-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, InRcYI9cJEM2aOs5W3FmhjO+W9bt4BVLO8jqsNjoAT7varGSadpTp1hpiaD1JprA RB9Ug0WTzQm0ZPhu86gaUA== 0000950133-99-000367.txt : 19990212 0000950133-99-000367.hdr.sgml : 19990212 ACCESSION NUMBER: 0000950133-99-000367 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990210 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORK SOLUTIONS INC /DE/ CENTRAL INDEX KEY: 0001030341 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 521146119 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22967 FILM NUMBER: 99531105 BUSINESS ADDRESS: STREET 1: 505 HUNTMAR PARK DR CITY: HERNDON STATE: VA ZIP: 20170 BUSINESS PHONE: 7037420400 MAIL ADDRESS: STREET 1: 505 HUNTMAR PARK DRIVE CITY: HERNDON STATE: VA ZIP: 20170 FORMER COMPANY: FORMER CONFORMED NAME: NETWORK SOLUTIONS INC /DE/ DATE OF NAME CHANGE: 19970702 8-K 1 FORM 8-K DATED FEBRUARY 10, 1999 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: February 10, 1999 NETWORK SOLUTIONS, INC. (Exact name of registrant as specified in its charter) Delaware 0-22967 52-1146119 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification Number) 505 Huntmar Park Drive, Herndon, Virginia 20170 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (703) 742-0400 2 ITEM 5. OTHER EVENTS. On February 10, 1999, the Company announced its 1998 fourth quarter and annual revenue and earnings. A copy of the Company's press release, announcing its earnings and revenues is attached hereto as Exhibit 99.1 and incorporated by reference herein. This report and the Company's press release attached hereto contain 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, uncertainty of Internet governance and regulation, increased 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 the Company's international business, 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 January 4, 1999, as amended, Annual Report on Form 10-K for the year ended December 31, 1997 and the Quarterly Reports on Form 10-Q for the periods ended March 31, 1998, June 30, 1998 and September 30, 1998. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. 99.1 Text of Press Release SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NETWORK SOLUTIONS, INC. Date: February 11, 1999 By: /s/ Robert J. Korzeniewski ------------------------ Robert J. Korzeniewski Chief Financial Officer, Acting Chief Operating Officer and Authorized Signatory 3 NETWORK SOLUTIONS, INC. INDEX TO EXHIBITS
Exhibit Description - ------- ----------- 99.1 Text of Press Release
EX-99.1 2 PRESS RELEASE 1 [NETWORK SOLUTIONS LOGO] NETWORK SOLUTIONS ANNOUNCES RECORD 1998 FOURTH QUARTER AND ANNUAL REVENUE AND EARNINGS Fourth Quarter 1998 Highlights Year Over Year Net new registrations 621,000 - up 137 percent International net new registrations 168,000 - up 91 percent Revenue $31.3 million - up 117 percent Net income $3.7 million - up 113 percent Earnings per share of $.22 versus $.11 - up 100 percent HERNDON, VA., FEBRUARY 10, 1998 - Network Solutions, Inc. (NASDAQ: NSOL) today reported record net revenues for the fourth quarter ended December 31, 1998 of $31,257,000, an increase of 117 percent over net revenues of $14,430,000 for the fourth quarter of 1997. Net income increased to $3,718,000 or $0.22 per share on a diluted basis, compared to $1,743,000 or $0.11 per share for the fourth quarter of 1997. Income from operations increased to $6,401,000, compared to $3,208,000 for the fourth quarter of 1997. For the year ended December 31, 1998, net revenues were $93,652,000, an increase of 107 percent over net revenues of $45,326,000 for the comparable 1997 period. Net income increased to $11,235,000 or $0.67 per share on a diluted basis, compared to $4,231,000 or $0.31 per share for the year ended December 31, 1997. Income from operations increased to $19,344,000, compared to $7,702,000 for the year ended December 31, 1997. Network Solutions registered a record 621,000 net new Internet domain names in the fourth quarter of 1998, up 137 percent from the fourth quarter 1997 total of 262,000 names and up 22 percent from the third quarter 1998 total of 507,000. The cumulative total of net registrations grew 118 percent from 1.5 million at December 31, 1997, to nearly 3.4 million at December 31, 1998. In the fourth quarter of 1998, the number of net new international registrations in .com, .net and .org totaled 168,000, up 91 percent from the fourth quarter 1997 total of 88,000 and up 22 percent from the third quarter 1998 total of 138,000. (more) 2 "Network Solutions' revenue more than doubled in 1998 as we registered more than 1.9 million net new domain names," said Michael A. Daniels, chairman and acting chief executive officer, Network Solutions. "The growth helped us increase our entire registration base by 118 percent in 1998, bringing total registrations of 1.5 million domain names at the end of 1997 to a new high of nearly 3.4 million domain names at the close of 1998." "In the fourth quarter we saw continued growth in dot com Web addresses, increasing our entire registration base 21 percent in the past quarter alone. This growth contributed to our ninth consecutive quarter of increasing profitability," said Robert Korzeniewski, chief financial officer and acting chief operating officer, Network Solutions. "Our business model generated over $63 million in operating cash flow in 1998, nearly six times our reported net income of $11 million on nearly $94 million in revenue. These results highlight the strength of our capital structure with $145 million in cash and investments with virtually no debt." Network Solutions' Consulting Services reported revenues of $3.3 million in the fourth quarter, up 47 percent from third quarter 1998 revenues of $2.3 million and up 117 percent from fourth quarter 1997 revenues of $1.5 million. For the year ended December 31, 1998, Consulting Services' revenues were $8 million, an increase of 22 percent over revenues of $6.5 million for the comparable 1997 period. Since 1998, Consulting Services has expanded its operations with new offices in Atlanta, Los Angeles and New York to increase local support for clients of its Internet and enterprise network services. Highlights include: - - Branding of Network Solutions as the DOT COM PEOPLE(TM) - In 1998, Network Solutions launched an advertising campaign branding Network Solutions as the DOT COM PEOPLE. The campaign included television advertising to raise awareness of Network Solutions and a product line of Internet services for small businesses. - - Introduction of new products and services - Network Solutions introduced six new products in 1998: REGISTRATIONPLUS,(TM) a five-step process for domain name registrations and reservations; the DOT COM TOOLKIT,(TM) DOT COM MAIL(TM) and DOT COM PROMOTIONS(TM) - all aimed at providing small businesses with additional resources to build and brand their online identity, communicate with their customers and set up and promote their Web business; and country-code top-level domain name registration services and RealName registrations to identify and retrieve individual Web pages - two complementary Internet identity services. - - Expansion of Domestic Premier Program - Network Solutions increased the total number of distribution channel companies to more than 150 members and launched two new channel programs with Internet Service Providers and Web hosting companies: 1) The Alliance Program, which gives Network Solutions and participating companies the ability to serve as reciprocal distribution channels for their respective services. To date NSI has signed alliance agreements with MindSpring, EarthLink, ValueWeb and most recently NetCom; and 2) An Affiliate program to expand its relationships with local and regional ISPs and Web hosting companies. Currently, there are more than 3,500 affiliate members on board. - - International Marketing Strategies - Network Solutions created an International Premier program that now includes more than 85 Internet companies in 22 countries including most recently Germany, India, Ireland and Italy. In addition, Network Solutions enhanced its presence in both China and Japan: signing a Strategic Bilateral Agreement with China's Internet registry, Computer Network Information Center, to jointly promote Web address registrations in the .com, .net, .org and .cn domains; and announcing its initial entry into the Japanese market through a strategic agreement with ASCII Corporation. 3 WorldNIC-JP is a Japanese version of Network Solutions' simplified registration service for global Web addresses ending in .com, .net and .org. - - Acquisition and Investments - Network Solutions made one acquisition and two investments in 1998. Early in the year, the Company acquired idNames which helps large companies protect their brand names in all the open country code top-level domains. Later in the year, Network Solutions made an investment in Centraal Corporation to support the development of RealNames technology which complements Network Solutions' Internet identity business. A second investment was in Critical Path, which provides the back office infrastructure for Network Solutions' business e-mail solution, DOT COM MAIL. - - Portal Agreements with Yahoo! and Netscape - In December, Network Solutions signed agreements with Yahoo! and Netscape aimed at expanding its brand awareness and promoting Web address registrations to the global Internet community. Network Solutions, Inc., (NASDAQ: NSOL) is the worldwide leader in Internet domain name registration services with nearly 3.4 million net registrations at year end. Internet domain names are unique identities that enable businesses, other organizations and individuals to communicate and conduct commerce on the Internet. Pursuant to an agreement with the U.S. Department of Commerce, Network Solutions currently acts as the exclusive registrar for all Web addresses within the .com, .net, .org and .edu top-level domains (TLDs). Network Solutions also offers search and registration services in country-code TLDs around the world. In addition, Network Solutions provides enterprise network services that focus on assisting large commercial organizations in the evolution and management of their enterprise networks. For Network Solutions, Media: Cheryl Regan, cherylr@netsol.com, 703/742-4847. Investor Relations: Sean McClorey, smcclorey@netsol.com, 703/326-6090. 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, uncertainty of Internet governance and regulation, increased 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 the company's international business, 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 January 4, 1999, as amended, Annual Report on Form 10-K for the year ended December 31, 1997 and Quarterly Reports on Form 10-Q for the periods ended March 31, 1998, June 30, 1998 and September 30, 1998. 4 NETWORK SOLUTIONS, INC. STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, 1997 1998 1997 1998 (UNAUDITED) (AUDITED) (UNAUDITED) Net revenue $14,430,000 $31,257,000 $45,326,000 $93,652,000 Cost of revenue 7,330,000 12,079,000 25,798,000 38,530,000 Gross profit 7,100,000 19,178,000 19,528,000 55,122,000 Research and development expenses 558,000 1,928,000 1,653,000 4,821,000 Selling, general and administrative expenses 4,375,000 12,706,000 12,268,000 37,144,000 Interest income (1,157,000) (1,880,000) (2,211,000) (6,303,000) Other expenses 116,000 23,000 116,000 116,000 Income before income taxes 3,208,000 6,401,000 7,702,000 19,344,000 Provision for income taxes 1,465,000 2,683,000 3,471,000 8,109,000 Net income $ 1,743,000 $ 3,718,000 $ 4,231,000 $11,235,000 Earnings per common share: Basic $ 0.11 $ 0.23 $ 0.32 $ 0.70 Diluted $ 0.11 $ 0.22 $ 0.31 $ 0.67 Shares used in computing earnings per common share Basic 15,720,000 16,249,000 13,305,000 15,979,000 Diluted 16,134,000 17,156,000 13,483,000 16,698,000
5 NETWORK SOLUTIONS, INC. STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, DECEMBER 31, 1997 1998 (AUDITED) (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 41,146,000 $ 12,862,000 Short-term investments 40,200,000 118,808,000 Accounts receivable, net 5,792,000 22,628,000 Prepaids and other assets 1,005,000 4,001,000 Deferred tax asset 20,153,000 40,508,000 Restricted assets 25,873,000 - Total current assets 134,169,000 198,807,000 Furniture and equipment, net 6,146,000 16,005,000 Long-term investments - 13,590,000 Deferred tax asset 8,128,000 14,831,000 Goodwill, net 1,177,000 634,000 Total Assets $ 149,620,000 $ 243,867,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 6,426,000 $ 28,287,000 Due to parent 1,250,000 4,766,000 Income taxes payable 5,042,000 5,409,000 Current portion of capital lease obligations 842,000 834,000 Deferred revenue, net 43,789,000 93,720,000 Internet fund liability 25,873,000 - Total current liabilities 83,222,000 133,016,000 Capital lease obligations 1,081,000 247,000 Long-term deferred revenue, net 17,662,000 35,474,000 Total liabilities 101,965,000 168,737,000 Commitments and contingencies Stockholders' equity: Preferred stock, $.001 par value, authorized 10,000,000 shares; none issued and outstanding in 1997 and 1998 - - Class A common stock, $.001 par value; authorized 100,000,000 shares; 3,795,000 and 4,570,186 issued and outstanding in 1997 and 1998 4,000 4,000 Class B common stock, $.001 par value; authorized 30,000,000 shares; 11,925,000 issued and outstanding in 1997 and 1998 12,000 12,000 Additional paid-in capital 56,451,000 72,332,000 Retained Earnings (Accumulated deficit) (8,812,000) 2,423,000 Accumulated other comprehensive income - 359,000 Total stockholders' equity 47,655,000 75,130,000 Total Liabilities and Stockholders' Equity $ 149,620,000 $ 243,867,000
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