David Atchley - Corporate Treasurer D. James Bidzos - Founder, Executive Chairman, Chief Executive Officer and President George E. Kilguss - Chief Financial Officer and Senior Vice President Patrick S. Kane - Senior Vice President and General Manager of Naming Services

Philip Winslow - Crédit Suisse AG, Research Division Gray Powell - Wells Fargo Securities, LLC, Research Division Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division Walter H. Pritchard - Citigroup Inc, Research Division Sterling P. Auty - JP Morgan Chase & Co, Research Division Rob D. Owens - Pacific Crest Securities, Inc., Research Division Gregg Moskowitz - Cowen and Company, LLC, Research Division Daniel T. Cummins - B. Riley & Co., LLC, Research Division Craig Nankervis - First Analysis Securities Corporation, Research Division Scott H. Kessler - S&P Equity Research

Good day and welcome to the VeriSign's Fourth Quarter 2012 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. David Atchley. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Thank you for joining us on VeriSign's Fourth Quarter and Full Year 2012 Earnings Conference Call. I am David Atchley, Director of Investor Relations and Corporate Treasurer. I'm here today with Jim Bidzos, Executive Chairman, President and CEO; George Kilguss, Senior Vice President and CFO; and Pat Kane, Senior Vice President and General Manager of Naming Services. Please note that this call and accompanying slide presentation are being webcast from the Investor Relations section of our corporate website, www.verisigninc.com. Please refer to that website for important information, including the fourth quarter and full year 2012 earnings press release. A replay of this call will be available on the website within a few hours. Today's slide presentation will also be available for download after the call. Financial results in today's press release are unaudited, and the matters we will be discussing today include forward-looking statements and, as such, are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent report on Forms 10-K and 10-Q and any applicable amendments which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. I would like to remind you that in light of Regulation FD, VeriSign retains its longstanding policy to not comment on financial performance or guidance during the quarter unless it is done through a public disclosure. The financial results in today's press release and the matters we will be discussing today include GAAP and non-GAAP measures used by VeriSign. The GAAP to non-GAAP reconciliation information is appended to our press release and slide presentation, as applicable, each of which can be found on the Investor Relations section of our website. In a moment, Jim and George will provide some prepared remarks and afterward we will open up the call for your questions. Unauthorized recording of this conference call is not permitted. And with that, I would like to turn the call over to Jim. D. James Bidzos: Thanks, David, and good afternoon, everyone. The fourth quarter capped a solid 2012 for VeriSign. We delivered for the global community of Internet users that increasingly rely on us by marking 15 years of uninterrupted availability for .com and .net. We renewed the .com agreement for another 6 years, reported 2012 revenue of $874 million which was 13% revenue year-over-year growth and delivered strong financial performance including $503 million in free cash flow. We continue to see benefits from our restructuring, focus and discipline. In Naming we processed a record 33.1 million new gross registrations during 2012, finishing the year with 121.1 million names on the domain name base. Our balance sheet remains strong with approximately $1.6 billion in cash, cash equivalents and marketable securities. With the clarity of the .com renewal now behind us, we can now focus more of our attention on other strategic initiatives. In 2013, we intend to put greater emphasis on developing new revenue streams as we explore new products, services and innovation to enhance our offerings. The certainty of the renewal also allows us to focus on our longer-term financial plan, including a review of our capital structure and putting more emphasis on finding efficiencies in our business. Before I get into the fourth quarter results, I want to highlight a few events from the quarter. On November 30, 2012, we announced the approval of the renewal of the revised .com agreement by the U.S. Department of Commerce for the term beginning on December 1, 2012, and running through November 30, 2018, and the modified terms of the revised agreement. This approval is an endorsement of our record on security and stability and our offerings of .com registry services on reasonable prices, terms and conditions. The price of a .com registration is now fixed at $7.85 and as of the fourth quarter 2012 end we have 106.2 million .com names in our domain name base. On December 19, we announced an increase in registry domain name fees for .net per our agreement with ICANN. As of July 1, 2013 the registry fee for .net domain names will increase from $5.11 to $5.62. Also by way of update, in December, ICANN completed its prioritization draw for processing applications related to its new gTLD program. As expected, ICANN gave priority to internationalized domain name transliterations. As you may recall, 12 of our 14 applications were for IDN versions of .com and .net. Based on ICANN's current time line, we are not likely to see revenue from this opportunity until 2014. Finally, during the fourth quarter, we continued our share repurchase program by repurchasing 2.3 million shares for $94 million. Through 2012, we repurchased approximately 7.7 million shares for $315 million. On December 5, 2012, the Board of Directors increased the share repurchase authorization by approximately $459 million to a total of $1 billion for VeriSign common stock. As of December 31, 2012, we have approximately $976 million remaining in our share repurchase program which has no expiration. We continually evaluate the overall cash and investing needs of the business and consider the best uses for our cash, including potential share repurchases. I'll comment now on fourth quarter operating highlights. In our naming business at the end of December, the base of registered names in .com equaled 106.2 million names while .net equaled 14.9 million names. The total base of registered names in .com and .net was 121.1 million at the end of December. This represents an increase of 6.4% year-over-year and 1% quarter-over-quarter. In the fourth quarter, we added 1.25 million net names to the domain name base after processing 8 million new gross registrations during the fourth quarter, up 1% compared with the same period a year ago. For the full year 2012, we processed a record 33.1 million new gross registrations, up 3% from full year 2011. In the third quarter of 2012, the overall renewal rate was 72.5%. While renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for the fourth quarter of 2012 will be approximately 72.9%. This rate compares to 73.5% achieved in the fourth quarter of 2011. We see the continuing effects of changes in search out rhythms and macroeconomic headwinds we discussed during last quarter earnings call in our net additions. Search engine adjustments made over the past several months have affected the economics which drive domain monetization. As noted in prior earnings calls, we have seen these search engine changes in the past which have impacted our first time renewing names and our overall renewal rates. Historically, the domain monetization community has adjusted to such changes over several quarters but we have no way of knowing how long they will be impacted by the changes being made in the current environment but we are now experiencing the third quarter of these effects. Secondly, we continue to see signs suggesting that macroeconomic headwinds, particularly in Europe, have led to softer international renewal rates. However, while these factors are still present, we are seeing some early signs of stabilization and improvement in the renewal rate. Taking into consideration these and other factors, we expect the first quarter net names for .com and .net added to the base to between 2.0 million and 2.4 million names. As discussed on prior calls, we post updates to the zone on our website at least once per day. With this continued transparency, you're able to track how the zone is growing throughout the first quarter. Our NIA business continues to exhibit good year-over-year revenue for both. Our efforts remain focused on positioning the NIA business to achieve quality of revenue and stable growth while better aligning expenses with revenue. Now I'd like to turn the call over to our CFO, George Kilguss. George E. Kilguss: Thanks, Jim, and good afternoon, everyone. During 2012, we generated revenue of $874 million and delivered non-GAAP operating income of $491 million, all while expanding non-GAAP operating margins to 56.2%. These results drove approximately $503 million in free cash flow for the year. As Jim mentioned, our balance sheet remains strong. As of December 31, 2012, the company maintained total assets of approximately $2.1 billion of which $1.6 billion was in cash, cash equivalents and marketable securities. Of the $1.6 billion, approximately $280 million was domestic with the remainder held overseas. Total liabilities were $2.1 billion as of the fourth quarter, up from $1.9 billion a year ago. Due to the stock price not exceeding the convertible debenture trigger of $44.68 in 20 of the last 30 trading days during the fourth quarter, our convertible debentures were no longer convertible starting January 1, 2013. Therefore, in accordance with GAAP, the debt component of the convertible debentures, the related embedded derivative and the deferred tax liability were reclassified from current liabilities back to long-term liabilities while the associated unamortized debt issuance costs were reclassified from current assets back to long-term assets as of the third -- December 31, 2012. Total debt on the balance sheet was $698 million at quarter end consisting of $100 million of outstandings drawn under our $200 million revolving credit facility and the $598 million present value of the $1.25 billion in convertible debentures. The convertible debentures will continue to be accreted onto our balance sheet up to its $1.25 billion par value over its 25-year remaining term. As mentioned in prior calls, we are in the process of reviewing the company's capital structure. As we review our capital structure, we are looking at both the leverage profile, including our domestic borrowing capacity, as well as our international cash balance and how that cash balance inter-relates with our international tax structure. We expect to have more information to share with you related to our thoughts around the company's capital structure during our Q1 earnings call in April. Deferred revenue at the end of the year totaled $813 million, an $84 million increase from year-end 2011. For the 3 months ended December 31, 2012 the company generated revenues of $230 million, up 13% from a year ago and up 3% sequentially. During the quarter, the company delivered GAAP operating income of $135 million, up 46% from $93 million in the fourth quarter of 2011. GAAP operating margin in the quarter also improved to 58.8% compared to 45.6% in the comparable quarter a year ago, which was as a result of both top line growth and stable costs during the quarter. GAAP net income totaled $106 million compared to $54 million a year earlier, which produced diluted GAAP earnings per share of $0.65 in the fourth quarter compared to $0.34 for the fourth quarter in 2011. Results for the fourth quarter of 2012 included nonrecurring, pretax benefits of $13.6 million, split $5.8 million and $7.8 million between continuing operations and discontinued operations, respectively. These amounts were primarily related to reimbursements of previously incurred litigation and defense costs received upon settlement with the selling shareholders of a previously acquired business. Additionally, fourth quarter 2012 results include pretax benefits of $5.5 million related to a reduction in our estimated bonus payout for fiscal 2012. Together these items increased the GAAP operating margin by 4.9% and diluted earnings per share by $0.07. I'll now review some of our key fourth quarter and full year operating metrics which are revenue, deferred revenue, non-GAAP operating margin, non-GAAP EPS, operating cash flow and free cash flow. I will then discuss our 2013 full year guidance. As mentioned, revenue totaled $230 million for the third quarter, up 13% year-over-year. Approximately 60% of our revenue was derived from customers in the United States, and 40% was from foreign customers. Revenue in the fourth quarter from international sources grew 14.5% year-over-year and slightly faster than our domestic-sourced revenue, which grew 12.1% year-over-year. 2012 full year revenue was $874 million, up 13% year-over-year. Non-GAAP results for the fourth quarter of 2012 included nonrecurring pretax benefits of $5.8 million recorded in continuing operations primarily related to the reimbursement of the previously incurred litigation defense costs received upon settlement with selling shareholders of that previously acquired business. Additionally, the non-GAAP results for the fourth quarter of 2012 also included the pretax benefit of $5.5 million related to the reduction in our estimated bonus payout. Fourth quarter non-GAAP operating expense, which excludes $7 million in stock-based compensation, totaled $87 million and was down 11% sequentially as a result of the abovementioned $11.3 million in Q4 benefits. Non-GAAP operating margin for the fourth quarter expanded to 62% compared to 56.4% in the third quarter of 2012. The nonrecurring pretax benefits and estimated bonus accruals adjustment previously discussed also increased non-GAAP operating margin by 4.9%. After adjusting for these credits and accrual adjustments, our fourth quarter operating margin improvement was driven by revenue growth and our ability to obtain operational efficiencies to help offset rising costs, which allowed us to keep total expenses in line with the previous quarter. Our non-GAAP net income for the fourth quarter was $96 million resulting in non-GAAP diluted earnings per share of $0.59 compared to $0.40 in the fourth quarter of 2011 and $0.50 last quarter. The estimated bonus accrual adjustment and credits previously mentioned increased fourth quarter non-GAAP diluted earnings per share by $0.05. Full year 2012 non-GAAP earnings per share was $1.97, a 32% increase over fiscal 2011. Non-GAAP interest expense and non-GAAP operating income net for fiscal 2012 was $38 million. With respect to taxes, as we've previously stated, starting from the third quarter of 2012, we are using a non-GAAP tax rate of 28% for our non-GAAP net income and our non-GAAP EPS calculations. We continue to use the 30% non-GAAP tax rate for prior periods presented. In 2013, we expect to pay cash taxes of approximately $40 million to $50 million. We had a weighted average diluted share count of 162 million shares in the fourth quarter compared to 166.6 million shares in the third quarter of this year. Dilution related to the convertible debentures was approximately 6.4 million shares based on the average share pricing during the quarter, a decrease of 2.8 million shares from the third quarter. Share count was decreased further by the full impact of Q3 share repurchase activity and the weighted impact of the 2.3 million shares repurchased during the fourth quarter. Operating cash flow was $171 million for the fourth quarter up from $122 million in the third quarter of 2012 and up compared to $124 million for the same quarter last year. Full-year operating 2012 cash flow was $538 million compared with $336 million for 2011. Free cash flow was $155 million for the fourth quarter of 2012 and includes a decrease of $2.3 million in excess benefits from stock-based compensation and excludes $13 million in capital expenditures in the quarter. Free cash flow for 2012 was $503 million, including $18 million in excess tax benefits and excluding $53 million in capital expenditures. With respect to 2013 guidance, revenue for 2013 should be in the range of $945 million to $960 million, representing an annual growth rate of 8% to 10%. Non-GAAP gross margin is expected to be at least 80%. Full-year 2013 non-GAAP operating margin is expected to be at least 57%. Non-GAAP interest expense and non-GAAP, non-operating income net is expected to be an expense of between $40 million and $42 million for 2013, and capital expenditures for the year are expected to be between $60 million and $80 million. Our guidance is based on expectations about the outlook of our business and increased operating efficiencies in addition to our financial projections for interest income and expense. In summary, we continue to demonstrate sound performance in the fourth quarter and full year 2012. We have grown our non-GAAP operating income and net income. We have maintained a strong balance sheet and expect strong operating cash flow generation to continue as a result of our financial model. Now I will turn the call back to Jim for his closing remarks. D. James Bidzos: Thank you, George. Before opening the call to your questions, I would like to use our strategic framework and its 4 areas of focus to frame how we think about the business. These 4 areas are to protect, grow, innovate and manage the business. First, protect. We will continue to protect the business by meeting all of our obligations under our ICANN agreements to operate top level domains. Second, grow. We will continue to see growth in the following ways: expansion of our existing businesses through focused marketing programs that target com/net zone growth, particularly in emerging international markets, by extending our brand and serving new markets through the IDNs for which we have applied; by extending our high reliability platform to underpin new brand and generic TLDs, including our approximately 220 new gTLD customers; by continuing to scale and grow our NIA business; and by leveraging our patent portfolio to both generate revenue and support our business strategy. Third, innovate. As evidenced by our continued filing of patent applications, we are focused on innovation. The goal is new revenue streams resulting from innovative new services that leverage our strengths. And fourth, manage. We will continue to manage the business responsibly from a financial perspective. As mentioned earlier, one of the benefits of the .com contract renewal is certainty which allows us greater flexibility in optimizing debt, capital allocation and capital structure. We will have more to say on this subject during our next earnings call. We believe that continuing to deliver on these 4 areas with the right balance should best serve our customers, employees and shareholders. We'll now take your questions. Operator, we're ready for the first question.

[Operator Instructions] We'll take our first question from Philip Winslow with Crédit Suisse. Philip Winslow - Crédit Suisse AG, Research Division: Obviously, you've been adjusting for the one-time items, very strong operating margin. The outlook you gave on the margin side was quite strong as well. Just wondering if you could walk through just sort of how you kind of view incremental operating margins from here, especially kind of with the context of the renewal having gone through and then you all focusing also on some new business areas and some new segments. Does that include incremental costs going forward? Where do you see the leverage coming from, et cetera? George E. Kilguss: Sure, Philip. This is George. With respect to incremental operating margins throughout fiscal 2012, really our incremental operating margin came from our revenue growth. If you look at our expenses, taking out some of those one-time items, we've been consistently around the $98 million, $99 million on a non-GAAP basis, excluding stock-based compensation from an expense standpoint. And we’ve -- as we've talked about, we've been able to invest in those areas, sales and marketing, R&D, while creating efficiencies in our operations. As we look out into 2013 we do have some increasing expenses. Like all companies, we have wage expense increases and health care benefits increasing. Unique to VeriSign, we also have costs associated increasing with our new contract with the com renewal where that's now a variable cost. And that, as I said before, will increase costs probably somewhere around $700,000 a month. So we absolutely have increased costs going forward in the business. What we -- what's included in our guidance is our desire, our objective to try to offset those costs to some degree with increased efficiencies. Again, as in 2012, the majority of our margin expansion will come from revenue growth. D. James Bidzos: And Phil, this is Jim. Let me just add, too, I think you mentioned how we're looking at margins and expense given the growth initiatives that we have. Let me just add to what George said that the growth initiatives that I mentioned, so for example, expanding our existing businesses through focused marketing programs. That's baked into the budget and obviously baked into the forecast and the guidance that we gave. We have invested in marketing programs over the years. They are more focused going forward. We're targeting geographies where we think there's real growth opportunity for the com/net zone. The IDNs, we have made -- we've already made the investment in the application fees, as you know, in early 2012. And the support that we'll be providing in terms of back-end registry services for the 220 customers that we signed up, we do have something of an advantage, having been a registry in operation for a long time and having supported multiple TLDs over all of those years of com, net, tv, cc, several others that VeriSign supports. So we've built something called Name Store. So basically, we have a tremendous amount of experience in standing up and operating multiple TLDs within our existing platform. So I think that gives us something of an advantage in that this is something we've invested in, we've built and we have operational and we know how to do. NIA, of course, is something we've been investing in for over 2 years now, and we're optimizing that business. And I talked about our patent portfolio and that's something new. We've never really exploited it before. But essentially, the investments in those areas -- the substantial investments have been made. And I think we've been consistently clear, but let me do it again, about mergers and acquisitions. We don't believe that M&A is a strategy. We don't see any M&A on our horizon. If an opportunity presented itself that helped us accelerate our business strategy, certainly we'd look at that. But that's not part of our plan. So I hope that bit of color gives you a little more insight into how to think about expenses, margins, and growth opportunities through 2013.

We'll take our next question from Gray Powell with Wells Fargo. Gray Powell - Wells Fargo Securities, LLC, Research Division: I just had a couple. So could you maybe help me clarify something in terms of the timing of new gTLDs? Because it looks like ICANN will be approving your foreign language .com transliterations a little bit earlier, at least than what we'd expected. From the website, it looks like possibly early June. So I guess, is that correct? And if so, when do you expect to actually go live? And then, just lastly, how should we think about pricing on the foreign language transliterations? D. James Bidzos: Pat, do you want to comment? Patrick S. Kane: Sure. So as far as the timing goes, the way that the -- this is Pat, the way that -- the way ICANN has laid out the process, it is mechanically possible for new gTLDs to go sometime in Q3. But there's still many outstanding items to be completed, and so I think it's more towards the end of the year. And just recently, Steve Crocker, the Chairman of the Board for ICANN, has indicated that it would be more towards the end of the year. So while it's possible, I think it's going to be, like I said, towards the end of the year. So that is -- and then as far as pricing goes, it's not really -- it doesn't have the same boundaries as the .com contract does, so we can basically set the pricing, and we're still evaluating what that pricing looks like. D. James Bidzos: Yes, just for clarity, the .com contract is unique in that the cooperative agreement between the Department of Commerce and VeriSign exists for that TLD only. .net is only between VeriSign and ICANN. All of the new applications that we've made in ICANN's new gTLD program and the other domains that we operate are strictly based on contractual relationships between ICANN and VeriSign and are not subject to any price limitations, such as the ones that were imposed in the renewal by the Department of Commerce for .com. And as Pat said, we're still evaluating how we'll be pricing those IDNs. But just like every other applicant in the new gTLD program, we have complete flexibility in how we price them and whatever price increases we choose to bring in over time. Gray Powell - Wells Fargo Securities, LLC, Research Division: Got it, got it. That's very helpful. And then one more, if I may. Just of the 220 new gTLDs that you will be supporting, can you give us a sense as to how many are brands versus geographies or communities of interest and I guess maybe any other classifications that I may have missed? Patrick S. Kane: Yes, this is Pat. The majority of those 220 are brands or generics operated by brands, and so they will be used probably differently than you would see the major generics. And we have probably 8% to 10% that fall in the other range to include some generics, but the majority of them are brands.

And we'll take our next question from Steve Ashley with Robert W. Baird. Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division: I'd just like to talk about the outlook for the zone file kind of in general and what kind of growth are you looking for in 2013 in the .net and .com zone file? George E. Kilguss: Sure, Steve. So as you know, we guided between 8% to 10% revenue growth for the year for 2013. Last year, we grew at 6.4% for the full year. As you also know, the components of the zone growth really are a function of the growth additions we experienced in the zone as well as the deletes coming out. And we've talked for a few quarters now about the deletes and the deletes we've been seeing overseas which results from the economy, and some of the deletes that have been impacted as a result of some of the changes to the Google algorithm. So part of our guidance, as we look into 2013, is clearly taking into consideration some of those trends with the deletes in the zone. And as we go through the year, we'll get some more visibility as we're right now 3 quarters into or beyond the time when Google made those material changes which impacted us. So today, to answer your question, our current view is the zone growth is somewhere between 4% and 6% that's baked into our full year guidance for 2013. Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division: And is it possible that we could see the renewal rates start to improve in the second half of the year after we start to anniversary the algorithm change? George E. Kilguss: So I think that's a possibility. I think the real answer is we don't know. What we've seen our preliminary renewal rate for the fourth quarter is that it seems to be upticking a little bit. It is back to the second quarter of 2012 rate or thereabouts. Still below 2011 but we are seeing some stabilization, some early signs of that. So it is a possibility, but I think it's just fairly too early to tell right now to where the renewal rate will trend for the full year of 2013. D. James Bidzos: Yes, Steve. This is Jim. There's also a lot of moving parts to sort of calculating revenue growth and zone growth. In addition to what George said in terms of impact from the search engine, search algorithm changes which are just really hard to predict, we, at this point, have no visibility, no idea what sort of promotional programs registrars may bring into play during any one of the 4 quarters of 2013. Promotions tend to bring in a lot of names that then later on have impact in the subsequent year. So it's just hard to predict what that growth will be because there's just so many variables.

We'll take our next question from Walter Pritchard with Citi. Walter H. Pritchard - Citigroup Inc, Research Division: George, I was wondering if you could talk to us about on the guidance sort of a cash flow number we should be thinking about for 2013. And then also related to that, how much of that cash do you expect to generate in the U.S.? George E. Kilguss: Well, I think in general, when you look at our revenues, Walter, we've talked about 60% domestic and 40% international. And that math tends to flow through our income statement for the most part as it relates to cash. So I think that's a fair assessment. I guess from a cash flow perspective, we don't guide to a full year free cash flow number but I think if you take our non-GAAP operating margins, you take and consider the CapEx that we guided, I think you can get a pretty good idea from that math. But this year, we did $503 million. Clearly, incrementally, we expect that number to grow. And then I think you have enough data points to come to a conclusion there, but about 60% is domestic and 40% is international. Walter H. Pritchard - Citigroup Inc, Research Division: And then just a question for Jim on the patents, are you -- I guess monetization of patents, you've talked about here now for a couple quarters. Is this something that you intend to monetize through IP or is there any products? Can you talk a bit about -- or sale of patents, could you talk a bit about more specifically about how you think you can monetize some of the patents that you have? D. James Bidzos: I think it's a bit early to talk in detail about how we'll actually do that, but there are a number of different ways. Certainly, one of them that you mentioned, selling patents, that's probably the least likely to occur here. We have a broad patent portfolio. We have over 200 patents and applications in the U.S. alone. We have, to date, not asserted any of our patents. We're reviewing that policy. We have a large number of patents -- a portion of our patents read directly on registry operations, so we think that there are some things that are certainly worth looking at there. The 2 primary ways, one would be to license the patents and generate royalty revenue. Having been in a business before that -- where patents were a great asset, I can tell you from experience that a much more attractive way is to use the patents, if possible, to leverage a business strategy. So that would be the preferred method, but certainly behind that, royalty revenue would be another way to do it. And we are very active in our innovation program, and we're filing many new applications as well so this is a new area. Too early to say exactly how and what that will produce, but we're looking at it very closely and we think it's an opportunity for us. Walter H. Pritchard - Citigroup Inc, Research Division: Safe to say this is no part of your 2013 guidance or are you thinking that you may get some revenue in 2013? D. James Bidzos: I think it's just really too early to say.

And we'll take our next question from Sterling Auty with JPMorgan Chase. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Just a couple of questions. I want to clarify or I want to make sure I heard correctly, George, you said the operating margin guidance is 57% at least for the full year? George E. Kilguss: That's correct, at least 57% for the full year. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Okay, great. Jim, when you talk about the tweaks to the search engine, were there further tweaks made in the fourth quarter and does that restart the clock of the 2- to 3-quarter adjustment? Or are we 3 quarters into people adapting to it and we should be in the smaller tail of the impacts? D. James Bidzos: I don't know that we have enough detailed information about what changes were being made in that timeframe to say. First, I'll just say that there are changes being made to -- Google, for example, makes changes to their search algorithms essentially constantly. We noticed on, as you know, back in 2009 there were changes they made that directly affected the renewal of domain names and again a year ago. To what extent they either extended or renewed or intensified or changed in any way those efforts, we, at this point, can't say. We do know that over time, the people who use domain names for monetization purposes, advertising or other ways that they generate revenue from them, we do know that they typically tend to find ways to adjust and adapt. There is one thing we do know, that a domain monetization, entity or individual can currently look at their portfolio of names, and essentially I think they can expect a higher yield from it because their cost of goods, essentially the cost of acquiring domain names, has just been fixed at $7.85. So there's one data point that we can give you with some certainty based on the renewal of last November that does change the financials for the monetization of domain names. Their cost of goods is fixed. The portfolios that they hold should now basically have a higher yield. That may be [indiscernible]. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Great. Sorry, Jim. And just last question, you mentioned the new revenue sources for 2013, new products and services. While I don't expect you to tell us exactly what they are tonight, can you give us a sense of when we might -- timing wise, when we might hear more in terms of exactly what those things would be? D. James Bidzos: Well, I hope it will be earlier in the year. Our plan is to share more information and possibly roll something out in 2013, but that's a -- those new products and services that play to our strengths that are very core are really the central focus of our innovation efforts. Those efforts tend to spin out a lot of the times that I talked about earlier. But I hope to be talking to you more about it in 2013, and I hope sooner rather than later in the year. But it's too early to say exactly when right now.

[Operator Instructions] We'll take our next question from Rob Owens with Pacific Crest Securities. Rob D. Owens - Pacific Crest Securities, Inc., Research Division: Was curious on the network intelligence availability front, just if we look at those different services, are they material to revenue? Are there about 10% or more yet or at what point in the future do you think they'll reach that type of level? D. James Bidzos: They're not at that point yet and we don't guide to those, so I can't really tell you exactly when that'll happen. I can tell you that our efforts to streamline that business, to improve the quality of revenue and to optimize the offerings are yielding some fruit. And as I mentioned, we are seeing increased revenue from that part of the business, so that much I can say. I think everybody knows, who reads the press, that our DDoS attacks are growing, so we see that as an opportunity. Our managed DNS customers certainly benefit from that service that we offer. We -- that part of the business is relatively new, of course, compared to the domain name business. So learning how to optimize it, improve the quality of revenue, more efficiently onboard customers, provision them better, more efficiently, these are all the kinds of things that we're constantly working on. But at this point, we're not reporting it separately, and I can't tell you when that might happen. Rob D. Owens - Pacific Crest Securities, Inc., Research Division: Okay. Could you elaborate a little bit on what you mean by improve the quality? Has it been a lumpy business? Have you seen a lot of customer churn there? D. James Bidzos: What we've said in the past and is still true today is that initially, when we launched this business a couple of years ago, the primary focus was to see how it might grow and to pursue bookings. And what we're doing now is optimizing it. It's basically aligning revenue. We're focusing more on revenue rather than bookings and aligning revenue with expenses better and improving the quality of revenue, primarily translating into better margins. Rob D. Owens - Pacific Crest Securities, Inc., Research Division: Okay, great. And then second, as I think about new name growth, you've had kind of a flat 6 months here in terms of new names, and you have a tough comp coming up year-over-year in Q1. Just how should we think about new name growth in 2013 and how that helps contribute to overall net new name growth? George E. Kilguss: Well, again, as I mentioned, Rob, I mean, our guidance implies about a 4% to 6% zone growth, so that would be your net numbers. We gave you guidance for the first quarter of what we think our first quarter net addition would be in the 2 million to 2.4 million names. Excuse me, so clearly, that is below what we achieved in the prior year. And what you're seeing in some of that estimation is clearly some of the trends we're seeing, even though the renewal rate seems to be stabilizing and looks to be upticking between last quarter. Some of the cautiousness of the changes that we've seen in the international economy as well are factored into our guidance for 2013. Now we'll continue to monitor that. And as we get more information, we'll fully update the market on that. But those are the factors that are really baked into our 2013 guidance at the present. D. James Bidzos: Yes, don't forget also, Rob, that we're currently at 121.1 million names in the com/net zone. So as the zone gets bigger, you would expect that the rate of growth would start to basically decline a bit, the law of large numbers, et cetera, coming into effect. In answer to an earlier question as well, I might add, about the renewal rate in the second half of 2013, I believe was the question we had earlier, that the larger zone, the aging zone should theoretically at least yield higher renewal rates as the growth rate tends to slack off. Those are more of the moving parts, so it's just really hard to say. As the zone gets older and it gets larger, the growth dynamics of it change. And as George mentioned, the market's changing as well.

We'll take our next question from Sterling Auty with JPMorgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Two more follow-ups. One, on the capital discussion that you're having specifically to repatriating cash, can you talk to us a little bit about what some of the hurdles or things that you have to consider in repatriating that cash beyond just paying the taxes to bring it back? George E. Kilguss: Sure, Sterling. I can give you some insight. I mean, we're still working that and we'll have more to say next quarter. But clearly, there's a couple things or factors that we need to consider. One is that cash that we have international, like most firms, is part of our international tax structure. And as a result, on the cash we generate overseas, we pay a much lower effective tax rate. So to the extent we were to evaluate any type of repatriation in addition to understanding the tax rate that you'd have to pay, we have to take into consideration how that may disrupt our international tax structure over there, with 40% of our business over there, and would that actually increase our effective tax rate on the monies earned over there if we were to change that tax structure. In addition, we'd also have to look at any other taxes that may -- may or may not incur as a result of taking that cash back with the international entity that we contracted with in setting up that structure. So there may be some other taxes, whether it be exit tax or some other type of tax that may be incurred if you were to make significant changes. And so we're looking at that tax structure. We're looking at our planning and our forecasting, where we're generating our revenues, and it's really those factors that could create potentially increased liability or forego some of the benefits that we've already put in place with the effective tax rate we have over there, which is a much lower effective tax rate to the United States. D. James Bidzos: Yes. And Sterling, I would just -- it's Jim. I would just add to that, too. At least if you look backwards in the past, when opportunities have presented themselves, in the fourth quarter of 2011 for example, we had an opportunity with some previously taxed income to do a repatriation. When those opportunities have presented themselves, we've taken advantage of them. But I think it's complex. It's part of our international tax structure, as George said. And we're in the same boat as numerous other American companies with offshore cash essentially for the same reasons. Sterling P. Auty - JP Morgan Chase & Co, Research Division: Okay. And one housekeeping question. Can you give us a sense of the total names up for renewal in the first quarter versus what it was in the first quarter of 2012? D. James Bidzos: Yes. We can find that number here. That's $27.2 million. Sterling P. Auty - JP Morgan Chase & Co, Research Division: And what was it in… D. James Bidzos: Oh, sorry, the year-ago number? Sterling P. Auty - JP Morgan Chase & Co, Research Division: Yes. D. James Bidzos: $25.2 million.

We want to take our next question from Gregg Moskowitz of Cowen and Company. Gregg Moskowitz - Cowen and Company, LLC, Research Division: Jim, I know you're not breaking out NIA, it's obviously too small a business at this point. But just looking back at 2012, how did your – qualitatively, how did your NIA business perform relative to your initial expectations? D. James Bidzos: Well, if you mean by initial, expectations of roughly a year ago when we started streamlining it or optimizing it, or from 2 years ago? Gregg Moskowitz - Cowen and Company, LLC, Research Division: Exactly, from 1 year ago. D. James Bidzos: From a year ago, I'd say it's performing in line with our expectations. Gregg Moskowitz - Cowen and Company, LLC, Research Division: Okay. And any thoughts in terms of headcount for 2013 versus 2012? Are you expecting any change in either direction? D. James Bidzos: Let's see. Our current headcount, I believe, is roughly… George E. Kilguss: Well, roughly 1,100. D. James Bidzos: [indiscernible] something like that, yes. George E. Kilguss: So we have some -- as always, we have in our budget some planned headcount in different departments but it doesn't appear, well, I can tell you, it's not material right now from our perspective. But clearly, as businesses have different needs and as they change, we absolutely add headcount in certain areas. To the extent we have those skill sets internally and we can adjust, we'll do that. But there are some times when we don't have the skill set in house and we have to go outside for that, so we do have some headcount budgeted to add in fiscal ‘13. Gregg Moskowitz - Cowen and Company, LLC, Research Division: Okay, great. And then just lastly, George, on the cash flow statement, you had a pretty big benefit this quarter from accounts payable and accrued liabilities. Just wondering if you would provide some color as to why that was so strong in the December period. George E. Kilguss: We can follow up on you that, but it has to do with our Synnex benefit. The share price declined, and as a result, we had a change in the embedded derivative related to our Synnex instrument as the stock price declined. But we can follow up on the specifics on that if you'd like.

And we'll take our next question from Dan Cummins with B. Riley & Company. Daniel T. Cummins - B. Riley & Co., LLC, Research Division: First question for George. In thinking about spending and in anticipation of kind of the back-end registry mandates. Can you give us a sense, if you took brand assignments on the one hand, presuming that those would be fixed priced arrangements because the volumes would not be significant, would spending for something like that be in the tens of thousands of dollars, perhaps, as opposed to something like a mandate like running.web, something that could actually scale? In that instance, do you anticipate that preparatory spending could be as much as $1 million or $2 million? Can you just kind of give us a sense of what to think about as these new generic TLDs go live, kind of your spending profile ahead of those? And then I have a follow-up. D. James Bidzos: Okay, this is Jim. Let me just make a general comment about that, and then I'll let George or Pat weigh in. First of all, as I mentioned earlier, we have the infrastructure in place already to support multiple TLDs. So essentially, the larger investments to create the infrastructure and the framework, to operate multiple TLDs is something we already have in place. As far as the individual cost per TLD, whether it's a brand or whether it's a distributed TLD, I'm not sure that we can into that level of detail or even explain what it is or even if there is that much difference. I'll let Pat weigh in on what sort of provisioning there is there. Patrick S. Kane: Yes, so it's a task. The mainframe platform, as Jim mentioned earlier, is really -- it's already set up and designed to onboard these new gTLDs. And then our resolution sites, we've got 74 or 75 around the globe that are positioned strategically that we can actually run traffic through. And as that traffic continues to grow, we'll scale those sites based upon the same decision process we take today. Daniel T. Cummins - B. Riley & Co., LLC, Research Division: And just on hand -- do you know how many of those so-called distributed TLDs you have in hand right now of the 220? Patrick S. Kane: It's between 8% and 10%. Daniel T. Cummins - B. Riley & Co., LLC, Research Division: Okay. My other question was for George or for Jim. When George talked in very specific terms, I think it was on the July call, about the possibility of levering up the company, I think you were talking about your gross debt EBITDA being around 3, I think. You said that those decisions would be made very carefully in the context of your risk profile. And I apologize if this was asked on the November call, but I was kind of out of the loop. But do you feel like the company's risk profile has changed significantly as a result of what Congress has done or not? George E. Kilguss: That's a good question. I think, clearly, with the certainty of the contract renewed I think -- excuse me, that from a timing perspective, clearly, that gives us certainty over the next 6 years. The risk of the company is a dynamic thing. We clearly have to position ourselves to protect the assets we have and to invest in growth. But I would say, in general, at the higher level, I don't think the risk profile has changed that dramatically year-over-year from before the renewal or after the renewal.

[Operator Instructions] We'll take our next question from Craig Nankervis with First Analysis. Craig Nankervis - First Analysis Securities Corporation, Research Division: Most of my questions have been asked, but I do have one. Just out of curiosity, can you talk at all about the linearity within a quarter of how names are renewed and how your progress towards the net new names may play out, especially in Q4? Is there a certain seasonality within the months of Q4 that is different than the other quarters? Or just is there any pattern that you've seen that you can just relate? George E. Kilguss: Well, clearly, with regard to names or new additions there, there is seasonality. In the fourth quarter, we clearly see things trail off as you get close to the holidays. The last few weeks of December, everybody's on holiday and they go away. We have a similar phenomenon typically in the first quarter that surrounds the Chinese New Year where when that happens it slows down for a period of time. And we've also seen in previous quarters that revenue or -- I'm sorry, new units have grown dramatically in the first quarter as a lot of registrars have run promotions in the first quarter. So it varies from quarter-to-quarter. From a revenue perspective, however, you probably wouldn't see a lot of difference in seasonality as the majority of the revenue gets accreted into revenue as a result of our deferred revenue, and we're amortizing the bulk of that over the course of the year ratably. Craig Nankervis - First Analysis Securities Corporation, Research Division: Sure, sure. Yes, I understand the revenue side. I was just sort of curious about the actual renewals themselves and some of the patterns within the quarter, that's all.

And we will take our last question from Scott Kessler with Standard & Poor's. Scott H. Kessler - S&P Equity Research: So obviously, there's been a lot of talk on this call and I guess the prior couple of calls perhaps, Jim, about patents. I think you talked about some of the areas where you have patents. I think you mentioned 200 patenting applications in the U.S. I'm wondering if you could somehow quantify both more recent activity related to patents. For example, I think I saw recently that you guys were awarded some sort of patent related to automated country code registrations in bulk. And I'm also wondering if, especially in light of the Department of Commerce and its involvement in the company, if you have concerns about the possibility that increased, let's say, monetization efforts around patents could potentially lead to some type of regulatory issue or concern. D. James Bidzos: Well, let's see. First of all, we, in late 2011, we stepped up our innovation efforts. We funded a larger innovation effort. We increased our research activities. And that started to yield a step-up in patent applications. There was a step-up back in 2008 but a bigger step-up in innovation in general, in R&D in particular, in late 2011. So we've been quite active in the last year, and there have been a number of applications that have been submitted. So I think that's where we're getting that from. We have not, in the past, asserted any patents or really exploited our patent portfolio. In terms of how we would do that or would there be any issues associated with any regulatory aspect of doing that, I guess I certainly can't think of any. There are certainly regulated utilities and other regulated entities that have patents, that monetize patents. I can't imagine that would be an issue for us. We're certainly entitled to exploit our intellectual property and to seek revenue streams where we can find them. And we're certainly motivated to do that given the flat pricing that we'll have over the next 6 years. So I guess the short answer to your question is I don't believe that should be any issue at all for us. Intellectual property is a company asset. And we're a public company, and it's our responsibility to exploit those assets for the benefit of the company and its shareholders and we certainly intend to do that. Having said that, patents are an asset for any company. They do help the community. There are inventions that get published and the company is entitled to benefit from those inventions and after 17 years they fall into the public domain, so I think that's the way the system works. I don't think that should have any impact on us in terms of any regulatory fallout associated with that. It's just simply an asset that's growing, that's valuable and that we are looking at in ways we haven't looked at before.

And that does conclude today's question-and-answer session. Mr. Atchley, at this time, I will turn the call over back to you for any additional and closing remarks.

Thank you, operator. Please call the Investor Relations Department with any follow-up questions from this call. Thank you for your participation and continued support. This concludes our call. Thank you and good evening.