax returns for those years remain under examination by the IRS.

Tax years 2015 and 2016 are closed to IRS audit as the statutes of limitations have lapsed.

The Company qualified for a tax holiday in Switzerland until the end of 2019 which lowered tax rates on certain types of income and required certain thresholds of foreign source income.

The tax holiday reduced our foreign income tax expense by $ 17.3 million ($ 0.15 per share) in 2019.

The benefit from the tax holiday is calculated before consideration of any offsetting tax impact in the United States.

Effective January 1, 2020, due to Swiss tax law changes, the tax holiday was eliminated, which was partially offset by a lowered statutory tax rate.

These remeasurements were based on written confirmations from the IRS, indicating no examination adjustments would be proposed related to the worthless stock deduction or certain

VERISIGN, INC.

1 unchanged sentence

DECEMBER 31, 2022, 2021 AND 2020

other matters reviewed as part of the audit of the Company’s federal income tax returns for 2010 through 2014, and the lapse of statutes of limitations related to other unrecognized income tax benefits.

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are as follows:

As of December 31,

(In thousands)

(In millions)

Deferred tax assets:

1 unchanged sentence

Deferred revenues, accruals and reserves 73.7 68.6

Net operating loss carryforwards 4,747 5,623

Research and development costs 12.0 —

Tax credit carryforwards 3.8 3.5

Net operating loss carryforwards 3.4 4.7

Other 1.8 1.7

7 unchanged sentences

Total net deferred tax assets $ 234.6 $ 230.7

With the exception of deferred tax assets related to certain state net operating loss and foreign tax credit carryforwards, management believes it is more likely than not that the tax effects of the deferred tax liabilities together with future taxable income, will be sufficient to fully recover the remaining deferred tax assets.

With the exception of deferred tax assets related to certain state and foreign net operating loss and foreign tax credit carryforwards, management believes it is more likely than not that the tax effects of the deferred tax liabilities together with future taxable income, will be sufficient to fully recover the remaining deferred tax assets.

As part of the Tax Cuts and Jobs Act of 2017, domestic and foreign research and development expenses, including costs related to internally developed software, are required to be amortized for income tax purposes, over five and fifteen years, respectively, beginning with our 2022 tax year.

As a result, the Company recognized a deferred tax asset of $ 12.0 million in 2022.

As of December 31, 2022, the Company’s deferred tax assets included $ 55.9 million of state net operating loss carryforwards, before applying tax rates for the respective jurisdictions.

4 unchanged sentences

As of December 31,

(In thousands)

(In millions)

Beginning balance $ 16.0 $ 23.7

5 unchanged sentences

Ending balance $ 15.1 $ 16.0

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2022, 2021 AND 2020

As of December 31, 2022, approximately $ 14.8 million of unrecognized tax benefits, including penalties and interest, could affect the Company’s tax provision and effective tax rate.

5 unchanged sentences

federal income tax returns are currently under examination by the IRS for 2010 through 2013.

federal statutes of

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2021, 2020 AND 2019

limitations are closed for the 2015 and 2016 tax years.

The Company’s U.S.

federal tax returns for 2019, and the years thereafter, also remain subject to examination.

The Company’s other material tax returns are not currently under examination by their respective taxing jurisdictions.

6 unchanged sentences

Purchase Obligations Transition Tax Operating Leases Senior Notes Total

(In thousands)

(In millions)

2023 $ 43.0 $ 14.6 $ 5.6 $ 72.6 $ 135.8

15 unchanged sentences

In connection with the .

com Registry Agreement with ICANN, the Company is required to make annual payments of $ 4.0 million to ICANN from 2021 through 2025 to support efforts to maintain the security and stability of the DNS.

com Registry Agreement with ICANN, the Company is required to make annual payments of $ 4.0 million to ICANN through 2025 to support efforts to maintain the security and stability of the DNS.

The payments for 2023 through 2025 are included in Purchase obligations in the table above.

The Transition Tax in the table above is the remaining installments of U.S.

The Transition Tax amounts in the table above are the remaining installments of U.S.

income taxes payable on our accumulated foreign earnings pursuant to the 2017 Tax Cuts and Jobs Act.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data