<PAGE>
EXHIBIT 99.3
NETWORK SOLUTIONS, INC.
CONDENSED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ --------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents............................... $196,589,000 $ 876,033,000
Short-term investments.................................. 116,342,000 22,425,000
Accounts receivable, net................................ 31,916,000 33,816,000
Income taxes receivable................................. 16,193,000 --
Prepaids and other assets............................... 8,809,000 13,256,000
Deferred tax asset...................................... 100,997,000 125,397,000
------------ --------------
Total current assets.......................... 470,846,000 1,070,927,000
Furniture and equipment, net............................ 57,406,000 62,063,000
Long-term investments................................... 62,475,000 75,549,000
Deferred tax asset...................................... 28,197,000 41,018,000
Other long-term assets.................................. - 1,270,000
Goodwill and other, net................................. 6,379,000 5,667,000
------------ --------------
Total Assets.................................. $625,303,000 $1,256,494,000
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities................ $ 53,204,000 $ 50,275,000
Due to SAIC............................................. 30,177,000 11,154,000
Income taxes payable.................................... 1,045,000 13,206,000
Deferred revenue, net................................... 255,307,000 334,096,000
------------ --------------
Total current liabilities..................... 339,733,000 408,731,000
Long-term deferred revenue, net......................... 106,332,000 130,587,000
Other long-term liabilities............................. 639,000 555,000
------------ --------------
Total liabilities............................. 446,704,000 539,873,000
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.001 par value, authorized
10,000,000 shares; none issued
and outstanding in 1999 and 2000...................... -- --
Common stock, $.001 par value; authorized
210,000,000 shares; 67,791,734 and 72,388,054
issued and outstanding in 1999 and 2000............... 68,000 72,000
Additional paid-in capital.............................. 117,289,000 645,219,000
Retained earnings....................................... 29,259,000 43,955,000
Accumulated other comprehensive income.................. 31,983,000 27,375,000
------------ --------------
Total stockholders' equity.................... 178,599,000 716,621,000
------------ --------------
Total Liabilities and Stockholders' Equity.... $625,303,000 $1,256,494,000
============ ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK SOLUTIONS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------
1999 2000
----------- -----------
<S> <C> <C>
Net revenue................................... $38,132,000 $98,171,000
Cost of revenue............................... 14,541,000 35,479,000
----------- -----------
Gross profit.................................. 23,591,000 62,692,000
Research and development expenses............. 2,035,000 4,545,000
Selling, general and administrative expenses.. 15,265,000 42,699,000
Interest income............................... (1,930,000) (9,351,000)
Other expenses................................ 19,000 4,000
----------- -----------
Income before income taxes.................... 8,202,000 24,795,000
Provision for income taxes.................... 3,404,000 10,099,000
----------- -----------
Net income.................................... $ 4,798,000 $14,696,000
=========== ===========
Earnings per common share:
Basic........................................ $ 0.07 $ 0.21
=========== ===========
Diluted...................................... $ 0.07 $ 0.20
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK SOLUTIONS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON STOCK ADDITIONAL COMPRE- COMPRE- TOTAL
----------------------- PAID-IN RETAINED HENSIVE HENSIVE STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS INCOME INCOME EQUITY
------------- -------- ------------ ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999.... 67,792,000 $68,000 $117,289,000 $29,259,000 $31,983,000 $178,599,000
Issuance of common
stock pursuant to
stock plans.................. 277,000 5,483,000 5,483,000
Tax benefit associated
with stock plans............. 11,459,000 11,459,000
Issuance of common stock
pursuant to secondary
offering..................... 4,319,000 4,000 510,988,000 510,992,000
Net income for the
period ended March 31,
2000......................... 14,696,000 $14,696,000 14,696,000
Other comprehensive
income, net of tax:
Unrealized loss on
securities................... (4,608,000) (4,608,000) (4,608,000)
-----------
Comprehensive income.......... $10,088,000
---------- ------- ------------ ----------- ----------- =========== ------------
Balance, March 31, 2000 72,388,000 $72,000 $645,219,000 $43,955,000 $27,375,000 $716,621,000
========== ======= ============ =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK SOLUTIONS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1999 2000
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................................ $ 4,798,000 $ 14,696,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization...................................... 1,474,000 4,324,000
Deferred income taxes.............................................. (25,271,000) (33,245,000)
Tax benefit associated with stock plans............................ 2,906,000 11,459,000
Change in operating assets and liabilities:
Increase in accounts receivable.................................. (13,117,000) (1,900,000)
Decrease in income taxes receivable.............................. -- 16,193,000
Increase in prepaids and other assets............................ (1,888,000) (5,717,000)
Increase (decrease) in accounts payable and accrued liabilities 843,000 (3,013,000)
Increase in income taxes payable................................. 23,936,000 12,161,000
Increase in deferred revenue..................................... 39,168,000 103,044,000
------------ ------------
Net cash provided by operating activities........................ 32,849,000 118,002,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment................................... (16,557,000) (8,269,000)
Redemption (purchase) of short-term investments, net.................. (1,821,000) 92,259,000
Purchase of long-term investments..................................... (2,000,000) (20,000,000)
------------ ------------
Net cash provided by (used in) investing activities.............. (20,378,000) 63,990,000
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net transactions with SAIC............................................ (188,000) (19,023,000)
Issuance of common stock pursuant to secondary offering............... -- 510,992,000
Issuance of common stock pursuant to stock plans...................... 1,809,000 5,483,000
------------ ------------
Net cash provided by financing activities........................ 1,621,000 497,452,000
------------ ------------
Net increase in cash and cash equivalents............................... 14,092,000 679,444,000
Cash and cash equivalents, beginning of period.......................... 12,862,000 196,589,000
------------ ------------
Cash and cash equivalents, end of period................................ $ 26,954,000 $876,033,000
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK SOLUTIONS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- ORGANIZATION AND BUSINESS
Network Solutions, Inc. ("Network Solutions") currently acts as the
exclusive registry and as a registrar of Internet domain names within the .com,
.org, .net and .edu top level domains pursuant to agreements with ICANN and the
Department of Commerce (for further information, please see "Overview" on page
9 herein). Domain names are used to identify a unique site or presence on the
Internet. As registry and a registrar for these top level domains, Network
Solutions registers new domain names and is responsible for the maintenance of
the master file of domain names through daily updates to the Internet. Network
Solutions also provides Internet Technology Services, focusing on architecture,
implementation and support services to help large enterprises and Internet
service providers improve their operational effectiveness.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL STATEMENTS
The interim financial statements have been prepared by Network Solutions
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). In the opinion of management, financial statements
included in this report reflect all normal recurring adjustments which Network
Solutions considers necessary for fair presentation of the results of operations
for the interim periods covered and of the financial position of Network
Solutions at the date of the interim balance sheet. Certain information and
footnote disclosures normally included in the annual financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. However, Network
Solutions believes that the disclosures are adequate for understanding the
information presented. The operating results for interim periods are not
necessarily indicative of the operating results for the entire year. These
interim financial statements should be read in conjunction with Network
Solutions' December 31, 1999 audited financial statements and notes thereto
included in Network Solutions' Form 10-K annual report for the year ended
December 31, 1999. Prior periods have been reclassified for comparative
purposes.
NOTE 3 -- COMMON STOCK
STOCK SPLIT
On December 21, 1999, Network Solutions' Board of Directors approved a
two-for-one stock split of its common stock, to be effected in the form of a
100% stock dividend on shares of common stock outstanding on February 25, 2000.
The stock dividend was distributed on March 10, 2000. Share and per share
information for all periods presented in the accompanying financial statements
have been adjusted to reflect the two-for-one stock split.
SECONDARY STOCK OFFERING
On February 8, 2000, Network Solutions completed a secondary offering in
which a total of 17,779,000 shares of common stock were sold. Of the shares
sold, Network Solutions sold 4,319,000 shares, SAIC Venture Capital Corporation
sold 13,400,000 shares and other selling stockholders sold 60,000 shares. Total
net proceeds to Network Solutions was approximately $511 million. Subsequent to
the offering, SAIC Venture Capital Corporation owns approximately 23% of
Network Solutions' outstanding common stock.
<PAGE>
NOTE 4 -- COMPUTATION OF EARNINGS PER SHARE
The following is a reconciliation of the numerator and denominator used in
the basic and diluted earnings per share computations:
<TABLE>
<CAPTION>
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ------------- ----------
<S> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1999
Basic.............................. $ 4,798,000 66,242,000 $ 0.07
=========== ========== ==========
Dilutive securities:
Outstanding options............... -- 3,228,000
---------- ----------
Diluted............................ $ 4,798,000 69,470,000 $ 0.07
=========== ========== ==========
THREE MONTHS ENDED MARCH 31, 2000
Basic.............................. $14,696,000 70,440,000 $ 0.21
=========== ========== ==========
Dilutive securities:
Outstanding options............... -- 4,486,000
---------- ----------
Diluted............................ $14,696,000 74,926,000 $ 0.20
=========== ========== ==========
</TABLE>
Common shares issued are weighted for the period the shares were
outstanding and incremental shares assumed issued under the treasury stock
method for diluted earnings per share are weighted for the period the underlying
options were outstanding.
NOTE 5 -- ACCUMULATED OTHER COMPREHENSIVE INCOME BALANCES
The changes in the components of accumulated other comprehensive income, net of
income taxes, for the three months ended March 31, 2000 and March 31, 1999 are
as follows:
<TABLE>
<CAPTION>
1999 2000
---------------------------------------- -----------------------------------------
UNREALIZED GAINS ACCUMULATED OTHER UNREALIZED LOSSES ACCUMULATED OTHER
ON SECURITIES COMPREHENSIVE INCOME ON SECURITIES COMPREHENSIVE INCOME
---------------- -------------------- ----------------- --------------------
<S> <C> <C> <C> <C>
Pre-tax amount..... $38,547,000 $38,547,000 $(8,583,000) $45,623,000
Income tax......... 16,189,000 16,189,000 (3,975,000) 18,248,000
----------- ----------- ----------- -----------
Net of tax amount.. $22,358,000 $22,358,000 $(4,608,000) $27,375,000
=========== =========== =========== ===========
</TABLE>
NOTE 6 -- PROPOSED ACQUISITION OF NETWORK SOLUTIONS BY VERISIGN, INC.
On March 7, 2000, VeriSign, Inc., the leading provider of Internet trust
services, and Network Solutions announced the signing of a definitive agreement
for VeriSign to acquire Network Solutions in an all-stock purchase transaction.
Under the agreement, VeriSign will issue 1.075 shares of VeriSign common stock
for each share of Network Solutions Common Stock. The transaction has been
approved by both companies' Boards of Directors and is subject to approval by
VeriSign and Network Solutions shareholders. After the merger, VeriSign
stockholders will own approximately 60% of the combined company while Network
Solutions shareholders will own approximately 40% of the combined company.
On May 9, 2000, VeriSign and Network Solutions announced that the
companies' Joint Proxy Statement relating to the proposed merger of the two
companies had been declared effective by the Securities and Exchange Commission
and filed electronically. In addition, VeriSign and Network Solutions also
announced that on May 5, 2000, the Department of Justice granted early
termination of the waiting periods for the antitrust review of the proposed
merger under the Hart-Scott-Rodino Act.
<PAGE>
Proxy materials were mailed to shareholders on May 8, 2000. Both VeriSign
and Network Solutions will hold shareholders meetings on June 8, 2000 for
shareholders of record on May 3, 2000 to vote on the merger. If shareholder
approval is obtained, the merger is expected to close shortly thereafter.
NOTE 7-- COMMITMENTS AND CONTINGENCIES
On March 15, 2000, a group of eight plaintiffs filed suit against the U.S.
Department of Commerce, the National Science Foundation and Network Solutions in
the United States District Court for the Northern District of California. The
case, entitled William Hoefer et al. v. U.S. Department of Commerce, et al.,
Civil Action No. 000918-VRW, challenges the lawfulness of the registration fees
that we were authorized to charge for domain name registrations from September
1995 to November 1999. The suit purports to be brought on behalf of all domain
name registrants who paid registration fees during that period and seeks
approximately $1.7 billion in damages. All of the defendants have been served
with the complaint, and have filed motions to transfer the suit to the Federal
District Court in the District of Columbia. The same attorney who unsuccessfully
challenged us in a similar action known as Thomas, et al. v. Network Solutions,
et al., filed this new action on behalf of eight former and current domain name
registrants. The suit contains eight causes of action against the defendants
based on alleged violations of Art. I, Section 8 and the Fifth Amendment of the
U.S. Constitution, the Independent Offices Appropriations Act (31 U.S.C. Section
9701), the Administrative Procedure Act, the Sherman Act, and the California
Unfair Competition Act, Section 17200. Network Solutions believes that the
complaint lacks merit and intends to vigorously defend itself as it did in
response to the Thomas case.
