##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K






|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999


OR



|      |                                                                                          
|----- | -----------------------------------------------------------------------------------------
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from
to


Commission File Number 0-22967



---

NETWORK SOLUTIONS, INC.

(Exact name of registrant as specified in its
charter)


|                                                                                   |  |                                               
|---------------------------------------------------------------------------------- |  | ----------------------------------------------
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|DelawareState or other jurisdiction
	of incorporation or organization              |  | 52-1146119(I.R.S. Employer Identification No.)
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|505 Huntmar Park Drive,
	Herndon, Virginia(Address of principal executive offices) |  | 20170-5139(Zip Code)                          

(703) 742-0400

Registrants telephone number, including
area code


Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:



Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
 to such filing requirements for at least the past
90 days.  YES  [X]  NO 
[   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  [X]

The aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately
$13,101,928,875 on March 13, 2000 based on the last sale
price as reported by the Nasdaq National Market System.

As of March 13, 2000, the Registrant had 72,367,694 shares
of Common Stock, $0.001 par value per share, issued and
outstanding.









---

TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                                                       
|Item 1. Business.                                                                            
|Item 2. Properties.                                                                          
|Item 3. Legal Proceedings.                                                                   
|Item 4. Submission of Matters to a Vote of Security Holders.                                 
|Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|Item 6. Selected Financial Data.                                                             
|Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation.
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|Item 8. Financial Statements and Supplementary Data                                          
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|Item 10. Directors and Executive Officers of the Registrant                                  
|Item 11. Executive Compensation                                                              
|Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|Item 13. Certain Relationships and Related Transactions                                      
|Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8K                     



---



TABLE OF CONTENTS

|         |  |                                                                                       |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                       |  | Page
|         |  |                                                                                       |  |     
|        
|        
|        
|        
|PART I  
|        
|        
|        
|        
|Item 1.  |  | Business                                                                              |  |      | 1  | 
|        
|        
|        
|        
|Item 2.  |  | Properties                                                                            |  |      | 21 | 
|        
|        
|        
|        
|Item 3.  |  | Legal Proceedings                                                                     |  |      | 21 | 
|        
|        
|        
|        
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  |      | 23 | 
|        
|        
|        
|        
|PART II 
|        
|        
|        
|        
|Item 5.  |  | Market for Registrants Common Equity Stock and Related
	Stockholder Matters          |  |      | 23 | 
|        
|        
|        
|        
|Item 6.  |  | Selected Financial Data                                                               |  |      | 24 | 
|        
|        
|        
|        
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operation |  |      | 26 | 
|        
|        
|        
|        
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |      | 34 | 
|        
|        
|        
|        
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  |      | 35 | 
|        
|        
|        
|        
|Item 9.  |  | Changes In and Disagreements With Accountants on Accounting and
	Financial Disclosure |  |      | 35 | 
|        
|        
|        
|        
|PART III
|        
|        
|        
|        
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  |      | 35 | 
|        
|        
|        
|        
|Item 11. |  | Executive Compensation                                                                |  |      | 39 | 
|        
|        
|        
|        
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  |      | 42 | 
|        
|        
|        
|        
|Item 13. |  | Certain Relationships and Related Transactions                                        |  |      | 45 | 
|        
|        
|        
|        
|PART IV 
|        
|        
|        
|        
|Item 14. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  |      | 47 | 
|        
|        
|        
|        
|         |  | Signatures                                                                            |  |      | 50 | 



---



##### Table of Contents






PART I




Item 1.  Business.

Overview

We are a leading provider of web identity services worldwide. Our
 web identity offerings include domain name registration
services, for which we are the global leader, and related
value-added products and services. We are the exclusive registry
and the leading registrar for second level domain names within
the .com, .net .organd .edutop level domains. As
the exclusive registry we maintain the definitive directory for
.com, .net, .organd .eduweb
addresses and we are responsible for the infrastructure that
propagates this information throughout the Internet. We also
facilitate global registration of domain names in other existing
top level domains, including country code top level domains. By
registering Internet domain names, we enable businesses, other
organizations and individuals to establish unique web identities
from which to communicate and conduct e-commerce. We also provide
 Internet technology services that focus on network engineering,
network and systems security and network management.

On November 10, 1999, we, the Department of Commerce and the
 Internet Corporation for Assigned Names and Numbers, commonly
known as ICANN, entered into a series of wide-ranging agreements
relating to the domain name system. These agreements, which
furthered the transition of the domain name system to a shared,
or competitive, registration system in the .com, .netand
.org top level domains, removed a substantial amount of
uncertainty regarding administration of the domain name system
and our role in that system going forward. Among other things,
the agreements provide that multiple registrars may register
second level domain names with us in our role as the exclusive
registry. Under these agreements:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We agreed to operate the registry in accordance with the
        provisions of the registry agreement and the consensus policies
        established by ICANN. The term of the registry agreement extends
        until November 2003 or, if ownership of our registry and
        registrar operations is separated by May 2001 in accordance
        with the agreement, until November  2007.
|
| |  | We, as the registry, charge all registrars $6 per registration
        per year unless increased to cover higher costs under the
        circumstances described in the registry agreement.                                                                                                                                                                                                     
|
| |  | We became an ICANN-accredited registrar. The term of our
        registrar accreditation agreement extends until
        November 2004 with a right to renew indefinitely in
        accordance with the agreement.                                                                                                                                                                             
|
| |  | We, and all other registrars, are permitted to offer variable
        registration terms, up to 10 years, and have discretion on
        pricing of registration services. As a registrar, we currently
        charge $35 per registration per year for our basic domain name
        registration service.                                                                                    

On December 21, 1999, our Board of Directors approved a
2-for-1 stock split of the shares of our Common Stock, that was
effected in the form of a 100% stock dividend distributed on
March 10, 2000 on shares of our Common Stock outstanding on
February 25, 2000. Except as noted otherwise, all share or
per share information in this Annual Report on Form 10-K has
 been adjusted to reflect the 2-for-1 stock split.

On March 7, 2000, we entered into an Agreement and Plan of
Merger with VeriSign, Inc., a Delaware corporation and leading
provider of Internet trust services, and Nickel Acquisition
Corporation, Inc., a Delaware corporation and wholly-owned
first-tier subsidiary of VeriSign. Under the Agreement and Plan
of Merger, VeriSign will issue 1.075 shares of VeriSign
common stock for each share of our Common Stock. The transaction
was approved by our Board of Directors and VeriSigns Board
of Directors and is contingent upon customary closing conditions,
 such as the

1



---



##### Table of Contents



Risk Factors  Risk Related to the
Proposed VeriSign Merger


We were incorporated in Washington, D.C. in 1979 as Network
Solutions Incorporated. We were acquired on March 10, 1995,
by Science Applications International Corporation, or SAIC, an
employee-owned research and engineering company that provides
information technology and systems integration products and
services to government and commercial customers. We were
reincorporated as Network Solutions, Inc. in Delaware in
November 1996. We completed our initial public offering of
3,795,000 shares on a pre-split basis of our Class A
common stock, $.001 par value, on October 1, 1997. As
of March 13, 2000, SAIC, through its wholly-owned subsidiary
 SAIC Venture Capital Corporation, owns approximately 23% of our
Common Stock, $.001 par value. Our principal executive
offices are located at 505 Huntmar Park Drive, Herndon,
Virginia 20170-5139, our telephone number is (703) 742-0400
and our Common Stock is traded on the Nasdaq National Market
under the ticker symbol NSOL. Our primary web sites are www.networksolutions.com and www.nsiregistry.net. The
information on our web sites is not incorporated by reference
into this annual report.

We own or have rights to various copyrights, trademarks and trade
 names used in our business. These include Network Solutions,
Inc.®, dot com mail, dot com toolkit, dot com
directory, dot com biz card, dot com
promotions, dot com people, dot com essentials,
 ImageCafe, and idNames. This Form 10-K also
includes trademarks, service marks and trade names of other
companies.

Our Businesses

We provide domain name registration services as the leading
registrar and the exclusive registry for second level domain
names within the .com, .net, .organd .edutop
level domains and we provide Internet technology services.

Registration Services

Registrar Services.Domain name registration
services are our core business. Through our registrar services we
 register second level domain names in the .com, .netand
.orgtop level domains, enabling registrants to establish
a unique identity on the Internet. Our customers apply to
register second level domain names either directly through our
web sites and e-mail-based registration templates or indirectly
through Internet access providers and others. Currently, we
charge a two-year services fee of $70 for initial registrations
and $35 per year for re-registrations for our basic registration
service. We accept registrations and re-registrations in one-year
 increments up to ten years, provided that the unexpired term of
any registration may not exceed ten years.

Our customers can submit applications for the registration of
second level domain names via e-mail through the Internet. We
process the application and either register the requested domain
name in the requested top level domain or reject the application.
 Upon registration or rejection, we notify the customer via
e-mail. For domain names which are registered, we either require
customers to pay through our online payment process or we invoice
 the customers and permit them to pay the registration services
fee after the domain name is registered. We require pre-payment
or some other reasonable assurance of payment at the time of
registration. We perform internally our core proprietary
automated registration process and associated security functions.

We also offer a web-based domain name registration process
through our new storefront web site. As part of our web-based
registration process, we offer the option of registering a domain
 name

2



---



##### Table of Contents



dot com biz card dot com mail dot com biz card


Through our idNamesservices, we have continued to expand
our registration services to the country code top level domains.
We provide search and registration services for domain names in
country code top level domains around the world. With the idNamesservices, we make it easier for companies to protect
their brands both globally and in local markets. In
November 1999, we expanded our idNamesservices to
meet the growing needs of large and Internet focused businesses
worldwide. These services include a confidential domain name
reservation service, a domain name modification assistance
service and a multi-year domain name maintenance program in the
.com, .netand .orgtop level domains and in many
of the available country code top level domains. We intend to
continue to introduce new idNamesservices to meet the
needs of this market.

We also provide value-added products and services through our web
 site, which serves as a one-stop shop for our customers at a
very early point in the establishment of their web identities. We
 offer an expanding set of value-added products and services that
 can extend our relationship with our customers as we help them
maximize the value of their web identities over time. We sold
value-added products and services along with approximately 17% of
 our 1,600,000 net new registrations in the fourth quarter
of 1999. These value-added products and services include:



| |   |                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | dot com directory, an Internet find
	engine which allows users to quickly locate, research and
	do business with companies that have registered domain names
	through us in the .com, .netand .orgtop level
	domains,
|
| |  | ImageCafe, an automated tool which allows users to
	build web sites efficiently at an attractive price point,                                                                                                          
|
| |  | dot com biz card, a one page web site that can be
	used as a virtual business card to promote businesses
	 on the Internet,                                                                                          
|
| |  | dot com forwarding, a service that enables our
	customers to point or forward users from multiple
	domain names to one web site,                                                                                     
|
| |  | RealNames, an Internet keyword service that offers
	companies, brand managers, and trademark owners a way to enhance
	their identities on the Internet,                                                                
|
| |  | dot com mail, a portable, personalized e-mail
	service designed primarily for small businesses,                                                                                                                        
|
| |  | dot com toolkit, a small business resource center
	that provides access to tools and services for setting up a web
	site and conducting business on the Internet, and                                                  
|
| |  | dot com promotions, a service through which a
	domain name registrant can link to and subscribe to various
	services provided by Microsoft/ LinkExchange.                                                              

Marketing and Distribution Relationships. We have
relationships with many companies worldwide to promote our
registrar services, penetrate new customer bases and integrate
third party products and services.



| |   |                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Strategic Programs with Internet Access Providers and Others. We have entered into wholesale agreements to provide
	enhanced services to certain Internet access providers, including
	 Internet service providers, or ISPs, both in the United States
	and in other countries,

3



---



##### Table of Contents



| |  |                                                                                                      
| |  | -----------------------------------------------------------------------------------------------------
| |  | who register a significant number of second level domain names
	with us on behalf of their customers.



| |   |                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Business Account Program.Our Business Account
	Program provides participants with the use of our convenient
	e-mail template registration and invoicing system. Participants
	receive referral fees for each paid domain name registration they
	 provide to us and other benefits. As of March 13, 2000 we
	had over 1,000 members in our Business Account Program.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Premier Program.Our Premier Domain Registration
	Service Program provides participating Internet access providers
	with personalized account management, customized billing and
	financial reports, private e-mail boxes and other customized
	features. As of March 13, 2000, we had entered into
	agreements with over 263 companies under the Premier Program
	 which include agreements with approximately 98 companies
	located in the United States and 165 companies located in Canada,
	 Australia, New Zealand and the European, South American and
	Asia-Pacific regions. These companies include: EarthLink Network,
	 Deutsche Telekom, Hong Kong Telecom, Interland, Interliant
	(formerly Sage Networks) and Singapore Telecommunications.
|
| |  | Alliance Program.The Alliance Program is available
	 to members of the Premier Program who have participated in the
	program for a minimum of one year and who have registered a
	significant number of second level domain names with us. The
	Alliance Program is designed to enable us and our participating
	companies to provide reciprocal links and referrals to the other
	partys distribution channels for each others
	complementary services. Through these relationships with
	EarthLink, Interliant and Interland, we seek to deliver our
	enhanced registration services and identify additional
	opportunities to expand our registrar services.                                                                                       



| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Distribution Channel Marketing Agreements. We are
	developing co-marketing programs with retail channel partners
	designed to take advantage of their complementary marketing
	capabilities.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Affiliate Program.Our Affiliate Program provides
	an easy way for small Internet access providers and other
	companies and individuals to establish a link to our enhanced
	domain name registration process, enabling them to earn
	additional revenue and add value for their web site visitors. The
	 Affiliate Program is designed for participation by the thousands
	 of Internet access providers, web hosting companies, and web
	site design companies that currently register their
	customers domain names through us, as well as other
	companies and individuals who could benefit from providing this
	service to their customers. As of March 13, 2000, we had
	over 41,000 members in our Affiliate Program.
|
| |  | Domestic Agreements.In 1999, we entered into
	strategic agreements with Go2Net, IBM and Microsoft and expanded
	our agreement with RealNames (formerly Centraal Corporation) for
	the marketing and development of products and services to meet
	the future needs of the business marketplace.                                                                                                                                                                                                                                                                                                                                                                                                                              



| |   |                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our agreement with Go2Net provides members of Go2Nets
	HyperMart and Virtual Avenue business hosting services with
	access to our domain name registration and dot com directoryservices. Go2Net is a network of branded, technology and
	community-driven web sites focused on personal finance, search
	and directory, commerce and business services, and games.
|
| |  | Under our agreement with IBM, IBM provides a hypertext link to
	our domain name registration and dot com directory
	services from its HomePage Creator e-business                                                                                                                                                                                                   

4



---



##### Table of Contents



| |  |                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | web site and we provide a hypertext link to the IBM HomePage
	Creator for e-business small business resource center from our
	dot com toolkit.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Under the Microsoft/ LinkExchange agreement, we are promoting the
	 Microsoft/ LinkExchange suite of marketing services designed to
	help small businesses increase their online traffic and sales
	through our dot com toolkit resource center and Microsoft
	is offering our domain name registration services through a
	service offering co-branded as SiteRegistration. This new
	offering is being promoted throughout the LinkExchange web site
	and on the LinkExchange BannerNetwork.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Other Channel Agreements.Under our agreement with
	RealNames, we have executed agreements with 14 channel
	distributors that act as our sales representatives in marketing
	RealNames Internet Keyword subscriptions. The Internet Keyword
	service is a web navigation service that offers companies, brand
	managers and trademark owners a way to enhance their identities
	on the Internet and is complementary to our domain name
	registration services.
|
| |  | International Agreements.We have also established
	additional international distribution channels through
	Orientation.com and Yupi.com.                                                                                                                                                                                                                                                                                                                      



| |   |                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The agreement with Orientation.com provides a distribution
	channel for our domain name registration and dot com directory services through Orientation.coms extensive network of
	 multilingual portal sites with content that target specific
	regions and countries including Asia, Africa, Central/ Eastern
	Europe, Latin America/ Caribbean, the Middle East and Oceania.
|
| |  | Our agreement with Yupi.com promotes our domain name registration
	 services to Spanish speaking Internet users throughout Latin
	America.                                                                                                                                                                                                                                      

Advertising. In 1999, we expanded our advertising and
marketing through various targeted print and on-line advertising
campaigns. We also launched several major multi-piece direct
mail, print and web site banner advertising campaigns announcing
our new products and services.

In November 1999, we extended our global marketing agreement
 with Yahoo! under which we purchased advertising to broadly
promote our domain name registration services and other services
on certain Yahoo! web sites during 2000. Under this agreement we
are expanding our promotions for domain name registration
services in the .com, .netand .orgtop level
domains globally and expect to extend the reach of the Network
Solutions brand to the global Internet community.

In February 2000, we entered into an advertising agreement
with Microsoft Corporation, through which we purchased
advertising to broadly promote our domain name registration and
other services on certain Microsoft websites. We run banner
advertisements throughout Microsofts MSN site with MSN Link
 Exchange and bCentral small business portal. We are targeting
certain MSN audiences and offer the tools and services we believe
 they need to establish a presence on the Web.

Direct Sales. Our services are marketed and distributed
directly through our web sites. We are continuing to target
additional channel and distribution partners to offer our
registration services electronically through existing web sites
and through other direct channels, such as direct mail and
telemarketing. Through our direct sales efforts we are seeking to
 expand the number of registrations in targeted customer segments
 both domestically and internationally. We are targeting customer
 segments such as small business users, individuals, holders of
trademarks, service marks and product marks and event sponsors.

Registry Services.We are the exclusive registry
for the .com, .netand .orgtop level domains until
 at least November 2003. Our registry, the leading provider
of Internet locator services, maintains the definitive directory
for .com, .net, .organd .eduweb addresses and is
responsible for the infrastructure that propagates this
information throughout the Internet. As the exclusive provider of
 registry services to .com, .net, and .org,we
currently support 34 active ICANN accredited registrars

5



---



##### Table of Contents



.com, net .org .com, .net .org .com, .net .org


As of March 13, 2000, there were 33 ICANN-accredited
registrars (in addition to us) submitting domain name
registrations to us through the shared registration system. An
additional 40 accredited registrars, as of such date, were
testing in our pre-production environment and 36 other entities
have received accreditation status. Once a registrar achieves its
 accreditation we enter into an agreement with such registrar and
 license our software development toolkit, protocol and
application programmers interface to our system to each registrar
 to enable it to develop its front-end domain name registration
systems. We receive a one-time $10,000 license fee from each
registrar.

We have made significant investments in our registry developing
the shared registration system and building our system
infrastructure. We have developed an operational test and
evaluation environment for registrars to test their systems prior
 to going into a production environment. We have assigned one
point of contact to each registrar to help resolve issues. We
have a trained team of engineers on standby to address any
operational issues that adversely impact the registrars. Finally,
 we have developed service level agreements with the registrars
to provide high quality service that the registrars can count on.

We have invested and are continuing to invest significant
technical and financial resources in our registry infrastructure.
 Our shared registration system is custom-developed and
proprietary. We intend to deploy new top level domain name
servers in various locations worldwide under agreements with
service level obligations to increase the robustness of the .com, .netand .orgtop level domain system. This will
 be a significant improvement to the current domain name server
infrastructure, in which nine of the 13 existing top level domain
 name servers are operated by volunteer organizations with no
contractual or legal obligations. Our deployment should also
enhance reliability, speed and scalability.

We are working to expand our registry business through the
possible operation of additional registries and by potentially
providing new domain name system functionality and offering
additional trusted third party services for e-commerce.

Competition in Registration Services.We currently
face competition among registrars within a single top level
domain like .com, and could in the future face competition
 among registrars within potential new top level domains. As of
March 13, 2000, there were 110 ICANN-accredited registrars,
including us, AT&T, Alabanza, America Online, CORE or
Internet Council of Registrars, Deutsche Telekom,
France Telecom Oleane, iDirections, Internet Domain Registars,
interQ Incorporated, Melbourne IT, NameSecure.com, NetBenefit,
PSINet, Register.com, Talk.com and Verio. As of March 13,
2000, our shared registration system was being used by 33
accredited registrars, in addition to ourselves, in the .com, .netand .orgtop level domains to register
second level domain names. We also face competition from third
level domain name providers such as Internet access providers and
 registrars of top level domains other than those top level
domains for which we act as exclusive registry. Although we
currently act as the exclusive registry for second level domain
names within the .com, .netand .orgtop
level domains, we face competition from registries of country
code top level domains and could face competition from potential
new top level domains. The introduction of potential new
top-level domains is currently an issue of global significance.
At its most recent meeting in Cairo, the ICANN Board requested
the Names Council, a branch of the Domain Name Supporting
Organization (DNSO) primarily responsible for the
consensus-building process of

6



---



##### Table of Contents





Future competition in domain name registration services could
come from many different companies. Many of these companies have
core capabilities to deliver registration services such as help
desks, billing services and network management, along with strong
 name recognition and Internet industry experience. Examples of
these types of companies include:



| |   |                                    
| | - | -----------------------------------
| |  | domain name registration resellers,
|
| |  | country code registries,           
|
| |  | Internet access providers, and     
|
| |  | major telecommunications firms.    

Internet Technology Services

We deliver Internet technology services to some of the
worlds leading businesses that are utilizing Internet
technologies for their internal enterprise networks, or
intranets. Our engineers have extensive knowledge and experience
in network engineering, network security and network management.
By leveraging this knowledge and experience, we are able to
provide solutions to clients complex network needs.



| |   |                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Network Engineering.We offer a line of services to
	 help develop and integrate enterprise network solutions in a
	manner tailored to individual clients needs. All of these
	services are focused on building a strong network foundation for
	the enterprise.                                                                                                                
|
| |  | Network and System Security.We provide a range of
	security consulting services to allow clients to protect their
	data and systems. We develop access and protection controls that
	permit internal and remote users to access computer systems,
	databases and applications on the network, while protecting
	against unauthorized access to information or misuse of systems.
|
| |  | Network Management.We provide a range of services
	that allow clients to monitor, control and improve their network
	performance. We also provide planning and analysis to implement
	disaster recovery and contingencies for network system failures.                                                                                                                          

During 1999, we provided Internet technology consulting services
to more than 20 large companies. Our Internet technology services
 are generally provided to clients on a time and expense basis.
We also perform some engagements on a fixed-price basis.

Most of our Internet technology services customers are in the
financial services industry. Bank of America, formerly
NationsBanc, is currently our largest consulting services client,
 accounting for 51.4% of our Internet technology services net
revenue and 2.6% of our total net revenue in the year ended
December 31, 1999. NationsBanc originally contracted with us
 in 1993 and we currently provide network design and engineering
services as well as a variety of project specific services under
the contract.

Competition in Internet Technology Services.
Companies with Internet expertise are current or potential
competitors to our Internet technology services. These companies
include systems integrators and consulting firms, such as
Andersen Consulting, IBM Global Services and Lucent NetCare. We
also compete with certain companies that have developed products
that automate the management of Internet protocol addresses and
name maps throughout enterprise-wide intranets, and with
companies with internally-developed systems integration efforts.
A number of these competitors and potential competitors have
longer operating histories and greater name recognition and
significantly greater financial, technical, marketing,
distribution and other resources than we do.

7



---



##### Table of Contents



Operations

We have operating facilities to support our current registration
operations and customer support needs as well as to provide
expansion capability for future business. One facility houses our
 call center, a training center equipped for both computer and
telephone training and a new computer room with expanded systems
and telecommunications services. Another facility houses our
registry systems and our primary computer room and
telecommunications systems. In addition, we contract for a
back-up facility to a third partys secure facility in
California to provide redundancy and enhanced reliability for our
 Internet root zone administration. It is our intention to
develop a live redundant site for the registry during the first
half of 2000.

Our systems have periodically been subject to large numbers of
speculative and repetitive e-mail domain name registration and
modification requests from domain name speculators and other
abusers. Such abuses of our systems have resulted in processing
delays. We have taken, and are continuing to take, actions to
combat these delays and abusive e-mails to minimize the impact of
 such system abuses.

In the latter part of 1999, the operations infrastructure was
significantly augmented to reflect the creation of the shared
registration system implementing the terms of our agreements with
 ICANN and the Department of Commerce. Throughout 1999, new
hardware configurations were added for the registration and
billing databases to both the registrar and registry systems.
Bandwith connections to multiple Internet service providers were
increased threefold. State of the art storage technology was
added to both systems. The overall systems management and
monitoring was improved with the addition of a 24 hour,
7 day a week network operations center function. All of the
infrastructure enhancements were integrated into an improved
state-of-the-art network management system. Many legacy systems
were upgraded to resolve potential year 2000 issues. All
production systems were successfully remediated.

In December 1999, our registrar system web servers were
upgraded to provide a storefront ability and our on-line payment
system was replaced. Additionally, our customer service technical
 support infrastructure was improved with the installation of new
 telephone equipment.

The internal telecommunications infrastructure between our
multiple locations was upgraded to support increasing business
requirements in both the registry and registrar.

Ongoing Privatization of Internet Administration

The cooperative agreement, which we entered into with the
National Science Foundation in December 1992, provided that
we would perform Internet domain name registration services for
the top level domains .com, .net, .org, .eduand .gov. These registration services included the initial two-year
domain name registration and annual re-registration, and
throughout the registration term, maintenance of and unlimited
modifications to individual domain name records and updates to
the master file of domain names. The cooperative agreement became
 effective January 1, 1993. Effective September 9,
1998, the Department of Commerce took over the administration of
the cooperative agreement from the National Science Foundation.

With the onset of increased commercial growth of the Internet,
the U.S. Government initiated an activity directed at increased
privatization of the policy making and central administration of
the Internet. Within the U.S. Government, leadership for the
continued privatization of Internet administration is currently
provided by the Department of Commerce. On June 10, 1998,
the Department of Commerce published in the Federal Register a
plan referred to as the Statement of Policy or White Paper,
calling for increased competition and the formation of a
corporation to assume certain responsibilities relating to the
domain name system.

8



---



##### Table of Contents



The process initiated by the Statement of Policy resulted in the
entry by the U.S. Government into a Memorandum of Understanding,
or MOU, with ICANN, a U.S. based private not-for-profit
corporation with an international board of directors. The U.S.
Government has recognized ICANN as the corporation described in
amendment 11 to our December 1992 cooperative agreement, in
the performance of ICANNs obligations under the MOU, and
until such time as the MOU is terminated.

Currently, the technical structure of the Internet only permits
one registry for each top level domain. A registrar acts as the
interface between the registry and the end-user domain name
registrants. Registrars submit to the registry certain limited
information for each of their customers that has a second level
domain name in a given top level domain. A registrar can provide
value-added products and services in addition to its basic
registration service. Numerous registrars are able to operate
within each top level domain. We currently are the exclusive
registry in the .com, .netand .orgtop level
domains and the leading registrar in those domains.

On November 10, 1999, a series of wide-ranging agreements
were entered into which removed a substantial amount of
uncertainty regarding the administration of the domain name
system and our role in that system going forward. These
agreements include the following:



| |   |                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A registry agreement between us and ICANN under which we will
	continue to act as the exclusive registry for the .com, .netand .orgtop level domains for at least four years
	from that date,
|
| |  | A revised registrar accreditation agreement between ICANN and all
	 registrars registering names in the .com, .netand .orgdomains,                                                           
|
| |  | A revised registrar license and agreement between us as registry
	and all registrars registering names in the .com, .netand
	 .orgdomains using our proprietary shared registration
	system, 
|
| |  | An amendment to the cooperative agreement, and                                                                                                                                               
|
| |  | An amendment to the MOU.                                                                                                                                                                     

Under these agreements we have: (i) recognized ICANN as the
not-for-profit corporation described in amendment 11 to the
cooperative agreement, (ii) become an ICANN-accredited
registrar and (iii) agreed to operate the registry in
accordance with the provisions of the registry agreement and the
consensus policies established by ICANN in accordance with the
terms of that agreement. We will be an accredited registrar
through November 9, 2004 with a right to renew indefinitely
in accordance with the agreement.

We recently implemented a system under which we will not accept
the registration of a domain name as a registrar unless we have
received a reasonable assurance of payment of the registration
fee. We are entitled to establish our own prices for registrar
services.

We have implemented modifications to the shared registration
system that enable a registrar to (a) accept registrations
and re-registrations in one-year increments and (b) add one
year to a registrants registration period upon transfer of
a registration from one registrar to another. The unexpired term
of any registration may not exceed ten years. We are
contractually obligated to provide equivalent access to the
shared registration system to all ICANN-accredited registrars and
 to ensure that the revenues and assets of the registry are not
utilized to advantage our registrar to the detriment of other
registrars. We have agreed to and implemented an organizational
conflict of interest compliance plan that includes
organizational, physical and procedural safeguards in connection
with these obligations.

The term of the registry agreement extends until November 9,
 2003, except that in the event that we complete the legal
separation of the ownership of our registry business from our
registrar

9



---



##### Table of Contents



.com, .net .org .com, .net .org .com, .net .org


ICANN is contractually obligated to the registry and to all
accredited registrars to comply with specified procedural
requirements governing the exercise of its authority. The
agreements also explicitly define the subjects within the scope
of ICANNs authority with respect to both the registry and
registrars. ICANNs authority to set policy for the registry
 may be terminated if (a) ICANN breaches the registry
agreement and fails to remedy that breach; (b) the
Department of Commerce withdraws its recognition of ICANN; or
(c) the Department of Commerce concludes that ICANN has not
made sufficient progress towards entering into agreements with
other registries and we are competitively disadvantaged. In the
event ICANNs authority is terminated, the Department of
Commerce will assume the policy-setting function for registry
services for the .com, .netand .orgtop level
domains.

We have agreed to pay annual fees to ICANN as set by ICANN at
levels currently not to exceed $2 million for our registrar
and $250,000 for our registry. We have agreed to provide to the
Department of Commerce control over the content and use of the
internic.net website, subject to transition arrangements set
forth in the agreements.

All accredited registrars are obligated to provide query-based
access to registration data and are barred from placing
conditions upon any legal use of that data, except to prohibit
use of the data to enable the transmission of mass unsolicited
commercial solicitations via e-mail (spam) or to enable high
volume, automated electronic processes that apply to the
registrar (or its systems). In addition, all accredited
registrars are required to provide third-party bulk access to
registration data (subject to the restrictions described above)
for an annual fee not to exceed $10,000. This obligation would
remain in effect until replaced by a different policy adopted by
ICANN or a finding by the Department of Commerce that no
individual or entity is able to exercise market power with
respect to data used for development of third-party value added
products and services.

On October 24, 1999, ICANN adopted the Uniform Domain Name
Dispute Resolution Policy, commonly known as the dispute policy,
and accompanying rules of procedure required to be used by all
accredited registrars in the .com, .netand .orgtop level domains. We implemented this policy on
January 1, 2000. Registrars do not participate in the
administration or conduct of any proceeding brought under the
dispute policy. Each registrant agrees in its contract with a
registrar to be bound

10



---



##### Table of Contents





On November 29, 1999, the Anticybersquatting Consumer
Protection Act was signed into law by the President, making it
illegal under certain circumstances for persons to register
domain names which conflict with personal names or trademarks.
The remedies under this Act are forfeiture, cancellation, and
transfer of the domain name registration to the trademark owner
or the individual. Except in cases of bad faith, reckless
disregard or willful failure to comply with a court order, the
registry and registrar are not liable for injunctive or monetary
relief as long as the registry and registrar comply with the
procedural requirements of the statute.

Research and Development

In 1997, our research and development expenses were $1,653,000 or
 3.6% of net revenues. In 1998, our research and development
expenses were $4,821,000 or 5.1% of net revenues. In 1999, our
research and development expenses were $10,989,000 or 5.0% of net
 revenues. We expect that the level of research and development
expenses will continue to increase in the near future in terms of
 absolute dollars as we invest in developing new service
offerings.

Intellectual Property Rights

Our principal intellectual property consists of, and our success
is dependent upon, our proprietary software used in our
registration service business and certain methodologies and
technical expertise we use in both the design and implementation
of our current and future registration services and
Internet-based products and services businesses. We own our
proprietary shared registration system through which competing
registrars, including our registrar, submit .com, .net and .org second level domain name registrations. Some
 of the software and protocols we use in our registration
services are in the public domain or are otherwise available to
our competitors. We also have compiled a database of information
relating to customers in our registration business. While a
portion of this database is available to the public in the form
of a directory service, we believe that we have certain ownership
 rights in this database and we intend to protect such rights. We
 have applied for several patents. However, we currently have no
registered patents but our proprietary materials are protected by
 trade secret laws. We also own or have rights to various
copyrights, trademarks and trade names in our business.

Employees

As of March 13, 2000, we had approximately 888 full-time
employees. None of our employees are covered by collective
bargaining agreements. We believe that our relations with our
employees are good.

Risk Factors

IN ADDITION TO OTHER INFORMATION IN THIS FORM 10-K, THE
FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED IN
EVALUATING US AND OUR BUSINESS BECAUSE SUCH FACTORS CURRENTLY
HAVE A SIGNIFICANT IMPACT OR MAY HAVE A SIGNIFICANT IMPACT ON OUR
 BUSINESS, OPERATING RESULTS OR FINANCIAL CONDITION. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS

11



---



##### Table of Contents





Risks Related to the Proposed VeriSign Merger

We face risks relating to the proposed VeriSign merger

On March 7, 2000, we executed a merger agreement to be
acquired by VeriSign. Under the terms of the agreement, each
outstanding share of Network Solutions Common Stock will be
exchanged for 1.075 shares of VeriSign common stock. The
announcement of the proposed merger may have a negative impact on
 our ability to sell our services and products, attract and
retain employees and clients, and maintain strategic
relationships with third parties. For example, our employees may
experience uncertainty about their future role with VeriSign
until VeriSigns strategies with regard to us are announced
or executed. The announcement may also have an adverse effect on
our relationships with significant clients and strategic
partners.

If the merger is successfully completed, holders of Network
Solutions Common Stock will become holders of
VeriSigns common stock. VeriSigns business differs
from our business, and VeriSigns results of operations, as
well as the price of VeriSigns common stock, may be
affected by factors different than those affecting our results of
 operations and the price of our Common Stock before the merger.
For further information on VeriSigns business and certain
factors to consider in connection with the proposed merger and
VeriSigns business, please see VeriSigns Annual
Report on Form 10-K for the fiscal year ended December 31,
1998 and VeriSigns Rule 425 filings on March 7 and 8,
2000  all of which may be accessed through the
SECs EDGAR filings on their website at www.sec.gov.

If the VeriSign merger is completed, our stockholders will
receive a fixed number of shares of VeriSign common stock despite
 changes in the market value of our Common Stock or
VeriSigns common stock. The 1:1.075 ratio of our Common
Stock to VeriSign common stock is a fixed number and will not be
adjusted in the event of any increase or decrease in the price of
 VeriSign common stock or our Common Stock, except with respect
to stock dividends, splits, etc., as specifically set forth in
the merger agreement. The prices of VeriSign common stock and our
 Common Stock at the closing of the proposed merger may vary from
 their respective prices on the date the merger agreement was
signed. These prices may vary because of the changes in the
business, operations or prospects of VeriSign or Network
Solutions, market assessments of the likelihood that the merger
will be completed, the timing of the completion of the merger,
the prospects of post-merger operations, regulatory
considerations, general market and economic conditions as well as
 other factors.

Our failure to complete the proposed merger with VeriSign
could adversely affect our stock price and future business and
operations

The merger is subject to the approval by both our shareholders
and certain regulatory agencies and VeriSigns shareholders
must approve the issuance of Common Stock and amendments to
VeriSigns Certificate of Incorporation required to effect
the merger. Accordingly, there can be no assurance that the
merger will be successfully completed. In the event that the
merger is not successfully completed, we may be subject to a
number of material risks, including the following:



| |   |                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We may be required to pay VeriSign a termination fee of
	$425 million for several reasons, including if prior to
	termination of our merger agreement we publicly announce another
	acquisition proposal (as defined in the agreement), and:



| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Network Solutions or VeriSign terminates the merger agreement
	because the required approval of the merger by our stockholders
	was not obtained,
|
| |  | if a triggering event (as defined in the agreement) shall have
	occurred, or                                                                     

12



---



##### Table of Contents





| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | if VeriSign terminates the merger agreement due to a breach of
	any representation, warranty, covenant or agreement of ours in
	the agreement.



| |   |                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The price of our Common Stock may decline to the extent that the
	current market price for our Common Stock reflects a market
	assumption that the proposed merger will be completed; and
|
| |  | Costs related to the proposed merger, such as legal, accounting,
	and financial advisor fees, must be paid even if the merger is
	not completed.                                         

We are dependent upon the successful integration of our
proposed merger with VeriSign

Achieving the anticipated benefits of the proposed acquisition of
 our company by VeriSign is dependent in part upon whether the
integration of the two companies products, services and
technologies, research and development activities, sales and
marketing, and administrative organizations is accomplished in an
 efficient and effective manner. There can be no assurance that
this will occur. Moreover, the integration process may
temporarily divert management attention from our day-to-day
business. Failure to successfully accomplish integration could
have a material adverse effect on the business, financial
condition or results of operations of the combined company.

Industry Risks

Increased competition could harm our domain name registration
business

The introduction of additional competition into the domain name
registration business could harm our business. This includes, in
particular, competition among registrars within a single top
level domain, such as .com, .netor.org, and
competition among registrars and registries of existing and
potential new top level domains. We currently face competition in
 the domain name registration business from other registrars in
the top level domains for which we act as registry, third level
domain name providers such as Internet access providers and
registrars and registries of top level domains other than those
top level domains for which we act as registry. As of
March 13, 2000, 33 accredited registrars (in addition to us)
 in the .com, .netand .orgtop level domains used
our shared registration system to register domain names. ICANN
has accredited 76 additional registrars as of that date. We
expect these and additional accredited registrars to offer
competing registration services in these top level domains in the
 near future.

The accredited registrars include, among others, AT&T,
Alabanza, America Online, CORE or Internet Council of Registrars,
 Deutsche Telekom, France Telecom Oleane, iDirections, interQ,
Internet Domain Registrars, Melbourne IT, NameSecure.com,
NetBenefit, PSINet, Register.com, Talk.com and Verio. For the
quarter ended December 31, 1999, we registered 1,600,000 net
 new second level domain names and competing accredited
registrars registered 890,000 second level domain names.

The introduction of potential new top-level domains is currently
an issue of global significance. At its most recent meeting in
Cairo, the ICANN Board requested the Names Council, a branch of
the Domain Name Supporting Organization (DNSO) primarily
responsible for the consensus-building process of the DNSO, and
its staff to prepare recommendations regarding the introduction
of new generic top-level domains, indicating that the ICANN Board
 intends to act on these topics at its Yokohama meeting on
July 15-16, 2000.

Future competition in the domain name registration business as a
registry or registrar could come from many different companies,
including:



| |   |                                    
| | - | -----------------------------------
| |  | domain name registration resellers,
|
| |  | country code registries,           

13



---



##### Table of Contents





| |   |                                
| | - | -------------------------------
| |  | Internet access providers and  
|
| |  | major telecommunications firms.

Many of these entities have core capabilities to deliver registry
 and/or registrar services, such as help desks, billing services
and network management, along with strong name recognition and
Internet industry experience. The recent agreements among ICANN,
the Department of Commerce, us and other registrars permit
flexibility in pricing for and term of registrations. Our
revenue, therefore, could be reduced due to pricing pressures,
bundled service offerings and variable terms resulting from
increased competition. Some registrars and resellers in the .com, .netand .org top level domains are already
charging lower prices for domain name registration services in
those domains. In addition, other entities are bundling, and may
in the future bundle, domain name registrations with other
products or services at reduced rates or for free.

Issues arising from implementation of our agreements with
ICANN and the Department of Commerce could harm our registration
business

The Department of Commerce has adopted a plan for a phased
transition of the Department of Commerces responsibilities
for the domain name system to ICANN by September 30, 2000.
We face risks from this transition, including:



| |   |                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ICANN could adopt or promote policies, procedures or programs
        that are unfavorable to our role in the registration of domain
        names or that are inconsistent with our current or future plans,                                                                              
|
| |  | The Department of Commerce or ICANN could terminate our
        agreements to be the registry and/or a registrar in the .com,
        .netand .orgtop level domains if they find that we
        are in violation of our agreements with them,                                             
|
| |  | If we do not separate ownership of our registry and registrar by
        May 2001 in accordance with the registry agreement, the term of
        the registry agreement will expire in November 2003 and we
        may not be chosen as the successor registry,                           
|
| |  | The terms of the registrar accreditation contract could change,
        as a result of an ICANN-adopted policy, in a manner which is
        unfavorable to us,                                                                                                                            
|
| |  | The Department of Commerces or ICANNs interpretation
        of provisions of our agreements with either of them above could
        differ from ours,                                                                                                                                   
|
| |  | The Department of Commerce could revoke its recognition of ICANN,
         as a result of which the Department of Commerce would take the
        place of ICANN for purposes of the various agreements described
        above, and could take actions which are harmful to us,           
|
| |  | ICANN may approve new top level domains and we may not be
        selected to act as a registrar or registry with respect to those
        top level domains,                                                                                                                              
|
| |  | The U.S. Government could refuse to transfer certain
        responsibilities for domain name system administration to ICANN
        due to security, stability or other reasons, resulting in
        fragmentation or other instability in domain name system
        administration, and
|
| |  | Our registry business could face legal or other challenges
        resulting from the activities of other registrars.                                                                                                                                                                      

14



---



##### Table of Contents



Challenges to ongoing privatization of Internet administration
 could harm our registration business

Risks we face from challenges by third parties, including other
domestic and foreign governmental authorities, to our role in the
 ongoing privatization of the Internet include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Legal, regulatory or other challenges, including challenges to
	the agreements governing our relationship with, or to the legal
	authority underlying the roles and actions of, the Department of
	Commerce, ICANN and/or us, could be brought,                                                                                                                                                       
|
| |  | Congress has held two hearings in which various issues about the
	domain name system have been raised and Congress could take
	action which is unfavorable to us,                                                                                                                                                                                                                                     
|
| |  | Congress has issued a Conference Report directing the General
	Accounting Office to review the relationship between the
	Department of Commerce and ICANN and the adequacy of security
	arrangements under existing Department of Commerce cooperative
	agreements. An adverse report could cause Congress to take action
	 which is unfavorable to us or to the stability of the domain
	name system,
|
| |  | ICANN could fail to maintain legitimacy resulting in instability
	in domain name system administration, and                                                                                                                                                                                                                                                                                           
|
| |  | Some foreign governments and governmental authorities have in the
	 past disagreed with, and may in the future disagree with, the
	actions, policies or programs of ICANN, the U.S. Government and
	us relating to the domain name system. These foreign governments
	or governmental authorities may take actions or adopt policies or
	 programs which are harmful to our business.                 

We depend on future growth of the Internet and Internet
infrastructure

Our future success substantially depends on the continued growth
in the use of the Internet. If the use of and interest in the
Internet does not continue to grow, our business would be harmed.
 Continued growth of the Internet could be slowed by:



| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | inadequate infrastructure,                                                                                      
|
| |  | lack of availability of cost-effective, high speed systems and
	service,                                        
|
| |  | delays in developing or adopting new standards and protocols to
	handle increased levels of Internet activity or
|
| |  | government regulation.                                                                                          

We rely on third parties who maintain and control root zone
and top level domain zone servers

We currently administer and operate only two of the 13 root
zone servers and four top level domain zone servers. The others
are administered and operated by independent operators on a
volunteer basis. Because of the importance to the functioning of
the Internet of these root zone servers and top level domain zone
 servers, our registration business could be harmed if these
volunteer operators fail to properly maintain such servers or
abandon such servers.

Further, our registration business could be harmed if any of
these volunteer operators fail to include or provide
accessibility to the data that we maintain in the root zone
servers and the top level domain zone servers that we control.

In the event and to the extent that ICANN is authorized to set
policy with regard to an authoritative root server system, as
provided in the registry agreement, it is required to ensure that

15



---



##### Table of Contents





We rely on Internet service providers

Our registration business could be harmed if a significant number
 of Internet service providers decided not to route Internet
communications to or from domain names registered by us or if a
significant number of Internet service providers decided to
provide routing to a set of domain name servers which did not
point to our top level domain zone servers.

Company Risks

Our near term success depends on the growth of our domain name
 registration business

We may not be able to sustain the revenue growth we have
experienced in recent periods. In addition, past revenue growth
may not be indicative of future operating results. If we do not
successfully maintain our current position as a leading provider
of domain name registration services or develop or market
additional value-added products and services, our business could
be harmed.

Our domain name registration services business generates over 90%
 of our revenue and is expected to continue to account for a very
 significant portion of our revenue in at least the near term.
Our future success will depend largely on:



| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | the continued increase in domain name registrations,                                                                        
|
| |  | re-registration rates of our customers,                                                                                     
|
| |  | our ability to maintain our current position as a leading
	registrar of domain names,                                       
|
| |  | the successful development, introduction and market acceptance of
	 new services that address the demands of Internet users,
|
| |  | our ability to provide robust domain name registration systems
	and                                                         
|
| |  | our ability to provide a superior customer service infrastructure
	 as a registry and registrar.                            

The contractual requirement that we provide bulk access to
customer data could hurt our ability to market and sell other
value-added services in addition to domain name registration
services.

System failure or interruption, security breaches or our
failure to meet increasing demands on our systems could harm our
business

Any significant problem, including any security breach, with our
systems or operations could result in lost revenue, customer
dissatisfaction or lawsuits against us. A failure in the
operation of our registration systems or other events could
result in deletion of one or more domain names from the Internet
for a period of time. A failure in the operation of our shared
registration system could result in the inability of one or more
other registrars to register and maintain domain names for a
period of time. A failure in the operation or update of the
master database that we maintain could result in deletion of one
or more top level domains from the Internet and the
discontinuation of second level domain names in those top level
domains for a period of time. The inability of our registrar
systems, including our back office billing and collections
infrastructure, and telecommunications systems to meet the
demands of the increasing number of domain name registration
requests and corresponding customer e-mails and telephone calls,
including speculative, otherwise abusive and repetitive e-mail
domain name registration and modification requests, could result
in substantial degradation in our customer support service and
our ability to process, bill and collect registration requests in
 a timely manner.

16



---



##### Table of Contents



We recently completed a physical separation of our registrar and
registry computer systems and have run the operations of our new
systems separately for only a limited time. Any data integrity,
non-compatibility or other issues that may arise from this
separation could materially harm our business.

Our operations depend on our ability to maintain our computer and
 telecommunications equipment in effective working order and to
reasonably protect our systems against interruption and
potentially on such maintenance and protection by other
registrars in the shared registration system. The root zone
servers and top level domain zone servers that we operate are
critical hardware to our operations. Interruptions could result
from:



| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | fire, natural disaster, sabotage, power loss, telecommunications
	failure, human error or similar events,                   
|
| |  | computer viruses, hackers or similar disruptive problems caused
	by employees, customers or other Internet users and        
|
| |  | systems strain caused by the growth of our customer base and our
	inability to sufficiently maintain or upgrade our systems.

We must attract, integrate, train and retain key personnel
knowledgeable about our business

We face intense competition for the limited supply of people
qualified to work for us. Our future success depends on the
continued service of key engineering, sales, marketing, executive
 and administrative personnel, and our ability to identify,
attract, hire, integrate, train and retain such personnel.
Competition for engineering, sales, marketing and executive
personnel is intense, particularly in the technology and Internet
 sectors and in the regions where our facilities are located. We
may be unable to retain existing personnel or attract, hire or
retain additional qualified personnel. The loss of the services
of any of our senior management team or other key employees or
our failure to attract, integrate, train and retain additional
key employees could harm our business.

We must effectively manage our marketing organization and
establish and maintain distribution channels

We will need to effectively manage our growing sales and
marketing organization if we want to achieve future revenue
growth. We may not be able to identify, attract and retain
experienced sales and marketing personnel with relevant
experience. Further, our sales and marketing organization may not
 be able to successfully compete against the significantly more
extensive and well-funded sales and marketing operations of our
current or potential competitors for registration or Internet
technology services.

Our ability to achieve future revenue growth will also depend on
our ability to continue to establish direct sales channels and to
 develop multiple distribution channels. To do this we must
maintain relationships with Internet access providers and other
third parties.

We have a high level of uncollectible receivables

Because of our high level of uncollectible receivables, we
continually review our billing practices. Any modifications that
we implement including prepayment or other reasonable assurance
of payment for new registration orders could have unanticipated
harmful consequences to our business. We have recently
implemented a prepayment or reasonable assurance of payment terms
 billing practice as required by our agreements with ICANN. We
believe we have experienced a high level of uncollectible
receivables due to, among other factors, the large number of
individuals and corporations that have registered multiple domain
 names with the apparent intention of transferring such names at
a profit. Our experience has been that such speculative resellers
 have a greater tendency than other

17



---



##### Table of Contents





We are party to legal proceedings which could have a negative
financial impact on us

We are involved in a number of legal proceedings. We cannot
reasonably estimate the potential impact of any of these
proceedings. An adverse determination in any of these
proceedings, however, could harm our business. Legal proceedings
in which we are involved are expensive and divert the attention
of our personnel. Please see Item 3 
Legal Proceedings on page 21 herein.

We may not be able to protect our intellectual property rights
 and proprietary information or we may be subject to claims of
infringement of third party intellectual property rights

We rely on a combination of nondisclosure and other contractual
arrangements with the U.S. Government, our employees, and third
parties, as well as copyright, privacy and trade secret laws, to
protect and limit the distribution of our proprietary data,
computer software, documentation, and processes used in
conducting our domain name registration and other businesses. If
we fail to adequately protect our intellectual property rights
and proprietary information, or if we are subject to adverse
results in litigation relating to our intellectual property
rights and proprietary information, our business could be harmed.
 Any actions we take may not be adequate to protect our
intellectual property rights and proprietary information. Other
companies may develop competing technology that is similar or
superior to our technology. Although we have no reason to believe
 that our domain name registration business activities infringe
on the intellectual property rights of others, and we believe
that we have all rights needed to conduct our business, it is
possible that we could become subject to claims alleging
infringement of third party intellectual property rights. Any of
these claims could subject us to costly litigation, and any
adverse final rulings on any of these claims could require us to
pay damages, seek to develop alternative technology, and/or seek
to acquire licenses to the intellectual property that is the
subject of any alleged infringement, and any rulings not in our
favor could harm our business.

In addition, legal standards relating to the validity,
enforceability, and scope of protection of intellectual property
rights in Internet-related businesses are uncertain and still
evolving. Because of the growth of the Internet and Internet
related businesses, patent applications are continuously and
simultaneously being filed in connection with Internet-related
technology. There are a significant number of U. S. and foreign
patents and patent applications in our areas of interest, and we
believe that there has been, and is likely to continue to be,
significant litigation in the industry regarding patent and other
 intellectual property rights.

Future acquisitions and investments could decrease operating
income, cause operational problems or otherwise disrupt our
business

We evaluate potential acquisitions and investments on an ongoing
basis for various reasons including, among others,
diversification of our domain name registration services and
Internet technology services businesses. Our acquisition and
investment strategy poses many risks, including:



| |   |                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we may not be able to compete successfully for available
	acquisition or investment candidates, complete future
	acquisitions and investments or accurately estimate the financial
	 effect on our company of any businesses we acquire or
	investments we make,
|
| |  | future acquisitions and investments may require us to spend
	significant cash amounts or may decrease our operating income,                                                                                                                                     
|
| |  | we may have trouble integrating the acquired business and
	retaining personnel,                                                                                                                                                                                 

18



---



##### Table of Contents





| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | acquisitions or investments may disrupt our business and distract
	 our management from other responsibilities,



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | to the extent that any of the companies which we acquire or in
	which we invest fail, our business could be harmed and
|
| |  | we may not identify appropriate acquisition or investment
	targets.                                                   

We face increasing risks associated with our international
business

While substantially all of our operations, facilities, and
personnel are located within the United States, our revenues from
 sources outside the United States have increased significantly
and may continue to increase in the future. As a result, we are
subject to the risks of conducting business internationally,
including unexpected changes in regulatory requirements,
competition from foreign companies, fluctuations in the U.S.
dollar, tariffs and other barriers and restrictions and the
burdens of complying with a variety of foreign laws. We do not
know what the impact of such regulatory, geopolitical and other
factors will be on our business in the future or if we will have
to modify our business practices. In addition, the laws of
certain foreign countries may not protect our proprietary rights
to the same extent as do the laws of the United States.

Our quarterly operating results may fluctuate; our future
revenue and profitability are uncertain

Our quarterly operating results may fluctuate significantly in
the future due to a variety of factors, some of which are beyond
our control. Factors that may affect our revenue include:



| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | variations in the number of requests for domain name
	registrations or demand for our services,                                                      
|
| |  | successful competition by others,                                                                                                                    
|
| |  | termination or completion of contracts in our Internet technology
	 services business or failure to obtain additional contracts in
	that business and
|
| |  | market acceptance of new service offerings.                                                                                                          

In addition, we expect a significant increase in our operating
expenses as we:



| |   |                                                               
| | - | --------------------------------------------------------------
| |  | increase our sales and marketing operations and activities and
|
| |  | continue to update our systems and infrastructure.            

If the increase in our expenses is not followed by a
corresponding increase in our revenue, our operating results will
 suffer. The fact that in the past our revenue has increased and
we have been profitable on a quarterly and annual basis is not
indicative of whether our revenue will increase or whether we
will be profitable on a quarterly or annual basis in the future.

Investment Risks

Our stock price, like that of many Internet companies, is
highly volatile

The market price of our Common Stock has been and is likely to
continue to be highly volatile and significantly affected by
factors such as:



| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general market and economic conditions and market conditions
	affecting technology and Internet stocks generally,                                            
|
| |  | actual or anticipated fluctuations in our quarterly or annual
	registrations or operating results,                                                           
|
| |  | announcements of technological innovations, acquisitions or
	investments, developments in Internet governance or corporate
	actions such as stock splits, and
|
| |  | industry conditions and trends.                                                                                                                              

The stock market has experienced significant price and volume
fluctuations that have particularly affected the market prices of
 the stocks of technology companies, especially Internet-related

19



---



##### Table of Contents





The market price of our Common Stock also has been and is likely
to continue to be significantly affected by expectations of
analysts and investors. Reports and statements of analysts do not
 necessarily reflect our views. The fact that we have in the past
 met or exceeded analyst or investor expectations does not
necessarily mean that we will do so in the future.

In the past, securities class action lawsuits have often followed
 periods of volatility in the market price of a particular
companys securities. This type of litigation could result
in substantial costs and a diversion of our managements
attention and resources.

Future issuances or sales of Common Stock could cause our
stock price to decrease

We may in the future issue shares of Common Stock in connection
with acquisitions or other strategic investments. Also, SAIC
Venture Capital Corporation, a wholly-owned subsidiary of SAIC,
owns 16,300,000 shares of our Common Stock. A decision by us to
issue shares of Common Stock or by SAIC Venture Capital
Corporation or other stockholders to sell our Common Stock could
depress the market price of the Common Stock.

SAIC may maintain significant influence over us

SAIC Venture Capital Corporation, a wholly-owned subsidiary of
SAIC, owns approximately 23% of our Common Stock and is our
largest stockholder. Matters requiring approval by our
stockholders, including the election of members of our Board of
Directors, changes in the size and composition of the Board of
Directors and a change in control, may need the approval of SAIC
Venture Capital Corporation to be effected. SAIC Venture Capital
Corporation has agreed to vote its shares in favor of the
approval and adoption of the merger with VeriSign and against
approval of any proposal made in opposition to or in competition
with the consummation of the merger. We do not have an agreement
with either SAIC or SAIC Venture Capital Corporation which
restricts SAIC Venture Capital Corporations rights to
distribute or sell its shares of our Common Stock.

Some of our directors may have conflicts of interest

Some of our directors currently serve as directors, officers and
employees of SAIC and other companies, including Stratton
Sclavos, who serves as Chief Executive Officer of VeriSign, Inc.
Therefore, there may be various conflicts of interest or
conflicting duties for these individuals. Since our directors and
 officers may also own stock of those companies, there may be
conflicts of interest when directors and officers are faced with
decisions that could have different implications for us and those
 companies.

We rely on SAIC for corporate services and employee benefits

We currently receive corporate services under an agreement with
SAIC. If SAIC were to terminate these services, we might not be
able to secure alternative sources for such services or such
services might only be available to us at prices higher than
those charged by SAIC.

20



---



##### Table of Contents



Our employees are currently eligible to participate in some of
SAICs employee benefit plans through the end of calendar
year 2000. However, since SAIC now indirectly owns less than 50%
of our Common Stock, we will have to establish certain employee
benefit plans of our own which could result in incremental costs
to us.

Our certificate of incorporation contains provisions relating
to SAIC that may adversely affect us or our stockholders

Our certificate of incorporation includes provisions relating to
competition by SAIC with us, allocations of corporate
opportunities, transactions with interested parties and
intercompany agreements and provisions limiting the liability of
certain people. It is unclear whether such provisions are
enforceable under Delaware corporate law. Our certificate of
incorporation provides that any person purchasing or acquiring an
 interest in shares of our capital stock shall be deemed to have
consented to the provisions in the certificate of incorporation
relating to competition with SAIC, conflicts of interest,
corporate opportunities and intercompany agreements, and such
consent may restrict such persons ability to challenge
transactions carried out in compliance with such provisions. The
corporate charter of SAIC does not include similar provisions.
Therefore, persons who are directors and/or officers of ours and
who are also directors and/or officers of SAIC may choose to take
 action in reliance on such provisions rather than act in a
manner that might be favorable to us but adverse to SAIC.




Item 2.  Properties.

Our principal executive office is located in approximately 55,000
 square feet of a facility in Herndon, Virginia, under a lease
that expires in November 2002. We also lease additional
facilities in Herndon, Virginia of 40,306 square feet expiring in
 July 2002 and 60,000 square feet expiring in
March 2004. Additionally, our Internet Technology Services
division has the following office locations: approximately 2,900
square feet in a facility in Charlotte, North Carolina, under a
space usage arrangement with SAIC which expires in
July 2002; approximately 3,700 square feet in a facility in
Duluth, Georgia, under a month-to-month sublease; and
approximately 5,000 square feet in a facility located in New
York, New York which expires in December 2002. We believe
that our current facilities will be adequate for the next
12 months and that any additional facilities will be
available in the future as needed on commercially reasonable
terms.




Item 3.  Legal Proceedings.

As of March 13, 2000, we were a defendant in eight active
lawsuits involving domain name disputes between trademark owners
and domain name holders. We are drawn into such disputes, in
part, as a result of claims by trademark owners that we are
legally required, upon request by a trademark owner, to terminate
 the right we granted to a domain name holder to register a
domain name which is alleged to be similar to the trademark in
question. On October 25, 1999, however, the Ninth Circuit
Court of Appeals ruled in our favor and against Lockheed
Corporation, holding that our services do not make us liable for
contributory infringement to trademark owners. Thus, we believe,
this type of suit should decline. The holders of the domain name
registrations in dispute have, in turn, questioned our right,
absent a court order, to take any action which suspends their use
 of the domain names in question. Beginning January 1, 2000,
 however, we no longer included a contractual provision in our
service contracts with domain name holders under which we would
suspend their use of their domain name under dispute by a
trademark owner. Thus, we believe, this type of suit also should
decline. Although 68 out of approximately 9,500 of these
situations have resulted in suits actually naming us as a
defendant, as of March 13, 2000, no adverse judgment has
been rendered and no award of damages has ever been made against
us. We believe that we have meritorious defenses and vigorously
defend ourselves against these claims.

21



---



##### Table of Contents



On March 15, 2000, a group of eight plaintiffs filed suit
against the U.S. Department of Commerce, the National Science
Foundation and us 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.
 The same attorney who challenged us in a similar action known as
 Thomas, et al. v. Network Solutions, et al.,has 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, § 8
and the Fifth Amendment of the U.S. Constitution, the Independent
 Offices Appropriations Act (31 U.S.C. § 9701), the
Administrative Procedures Act, the Sherman Act, and the
California Unfair Competition Act, § 17200. We believe that
the complaint lacks merit and we intend to vigorously defend
ourselves as we did in response to the Thomascase.

On October 17, 1997, a group of six plaintiffs filed the Thomas suit against us and the National Science Foundation in
 the United States District Court, District of Columbia,
challenging the legality of fees defendants charge for the
registration of domain names on the Internet and seeking
restitution of fees collected from domain name registrants in an
amount in excess of $100 million, damages, and injunctive and
other relief. Plaintiffs alleged violations of the Sherman Act,
the U.S. Constitution, the Administrative Procedures Act and the
Independent Offices Appropriations Act. On February 10,
1998, the plaintiffs filed a motion for preliminary injunction
against us seeking several items of relief. On April 6,
1998, the Court issued its opinion granting summary judgment in
favor of the plaintiffs on the Intellectual Infrastructure Fund,
ruling it an unlawful tax. The court also granted our
 motion to dismiss all other counts (II through X) and
simultaneously denied the plaintiffs preliminary injunction
 motion against us. On April 30, 1998, Congress passed H.R.
3579 which was signed into law by the President on May 1,
1998. Section 8003 of H.R. 3579 legalized, ratified and
confirmed the entire Intellectual Infrastructure Fund and
authorized and directed the National Science Foundation to
deposit the entire fund into the U.S. Treasury. On August 28,
1998, the District Court dismissed the entire case, issuing a
final judgment in the matter. In October 1998, the
plaintiffs appealed the courts dismissal of their claims,
and oral argument occurred on February 25, 1999. On
May 14, 1999, the Court of Appeals ruled in our favor by
unanimously affirming the District Courts decision. The
Court of Appeals denied the plaintiffs motion for
reconsideration and entered final judgment on July 20, 1999.
 On October 12, 1999, the plaintiffs filed a Petition for a
Writ of Certiorari with the U.S. Supreme Court. Our opposition to
 that Petition was filed on December 8, 1999. On January 18,
 2000, the U.S. Supreme Court denied the plaintiffs
petition.

On August 17, 1998, we received notice from the Commission
of the European Communities, or EC, of an
investigation concerning the Companys Premier Program
agreements in Europe. The EC requested production of these
agreements and related materials for review and we complied. On
June 17, 1999, we received a second inquiry from the EC
concerning our registrar licensing agreements with the five
newly-accredited testbed registrars and we responded to this
inquiry on July 9, 1999. On January 26, 2000, the EC
formally notified us that its investigation had been closed. No
enforcement action was taken.

On March 20, 1997, PG Media, Inc., a New York-based
corporation, filed a lawsuit against us in the United States
District Court, Southern District of New York alleging that we
had restricted access to the Internet by not adding PG
Medias requested 490 top level domains to the Internet root
 zone in violation of the Sherman Act. In its complaint, PG
Media, in addition to requesting damages, asked that we be
ordered to include reference to PG Medias top level domains
 and name servers in the root zone file administered by us under
the cooperative agreement. In June 1997, we received written
 direction from the National Science Foundation not to take any
action which would create

22



---



##### Table of Contents





On June 27, 1997, SAIC received a Civil Investigative
Demand, or CID, from the U.S. Department of Justice
issued in connection with an investigation to determine whether
there is, has been, or may be any antitrust violation under the
Sherman Act relating to its Internet registration services. The
CID sought documents and information from SAIC and us relating to
 our Internet registration business. On April 29, 1999, we
received a second CID seeking additional information and
documents relating to our ownership rights in, policies relating
to access to, and our use of, data that we compile in the course
of operating our Internet registration business. We provided
information responsive to the CID. On June 23, 1999, the
Department of Justice formally notified us that SAIC had been
removed as a subject of the investigation. On January 28,
2000, the Department of Justice formally notified us that the
investigation had been closed. No enforcement action was taken.

We are involved in various other investigations, claims and
lawsuits arising in the normal conduct of our business, none of
which, in our opinion will harm our business.

Legal proceedings in which we are involved have resulted and
likely will result in, and any future legal proceedings can be
expected to result in, substantial legal and other expenses and a
 diversion of the efforts of our personnel.

Please see Item 1  Business 
Risk Factors  We are party to several legal
proceedings which could have a negative financial impact on
us on page 18 herein.




Item 4.  Submission of Matters to a Vote of Security
 Holders.

No matters were submitted to a vote of security holders during
the fourth quarter of 1999.

PART II






|        |                                                                       
|------- | ----------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
	Stockholder Matters

On December 21, 1999, our Board of Directors approved a
2-for-1 stock split of the shares of our Common Stock, that was
effected in the form of a 100% stock dividend on March 10,
2000 on shares of our Common Stock outstanding on
February 25, 2000. The following table sets forth the range
of high and low reported last sales prices of the Common Stock on
 the Nasdaq National

23



---



##### Table of Contents





|                               |                                      |      |   |         |  |  |   |        | 
|------------------------------ | ------------------------------------ | ---- | - | ------- |  |  | - | ------ | 
|                               |                                      | High |   | Low    
|                               |                                      |      |   |        
|Year Ended December 31, 1998:  |                                      |      |   |         |  |  |   |       
|                              
|                              
|                              
|                              
|                               | First Quarter                        |      | $ | 9.282   |  |  | $ | 3.235  | 
|                              
|                              
|                              
|                              
|                               | Second Quarter                       |      |   | 13.750  |  |  |   | 8.125  | 
|                              
|                              
|                              
|                              
|                               | Third Quarter                        |      |   | 11.578  |  |  |   | 6.438  | 
|                              
|                              
|                              
|                              
|                               | Fourth Quarter                       |      |   | 41.180  |  |  |   | 7.094  | 
|                              
|                              
|                              
|                              
|Year Ended December 31, 1999:  |                                      |      |   |         |  |  |   |       
|                              
|                              
|                              
|                              
|                               | First Quarter                        |      | $ | 72.000  |  |  | $ | 35.000 | 
|                              
|                              
|                              
|                              
|                               | Second Quarter                       |      |   | 57.750  |  |  |   | 25.875 | 
|                              
|                              
|                              
|                              
|                               | Third Quarter                        |      |   | 47.531  |  |  |   | 27.063 | 
|                              
|                              
|                              
|                              
|                               | Fourth Quarter                       |      |   | 136.125 |  |  |   | 42.563 | 
|                              
|                              
|                              
|                              
|Year Ending December 31, 2000: |                                      |      |   |         |  |  |   |       
|                              
|                              
|                              
|                              
|                               | First Quarter through March 13, 2000 |      | $ | 247.250 |  |  | $ | 98.969 | 

As of March 17, 2000, there were 167 holders of record of
Network Solutions Common Stock. Because many of our shares of
Common Stock are held by brokers and other institutions on behalf
 of beneficial stockholders, we are unable to determine the exact
 number of beneficial stockholders represented by these record
holders.

We have neither declared nor paid cash dividends on our Common
Stock in the two years ended December 31, 1999. We currently
 intend to retain our earnings, if any, for future growth and do
not anticipate paying any dividends in the foreseeable future.
Our Board of Directors will determine our future dividend policy
on the basis of various factors, including our results of
operations, financial condition, capital requirements and
investment opportunities.




Item 6.  Selected Financial Data.

The following table sets forth selected financial and operating
data of Network Solutions for the periods indicated and should be
 read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations,
the Financial Statements and the Notes related thereto included
elsewhere and incorporated by reference in this 10-K. The
Statements of Operations Data and Balance Sheet Data as of and
for the years ended December 31, 1996, 1997, 1998 and 1999 were
derived from Network Solutions audited financial
statements. The selected financial data for the year ended
December 31, 1995 were derived by combining Network
Solutions results of operations for the period
January 1, 1995 through March 10, 1995 and the period
March 11, 1995 through December 31, 1995, both as
derived from Network Solutions audited financial
statements. Comparability of pre-acquisition periods to
post-acquisition periods is limited because the financial

24



---



##### Table of Contents





|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |      | 
|------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------- | ----------------------------------- | ------ | ----- | - | ---- | ------ | ----- | - | ---- | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                                                                                                         |                                          |                                    
|                                                                                                                         |                                          | Year Ended December 31,            
|                                                                                                                         |                                          |                                    
|                                                                                                                         |                                          | 1995                                |        | 1996  |   | 1997 |        | 1998  |   | 1999
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |     
|                                                                                                                         |                                          |                                    
|                                                                                                                         |                                          | In thousands, except per share data
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Statements of Operations Data:                                                                                           |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Net revenue                                                                                                              |                                          | $                                   | 6,486  |       |   | $    | 18,862 |       |   | $    | 45,326  |      |  | $ | 93,652  |      |  | $ | 220,811 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Cost of revenue                                                                                                          |                                          |                                     | 5,704  |       |   |      | 14,666 |       |   |      | 25,798  |      |  |   | 38,530  |      |  |   | 81,606  |     
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|Gross profit                                                                                                             |                                          |                                     | 782    |       |   |      | 4,196  |       |   |      | 19,528  |      |  |   | 55,122  |      |  |   | 139,205 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Research and development expenses                                                                                        |                                          |                                     |       |       |   |      | 680    |       |   |      | 1,653   |      |  |   | 4,821   |      |  |   | 10,989  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Selling, general and administrative expenses                                                                             |                                          |                                     | 2,394  |       |   |      | 6,280  |       |   |      | 12,268  |      |  |   | 37,144  |      |  |   | 92,517  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Interest income                                                                                                          |                                          |                                     |       |       |   |      | (496   | )     |   |      | (2,211  | )    |  |   | (6,303  | )    |  |   | (9,928  | )   
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Other expenses                                                                                                           |                                          |                                     | 61     |       |   |      |       |       |   |      | 116     |      |  |   | 116     |      |  |   | 52      |     
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|Income (loss) from continuing operations before income taxes
	 and cumulative effect of a change in accounting principle |                                          |                                     | (1,673 | )     |   |      | (2,268 | )     |   |      | 7,702   |      |  |   | 19,344  |      |  |   | 45,575  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Provision (benefit) for income taxes                                                                                     |                                          |                                     | (239   | )     |   |      | (643   | )     |   |      | 3,471   |      |  |   | 8,109   |      |  |   | 18,689  |     
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|Income (loss) from continuing operations                                                                                 |                                          |                                     | (1,434 | )     |   |      | (1,625 | )     |   |      | 4,231   |      |  |   | 11,235  |      |  |   | 26,886  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Loss from discontinued operations, net of income taxes                                                                   |                                          |                                     | (1,403 | )     |   |      |       |       |   |      |        |      |  |   |        |      |  |   |        |     
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|Net income (loss)                                                                                                        |                                          | $                                   | (2,837 | )     |   | $    | (1,625 | )     |   | $    | 4,231   |      |  | $ | 11,235  |      |  | $ | 26,886  |     
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|Basic earnings per share:                                                                                                |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Income (loss) from continuing operations |                                     | $      | (0.04 | ) |      | $      | (0.03 | ) |      | $       | 0.08 |  |   | $       | 0.18 |  |   | $       | 0.40 | 
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Loss from discontinued operations        |                                     |        | (0.03 | ) |      |        |      |   |      |         |     |  |   |         |     |  |   |         |     | 
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                                                                                         | Net income (loss)                        |                                     | $      | (0.07 | ) |      | $      | (0.03 | ) |      | $       | 0.08 |  |   | $       | 0.18 |  |   | $       | 0.40 | 
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|Weighted average shares                                                                                                  |                                          |                                     | 41,340 |       |   |      | 50,000 |       |   |      | 53,220  |      |  |   | 63,914  |      |  |   | 66,687  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Diluted earnings per share:                                                                                              |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Income (loss) from continuing operations |                                     | $      | (0.04 | ) |      | $      | (0.03 | ) |      | $       | 0.08 |  |   | $       | 0.17 |  |   | $       | 0.38 | 
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Loss from discontinued operations        |                                     |        | (0.03 | ) |      |        |      |   |      |         |     |  |   |         |     |  |   |         |     | 
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                                                                                         | Net income (loss)                        |                                     | $      | (0.07 | ) |      | $      | (0.03 | ) |      | $       | 0.08 |  |   | $       | 0.17 |  |   | $       | 0.38 | 
|                                                                                                                         |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|Weighted average shares                                                                                                  |                                          |                                     | 41,340 |       |   |      | 50,000 |       |   |      | 53,932  |      |  |   | 66,794  |      |  |   | 69,917  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Other Operating Data:                                                                                                    |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Net new registrations                                                                                                    |                                          |                                     | 141    |       |   |      | 489    |       |   |      | 960     |      |  |   | 1,911   |      |  |   | 5,037   |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Registrations not re-registered                                                                                          |                                          |                                     | 1      |       |   |      | 39     |       |   |      | 46      |      |  |   | 90      |      |  |   | 346     |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Net registrations as of period end                                                                                       |                                          |                                     | 177    |       |   |      | 627    |       |   |      | 1,541   |      |  |   | 3,362   |      |  |   | 8,055   |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Balance Sheet Data:                                                                                                      |                                          |                                     |        |       |   |      |        |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Cash and cash equivalents                                                                                                |                                          | $                                   | 5      |       |   | $    | 15,540 |       |   | $    | 41,146  |      |  | $ | 12,862  |      |  | $ | 196,589 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Total marketable securities                                                                                              |                                          |                                     |       |       |   |      |       |       |   |      | 40,200  |      |  |   | 128,098 |      |  |   | 164,920 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Working capital                                                                                                          |                                          |                                     | (559   | )     |   |      | 1,362  |       |   |      | 50,947  |      |  |   | 65,791  |      |  |   | 131,113 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Total assets                                                                                                             |                                          |                                     | 11,748 |       |   |      | 66,118 |       |   |      | 149,620 |      |  |   | 243,867 |      |  |   | 625,303 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Restricted assets included in total assets                                                                               |                                          |                                     | 1,408  |       |   |      | 17,453 |       |   |      | 25,873  |      |  |   |        |      |  |   |        |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Deferred revenue, net                                                                                                    |                                          |                                     | 3,346  |       |   |      | 29,352 |       |   |      | 61,451  |      |  |   | 129,194 |      |  |   | 361,639 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Long-term obligations, excluding current portion                                                                         |                                          |                                     | 1,353  |       |   |      | 9,440  |       |   |      | 18,743  |      |  |   | 35,721  |      |  |   | 106,971 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Total stockholders equity                                                                                               |                                          |                                     | 3,062  |       |   |      | 1,437  |       |   |      | 47,655  |      |  |   | 75,130  |      |  |   | 178,599 |     

25



---



##### Table of Contents



Net new registrations shown above under Other Operating
Data for each period include gross new registrations less
an estimate of registrations that are uncollectible for our
registrar services. Net registrations at period end include net
new registrations less managements estimate of
registrations not re-registered. Prior to September 14,
1995, net registrations equaled gross registrations because
Network Solutions was reimbursed by the National Science
Foundation for all registrations under a cost plus fixed-fee
contract.






|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
	Condition and Results of Operation.

The following discussion and analysis should be read in
conjunction with Selected Financial Information and
Network Solutions Financial Statements and Notes thereto
included elsewhere and incorporated by reference in this annual
report on Form 10-K. Except for the historical information
contained and incorporated by reference in this Form 10-K,
the discussion in this Form 10-K contains certain
forward-looking statements that involve risks and uncertainties,
such as statements of Network Solutions plans, objectives,
expectations and intentions. The cautionary statements made in
this Form 10-K should be read as being applicable to all
related forward-looking statements wherever they appear in this
Form 10-K. Network Solutions actual results may differ
 materially from the results discussed in the forward-looking
statements as a result of certain factors, including, but not
limited to, those discussed in Risk Factors and
elsewhere in this Form 10-K and from time to time in Network
 Solutions periodic reports. Unless otherwise indicated,
the accompanying financial statements and Managements
 Discussion and Analysis of Financial Condition and Results of
Operations for all periods presented for continuing
operations reflect the financial position and results of
operations of Network Solutions commercial business, which
includes registration services and consulting services.

Recent Development

On March 7, 2000, we entered into an Agreement and Plan of
Merger with VeriSign, Inc., a Delaware corporation and leading
provider of Internet trust services, and Nickel Acquisition
Corporation, Inc., a Delaware corporation and wholly-owned
first-tier subsidiary of VeriSign. Under the Agreement and Plan
of Merger, VeriSign will issue 1.075 shares of VeriSign common
stock for each share of our Common Stock. The transaction was
approved by our Board of Directors and VeriSigns Board of
Directors and is contingent upon customary closing conditions,
such as the approval of our shareholders, standard regulatory
approvals and approval by VeriSigns shareholders of the
issuance of common stock and amendment to the certificate of
incorporation of VeriSign required to effect the transaction. The
 transaction is intended to be completed in the third quarter of
2000, at which time we will become a wholly-owned subsidiary of
VeriSign, though we cannot give assurances that it will be
completed. Failure to complete the merger could have a material
adverse effect on our stock price, financial condition and
results of operations. A more detailed description of the merger
and the risks associated thereto are set forth under Risk Factors  Risk Related to the Proposed
VeriSign Merger on page 12 herein.

Overview

Network Solutions, Inc.

Network Solutions is the exclusive registry and the leading
registrar for second level domain names within the .com, .
netand .orgtop level domains pursuant to
agreements with ICANN and the Department of Commerce. Internet
domain names are unique identities which enable businesses, other
 organizations and individuals to communicate and conduct
commerce on the Internet. As a registry, we maintain the master
directory of all second level domain names in the .com, .netand .orgtop level domains. We own and maintain the
shared registration system that allows all registrars,

26



---



##### Table of Contents





Registration Services

In December 1992, Network Solutions entered into the
cooperative agreement with the National Science Foundation under
which Network Solutions was to provide Internet domain name
registration services for five top level domains: .com, .net,
 .org, .eduand .gov. These registration services
include the initial two year domain name registration and annual
re-registration, and throughout the registration term,
maintenance of and unlimited modifications to individual domain
name records and updates to the master file of domain names. The
cooperative agreement became effective January 1, 1993. It
included a three-month phase-in period, a five-year operational
period, commencing April 1, 1993 and ending March 31, 1998,
and a six-month flexibility period through September 30,
1998. Effective September 9, 1998, the Department of
Commerce took over the administration of the cooperative
agreement from the National Science Foundation. In
October 1998, the cooperative agreement was amended to
extend the flexibility period until September 30, 2000 and
to transition to a shared registration system. In
November 1999, we entered into a series of agreements with
ICANN and the Department of Commerce relating to our Internet
domain name registration services.

The original terms of the cooperative agreement provided for a
cost reimbursement plus fixed-fee contract (with an initial fee
of 8%). Effective September 14, 1995, the National Science
Foundation and Network Solutions amended the cooperative
agreement to require Network Solutions to begin charging end
users a services fee of $50 per year for each domain name in the
.com, .netand .orgtop level domains. Prior to
April 1, 1998, registrants paid a services fee of $100 for
two years of domain name registration services upon each initial
registration and an annual re-registration fee of $50 per year
thereafter. The National Science Foundation paid the registration
 fees for domain names within the .eduand .govtop
 level domains through March 31, 1997. Commencing
April 1, 1997, Network Solutions agreed with the National
Science Foundation to provide domain name registration services
within the .eduand .govtop level domains free of
charge. As of October 1, 1997, Network Solutions ceased to
register or administer domain names in the .govtop level
domain.

Under the terms of the September 14, 1995 amendment to the
cooperative agreement, 30% of the registration fees collected by
Network Solutions was required to be set aside for the
enhancement of the intellectual infrastructure of the Internet
and, as such, was not recognized as revenue by Network Solutions.
 The set aside funds, plus any interest earned, were disbursed at
 the direction of the National Science Foundation. As of
December 31, 1998, Network Solutions had cumulatively
disbursed to the National Science Foundation at its direction all
 set aside funds collected and associated interest earned for a
total of $62.3 million.

On March 12, 1998, the National Science Foundation and
Network Solutions amended the cooperative agreement to eliminate
the 30% set aside requirement effective April 1, 1998 and to
 reduce the registration fees by a corresponding amount. Initial
registrations on and after April 1, 1998 are charged $70 for
 two years of registration services and an annual re-registration
 fee of $35 per year thereafter. This amendment had no effect on
the revenue recognized on each registration ($70 for initial
registrations and $35 for re-registrations) since Network
Solutions previously did not recognize revenue on the 30% set
aside funds. Accordingly, while the revenue to Network Solutions
on a per registration basis did not change, the amount charged to
 customers declined.

27



---



##### Table of Contents



In order to provide prompt access to new domain names on the
Internet, Network Solutions has historically invoiced customers
and permitted them to pay their registration fees after their
domain names are registered. Network Solutions experience
has been that, for the period from September 1995 through
December 1999, approximately 36.5% of registrations have
ultimately been deactivated for non-payment. Network Solutions
believes that this level of uncollectible receivables is due to,
among other factors, the large number of individuals and
corporations that have registered multiple domain names with the
apparent intention of transferring registration for such names at
 a profit. Network Solutions believes such speculative resellers
have a greater tendency than other customers to default on their
registration fees. As a consequence, Network Solutions has
recorded a comparable provision for uncollectible accounts in
determining net registration revenue.

Registration fees charged to customers for registration services
are recognized as revenue evenly over the registration term.
Accordingly, Network Solutions recognizes $35 per year over the
service period for each initial basic domain name registration
and re-registration of domain names. This subscription-based
model defers revenue recognition until Network Solutions provides
 the registration services, including maintenance of and
unlimited modifications to individual domain name records, over
the respective registration terms. At December 31, 1999,
Network Solutions had net deferred revenue of $362 million.

On November 10, 1999 we, the Department of Commerce and
ICANN entered into a series of wide-ranging agreements relating
to the domain name system. Under these agreements we have
recognized ICANN as the not-for-profit corporation described in
amendment 11 to the cooperative agreement, have become an
ICANN-accredited registrar and have agreed to operate the
registry in accordance with the provisions of the registry
agreement and the consensus policies established by ICANN in
accordance with the terms of that agreement. We will be an
accredited registrar through November 9, 2004 with a right
to renew indefinitely in accordance with the agreement. As the
registry, Network Solutions charged registrars $9 per
registration per year until January 15, 2000. Since then,
the fee is $6 per registration per year unless increased to cover
 increases in registry costs under the circumstances described in
 the registry agreement.

We have implemented a system under which we will not accept the
registration of a domain name as a registrar unless we have
received a reasonable assurance of payment of the registration
fee. We are entitled to establish our own prices for registrar
services.

We have implemented modifications to the shared registration
system that enable a registrar to (a) accept registrations
and re-registrations in one-year increments and (b) add one
year to a registrants registration period upon transfer of
a registration from one registrar to another. The unexpired term
of any registration may not exceed ten years. We are
contractually obligated to provide equivalent access to the
shared registration system to all ICANN-accredited registrars and
 to ensure that the revenues and assets of the registry are not
utilized to advantage our registrar to the detriment of other
registrars. We have agreed to and implemented an organizational
conflict of interest compliance plan that includes
organizational, physical and procedural safeguards in connection
with these obligations.

The term of the registry agreement extends until November 9,
 2003, except that in the event that we effect the legal
separation of the ownership of our registry business from our
registrar business by May 9, 2001 as described in the
agreement, the term will be extended until November 9, 2007.
 Please see Item 1 Business  Ongoing
Privatization of Internet Administration on page 8 herein.

28



---



##### Table of Contents



We have agreed to pay annual fees to ICANN as set by ICANN at
levels currently not to exceed $2 million for our registrar
and $250,000 for our registry.

Internet Technology Services

Substantially all of Network Solutions Internet technology
services revenue is derived from professional services which are
generally provided to clients on a time and expense basis and is
recognized as services are performed.

The majority of Network Solutions Internet technology
services are provided to customers in the financial services
industry. Bank of America, formerly NationsBanc, is currently
Network Solutions largest Internet technology services
client, accounting for 51.4% of Network Solutions Internet
technology services business net revenue and 2.6% of Network
Solutions total net revenue during the year ended
December 31, 1999. NationsBanc originally contracted with
Network Solutions in 1993 and Network Solutions currently
provides network design and engineering services as well as a
variety of project specific services under the contract.

Results of Operations

The following table sets forth, for the periods indicated, the
percentage relationship to net revenue of certain items in
Network Solutions Statements of Operations.

|                                             |  |                         |       |      |  |      |       |   |  |  |       |  
|-------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                             |  |                        
|                                             |  | Year Ended December 31,
|                                             |  |                        
|                                             |  | 1997                    |       | 1998 |  | 1999
|                                             |  |                         |       |      |  |     
|Percentage of net revenue:                   |  |                         |       |      |  |      |       |   |  |  |       |  
|                                            
|                                            
|                                            
|                                            
|Net revenue                                  |  |                         | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                                            
|                                            
|                                            
|                                            
|Cost of revenue                              |  |                         | 56.9  |      |  |      | 41.1  |   |  |  | 37.0  |  
|                                             |  |                         |       |      |  |      |       |   |  |  |       |  
|Gross profit                                 |  |                         | 43.1  |      |  |      | 58.9  |   |  |  | 63.0  |  
|                                            
|                                            
|                                            
|                                            
|Research and development expenses            |  |                         | 3.6   |      |  |      | 5.1   |   |  |  | 5.0   |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |  |                         | 27.1  |      |  |      | 39.7  |   |  |  | 41.9  |  
|                                            
|                                            
|                                            
|                                            
|Interest income and other expense, net       |  |                         | (4.6  | )    |  |      | (6.6  | ) |  |  | (4.5  | )
|                                             |  |                         |       |      |  |      |       |   |  |  |       |  
|Income before income taxes                   |  |                         | 17.0  |      |  |      | 20.7  |   |  |  | 20.6  |  
|                                            
|                                            
|                                            
|                                            
|Provision for income taxes                   |  |                         | 7.7   |      |  |      | 8.7   |   |  |  | 8.4   |  
|                                             |  |                         |       |      |  |      |       |   |  |  |       |  
|Net income                                   |  |                         | 9.3   | %    |  |      | 12.0  | % |  |  | 12.2  | %
|                                             |  |                         |       |      |  |      |       |   |  |  |       |  

Comparison of Year Ended December 31, 1998 and 1999

Net Revenue

Net revenue increased 136% from $93.7 million for the year
ended December 31, 1998 to $220.8 million for the year
ended December 31, 1999. This increase in net revenue was
primarily attributable to the increase in the number of domain
name registrations, principally in the .comtop level
domain. Net revenue from registration services increased 144%
from $85.7 million for the year ended December 31, 1998
 to $209.5 million for the year ended December 31,
1999.

Net new registrations for Network Solutions registrar
services, or NSI registrar, during the year ended
December 31, 1999 were 5,037,000 as compared to 1,911,000
during the year ended December 31, 1998, an increase of
164%. Due in part to the addition of nearly 40 international
partners, 1,543,000, or 31%, of net new registrations were
international registrations for the year ended December 31,
1999. This is an increase in international registrations of 190%
over the 532,000 net

29



---



##### Table of Contents



.com, .net .org


Growth in net registrations continues to be driven by the
widespread use and adoption by businesses of the Internet and
intranets on a global basis. Cumulative net registrations for the
 NSI registrar as of December 31, 1998 were 3,362,000 as
compared to 8,055,000 as of December 31, 1999, for a 140%
increase.

Net revenue from Internet technology services increased 41% from
$8.0 million for the year ended December 31, 1998 to
$11.3 million for the year ended December 31, 1999.
This was primarily attributable to an increase in business from
Bank of America and other financial services customers.

Cost of Revenue

Cost of revenue consists primarily of salaries and employee
benefits, fees paid to subcontractors for work performed in
connection with revenue producing projects, depreciation and
equipment costs, lease costs of the operations infrastructure and
 the associated operating overhead. Cost of revenue increased
112% from $38.5 million for the year ended December 31,
 1998 to $81.6 million for the year ended December 31,
1999. This increase was driven by a $12.9 million increase in
outsourcing costs, $11.0 million in additional depreciation
charges and equipment expenditures and additional direct labor
charges of $11.7 million related to systems engineering and
operations primarily associated with supporting the growth of
Network Solutions registration services business. As a
percentage of net revenue, cost of revenue decreased from 41.1%
for the year ended December 31, 1998 to 37.0% for the year
ended December 31, 1999. Network Solutions expects to
realize certain increased economies of scale while the cost of
revenue will increase in terms of absolute dollars as we continue
 to enhance and improve the infrastructure supporting our new and
 future product and service offerings, customer service
capabilities and growing cumulative net registration base.

Research and Development Expenses

Research and development expenses consist primarily of
compensation expenses to support the creation, development and
enhancement of Network Solutions products and technologies.
 Research and development expenses increased 128% from
$4.8 million for the year ended December 31, 1998 to
$11.0 million for the year ended December 31, 1999. As
a percentage of net revenue, research and development expenses
decreased from 5.1% for the year ended December 31, 1998 to
5.0% for the year ended December 31, 1999. Network Solutions
 expects that research and development expenses will continue to
increase in the near future in absolute dollars as Network
Solutions invests in developing new product and service
offerings.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of
 salaries of business development, general management,
administrative and financial personnel, marketing expenses, legal
 and other professional costs. Selling, general and
administrative expenses increased 149% from $37.1 million
for the year ended December 31, 1998 to $92.5 million
for the year ended December 31, 1999. This increase was
primarily attributable to a $25.2 million increase in
advertising and promotion expenses including Internet banner
advertising and targeted direct mail campaigns, increased
staffing expenses of $10.4 million and an increase of other
professional costs of $9.5 million. As a percentage of net
revenue, selling, general and administrative expenses increased
from 39.7% for the year ended December 31, 1998 to 41.9% for
 the year ended December 31, 1999.

30



---



##### Table of Contents



Network Solutions expects that the level of selling, general and
administrative expenses will continue to increase significantly
in the near future as operations continue to expand. In
particular, sales, marketing and business development expenses
will increase as NSI registrar continues to promote the value of
 .comweb addresses and new value-added services including
web site design and enhanced value added service offerings. NSI
registrar also plans to continue to develop and enhance its
extensive partner and distribution channels, both domestically
and internationally in light of the new competitive environment.

Interest Income

Network Solutions had net interest income of $6.3 million
for the year ended December 31, 1998 as compared to
$9.9 million for the year ended December 31, 1999. The
increase is attributable to the investment of cash generated from
 operating activities.

Income Taxes

The provision for income taxes was 42% of pre-tax earnings or
$8.1 million for the year ended December 31, 1998, and
41% or $18.7 million for the year ended December 31,
1999. The difference between the effective rates and the
statutory rate is principally attributable to the relative impact
 that non-deductible goodwill had on pretax operating income.
Goodwill is being amortized by Network Solutions over five years
and is primarily associated with the acquisition of Network
Solutions by SAIC in 1995 and the acquisition of ImageCafe by
Network Solutions in 1999.

Comparison of Years Ended December 31, 1997 and 1998

Net Revenue

Net revenue increased 107% from $45.3 million for the year
ended December 31, 1997 to $93.7 million for the year
ended December 31, 1998. This increase in net revenue was
primarily attributable to the increase in the number of domain
name registrations, principally in the .comtop level
domain. Net revenue from registration services increased 121%
from $38.8 million for the year ended December 31, 1997
 to $85.7 million for the year ended December 31, 1998.
 Net new registrations increased 99% from 960,000 for the year
ended December 31, 1997 to 1,911,000 for the year ended
December 31, 1998. Growth in net registrations continues to
be driven by the widespread use and adoption by businesses of the
 Internet and intranets on a global basis. Cumulative net
registrations as of December 31, 1997 were 1,541,000 as
compared to 3,362,000 as of December 31, 1998 for a 118%
increase.

Net revenue from Internet technology services increased 22% from
$6.5 million for the year ended December 31, 1997 to
$8.0 million for the year ended December 31, 1998.
Further, the fourth quarter reflected an increase of 117% over
the same quarter last year and a 47% increase over the third
quarter of 1998. NationsBanc accounted for $1.9 million or
4% of Network Solutions total net revenue for the year
ended December 31, 1997 and $3.2 million or 3% for the
year ended December 31, 1998.

During the year ended December 31, 1998, the Internet
technology services division added new leadership in sales and
operations and hired additional technical consultants. In
addition, the division continued to emphasize its efforts
targeted at lead generation and regional sales and marketing
programs by opening offices in New York City and Atlanta,
Georgia.

Cost of Revenue

Cost of revenue increased from $25.8 million for the year
ended December 31, 1997 to $38.5 million for the year
ended December 31, 1998. This 49% increase was driven by a
$3.0 million

31



---



##### Table of Contents





As a percentage of net revenue, cost of revenue decreased from
56.9% for the year ended December 31, 1997 to 41.1% for the
year ended December 31, 1998 principally reflecting
economies of scale and other operational efficiencies achieved in
 Network Solutions registration business.

Research and Development Expenses

Research and development expenses increased 192% from
$1.7 million for the year ended December 31, 1997 to
$4.8 million for the year ended December 31, 1998. As a
 percentage of net revenue, research and development expenses
increased from 3.6% for the year ended December 31, 1997 to
5.1% for the year ended December 31, 1998.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 203% from
$12.3 million for the year ended December 31, 1997 to
$37.1 million for the year ended December 31, 1998. The
 increase was attributable to a $16.9 million increase in
marketing and business development expenses including television,
 Internet banner advertising and targeted direct mail campaigns,
increased staffing expenses of $1.8 million and an increase
in legal and other professional costs of $2.6 million. As a
percentage of net revenue, selling, general and administrative
expenses increased from 27.1% for the year ended
December 31, 1997 to 39.7% for the year ended
December 31, 1998.

Interest Income

Network Solutions had net interest income of $2.2 million
for the year ended December 31, 1997 as compared to
$6.3 million for the year ended December 31, 1998. The
increase is attributable to the investment of the positive cash
flow resulting primarily from increasing domain name
registrations and the net proceeds of Network Solutions
initial public offering.

Income Taxes

The provision for income taxes was 45% of pretax earnings, or
$3.5 million for the year ended December 31, 1997, and
42%, or $8.1 million for the year ended December 31,
1998. The difference between the effective rates for both periods
 presented is principally attributable to the relative impact
that non-deductible goodwill had on pretax operating income.
Goodwill is being amortized by Network Solutions over five years
and is associated with the acquisition of Network Solutions by
SAIC in 1995.

Selected Quarterly Results of Operations

The following tables set forth certain unaudited quarterly
financial information for each of the eight quarters in the
period ended December 31, 1999. In the opinion of
management, this information has been presented on the same basis
 as the audited financial statements appearing elsewhere and
incorporated by reference in this Form 10-K, and all
necessary adjustments (consisting only of normal recurring
adjustments) have been included in the amounts stated below to
present fairly the unaudited quarterly results when read in
conjunction with the audited financial statements of Network
Solutions and notes thereto. Interest income shown in the table
below is net of other

32



---



##### Table of Contents





|                                             |  |                |        |          |  |           |        |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |        |   |  |   |        |  
|-------------------------------------------- |  | -------------- | ------ | -------- |  | --------- | ------ | -------- |  | -------- | ------ | -------- |  | --------- | ------ | -------- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                             |  |               
|                                             |  | Quarter Ended 
|                                             |  |               
|                                             |  | Mar. 31,       |        | June 30, |  | Sept. 30, |        | Dec. 31, |  | Mar. 31, |        | June 30, |  | Sept. 30, |        | Dec. 31,
|                                             |  | 1998           |        | 1998     |  | 1998      |        | 1998     |  | 1999     |        | 1999     |  | 1999      |        | 1999    
|                                             |  |                |        |          |  |           |        |          |  |          |        |          |  |           |        |         
|                                             |  |               
|                                             |  | (In thousands)
|                                            
|                                            
|                                            
|                                            
|Net revenue                                  |  | $              | 16,492 |          |  | $         | 20,476 |          |  | $        | 25,427 |          |  | $         | 31,257 |          |  | $ | 38,132 |   |  | $ | 47,499 |   |  | $ | 59,254 |   |  | $ | 75,926 |  
|                                            
|                                            
|                                            
|                                            
|Cost of revenue                              |  |                | 7,348  |          |  |           | 8,791  |          |  |          | 10,312 |          |  |           | 12,079 |          |  |   | 14,541 |   |  |   | 17,711 |   |  |   | 21,788 |   |  |   | 27,566 |  
|                                             |  |                |        |          |  |           |        |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |        |   |  |   |        |  
|Gross profit                                 |  |                | 9,144  |          |  |           | 11,685 |          |  |          | 15,115 |          |  |           | 19,178 |          |  |   | 23,591 |   |  |   | 29,788 |   |  |   | 37,466 |   |  |   | 48,360 |  
|                                            
|                                            
|                                            
|                                            
|Research and development expenses            |  |                | 725    |          |  |           | 815    |          |  |          | 1,353  |          |  |           | 1,928  |          |  |   | 2,035  |   |  |   | 2,460  |   |  |   | 2,870  |   |  |   | 3,624  |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |  |                | 6,182  |          |  |           | 8,008  |          |  |          | 10,248 |          |  |           | 12,706 |          |  |   | 15,265 |   |  |   | 19,395 |   |  |   | 24,921 |   |  |   | 32,936 |  
|                                            
|                                            
|                                            
|                                            
|Interest income                              |  |                | (1,292 | )        |  |           | (1,384 | )        |  |          | (1,654 | )        |  |           | (1,857 | )        |  |   | (1,911 | ) |  |   | (1,912 | ) |  |   | (2,444 | ) |  |   | (3,609 | )
|                                             |  |                |        |          |  |           |        |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |        |   |  |   |        |  
|Income before income taxes                   |  |                | 3,529  |          |  |           | 4,246  |          |  |          | 5,168  |          |  |           | 6,401  |          |  |   | 8,202  |   |  |   | 9,845  |   |  |   | 12,119 |   |  |   | 15,409 |  
|                                            
|                                            
|                                            
|                                            
|Provision for income taxes                   |  |                | 1,480  |          |  |           | 1,783  |          |  |          | 2,163  |          |  |           | 2,683  |          |  |   | 3,404  |   |  |   | 4,050  |   |  |   | 4,841  |   |  |   | 6,394  |  
|                                             |  |                |        |          |  |           |        |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |        |   |  |   |        |  
|Net income                                   |  | $              | 2,049  |          |  | $         | 2,463  |          |  | $        | 3,005  |          |  | $         | 3,718  |          |  | $ | 4,798  |   |  | $ | 5,795  |   |  | $ | 7,278  |   |  | $ | 9,015  |  
|                                             |  |                |        |          |  |           |        |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |        |   |  |   |        |  

|                                             |  |                             |       |          |  |           |       |          |  |          |       |          |  |           |       |          |  |  |       |   |  |  |       |   |  |  |       |   |  |  |       |  
|-------------------------------------------- |  | --------------------------- | ----- | -------- |  | --------- | ----- | -------- |  | -------- | ----- | -------- |  | --------- | ----- | -------- |  |  | ----- | - |  |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|                                             |  |                            
|                                             |  | Quarter Ended              
|                                             |  |                            
|                                             |  | Mar. 31,                    |       | June 30, |  | Sept. 30, |       | Dec. 31, |  | Mar. 31, |       | June 30, |  | Sept. 30, |       | Dec. 31,
|                                             |  | 1998                        |       | 1998     |  | 1998      |       | 1998     |  | 1999     |       | 1999     |  | 1999      |       | 1999    
|                                             |  |                             |       |          |  |           |       |          |  |          |       |          |  |           |       |         
|                                             |  |                            
|                                             |  | (Percentage of net revenue)
|                                            
|                                            
|                                            
|                                            
|Net revenue                                  |  |                             | 100.0 | %        |  |           | 100.0 | %        |  |          | 100.0 | %        |  |           | 100.0 | %        |  |  | 100.0 | % |  |  | 100.0 | % |  |  | 100.0 | % |  |  | 100.0 | %
|                                            
|                                            
|                                            
|                                            
|Cost of revenue                              |  |                             | 44.6  |          |  |           | 42.9  |          |  |          | 40.6  |          |  |           | 38.6  |          |  |  | 38.1  |   |  |  | 37.3  |   |  |  | 36.8  |   |  |  | 36.3  |  
|                                             |  |                             |       |          |  |           |       |          |  |          |       |          |  |           |       |          |  |  |       |   |  |  |       |   |  |  |       |   |  |  |       |  
|Gross profit                                 |  |                             | 55.4  |          |  |           | 57.1  |          |  |          | 59.4  |          |  |           | 61.4  |          |  |  | 61.9  |   |  |  | 62.7  |   |  |  | 63.2  |   |  |  | 63.7  |  
|                                            
|                                            
|                                            
|                                            
|Research and development expenses            |  |                             | 4.4   |          |  |           | 4.0   |          |  |          | 5.3   |          |  |           | 6.1   |          |  |  | 5.3   |   |  |  | 5.2   |   |  |  | 4.8   |   |  |  | 4.8   |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |  |                             | 37.4  |          |  |           | 39.1  |          |  |          | 40.3  |          |  |           | 40.7  |          |  |  | 40.0  |   |  |  | 40.8  |   |  |  | 42.1  |   |  |  | 43.4  |  
|                                            
|                                            
|                                            
|                                            
|Interest income                              |  |                             | (7.8  | )        |  |           | (6.7  | )        |  |          | (6.5  | )        |  |           | (5.9  | )        |  |  | (4.9  | ) |  |  | (4.0  | ) |  |  | (4.2  | ) |  |  | (4.8  | )
|                                             |  |                             |       |          |  |           |       |          |  |          |       |          |  |           |       |          |  |  |       |   |  |  |       |   |  |  |       |   |  |  |       |  
|Income before income taxes                   |  |                             | 21.4  |          |  |           | 20.7  |          |  |          | 20.3  |          |  |           | 20.5  |          |  |  | 21.5  |   |  |  | 20.7  |   |  |  | 20.5  |   |  |  | 20.3  |  
|                                            
|                                            
|                                            
|                                            
|Provision for income taxes                   |  |                             | 9.0   |          |  |           | 8.7   |          |  |          | 8.5   |          |  |           | 8.6   |          |  |  | 8.9   |   |  |  | 8.5   |   |  |  | 8.2   |   |  |  | 8.4   |  
|                                             |  |                             |       |          |  |           |       |          |  |          |       |          |  |           |       |          |  |  |       |   |  |  |       |   |  |  |       |   |  |  |       |  
|Net income                                   |  |                             | 12.4  | %        |  |           | 12.0  | %        |  |          | 11.8  | %        |  |           | 11.9  | %        |  |  | 12.6  | % |  |  | 12.2  | % |  |  | 12.3  | % |  |  | 11.9  | %
|                                             |  |                             |       |          |  |           |       |          |  |          |       |          |  |           |       |          |  |  |       |   |  |  |       |   |  |  |       |   |  |  |       |  

Liquidity and Capital Resources

In February 2000, we received net proceeds of
$511 million following the public offering and sale by us of
 4,319,000 shares of our Common Stock. We intend to use the
net proceeds for general corporate purposes. We may also use a
portion of the proceeds to acquire or invest in businesses,
technologies, product lines or service offerings that are
complementary to our business.

At December 31, 1999, Network Solutions principal
source of liquidity was its cash and cash equivalents of
$196.6 million and its short-term investments of
$112.5 million, which when combined represent an increase of
 $177.4 million from its December 31, 1998 balances in
those accounts. Network Solutions also has $48.6 million of
marketable securities held as long term investments as of
December 31, 1999.

At December 31, 1999, Network Solutions cumulative net
 obligation to SAIC for intercompany activity was
$30.2 million. Intercompany activity is primarily comprised
of salaries and benefits paid by SAIC on behalf of Network
Solutions. Network Solutions currently reimburses SAIC for
intercompany activity on a monthly basis.

33



---



##### Table of Contents



Cash provided by operations was $198.6 million for the year
ended December 31, 1999. This amount is principally
attributed to net income plus the increase in deferred revenue
reflecting cash collected in advance of registration services
revenue recognition which occurs ratably over the registration
term. Partially offsetting this amount is an increase in deferred
 tax assets resulting from accelerated revenue recognition for
tax purposes and the associated tax liabilities, generally paid
on a quarterly basis.

Cash used in investing activities totaled $49.5 million for
the year ended December 31, 1999. Capital expenditures of
$52.8 million and net long-term investment purchases of
$11.7 million were partially offset by the redemption of
$9.5 million of short-term investments. Investments during
the year include a $2.0 million investment in Critical Path,
 a strategic business partner, which subsequently consummated its
 initial public offering during the year. Critical Path provides
outsourced e-mail services in support of Network Solutions
value-added e-mail product offerings. Network Solutions
November acquisition of ImageCafe included $3.9 million of
cash consideration, net of cash acquired. Also during the year, a
 $9.7 million investment was made in RealNames Corporation,
a strategic business partner. RealNames provides an Internet
keyword service that Network Solutions promotes in its
value-added product offerings.

Capital expenditures for the year ended December 31, 1999
were $52.8 million, primarily for computer equipment and
software to support Network Solutions registry and
registrar efforts, as well as costs related to the opening of
Network Solutions new call center. Network Solutions will
continue to invest in the back office infrastructure in advance
of continued growth in domain name registrations including
investments in the shared registration system in accordance with
the agreements between us, the Department of Commerce and ICANN.

Network Solutions believes that its existing cash balance,
investments and cash flows expected from future operations will
be sufficient to meet Network Solutions capital
requirements for at least the next 12 months.

Year 2000 Compliance

Prior to entering the year 2000, or Y2K, we developed
detailed plans for implementing, testing and completing any
necessary modifications to our key computer systems and equipment
 to ensure that they were Y2K compliant. We also developed a
testbed of our U.S. internal systems to implement and complete
testing of the requisite minor changes and completed an inventory
 of our internal systems. Now that we have entered the
year 2000, we have tested our key computer system and, to
date, we have not encountered any material Y2K related
disruptions or failures of our systems or services, nor have we
been notified of any disruptions or failures in the systems of
any of our third parties with whom we deal. There is an ongoing
risk that Y2K related problems could still occur and we will
continue to evaluate these risks. However, we believe that the
Y2K issue will not pose any significant operational problems for
us.




Item 7A.  Quantitative and Qualitative
Disclosures About Market Risk

Network Solutions is exposed to the impact of interest rate and
change in the market values of its investments.

Interest Rate Risk.Network Solutions
exposure to market rate risk for changes in interest rates
relates primarily to our investment portfolio. Network Solutions
has not used derivative financial instruments in its investment
portfolio. Network Solutions invests its excess cash in debt
instruments of the U.S. Government and its agencies, and in
high-quality corporate issuers and, by policy, limits the amount
of credit exposure to any one issuer. We protect and preserve our
 invested funds by limiting default, market and reinvestment
risk.

34



---



##### Table of Contents



Investments in both fixed rate and floating rate interest earning
 instruments carries a degree of interest rate risk. Fixed rate
securities may have their fair market value adversely impacted
due to a rise in interest rates, while floating rate securities
may produce less income than expected if interest rates fall. Due
 in part to these factors, our future investment income may fall
short of expectations due to changes in interest rates or we may
suffer losses in principal if forced to sell securities which
have declined in market value due to changes in interest rates.

Investment Risk.Network Solutions has invested in
the equity instruments of privately-held, information technology
companies for business and strategic purposes. These investments
are included in other long-term assets and are accounted for
under the cost method which approximates fair value.




Item 8.  Financial Statements and Supplementary
 Data

The financial statements required by this item are set forth in a
 separate section of this Annual Report on Form 10-K as
indicated in the Index to Financial Information
appearing on page F-1 and is incorporated herein by
reference.

The supplementary data required by this item are set forth
under the Item 7  Managements
Discussion and Analysis of Financial Condition and Results of
Operation beginning on page 26 herein and are
incorporated herein by reference.






|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
	and Financial Disclosure

None.

PART III




Item 10.  Directors and Executive Officers of
the Registrant

The following is a list of our executive officers and directors
as of March 13, 2000, including all persons nominated or
acting as directors, and a brief summary of their business
experience and certain other information as set forth below:

|                           |  |     |    |          |  |                                                                                        
|-------------------------- |  | --- | -- | -------- |  | ---------------------------------------------------------------------------------------
|Name                       |  | Age |    | Position
|                           |  |     |    |         
|James P. Rutt (1)(4)       |  |     | 46 |          |  | Chief Executive Officer and Director                                                   
|                          
|                          
|                          
|                          
|Michael A. Daniels (2)(4)  |  |     | 54 |          |  | Chairman of the Board and Director                                                     
|                          
|                          
|                          
|                          
|Robert J. Korzeniewski     |  |     | 43 |          |  | Chief Financial Officer                                                                
|                          
|                          
|                          
|                          
|Bruce L. Chovnick          |  |     | 40 |          |  | Senior Vice President and General Manager, Registry Business                           
|                          
|                          
|                          
|                          
|Roger J. Cochetti          |  |     | 49 |          |  | Senior Vice President, Chief Policy Officer                                            
|                          
|                          
|                          
|                          
|Jonathan W. Emery          |  |     | 48 |          |  | Senior Vice President, General Counsel and Secretary                                   
|                          
|                          
|                          
|                          
|David H. Holtzman          |  |     | 43 |          |  | Senior Vice President, Chief Technology Officer                                        
|                          
|                          
|                          
|                          
|Timothy R. Ranney          |  |     | 44 |          |  | Senior Vice President and General Manager, Internet Technology
	Services Business      
|                          
|                          
|                          
|                          
|Douglas L. Wolford         |  |     | 38 |          |  | Senior Vice President and General Manager, Registrar and
	Value-Added Services Business
|                          
|                          
|                          
|                          
|Michael G. Voslow          |  |     | 40 |          |  | Vice President, Finance and Treasurer                                                  
|                          
|                          
|                          
|                          
|Richard A. Walsh           |  |     | 52 |          |  | Vice President, Operations and acting Chief Information Officer                        
|                          
|                          
|                          
|                          
|Alan E. Baratz (1),(2),(3) |  |     | 45 |          |  | Director                                                                               
|                          
|                          
|                          
|                          
|J. Robert Beyster (2)(4)   |  |     | 75 |          |  | Director                                                                               
|                          
|                          
|                          
|                          
|Craig I. Fields (3)(4)     |  |     | 53 |          |  | Director                                                                               

35



---



##### Table of Contents



|                          |  |     |    |          |  |                
|------------------------- |  | --- | -- | -------- |  | ---------------
|Name                      |  | Age |    | Position
|                          |  |     |    |         
|J. Dennis Heipt (2)       |  |     | 57 |          |  | Director       
|                         
|                         
|                         
|                         
|William A. Roper, Jr. (3) |  |     | 54 |          |  | Director       
|                         
|                         
|                         
|                         
|Stratton D. Sclavos (2)   |  |     | 38 |          |  | Director       
|                         
|                         
|                         
|                         
|Donald N. Telage (5)      |  |     | 55 |          |  | Former Director
|                         
|                         
|                         
|                         
|John E. Glancy (5)        |  |     | 53 |          |  | Former Director




|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(1) | Nominee for Director, approved by the Board of Directors, pending
	 shareholder approval.
|   
|(2) | Member of Compensation Committee.                                                        
|   
|(3) | Member of Audit Committee.                                                               
|   
|(4) | Member of Executive Committee.                                                           
|   
|(5) | Former Director, resigned December 21, 1999.                                             

James P. Rutt has served as Chief Executive Officer of
Network Solutions since May 1999 and as a Director of
Network Solutions since July 1999. From 1993 until
May 1999, Mr. Rutt served in various senior management
positions with The Thomson Corporation, one of the worlds
leading information publishing companies, and, most recently, he
served as Chief Technology Officer. Prior to that, Mr. Rutt
was the co-founder of First Call, an investment information
service that was one of the earliest ventures to provide on-line
delivery of complex information products. Mr. Rutt received
a B.S. from the Massachusetts Institute of Technology 
 Sloan School of Management.

Michael A. Daniels has served as Chairman of the Board of
Network Solutions since 1995. From November 1998 to
May 1999, Mr. Daniels served as acting Chief Executive
Officer of Network Solutions. Since 1986, Mr. Daniels has
served in various positions with SAIC and has served as a Sector
Vice President and Sector Manager for the Technology Applications
 Sector of SAIC since 1993. Prior thereto, Mr. Daniels
served as a Group Senior Vice President of SAIC from 1991 to
1993. Mr. Daniels received a B.S. and an M.A. from
Northwestern University and received a J.D. from the University
of Missouri School of Law.

Robert J. Korzeniewski has served as Chief Financial
Officer of Network Solutions since March 1996. From
November 1998 to May 1999, Mr. Korzeniewski served
 as acting Chief Operating Officer of Network Solutions. From
1987 until October 1997, Mr. Korzeniewski held a
variety of senior financial positions with SAIC and served as a
Corporate Vice President for Administration of SAIC from 1989
until 1997. Mr. Korzeniewski is a Certified Public
Accountant and received a B.S. in Business Administration from
Salem State College.

Bruce L. Chovnick has served as Senior Vice President and
General Manager, Registry Business of Network Solutions since
August 1999 and Senior Vice President and General Manager,
Internet Technology Services Business of Network Solutions from
September 1997 to August 1999. From October 1993
until September 1997, Mr. Chovnick served in various
executive leadership roles with General Electric Information
Services, Inc., an electronic commerce company, and, most
recently, he served as Vice President of its Global Internet
Solutions business. Prior to that he was a Senior Manager of IBM
Corporation, a computer systems, software, networking systems and
 storage devices manufacturer, from January 1984 to
September 1993. Mr. Chovnick received a B.S. in
Computer Science from the University of Florida.

Roger J. Cochetti has served as Senior Vice President and
Chief Policy Officer of Network Solutions since
February 2000. From January 1994 until December 1999,
Mr. Cochetti served in various prominent management and
policy positions with IBM, a computer systems, software,
networking systems and storage devices manufacturer. From 1982 to
 1993, Cochetti served at the Communications Satellite
Corporation (COMSAT) both as vice president of Mobile
Business Development and as Director of Investor and Public
Relations. He is the author of numerous articles

36



---



##### Table of Contents





Jonathan W. Emery has served as Senior Vice President,
General Counsel and Secretary of Network Solutions since
December 1997. From 1986 until 1997, Mr. Emery held a
variety of positions with Tambrands Inc., a consumer products
company, most recently as Vice President, Senior Counsel and
Assistant Secretary. Prior thereto, from 1977 until 1986,
Mr. Emery was an associate with the law firm of Brown &
Wood. Mr. Emery received a B.A. from Trinity College,
Hartford, Connecticut, and a J.D. from Boston University School
of Law.

David H. Holtzman has served as Senior Vice President,
Chief Technology Officer of Network Solutions since
August 1999 and Senior Vice President, Engineering from
February 1997 to August 1999. From September 1995
until January 1997, he served as Business Development
Manager, Development Manager and Chief Scientist, Internet
Information Technology (InfoMarket) group of IBM Corporation, a
computer systems, software, networking systems and storage
devices manufacturer. From May 1992 to August 1995, he
served as a Senior Associate at Booz-Allen & Hamilton, a
management consulting firm. Mr. Holtzman received a B.A. in
Philosophy from the University of Pittsburgh and a B.S. in
Computer Science from the University of Maryland.

Timothy R. Ranney has served as Senior Vice President and
General Manager of the Internet Technology Services Business of
Network Solutions since September 1999. From February 1998
to September 1999, Mr. Ranney served as Director, then
Vice President of the Southeast Region, Internet Technology
Services of Network Solutions. Prior to joining Network
Solutions, Mr. Ranney was Vice President, Sales for
Distributed Systems Management, a consulting and software
development firm, from September 1997 to January 1998
and President of Unix Integration Services, a consulting and
software development firm, from March 1990 to August 1997.
Mr. Ranney received a B.S. in Business Administration from
Bemidji State University in Minnesota.

Douglas L. Wolford has served as Senior Vice President and
 General Manager, Registrar and Value-Added Services Business
since August 1999 and Senior Vice President, Marketing and
Sales of Network Solutions from December 1997 until
August 1999. From December 1994 to November 1997,
Mr. Wolford was employed by General Electric Information
Services, Inc., an electronic commerce company, during which
tenure he progressed to the position of General
Manager  Marketing (Americas). From March 1989 to
 December 1994 he was employed by the National Academy of
Engineering, most recently as Director, Development and Public
Affairs. Mr. Wolford received a B.S. in Mechanical
Engineering from North Carolina State University, a Certificat de
 Langue Francaise from Sorbonne University and an M.B.A. in
Marketing from the University of Maryland.

Michael G. Voslow has served as Vice President, Finance
and Treasurer since March 1998 and as Treasurer of Network
Solutions since January 1997. From January 1995 to
January 1997, Mr. Voslow was Vice President and
Corporate Controller for MAXM Systems Corporation, a worldwide
provider of computer software and professional services. Prior to
 joining MAXM, Mr. Voslow was a Senior Manager at Price
Waterhouse where he served from August 1983 to January 1995.
 Mr. Voslow is a Certified Public Accountant and received a
B.S. in Business Administration from Miami University (Ohio) and
an M.B.A. in Finance from Duke University.

Richard A. Walsh has served as acting Chief Information
Officer since August 1999, Vice President, Operations of Network
Solutions since March 1999 and Director, Operations Support
from July 1997 to March 1999. From September 1995
to July 1997, Mr. Walsh was self employed and provided
operation support consulting services to various large scale
information technology operations. Prior to that Mr. Walsh
held several executive management positions at Sprint
International, a provider of global telecommunications services,
from August 1991 to September 1995.

37



---



##### Table of Contents





Alan E. Baratz has served as a director of Network
Solutions since September 1999. Since September 1999,
Dr. Baratz has served as a Managing Director of E.M.
Warburg, Pincus & Co., LLC, a private equity investment
firm. Prior to joining Warburg, Pincus & Co., from 1996
to August 1999 Dr. Baratz served in various senior
management positions with Sun Microsystems, a provider of
products, services and support solutions for building and
maintaining network computing environments, most recently as
President of Sun Microsystems Software Products and
Platforms division. Prior to joining Sun Microsystems,
Dr. Baratz served as President and Chief Executive Officer
of Delphi Internet, the online business unit of Rupert
Murdochs News Corp from June 1994 to 1995.

J.  Robert Beyster has served as a director of
Network Solutions since 1996. Since 1998, Dr. Beyster has
been the Chief Executive Officer, President and Chairman of the
Board of SAIC, a company he founded in 1969. From 1988 to 1998,
Dr. Beyster was Chief Executive Officer and Chairman of the
Board of SAIC. Dr. Beyster is also the Chairman of the Board
 of SAIC Venture Capital Corporation. Dr. Beyster is a
Fellow of the American Nuclear Society and a Fellow of the
American Physical Society. Dr. Beyster is also the founder,
President and a member of the Board of Trustees of the Foundation
 for Enterprise Development, a nonprofit organization that
promotes employee ownership.

Craig I. Fields has served as a director of Network
Solutions since 1997. Dr. Fields has served as Chairman of
the Defense Science Board since 1994. Dr. Fields has served
as a consultant to several companies, including as a consultant
to SAIC since 1994. Prior thereto, Dr. Fields served as Vice
 Chairman of Alliance Gaming Corporation, a diversified
entertainment company, from 1994 to 1997. From 1990 until 1994,
Dr. Fields served as Chairman and Chief Executive Officer of
 the Microelectronics and Computer-Technology Corporation, a
privately held research and development consortium.
Dr. Fields serves as a director of ENSCO International
Incorporated and Firearms Training Systems, Inc.

J. Dennis Heipt has served as a director of Network
Solutions since February 1998. Mr. Heipt has served as
Executive Vice President of SAIC since October 1999 and as
Corporate Secretary since 1984. Mr. Heipt has held various
positions with SAIC since 1979, including Senior Vice President
for Administration from 1984 to October 1999. Mr. Heipt
 is also a director of SAIC Venture Capital Corporation.

William A. Roper, Jr.has served as a director of Network
Solutions since 1996. Mr. Roper has served as Executive Vice
 President of SAIC since October 1999 and as Chief Financial
 Officer since 1990. Mr. Roper served as Senior Vice
President of SAIC from 1990 to October 1999. Mr. Roper
also serves as a director of SAIC Venture Capital Corporation,
ODS Networks, Inc. and Daleen Technologies, Inc.

Stratton D. Sclavos has served as a director of Network
Solutions since 1997. Mr. Sclavos has served as President,
Chief Executive Officer and director of VeriSign, Inc., a leading
 provider of trust services and digital certificate solutions,
since 1995. From 1993 until 1995, Mr. Sclavos served as Vice
 President of Worldwide Marketing and Sales for Taligent, Inc., a
 joint venture of Apple Computer, Inc., IBM Corporation and The
Hewlett-Packard Company, Inc. From 1992 until 1993,
Mr. Sclavos served as Vice President of Worldwide Sales and
Business Development for GO Corporation, a mobile computing
company. From 1988 until 1993, Mr. Sclavos served in various
 executive positions with MIPS Computers Systems. Mr. Sclavos
also serves as a director of Keynote Systems and Marimba Inc.

38



---



##### Table of Contents



Compliance With Section 16(a) of the Securities Exchange
Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires certain officers, directors, and beneficial
owners of more than ten percent of our Common Stock to file
reports of ownership and changes in their ownership of our equity
 securities with the Securities and Exchange Commission. Based
solely on a review of the reports and representations furnished
to us during the last fiscal year, we believe that each of these
persons is in compliance with all applicable filing requirements.




Item 11.  Executive Compensation

Summary Compensation Table

The following table sets forth information regarding the annual
and long-term compensation for services in all capacities to
Network Solutions for the fiscal years ended December 31,
1999, 1998 and 1997, awarded, paid to or earned by those persons
who were, at December 31, 1999 (i) the chief executive
officer, or acting chief executive officer during the year ended
December 31, 1999, (ii) the other four most highly
compensated executive officers of Network Solutions, and
(iii) an individual for whom disclosure in (ii) would
have been provided, but for the fact that the individual was not
serving as an executive officer at the fiscal year ended
December 31, 1999 (collectively, the Named Executive
Officers).

Summary Compensation Table

|                                       |  |      |      |              |  |              |         |            |  |           |         |              |  |  |         |  |  |  |           |  |  |  |         |    
|-------------------------------------- |  | ---- | ---- | ------------ |  | ------------ | ------- | ---------- |  | --------- | ------- | ------------ |  |  | ------- |  |  |  | --------- |  |  |  | ------- | ---
|                                       |  |      |      |              |  |              |         |            |  |          
|                                       |  |      |      |              |  |              |         | Long-Term  |  |          
|                                       |  |      |      |              |  | Compensation |         |           
|                                       |  |      |      | Annual       |  |              |         |           
|                                       |  |      |      | Compensation |  | Restricted   |         | Securities |  |          
|                                       |  |      |      |              |  | Stock        |         | Underlying |  | All Other
|                                       |  |      |      | Salary       |  | Bonus        |         | Awards     |  | Options   |         | Compensation
|Name and Principal Position            |  | Year |      | ($)(1)(2)    |  | ($)          |         | ($)(3)     |  | (#)(4)    |         | ($)(5)      
|                                       |  |      |      |              |  |              |         |            |  |           |         |             
|James P. Rutt (6)                      |  |      | 1999 |              |  |              | 208,654 |            |  |           | 350,000 |              |  |  | 448,000 |  |  |  | 1,500,000 |  |  |  |        |    
|Chief Executive Officer                |  |      |      |              |  |              |         |            |  |           |         |              |  |  |         |  |  |  |           |  |  |  |         |    
|                                      
|                                      
|                                      
|                                      
|Michael A. Daniels (6)                 |  |      | 1999 |              |  |              |        |            |  |           |        |              |  |  |        |  |  |  | 34,000    |  |  |  |        |    
|Former Acting Chief Executive Officer, |  |      | 1998 |              |  |              |        |            |  |           |        |              |  |  |        |  |  |  | 20,000    |  |  |  |        |    
|Chairman of the Board                  |  |      |      |              |  |              |         |            |  |           |         |              |  |  |         |  |  |  |           |  |  |  |         |    
|                                      
|                                      
|                                      
|                                      
|Robert J. Korzeniewski                 |  |      | 1999 |              |  |              | 198,599 |            |  |           | 93,000  |              |  |  |        |  |  |  | 50,000    |  |  |  | 13,728  |    
|Chief Financial Officer                |  |      | 1998 |              |  |              | 165,462 |            |  |           | 90,000  |              |  |  |        |  |  |  | 72,000    |  |  |  | 14,880  |    
|                                       |  |      | 1997 |              |  |              | 148,077 |            |  |           | 60,000  |              |  |  |        |  |  |  |          |  |  |  | 12,945  |    
|                                      
|                                      
|                                      
|                                      
|Jonathan W. Emery (7)                  |  |      | 1999 |              |  |              | 186,129 |            |  |           | 80,850  |              |  |  |        |  |  |  | 30,000    |  |  |  | 11,528  |    
|Senior Vice President, General Counsel |  |      | 1998 |              |  |              | 181,731 |            |  |           | 40,000  |              |  |  |        |  |  |  | 12,000    |  |  |  | 148,847 | (8)
|and Secretary                          |  |      | 1997 |              |  |              |        |            |  |           |        |              |  |  |        |  |  |  | 120,000   |  |  |  |        |    
|                                      
|                                      
|                                      
|                                      
|Douglas L. Wolford (9)                 |  |      | 1999 |              |  |              | 168,654 |            |  |           | 90,000  |              |  |  |        |  |  |  | 120,000   |  |  |  | 13,711  |    
|Senior Vice President and General      |  |      | 1998 |              |  |              | 155,770 |            |  |           | 75,000  |              |  |  |        |  |  |  | 32,000    |  |  |  |        |    
|Manager, Registrar and Value-Added     |  |      | 1997 |              |  |              | 2,885   |            |  |           |        |              |  |  |        |  |  |  | 240,000   |  |  |  |        |    
|Services Business                      |  |      |      |              |  |              |         |            |  |           |         |              |  |  |         |  |  |  |           |  |  |  |         |    
|                                      
|                                      
|                                      
|                                      
|Bruce L. Chovnick (10)                 |  |      | 1999 |              |  |              | 182,741 |            |  |           | 56,350  |              |  |  |        |  |  |  | 34,000    |  |  |  | 15,140  |    
|Senior Vice President,                 |  |      | 1998 |              |  |              | 181,730 |            |  |           | 65,000  |              |  |  |        |  |  |  | 20,000    |  |  |  |        |    
|General Manager, Registry Business     |  |      | 1997 |              |  |              | 39,038  |            |  |           | 72,000  |              |  |  |        |  |  |  | 400,000   |  |  |  |        |    
|                                      
|                                      
|                                      
|                                      
|Donald N. Telage (11)                  |  |      | 1999 |              |  |              | 191,962 |            |  |           | 77,200  |              |  |  |        |  |  |  | 34,000    |  |  |  | 13,994  |    
|Former Senior Vice President,          |  |      | 1998 |              |  |              | 188,999 |            |  |           | 85,000  | (12)         |  |  |        |  |  |  | 48,000    |  |  |  | 15,293  |    
|Internet Relations and                 |  |      | 1997 |              |  |              | 173,462 |            |  |           | 67,500  | (2)          |  |  |        |  |  |  |          |  |  |  | 14,867  |    
|Special Programs                       |  |      |      |              |  |              |         |            |  |           |         |              |  |  |         |  |  |  |           |  |  |  |         |    




| |     |                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | In accordance with the rules of the SEC, the compensation
	described in this table does not include medical, group life
	insurance or other benefits received by the Named Executive

39



---



##### Table of Contents



| |  |                                                                                                                                                                                                                                                                                                         
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Officers which are available generally to all salaried employees
	of Network Solutions, and certain perquisites and other personal
	benefits received by the Named Executive Officers which do not
	exceed the lesser of $50,000 or 10% of any such officers
	salary and bonus disclosed in this table.



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Includes, where applicable, amounts electively deferred by each
	above-Named Executive Officer under the Network Solutions 401(k)
	Retirement Plan SAICs Cash or Deferred Arrangement,
	SAICs Key Executive Stock Deferral Plan and the Network
	Solutions Employee Stock Purchase Plan.                                                                                                                                                                                                                                                       
|
| | (3) | Mr. Rutt, pursuant to his offer letter with Network
	Solutions, was granted 14,000 stock units at $32.00 a share under
	 the Network Solutions 1996 Stock Incentive Plan, as amended, to
	vest at the rate of 30%, 30%, 20% and 20% of the shares on each
	of the first, second, third and fourth year anniversaries of the
	date of grant, respectively, unless Mr. Rutt is terminated
	for any reason other than cause or non-performance of if
	Mr. Rutt terminates his employment for good reason, then
	10,000 stock units will vest in full.
|
| | (4) | Represents options granted to acquire shares of Network
	Solutions Common Stock in each given year. All options
	reflect the two-for-one split on March 10, 2000.                                                                                                                                                                                                                                                                                                                                                                                
|
| | (5) | Amounts listed in this column reflect amounts, where applicable,
	contributed by Network Solutions for the Named Executive Officers
	 under SAICs Cash or Deferred Arrangement (exclusive of
	amounts deferred at the election of the Named Executive Officer),
	 Network Solutions 401(k) Retirement Plan (exclusive of amounts
	deferred at the election of the Named Executive Officer),
	Relocation Expense Reimbursement, SAICs Profit Sharing Plan
	 and SAICs Employee Stock Retirement Plan.                                           
|
| | (6) | James P. Rutt was elected Chief Executive Officer in
	May 1999. Mr. Rutts annual salary for 1999 would
	have been $350,000. Prior to that from November 1998 to
	May 1999, Michael A. Daniels assumed the position of
	Acting Chief Executive Officer. Mr. Daniels is an employee
	of SAIC and received no compensation from Network Solutions in
	1998 or 1999.                                                                                                                                                                                 
|
| | (7) | Jonathan W. Emery joined Network Solutions in late
	December 1997. Mr. Emery did not accrue or receive any
	compensation from Network Solutions in 1997.                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (8) | Represents amounts paid to Mr. Emery as compensation for
	relocation expenses, including a partial gross-up for tax
	purposes.                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (9) | Douglas L. Wolford joined Network Solutions in
	December 1997. Mr. Wolfords annual salary for
	1997 would have been $150,000.                                                                                                                                                                                                                                                                                                                                                                                                                    



|     |                                                                                                                                                                                              
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Bruce L. Chovnick joined Network Solutions in
	October 1997. Mr. Chovnicks annual salary for
	1997 would have been $175,000.                                                                
|    
|(11) | Donald N. Telage resigned as Senior Vice President of
	Internet Relations and Special Programs of Network Solutions in
	December  1999. Mr. Telage remains an employee of
	Network Solutions.
|    
|(12) | Represents accounts paid to Mr. Telage as deferred bonus
	compensation payable pursuant to the terms of SAICs Key
	Executive Stock Deferral Plan.                                           

40



---



##### Table of Contents



The following table sets forth certain information regarding
options granted during the fiscal year ended December 31,
1999 to the Named Executive Officers.

Option Grants In Last Fiscal Year

|                       |  |                   |         |              |  |                      |       |            |  |                  |        |        |  |  |            |  |  |  |           |  |  |  |            | 
|---------------------- |  | ----------------- | ------- | ------------ |  | -------------------- | ----- | ---------- |  | ---------------- | ------ | ------ |  |  | ---------- |  |  |  | --------- |  |  |  | ---------- | 
|                       |  |                   |         |              |  |                      |       |           
|                       |  | Individual Grants |         |              |  |                     
|                       |  |                   |         |              |  | Potential Realizable
|                       |  |                   |         | Percent of   |  |                      |       |            |  | Value at Assumed
|                       |  | Number of         |         | Total        |  |                      |       |            |  | Annual Rates of 
|                       |  | Securities        |         | Options      |  |                      |       |            |  | Stock Price     
|                       |  | Underlying        |         | Granted to   |  | Exercise             |       |            |  | Appreciation for
|                       |  | Options           |         | Employees in |  | or Base              |       |            |  | Option Term(4)  
|                       |  | Granted           |         | Fiscal Year  |  | Price                |       | Expiration |  |                 
|Name                   |  | (#)(1)            |         | (%)(2)       |  | ($/Share)(3)         |       | Date       |  | 5%($)            |        | 10%($)
|                       |  |                   |         |              |  |                      |       |            |  |                  |        |       
|James P. Rutt (5)      |  |                   | 750,000 |              |  |                      | 16.27 |            |  |                  | 32.000 |        |  |  | 05/20/2004 |  |  |  | 6,630,758 |  |  |  | 14,652,240 | 
|                       |  |                   | 750,000 |              |  |                      | 16.27 |            |  |                  | 28.094 |        |  |  | 06/06/2004 |  |  |  | 5,821,391 |  |  |  | 12,863,751 | 
|                      
|                      
|                      
|                      
|Michael A. Daniels (6) |  |                   | 34,000  |              |  |                      | 0.74  |            |  |                  | 46.000 |        |  |  | 04/20/2004 |  |  |  | 432,104   |  |  |  | 954,837    | 
|                      
|                      
|                      
|                      
|Robert J. Korzeniewski |  |                   | 50,000  |              |  |                      | 1.08  |            |  |                  | 46.000 |        |  |  | 04/20/2004 |  |  |  | 635,447   |  |  |  | 1,404,173  | 
|                      
|                      
|                      
|                      
|Jonathan W. Emery      |  |                   | 30,000  |              |  |                      | 0.65  |            |  |                  | 46.000 |        |  |  | 04/20/2004 |  |  |  | 190,634   |  |  |  | 421,251    | 
|                      
|                      
|                      
|                      
|Douglas L. Wolford     |  |                   | 40,000  |              |  |                      | 0.87  |            |  |                  | 46.000 |        |  |  | 04/20/2004 |  |  |  | 508,358   |  |  |  | 1,123,338  | 
|                       |  |                   | 80,000  |              |  |                      | 1.74  |            |  |                  | 29.688 |        |  |  | 08/16/2004 |  |  |  | 656,169   |  |  |  | 1,449,961  | 
|                      
|                      
|                      
|                      
|Bruce L. Chovnick      |  |                   | 34,000  |              |  |                      | 0.74  |            |  |                  | 46.000 |        |  |  | 04/20/2004 |  |  |  | 432,104   |  |  |  | 954,837    | 
|                      
|                      
|                      
|                      
|Donald N. Telage       |  |                   | 34,000  |              |  |                      | 0.74  |            |  |                  | 46.000 |        |  |  | 04/20/2004 |  |  |  | 432,104   |  |  |  | 954,837    | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Options have a maximum term of five years measured from the date
	of grant, subject to earlier termination in certain events
	related to termination of employment. Except for Mr. 
	Daniels options, these options vest at the rate of 30%,
	30%, 20% and 20% of the shares subject to the option on each of
	the first, second, third and fourth year anniversaries of the
	date of grant, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | Based on options to purchase an aggregate of 4,610,300 shares of
	Common Stock granted to employees, including the Named Executive
	Officers, during fiscal year 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(3) | The exercise price is equal to the fair market value of the
	Common Stock on the date of grant as determined by the last
	transaction price quoted by the Nasdaq system on the date of
	grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(4) | Amounts represent hypothetical gains that could be achieved for
	the respective options if exercised at the end of the option
	term. These gains are based on assumed rates of stock
	appreciation of 5% and 10% compounded annually from the date the
	respective options were granted to their expiration date and are
	not presented to forecast possible future appreciation, if any,
	in the price of the Common Stock. The gains shown are net of the
	option exercise price, but do not include deductions for taxes or
	 other expenses associated with the exercise of the options or
	the sale of the underlying shares. The actual gains, if any, on
	the stock option exercises will depend on the future performance
	of the Common Stock, the optionees continued employment
	through applicable vesting periods and the date on which the
	options are exercised.
|   
|(5) | Upon termination of employment by Network Solutions for any
	reason other than cause or non-performance, or by Mr. Rutt for
	good reason (as such terms are defined in the relevant option
	agreements), Mr. Rutt receives an additional 12  months of
	service credited towards vesting. The additional 12 months
	is increased to a total of 24  additional months if the
	termination occurs immediately before or within 18 months
	after a change in control of Network Solutions (as defined in the
	 option agreements).                                                                                                                                                                                                                                                                                                                                                  
|   
|(6) | Mr. Daniels options were fully vested upon grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

The following table shows the number of securities underlying
unexercised options held by each of the Named Executive Officers
on December 31, 1999 and the value of unexercised
in-the-money

41



---



##### Table of Contents





Aggregate Option Exercises In Last Fiscal Year and

Fiscal Year-End Option Value Table


|                       |  |             |         |          |  |                        |            |                         |  |             |        |               |  |  |           |  |  |  |           |  |  |  |             | 
|---------------------- |  | ----------- | ------- | -------- |  | ---------------------- | ---------- | ----------------------- |  | ----------- | ------ | ------------- |  |  | --------- |  |  |  | --------- |  |  |  | ----------- | 
|                       |  |             |         |          |  |                        |            |                        
|                       |  |             |         |          |  | Number of Securities   |            | Value of Unexercised   
|                       |  | Shares      |         |          |  | Underlying Unexercised |            | in-the-Money           
|                       |  | Acquired    |         | Value    |  | Options at FY-End(#)   |            | Options at FY-End($)(1)
|                       |  | Upon        |         | Realized |  |                        |            |                        
|Name                   |  | Exercise(#) |         | ($)      |  | Exercisable            |            | Unexercisable           |  | Exercisable |        | Unexercisable
|                       |  |             |         |          |  |                        |            |                         |  |             |        |              
|James P. Rutt          |  |             |        |          |  |                        |           |                         |  |             |       |               |  |  | 1,500,000 |  |  |  |          |  |  |  | 118,101,750 | 
|                      
|                      
|                      
|                      
|Michael A. Daniels     |  |             | 65,040  |          |  |                        | 3,277,626  |                         |  |             | 67,200 |               |  |  | 106,240   |  |  |  | 5,629,917 |  |  |  | 11,069,607  | 
|                      
|                      
|                      
|                      
|Robert J. Korzeniewski |  |             | 168,520 |          |  |                        | 8,380,492  |                         |  |             | 52,240 |               |  |  | 192,640   |  |  |  | 5,499,906 |  |  |  | 17,740,628  | 
|                      
|                      
|                      
|                      
|Jonathan W. Emery      |  |             | 39,600  |          |  |                        | 1,721,451  |                         |  |             | 36,000 |               |  |  | 86,400    |  |  |  | 3,782,250 |  |  |  | 7,741,510   | 
|                      
|                      
|                      
|                      
|Douglas L. Wolford     |  |             | 81,000  |          |  |                        | 5,903,631  |                         |  |             | 4,600  |               |  |  | 238,400   |  |  |  | 446,345   |  |  |  | 21,098,310  | 
|                      
|                      
|                      
|                      
|Bruce L. Chovnick      |  |             | 68,000  |          |  |                        | 4,827,488  |                         |  |             | 66,000 |               |  |  | 208,000   |  |  |  | 6,899,079 |  |  |  | 20,338,052  | 
|                      
|                      
|                      
|                      
|Donald N. Telage       |  |             | 275,140 |          |  |                        | 15,663,959 |                         |  |             | 0      |               |  |  | 190,600   |  |  |  |          |  |  |  | 18,344,454  | 




|    |                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Value is calculated by (i) subtracting the exercise price
	per share from the last reported sales price at fiscal year end
	of $108.781 per share; and (ii) multiplying by the number of
	 shares subject to the option.

Employment Contracts and Termination Of Employment and
Change-In-Control Arrangements

We entered into a separation agreement with Mr. Rutt as of
May 19, 1999. Under that agreement, if we terminate his
employment prior to his reaching age 65 for any reason other than
 cause, non-performance of his duties, disability or death, of if
 he terminates his employment for a good reason specified in the
separation agreement, we are obligated to pay him a cash
severance benefit. The cash severance is equal to 50% of his
annual salary and bonus if his gain on his stock options is less
than $3 million and 75% of his salary and bonus if the gain
on his stock options is at least $3 million but less than
$6 million. Any cash severance under this agreement would be
 payable in 39 biweekly installments.




Item 12.  Security Ownership of Certain
Beneficial Owners and Management

The following table sets forth certain information regarding
beneficial ownership of Network Solutions Common Stock as
of March 13, 2000, except as otherwise indicated, by:
(i) each person who is known by us to beneficially own more
than five percent of our Common Stock, (ii) each of our
directors and nominees for director, (iii) each of the Named
 Executive Officers, and (iv) all of our directors and
executive officers as a group.

|                                                               |  |              |            |            |  |  |      | 
|-------------------------------------------------------------- |  | ------------ | ---------- | ---------- |  |  | ---- | 
|                                                               |  | Shares       |            |           
|                                                               |  | Beneficially |            |           
|Name of Beneficial Owner(1)                                    |  | Owned        |            | Percent(2)
|                                                               |  |              |            |           
|Principal Stockholders:                                        |  |              |            |            |  |  |      | 
|                                                              
|                                                              
|                                                              
|                                                              
|SAIC Venture Capital Corporation (3)                           |  |              | 16,300,000 |            |  |  | 22.5 | 
|3573 Howard Hughes Parkway
	Suite 200
	Las Vegas, Nevada 89109 |  |              |            |            |  |  |      | 
|                                                              
|                                                              
|                                                              
|                                                              
|Janus Capital Corporation (4)                                  |  |              | 8,782,900  |            |  |  | 12.1 | 
|100 Fillmore Street
	Denver, Colorado 80206-4923               |  |              |            |            |  |  |      | 

42



---



##### Table of Contents



|                                                        |  |              |           |            |  |  |     | 
|------------------------------------------------------- |  | ------------ | --------- | ---------- |  |  | --- | 
|                                                        |  | Shares       |           |           
|                                                        |  | Beneficially |           |           
|Name of Beneficial Owner(1)                             |  | Owned        |           | Percent(2)
|                                                        |  |              |           |           
|MFS Investment Management (5)                           |  |              | 5,200,000 |            |  |  | 7.2 | 
|500 Boylston Street
	Boston, MA 02116                   |  |              |           |            |  |  |     | 
|                                                       
|                                                       
|                                                       
|                                                       
|Directors and Named Executive Officers:                 |  |              |           |            |  |  |     | 
|                                                       
|                                                       
|                                                       
|                                                       
|Alan E. Baratz (6)                                      |  |              | 61,500    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|J. Robert Beyster                                       |  |              | 7,200     |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Bruce L. Chovnick (7)                                   |  |              | 77,012    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Michael A. Daniels (8)                                  |  |              | 115,360   |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Jonathan W. Emery (9)                                   |  |              | 33,169    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Craig I. Fields (10)                                    |  |              | 30,000    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|J. Dennis Heipt (10)                                    |  |              | 30,000    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Robert J. Korzeniewski (11)                             |  |              | 99,631    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|William A. Roper, Jr.                                   |  |              | 4,000     |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|James P. Rutt (12)                                      |  |              | 4,200     |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Stratton D. Sclavos (13)                                |  |              | 60,400    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Donald Telage (14)                                      |  |              | 62,474    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|Douglas L. Wolford (15)                                 |  |              | 16,803    |            |  |  | *   | 
|                                                       
|                                                       
|                                                       
|                                                       
|All current executive officers and directors as a group |  |              |           |            |  |  |     | 
|                                                       
|                                                       
|                                                       
|                                                       
|(17 persons) (16)                                       |  |              | 703,747   |            |  |  | *   | 




| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *   | Less than 1%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (1) | This table is based upon information supplied by officers,
	directors and principal stockholders, and Schedules 13D and 13G
	filed with the SEC. Beneficial ownership is determined in
	accordance with the rules of the SEC and generally includes
	voting or investment power with respect to securities. Except as
	indicated by footnotes and subject to community property laws,
	where applicable, the persons named above have sole voting and
	investment power with respect to all shares of Common Stock shown
	 as beneficially owned by them.           
|
| | (2) | Applicable percentage ownership is based on 72,367,694 shares of
	Common Stock outstanding as of March 13, 2000. Shares of
	Common Stock subject to options or other conversion that are
	exercisable or convertible within 60 days of March  13,
	 2000 are deemed to be beneficially owned by the person holding
	such options or conversion rights for the purpose of computing
	the percentage ownership of such person but are not treated as
	outstanding for the purpose of computing any other persons
	percentage ownership.                              
|
| | (3) | Based on a Schedule 13D filed with the SEC on March 16,
	 2000 and includes shared voting power and shared dispositive
	power for 16,300,000 shares. According to the Schedule 13D,
	these shares are subject to a voting agreement dated
	March 6, 2000 between VeriSign and SAIC pursuant to which
	SAIC has granted VeriSign an irrevocable proxy to vote the shares
	 in favor of the proposed merger between us and VeriSign.
	VeriSign disclaims beneficial ownership of these shares. SAIC
	Venture Capital Corporation is a wholly-owned subsidiary of SAIC.
|
| | (4) | Based on Schedule 13G filed with the SEC dated
	March 10, 2000 and includes sole voting power and sole
	dispositive power for 8,782,900 shares.                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (5) | Based on our internal information and belief; such beneficial
	owner did not file a report on Schedule 13G with the SEC as
	of the date hereof.                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (6) | Includes 61,500 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (7) | Includes 76,200 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000,
	706 shares purchased under Network Solutions Employee
	Stock                                                                                                                                                                                                                                                                                                                                                                                   

43



---



##### Table of Contents



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Purchase Plan (through December 31, 1999), 72 shares
	purchased and contributed by Network Solutions under the Network
	Solutions 401(k) Retirement Plan (through December 31,
	1999), 29 shares purchased and contributed pursuant to the profit
	 sharing component of Networks Solutions 401(k) Retirement
	Plan (through December 31, 1999) and 5 shares contributed
	pursuant to Network Solutions match under SAICs
	401(k) Retirement Plan (through July 1999).



| |     |                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (8) | Includes 67,200 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000.                                                                                                                                                                                                                                                                            
|
| | (9) | Includes 29,600 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000,
	3,540 shares purchased under Network Solutions
	Employee Stock Purchase Plan (through December 31, 1999) and
	 29  shares purchased and contributed pursuant to the profit
	 sharing component of Network Solutions 401(k) Retirement
	Plan (through December 31, 1999).



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes 30,000 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|(11) | Includes 47,240 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000,
	3,322 shares purchased under Network Solutions
	Employee Stock Purchase Plan (through December 31, 1999),
	22 shares purchased and contributed by Network Solutions
	under the Network Solutions 401(k) Retirement Plan (through
	December 31, 1999), 29 shares purchased and contributed
	 pursuant to the profit sharing component of Network
	Solutions 401(k) Retirement Plan (through December 31,
	 1999) and 10 shares contributed pursuant to Network
	Solutions match under SAICs 401(k) Retirement Plan
	(through July 1999).                                                                                         
|    
|(12) | Includes 4,200 stock units, representing the right to receive
	4,200 shares of Network Solutions Common Stock,
	granted to Mr. Rutt pursuant to his offer letter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|(13) | Includes 58,400 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|(14) | Includes 10,200 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000,
	3,736 shares purchased under Network Solutions
	Employee Stock Purchase Plan (through December 31, 1999),
	29 shares purchased and contributed pursuant to the profit
	sharing component of Network Solutions 401(k) Retirement
	Plan (through December 31, 1999), 9  shares contributed
	 pursuant to Network Solutions match under SAICs
	401(k) Retirement Plan (through July 1999) and 4 shares
	 purchased and contributed by Network Solutions pursuant to
	Network Solutions 401(k) Retirement Plan (through
	December 31, 1999). Includes 2,000 shares indirectly
	beneficially owned by Mr. Telage through his spouse.
|    
|(15) | Includes 16,600 shares of Common Stock issuable pursuant to
	options exercisable within 60 days of March 13, 2000,
	132 shares purchased under Network Solutions Employee
	Stock Purchase Plan (through December 31, 1999),
	32 shares purchased and contributed by Network Solutions
	under the Network Solutions 401(k) Retirement Plan (through
	December 31, 1999), 29 shares purchased and contributed
	 pursuant to the profit sharing component of Network
	Solutions 401(k) Retirement Plan (through December 31,
	 1999) and 10 shares contributed pursuant to Network
	Solutions match under SAICs 401(k) Retirement Plan
	(through July 1999).                                                                                           
|    
|(16) | Includes an aggregate of 558,480 shares of Common Stock
	issuable pursuant to options exercisable within 60 days of
	March 13, 2000, 11,720 shares purchased under the
	Employee Stock Purchase Plan (through December 31, 1999),
	846  shares purchased and contributed by Network Solutions
	under the Network Solutions 401(k) Retirement Plan (through                                                                                                                                                                                                                                                                                                                                                                                              

44



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | December 31, 1999), 232 shares purchased and
	contributed pursuant to the profit sharing component of Network
	Solutions 401(k) Retirement Plan (through December 31,
	 1999) and 47 shares contributed pursuant to Network
	Solutions match under SAICs 401(k) Retirement Plan
	(through July 1999).




Item 13.  Certain Relationships and Related
Transactions

On February 8, 2000, Network Solutions completed a secondary
 offering in which a total of 17,779,000 shares of Common
Stock were sold. Prior to the secondary offering, SAIC, through
its wholly-owned subsidiary SAIC Venture Capital Corporation,
held approximately 44% of Network Solutions outstanding
Common Stock. 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,
including the underwriters exercise of their over-allotment
 option, was approximately $511 million. As of
March 13, 2000, SAIC owns approximately 23% of Network
Solutions outstanding Common Stock. In addition,
Messrs. Emery, Fields and Korzeniewski were all selling
shareholders in the offering, each respectively selling 15,400,
24,600 and 20,000 shares of Common Stock. Please see
Item 11  Executive Compensation 
 Aggregate Option Exercises Last Fiscal Year and Fiscal Year-End
Option Value Table on page 42 herein.

Agreements With SAIC

Network Solutions has entered into a Corporate Services Agreement
 and a Tax Sharing Agreement with SAIC. Pursuant to the Corporate
 Services Agreement, SAIC provides certain services to Network
Solutions and Network Solutions shares certain of SAICs
systems. The services SAIC provides include various routine and
ordinary corporate services, including business insurance,
accounting systems, employee benefits, payroll, tax and legal
services, as well as assistance in government relations and
corporate quality assurance services. The SAIC systems that
Network Solutions shares include the management information
system and the human resource system. The total fees paid by
Network Solutions to SAIC under these agreements for 1999 was
$4,505,000.

In addition, Network Solutions is a party to a non-competition
agreement and a registration rights agreement with SAIC.

Other Transactions With SAIC

During 1999, Network Solutions provided engineering consulting
services to third parties under subcontracts from SAIC. Network
Solutions received $234,000 for these services. In addition, in
1999, SAIC provided engineering and other services to third
parties during 1999 under subcontracts from Network Solutions for
 which SAIC received $447,000.

Network Solutions currently has offices located in Herndon,
Virginia and Charlotte, North Carolina under space usage
arrangements with SAIC. During 1999, Network Solutions made
payments of $2,066,000 to SAIC under such space usage
arrangements.

In addition to the fees for services provided by SAIC, Network
Solutions reimbursed SAIC for the actual and direct costs related
 to processing and funding of payroll, payroll taxes and employee
 benefits on a monthly basis.

Due To SAIC Liability

The due to SAIC balance represents the cumulative net activity of
 all transactions between Network Solutions and SAIC and is
primarily composed of direct reimbursement of salaries, payroll

45



---



##### Table of Contents





Compensation Committee Interlocks and Insider Participation

Network Solutions established a Compensation Committee in fiscal
year 1997, the current members of which are J. Robert
Beyster (Chairman), Alan E. Baratz, Michael A. Daniels,
 J. Dennis Heipt and Stratton D. Sclavos. There are no
Compensation Committee Interlocks as that term is defined under
Item 402(j) of Regulation S-K, as promulgated under the
 Exchange Act, among the committee members.

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. Stratton D.
 Sclavos is a member of our Board of Directors and the Chief
Executive Officer of VeriSign, Inc. 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 shareholders will own
approximately 60% of the combined company and have six members on
 the new Board of Directors while Network Solutions shareholders
will own approximately 40% of the combined company and will have
three Board members to be mutually agreed upon by VeriSigns
 Board of Directors and Network Solutions Board of
Directors. The transaction is expected to close in the third
quarter of 2000, subject to customary conditions, such as
shareholder approval, and obtaining necessary regulatory
approvals.

46



---



##### Table of Contents



PART IV




Item 14.  Exhibits, Financial Statement
Schedules, and Reports on Form 8K

(a)  Documents filed as part of this report



| |                         
| | ------------------------
| | 1. Financial Statements.

The list of financial statements set forth under the caption
Index to Financial Information on page F-1 is
incorporated herein by reference.



| |                                  
| | ---------------------------------
| | 2. Financial Statement Schedules.

The list of financial statement schedules set forth under the
caption Index to Financial Information on
page F-1 is incorporated herein by reference. All other
schedules have been omitted, as the required information is
inapplicable or the information is presented in the financial
statements or related notes.



| |            
| | -----------
| | 3. Exhibits

|        |                  |                                                                                                                                                         |                                                                                                                                                     
|------- | ---------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |                  |                                                                                                                                                        
|Number  |                  | Description of Document                                                                                                                                
|        |                  |                                                                                                                                                        
|        | 2.1************  |                                                                                                                                                         | Agreement and Plan of Merger among VeriSign, Inc., Nickel
	Acquisition Corporation and Network Solutions, Inc., dated March
	6, 2000.               
|        | 3(i)*            |                                                                                                                                                         | Second Amended and Restated Certificate of Incorporation.                                                                                           
|        | 3(ii)***         |                                                                                                                                                         | Second Amended and Restated Bylaws of Network Solutions, Inc., as
	 amended May 1, 1998.                                                            
|        | 3(iii)********** |                                                                                                                                                         | Certificate of Amendment of Second Amended and Restated
	Certificate of Incorporation filed with the Delaware Secretary of
	 State on June 17, 1999.
|        | 4.1*             |                                                                                                                                                         | Form of Common Stock Certificate.                                                                                                                   
|        | 4.2*             |                                                                                                                                                         | Reference is made to Exhibits 3(i) and 3(ii).                                                                                                       
|        | 9.1************* |                                                                                                                                                         | Voting Agreement dated as of March 6, 2000 between VeriSign
	and SAIC Venture Capital Corporation, together with Irrevocable
	Proxy.                
|10.1*   |                  | Cooperative Agreement between the National Science Foundation and
	 Network Solutions, Inc., as amended by Amendments Nos. 1,
	2, 3 and 5.             
|10.2*   |                  | Amendment No. 4 to the Cooperative Agreement dated
	September 13, 1995.                                                                                
|10.3*   |                  | Master Services Agreement for System Management Services dated
	January 21, 1997 by and between NationsBanc Services, Inc.
	and Network Solutions, Inc.
|10.4*  |                  | 1996 Stock Incentive Plan and forms of agreements thereunder.                                                                                          
|10.5*   |                  | Corporate Services Agreement between Network Solutions, Inc. and
	Science Applications International Corporation.                                      
|10.6*   |                  | Tax Sharing Agreement between Network Solutions, Inc. and Science
	 Applications International Corporation.                                            
|10.7*   |                  | Registration Rights Agreement between Network Solutions, Inc. and
	 Science Applications International Corporation.                                    
|10.8*   |                  | Noncompetition and Corporate Opportunities Agreement between
	Network Solutions, Inc. and Science Applications International
	Corporation.             
|10.9*   |                  | Offer Letter Between James Rutt and Network Solutions, Inc.                                                                                            
|10.10*  |                  | Separation Agreement between James Rutt and Network Solutions,
	Inc. dated May 19, 1999.                                                               
|10.11*  |                  | Non-Statutory Stock Option Agreement Between James Rutt and
	Network Solutions, Inc. dated June 7, 1999.                                               

47



---



##### Table of Contents



|                   |  |                                                                                                                                                                                               
|------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit            |  |                                                                                                                                                                                               
|Number             |  | Description of Document                                                                                                                                                                       
|                   |  |                                                                                                                                                                                               
|10.12*             |  | Non-Statutory Stock Option Agreement Between James Rutt and
	Network Solutions, Inc. dated May 21, 1999.                                                                                      
|10.13*             |  | Science Applications International Corporation Employee Stock
	Ownership Plan and amendments thereto.                                                                                         
|10.14*             |  | Science Applications International Corporation 1995 Stock Option
	Plan.                                                                                                                       
|10.15*             |  | Letter dated September 13, 1995 regarding Amendment
	No. 4 to the Cooperative Agreement.                                                                                                      
|10.16*             |  | Asset Transfer Agreement between Network Solutions, Inc. and
	Science Applications International Corporation.                                                                                 
|10.17*             |  | Amendment No. 6 to the Cooperative Agreement dated
	June  23, 1997.                                                                                                                           
|10.18***          |  | 1997 Employee Stock Purchase Plan.                                                                                                                                                            
|10.19**            |  | Amendment No. 7 to the Cooperative Agreement dated
	December 3, 1997.                                                                                                                         
|10.20**            |  | Amendment No. 8 to the Cooperative Agreement dated
	February 20, 1998.                                                                                                                        
|10.21**            |  | Amendment No. 9 to the Cooperative Agreement dated
	March  12, 1998.                                                                                                                          
|10.22*******       |  | Form of Indemnification Agreement entered into by the Company and
	 each of its directors and officers at the Vice President level
	or above.                                                 
|10.23**            |  | Deed of Lease By and Between Sugarland Business Park Limited
	Partnership and Network Solutions, Inc. dated May 30, 1997
	(Lease Agreement).                                                
|10.24**            |  | Amendment No. 1 to Lease Agreement dated January 31,
	1998.                                                                                                                                   
|10.25*********     |  | Lease Agreement By and Between Corporate Oaks LP and Network
	Solutions dated March 11, 1999.                                                                                                 
|10.26*********     |  | Amendment No. 10 to the Cooperative Agreement dated
	September 29, 1998.                                                                                                                      
|10.27*********     |  | Amendment No. 11 to the Cooperative Agreement dated
	October 6, 1998.                                                                                                                         
|10.28*********     |  | Amendment No. 12 to the Cooperative Agreement dated
	March  12, 1999.                                                                                                                         
|10.29*********     |  | Amendment No. 13 to the Cooperative Agreement dated
	May 6, 1999.                                                                                                                             
|10.30**********    |  | Amendment No. 14 to the Cooperative Agreement dated
	July  13, 1999.                                                                                                                          
|10.31**********    |  | Amendment No. 15 to the Cooperative Agreement dated
	July  16, 1999.                                                                                                                          
|10.32***********   |  | Amendment No. 16 to the Cooperative Agreement dated
	August  18, 1999.                                                                                                                        
|10.33***********   |  | Amendment No. 17 to the Cooperative Agreement dated
	October 11, 1999.                                                                                                                        
|10.34***********   |  | Amendment No. 18 to the Cooperative Agreement dated
	October 11, 1999.                                                                                                                        
|10.35************  |  | Amendment No. 19 to the Cooperative Agreement dated
	November 10, 1999.                                                                                                                       
|10.36************  |  | Registry agreement between Network Solutions and ICANN outlining
	the provisions and policies for operation of the Network
	Solutions Registry.                                               
|10.37************  |  | Revised registrar accreditation agreement between ICANN and all
	registrars, including Network Solutions, registering names in the
	 .com, .netand .orgdomains.                               
|10.38************  |  | Revised post-testbed registrar license and agreement between
	Network Solutions Registry and all registrars registering
	names in the .com, .netand .orgdomains.                             
|10.39************  |  | Amendment 1 to the Memorandum of Understanding between DoC
	and ICANN.                                                                                                                        
|10.40************  |  | Transition Agreement between ICANN and Network Solutions.                                                                                                                                     
|10.41********      |  | Guidelines for Accreditation of Internet Domain Name Registrars
	and the Selection of Registrars to the Shares Registry System
	Testbed for .com, .netand .orgDomains
	dated February 8, 1999.
|10.42************* |  | Registration Rights Agreement dated as of March 6, 2000
	Between VeriSign and SAIC Venture Capital Corporation.                                                                               
|23.1               |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                        
|27.1               |  | Financial Data Schedule (in electronic format only).                                                                                                                                          

48



---



##### Table of Contents



|        |  |                                                              
|------- |  | -------------------------------------------------------------
|Exhibit |  |                                                              
|Number  |  | Description of Document                                      
|        |  |                                                              
|27.2    |  | Restated Financial Data Schedule (in electronic format only).
|27.3    |  | Restated Financial Data Schedule (in electronic format only).
|27.4    |  | Restated Financial Data Schedule (in electronic format only).




|                |  |                                                                                                                                             
|--------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|1*              |  | Incorporated by reference from Network Solutions, Inc.s
	Registration Statement on Form S-1 (Registration No. 
	333-30705).                
|2**             |  | Incorporated by reference from Network Solutions, Inc.s
	Annual Report on Form 10-K for the year ended
	December 31, 1997.                 
|3***            |  | Incorporated by reference from Network Solutions, Inc.s
	Quarterly Report on Form 10-Q for the quarterly period ended
	 March 31, 1998.    
|4****           |  | Incorporated by reference from Network Solutions, Inc.s
	Registration Statement on Form S-8 (Registration No. 
	333-43821).                
|5*****          |  | Incorporated by reference from Network Solutions, Inc.s
	Quarterly Report on Form 10-Q for the quarterly period ended
	 September 30, 1998.
|6******         |  | Incorporated by reference from Network Solutions, Inc.s
	Report on Form 8-K dated October 9, 1998.                                         
|7*******        |  | Incorporated by reference from Network Solutions, Inc.s
	Annual Report on Form 10-K for the year ended
	December 31, 1998.                 
|8********       |  | Incorporated by reference from Network Solutions, Inc.s
	Report on Form 8-K dated February 9, 1999.                                        
|9*********      |  | Incorporated by reference from Network Solutions, Inc.s
	Quarterly Report on Form 10-Q for the quarterly period ended
	 March 31, 1999.    
|10**********    |  | Incorporated by reference from Network Solution, Inc.s
	Quarterly Report on Form 10-Q for the quarterly period ended
	 June 30, 1999.      
|11***********   |  | Incorporated by reference from Network Solution, Inc.s
	Quarterly Report on Form 10-Q for the quarterly period ended
	 September 30, 1999. 
|12************  |  | Incorporated by reference from Network Solutions, Inc.s
	Report on Form 8-K dated November 30, 1999.                                       
|13************* |  | Incorporated by reference from Network Solutions, Inc.s
	Report on Form 8-K dated March 8, 2000.                                           
|               |  | Executive Compensation Plans and Arrangements.                                                                                              

We own or have rights to various copyrights, trademarks and trade
 names used in our business. These include Network Solutions,
Inc.®, dot com mail, dot com toolkit, dot com
biz card, dot com directory, dot com
promotions, dot com people, dot com essentials,
 ImageCafe and idNames. This Annual Report also
includes trademarks, service marks and trade names of other
companies.

(b)  Reports on Form 8-K

The following reports on Form 8-K were filed during the
quarter ended December 31, 1999:

On October 6, 1999, we filed a report on Form 8-K,
pursuant to Item 5 on such form, to report that on
September 28, 1999, the U.S. Department of Commerce, Network
 Solutions, Inc. and the Internet Corporation for Assigned Names
and Numbers announced a series of wide-ranging agreements to
shape the future of the Internets domain name system.

On November 30, 1999, we filed a report on Form 8-K,
pursuant to Item 5 on such form, to report that the U.S.
Department of Commerce, Network Solutions, Inc. and the Internet
Corporation for Assigned Names and Numbers executed a series of
wide-ranging agreements to shape the future of the
Internets domain name system.

49



---



##### Table of Contents



Signatures

Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



| |                        
| | -----------------------
| | NETWORK SOLUTIONS, INC.



| |     |                  
| | --- | -----------------
| | By: | /s/ JAMES P. RUTT

| |                        
| | -----------------------
| |                        
| | James P. Rutt          
| | Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of
 1934, this report has been signed below by the following persons
 on behalf of the registrant and in the capacities indicated on
the dates indicated.

|                                                 |  |                                                                       |  |               
|------------------------------------------------ |  | --------------------------------------------------------------------- |  | --------------
|Name                                             |  | Title                                                                 |  | Date          
|                                                 |  |                                                                       |  |               
|/s/ JAMES P. RUTTJames P. Rutt                   |  | Chief Executive Officer and Director                                  |  | March 30, 2000
|/s/ MICHAEL A. DANIELSMichael A. Daniels         |  | Chairman of the Board                                                 |  | March 30, 2000
|/s/ ROBERT J. KORZENIEWSKIRobert J. Korzeniewski |  | Chief Financial Officer (Principal Financial Officer)                 |  | March 30, 2000
|/s/ MICHAEL G. VOSLOWMichael G. Voslow           |  | Vice President, Finance and Treasurer (Principal Accounting
	Officer) |  | March 30, 2000
|/s/ ALAN E. BARATZAlan E. Baratz                 |  | Director                                                              |  | March 30, 2000
|/s/ J. ROBERT BEYSTERJ. Robert Beyster           |  | Director                                                              |  | March 30, 2000
|/s/ CRAIG I. FIELDSCraig I. Fields               |  | Director                                                              |  | March 30, 2000
|/s/ J. DENNIS HEIPTJ. Dennis Heipt               |  | Director                                                              |  | March 30, 2000
|/s/ WILLIAM A. ROPER, JR.William A. Roper, Jr.   |  | Director                                                              |  | March 30, 2000
|/s/ STRATTON D. SCLAVOSStratton D. Sclavos       |  | Director                                                              |  | March 30, 2000

50



---



##### Table of Contents



Index to Financial Information

|                                                                                                    |  |           |      | 
|--------------------------------------------------------------------------------------------------- |  | --------- | ---- | 
|                                                                                                    |  | Page     
|                                                                                                    |  | Reference
|                                                                                                    |  |          
|Report of Independent Accountants                                                                   |  |           | F- 2 | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|1. Financial Statements:                                                                            |  |           |      | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Statements of Financial Position as of December 31, 1998 and
	 1999                                 |  |           | F- 3 | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Statements of Operations for the Years Ended December  31,
	1997, 1998 and 1999                     |  |           | F- 4 | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Statements of Changes in Stockholders Equity for the Years
	Ended December 31, 1997, 1998 and 1999 |  |           | F- 5 | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Statements of Cash Flows for the Years Ended December  31,
	1997, 1998 and 1999                     |  |           | F- 6 | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Notes to Financial Statements                                                                       |  |           | F- 7 | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|2. Financial Statement Schedule:                                                                    |  |           |      | 
|                                                                                                   
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Valuation and Qualifying Accounts and Reserves                                                      |  |           | F-23 | 

F-1



---



##### Table of Contents



Report of Independent Accountants

To the Board of Directors and Stockholders of Network Solutions,
Inc.

In our opinion, the financial statements listed in the index
appearing on page F-1 present fairly, in all material respects,
the financial position of Network Solutions, Inc., at
December 31, 1999 and 1998 and the results of its operations
 and its cash flows for each of the three years in the period
ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States. In addition,
in our opinion, the financial statement schedule listed in the
index appearing on page F-1 presents fairly, in all material
respects, the information set forth therein when read in
conjunction with the related financial statements. These
financial statements and financial statement schedule are the
responsibility of the Companys management; our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which
 require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.

/s/ PRICEWATERHOUSECOOPERS LLP



McLean, VA





F-2



---



##### Table of Contents



Network Solutions, Inc.

Statements of Financial Position

|                                     |                                                                                                               |                                            |            |              |             |  |             |             |             | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ------------ | ----------- |  | ----------- | ----------- | ----------- | 
|                                     |                                                                                                               | December 31,                               |            | December 31,
|                                     |                                                                                                               | 1998                                       |            | 1999        
|                                     |                                                                                                               |                                            |            |             
|                                    
|                                    
|                                    
|                                    
|ASSETS                              
|                                    
|                                    
|                                    
|                                    
|Current assets:                      |                                                                                                               |                                            |            |              |             |  |             |            
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                     |                                            | $          | 12,862,000   |             |  | $           | 196,589,000 |            
|                                    
|                                    
|                                    
|                                    
|                                     | Short-term investments                                                                                        |                                            |            | 118,808,000  |             |  |             | 116,342,000 |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, net                                                                                      |                                            |            | 22,628,000   |             |  |             | 31,916,000  |            
|                                    
|                                    
|                                    
|                                    
|                                     | Income taxes receivable                                                                                       |                                            |            |             |             |  |             | 16,193,000  |            
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaids and other assets                                                                                     |                                            |            | 4,001,000    |             |  |             | 8,809,000   |            
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred tax asset                                                                                            |                                            |            | 40,508,000   |             |  |             | 100,997,000 |            
|                                     |                                                                                                               |                                            |            |              |             |  |             |            
|                                     |                                                                                                               | Total current assets                       |            |              | 198,807,000 |  |             |             | 470,846,000 | 
|                                    
|                                    
|                                    
|                                    
|Furniture and equipment, net         |                                                                                                               |                                            | 16,005,000 |              |             |  | 57,406,000  |            
|                                    
|                                    
|                                    
|                                    
|Long-term investments                |                                                                                                               |                                            | 13,590,000 |              |             |  | 62,475,000  |            
|                                    
|                                    
|                                    
|                                    
|Deferred tax asset                   |                                                                                                               |                                            | 14,831,000 |              |             |  | 28,197,000  |            
|                                    
|                                    
|                                    
|                                    
|Goodwill and other, net              |                                                                                                               |                                            | 634,000    |              |             |  | 6,379,000   |            
|                                     |                                                                                                               |                                            |            |              |             |  |             |            
|                                     |                                                                                                               | Total Assets                               |            | $            | 243,867,000 |  |             | $           | 625,303,000 | 
|                                     |                                                                                                               |                                            |            |              |             |  |             |            
|                                    
|                                    
|                                    
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|Current liabilities:                 |                                                                                                               |                                            |            |              |             |  |             |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable and accrued liabilities                                                                      |                                            | $          | 28,287,000   |             |  | $           | 52,957,000  |            
|                                    
|                                    
|                                    
|                                    
|                                     | Due to SAIC                                                                                                   |                                            |            | 4,766,000    |             |  |             | 30,177,000  |            
|                                    
|                                    
|                                    
|                                    
|                                     | Income taxes payable                                                                                          |                                            |            | 5,409,000    |             |  |             | 1,045,000   |            
|                                    
|                                    
|                                    
|                                    
|                                     | Current portion of capital lease obligations                                                                  |                                            |            | 834,000      |             |  |             | 247,000     |            
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred revenue, net                                                                                         |                                            |            | 93,720,000   |             |  |             | 255,307,000 |            
|                                     |                                                                                                               |                                            |            |              |             |  |             |            
|                                     |                                                                                                               | Total current liabilities                  |            |              | 133,016,000 |  |             |             | 339,733,000 | 
|                                    
|                                    
|                                    
|                                    
|Capital lease obligations            |                                                                                                               |                                            | 247,000    |              |             |  |            |            
|                                    
|                                    
|                                    
|                                    
|Long-term deferred revenue, net      |                                                                                                               |                                            | 35,474,000 |              |             |  | 106,332,000 |            
|                                    
|                                    
|                                    
|                                    
|Other long-term liabilities          |                                                                                                               |                                            |           |              |             |  | 639,000     |            
|                                     |                                                                                                               |                                            |            |              |             |  |             |            
|                                     |                                                                                                               | Total liabilities                          |            |              | 168,737,000 |  |             |             | 446,704,000 | 
|                                    
|                                    
|                                    
|                                    
|Commitments and contingencies        |                                                                                                               |                                            |           |              |             |  |            |            
|                                    
|                                    
|                                    
|                                    
|Stockholders equity:                |                                                                                                               |                                            |            |              |             |  |             |            
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock, $.001 par value; authorized 10,000,000 shares;
	none issued and outstanding in 1998 and 1999 |                                            |            |             |             |  |             |            |            
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.001 par value; authorized 210,000,000 shares;
	67,791,734 issued and outstanding in 1999      |                                            |            |             |             |  |             | 68,000      |            
|                                    
|                                    
|                                    
|                                    
|                                     | Class A common stock, $.001 par value; 9,140,000 shares
	issued and outstanding in 1998                       |                                            |            | 9,000        |             |  |             |            |            
|                                    
|                                    
|                                    
|                                    
|                                     | Class B common stock, $.001 par value; 23,850,000 shares
	issued and outstanding in 1998                      |                                            |            | 24,000       |             |  |             |            |            
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                    |                                            |            | 72,331,000   |             |  |             | 117,289,000 |            
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                                             |                                            |            | 2,407,000    |             |  |             | 29,259,000  |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive income                                                                        |                                            |            | 359,000      |             |  |             | 31,983,000  |            
|                                     |                                                                                                               |                                            |            |              |             |  |             |            
|                                     |                                                                                                               | Total stockholders equity                 |            |              | 75,130,000  |  |             |             | 178,599,000 | 
|                                     |                                                                                                               |                                            |            |              |             |  |             |            
|                                     |                                                                                                               | Total Liabilities and Stockholders Equity |            | $            | 243,867,000 |  |             | $           | 625,303,000 | 
|                                     |                                                                                                               |                                            |            |              |             |  |             |            

The accompanying notes are an integral part of these financial
statements

F-3



---



##### Table of Contents



Network Solutions, Inc.

Statements of Operations

|                                             |         |                         |            |      |  |      |            |      |  |   |             |      | 
|-------------------------------------------- | ------- | ----------------------- | ---------- | ---- |  | ---- | ---------- | ---- |  | - | ----------- | ---- | 
|                                             |         |                        
|                                             |         | Year ended December 31,
|                                             |         |                        
|                                             |         | 1997                    |            | 1998 |  | 1999
|                                             |         |                         |            |      |  |     
|Net revenue                                  |         | $                       | 45,326,000 |      |  | $    | 93,652,000 |      |  | $ | 220,811,000 |     
|                                            
|                                            
|                                            
|                                            
|Cost of revenue                              |         |                         | 25,798,000 |      |  |      | 38,530,000 |      |  |   | 81,606,000  |     
|                                             |         |                         |            |      |  |      |            |      |  |   |             |     
|Gross profit                                 |         |                         | 19,528,000 |      |  |      | 55,122,000 |      |  |   | 139,205,000 |     
|                                            
|                                            
|                                            
|                                            
|Research and development expenses            |         |                         | 1,653,000  |      |  |      | 4,821,000  |      |  |   | 10,989,000  |     
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |         |                         | 12,268,000 |      |  |      | 37,144,000 |      |  |   | 92,517,000  |     
|                                            
|                                            
|                                            
|                                            
|Interest income                              |         |                         | (2,211,000 | )    |  |      | (6,303,000 | )    |  |   | (9,928,000  | )   
|                                            
|                                            
|                                            
|                                            
|Other expenses                               |         |                         | 116,000    |      |  |      | 116,000    |      |  |   | 52,000      |     
|                                             |         |                         |            |      |  |      |            |      |  |   |             |     
|Income before income taxes                   |         |                         | 7,702,000  |      |  |      | 19,344,000 |      |  |   | 45,575,000  |     
|                                            
|                                            
|                                            
|                                            
|Provision for income taxes                   |         |                         | 3,471,000  |      |  |      | 8,109,000  |      |  |   | 18,689,000  |     
|                                             |         |                         |            |      |  |      |            |      |  |   |             |     
|Net income                                   |         | $                       | 4,231,000  |      |  | $    | 11,235,000 |      |  | $ | 26,886,000  |     
|                                             |         |                         |            |      |  |      |            |      |  |   |             |     
|Earnings per common share:                   |         |                         |            |      |  |      |            |      |  |   |             |     
|                                            
|                                            
|                                            
|                                            
|                                             | Basic   |                         | $          | 0.08 |  |      | $          | 0.18 |  |   | $           | 0.40 | 
|                                             |         |                         |            |      |  |      |            |      |  |   |             |     
|                                             | Diluted |                         | $          | 0.08 |  |      | $          | 0.17 |  |   | $           | 0.38 | 
|                                             |         |                         |            |      |  |      |            |      |  |   |             |     

The accompanying notes are an integral part of these financial
statements

F-4



---



##### Table of Contents



Network Solutions, Inc.

Statements of Changes in Stockholders Equity

|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |            | 
|----------------------------------------------------------------------------- | ------------------------------------------------- | ------------ | ---------- | ------------ |  | ------------ | ------ | ---------- |  | -------- | ----------- | ------ |  | ------- | ------- | --------- |  |  | ----------- | - |  | - | ------- | - |  | - | ----------- | - |  | - | ----------- | ---------- | 
|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |       
|                                                                              |                                                   |              |            | Class A      |  | Class B      |        |            |  |         
|                                                                              |                                                   | Common Stock |            | Common Stock |  | Common Stock |        | Additional |  | Retained
|                                                                              |                                                   |              |            |              |  |              |        | Paid-in    |  | Earnings
|                                                                              |                                                   | Shares       |            | Amount       |  | Shares       |        | Amount     |  | Shares   |             | Amount |  | Capital |         | (Deficit)
|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |          
|Balance, December  31, 1996                                                   |                                                   |              |           |              |  | $            |       |            |  |          |            |        |  | $       |        |           |  |  | 12,500,000  |   |  | $ | 12,000  |   |  | $ | 4,468,000   |   |  | $ | (3,043,000  | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Declaration of Class B dividend                                               |                                                   |              |           |              |  |              |       |            |  |          |            |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   |            |   |  |   | (10,000,000 | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Conversion of Class  B common stock                                           |                                                   |              |           |              |  |              |       |            |  |          | 575,000     |        |  |         |        |           |  |  | (575,000    | ) |  |   |        |   |  |   |            |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Issuance of Class A common stock                                              |                                                   |              |           |              |  |              |       |            |  |          | 3,220,000   |        |  |         | 4,000   |           |  |  |            |   |  |   |        |   |  |   | 51,983,000  |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Net income for the year ended December  31, 1997                              |                                                   |              |           |              |  |              |       |            |  |          |            |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   |            |   |  |   | 4,231,000   |           
|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|Balance, December  31, 1997                                                   |                                                   |              |           |              |  |              |       |            |  |          | 3,795,000   |        |  |         | 4,000   |           |  |  | 11,925,000  |   |  |   | 12,000  |   |  |   | 56,451,000  |   |  |   | (8,812,000  | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Issuance of Common Stock pursuant to stock plans                              |                                                   |              |           |              |  |              |       |            |  |          | 775,000     |        |  |         | 1,000   |           |  |  |            |   |  |   |        |   |  |   | 10,273,000  |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Tax benefit associated with stock plans                                       |                                                   |              |           |              |  |              |       |            |  |          |            |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   | 5,607,000   |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Two-for-one common stock split effected in the form of a 100%
	stock dividend |                                                   |              |           |              |  |              |       |            |  |          | 4,570,000   |        |  |         | 4,000   |           |  |  | 11,925,000  |   |  |   | 12,000  |   |  |   |            |   |  |   | (16,000     | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Comprehensive income:                                                         |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Net income for the year ended December  31, 1998. |              |            |             |  |              |        |           |  |          |             |       |  |         |         |          |  |  |             |  |  |   |         |  |  |   |             |  |  |   |             | 11,235,000 | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Other comprehensive income, net of tax:                                       |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Unrealized gains on securities                    |              |            |             |  |              |        |           |  |          |             |       |  |         |         |          |  |  |             |  |  |   |         |  |  |   |             |  |  |   |             |           | 
|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|Comprehensive income                                                          |                                                   |              |           |              |  |              |       |            |  |          |            |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   |            |   |  |   |            |           
|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|Balance, December  31, 1998                                                   |                                                   |              |           |              |  |              |       |            |  |          | 9,140,000   |        |  |         | 9,000   |           |  |  | 23,850,000  |   |  |   | 24,000  |   |  |   | 72,331,000  |   |  |   | 2,407,000   |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Issuance of common stock pursuant to stock plans                              |                                                   |              | 583,000    |              |  |              | 1,000  |            |  |          | 323,000     |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   | 10,115,000  |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Tax benefit associated with stock plans                                       |                                                   |              |           |              |  |              |       |            |  |          |            |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   | 34,843,000  |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Conversion of Class  B common stock                                           |                                                   |              |           |              |  |              |       |            |  |          | 23,850,000  |        |  |         | 24,000  |           |  |  | (23,850,000 | ) |  |   | (24,000 | ) |  |   |            |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Reclassification of Class A common stock                                      |                                                   |              | 33,313,000 |              |  |              | 33,000 |            |  |          | (33,313,000 | )      |  |         | (33,000 | )         |  |  |            |   |  |   |        |   |  |   |            |   |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Two-for-one common stock split effected in the form of a 100%
	stock dividend |                                                   |              | 33,896,000 |              |  |              | 34,000 |            |  |          |            |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   |            |   |  |   | (34,000     | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Comprehensive income:                                                         |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Net income for the year ended December  31, 1999  |              |            |             |  |              |        |           |  |          |             |       |  |         |         |          |  |  |             |  |  |   |         |  |  |   |             |  |  |   |             | 26,886,000 | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Other comprehensive income, net of tax:                                       |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Unrealized gains on securities                    |              |            |             |  |              |        |           |  |          |             |       |  |         |         |          |  |  |             |  |  |   |         |  |  |   |             |  |  |   |             |           | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Comprehensive income                                                          |                                                   |              |           |              |  |              |       |            |  |          |            |        |  |         |        |           |  |  |            |   |  |   |        |   |  |   |            |   |  |   |            |           
|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           
|Balance, December  31, 1999                                                   |                                                   |              | 67,792,000 |              |  | $            | 68,000 |            |  |          |             |        |  | $       |         |           |  |  |             |   |  | $ |         |   |  | $ | 117,289,000 |   |  | $ | 29,259,000  |           
|                                                                              |                                                   |              |            |              |  |              |        |            |  |          |             |        |  |         |         |           |  |  |             |   |  |   |         |   |  |   |             |   |  |   |             |           

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                              |                                                   |             |            |            |  |               |            |            |  |   |             |            | 
|----------------------------------------------------------------------------- | ------------------------------------------------- | ----------- | ---------- | ---------- |  | ------------- | ---------- | ---------- |  | - | ----------- | ---------- | 
|                                                                              |                                                   | Accumulated |            |            |  |              
|                                                                              |                                                   | Other       |            |            |  |              
|                                                                              |                                                   | Compre-     |            | Compre-    |  | Total        
|                                                                              |                                                   | hensive     |            | hensive    |  | Stockholders
|                                                                              |                                                   | Income      |            | Income     |  | Equity       
|                                                                              |                                                   |             |            |            |  |              
|Balance, December  31, 1996                                                   |                                                   | $           |           |            |  | $             |           |            |  | $ | 1,437,000   |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Declaration of Class B dividend                                               |                                                   |             |           |            |  |               |           |            |  |   | (10,000,000 | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Conversion of Class  B common stock                                           |                                                   |             |           |            |  |               |           |            |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Issuance of Class A common stock                                              |                                                   |             |           |            |  |               |           |            |  |   | 51,987,000  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Net income for the year ended December  31, 1997                              |                                                   |             |           |            |  |               |           |            |  |   | 4,231,000   |           
|                                                                              |                                                   |             |            |            |  |               |            |            |  |   |             |           
|Balance, December  31, 1997                                                   |                                                   |             |           |            |  |               |           |            |  |   | 47,655,000  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Issuance of Common Stock pursuant to stock plans                              |                                                   |             |           |            |  |               |           |            |  |   | 10,274,000  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Tax benefit associated with stock plans                                       |                                                   |             |           |            |  |               |           |            |  |   | 5,607,000   |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Two-for-one common stock split effected in the form of a 100%
	stock dividend |                                                   |             |           |            |  |               |           |            |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Comprehensive income:                                                         |                                                   |             |            |            |  |               |            |            |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Net income for the year ended December  31, 1998. |             |            |           |  |               |            | 11,235,000 |  |   |             | 11,235,000 | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Other comprehensive income, net of tax:                                       |                                                   |             |            |            |  |               |            |            |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Unrealized gains on securities                    |             |            | 359,000    |  |               |            | 359,000    |  |   |             | 359,000    | 
|                                                                              |                                                   |             |            |            |  |               |            |            |  |   |             |           
|Comprehensive income                                                          |                                                   |             |           |            |  | $             | 11,594,000 |            |  |   |            |           
|                                                                              |                                                   |             |            |            |  |               |            |            |  |   |             |           
|Balance, December  31, 1998                                                   |                                                   |             | 359,000    |            |  |               |            |            |  |   | 75,130,000  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Issuance of common stock pursuant to stock plans                              |                                                   |             |           |            |  |               |           |            |  |   | 10,116,000  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Tax benefit associated with stock plans                                       |                                                   |             |           |            |  |               |           |            |  |   | 34,843,000  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Conversion of Class  B common stock                                           |                                                   |             |           |            |  |               |           |            |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Reclassification of Class A common stock                                      |                                                   |             |           |            |  |               |           |            |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Two-for-one common stock split effected in the form of a 100%
	stock dividend |                                                   |             |           |            |  |               |           |            |  |   |            |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Comprehensive income:                                                         |                                                   |             |            |            |  |               |            |            |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Net income for the year ended December  31, 1999  |             |            |           |  |               |            | 26,886,000 |  |   |             | 26,886,000 | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Other comprehensive income, net of tax:                                       |                                                   |             |            |            |  |               |            |            |  |   |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Unrealized gains on securities                    |             |            | 31,624,000 |  |               |            | 31,624,000 |  |   |             | 31,624,000 | 
|                                                                              |                                                   |             |            |            |  |               |            |            |  |   |             |           
|Comprehensive income                                                          |                                                   |             |           |            |  | $             | 58,510,000 |            |  |   |            |           
|                                                                              |                                                   |             |            |            |  |               |            |            |  |   |             |           
|Balance, December  31, 1999                                                   |                                                   | $           | 31,983,000 |            |  |               |            |            |  | $ | 178,599,000 |           
|                                                                              |                                                   |             |            |            |  |               |            |            |  |   |             |           

The accompanying notes are an integral part of these financial
statements

F-5



---



##### Table of Contents



Network Solutions, Inc.

Statements of Cash Flows

|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |             |             |             |  
|----------------------------------------------------- | ---------------------------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------- | ----------- | ----------- | ----------- | ----------- | ----------- | ----------- | ------------ | ----------- | ----------- | ----------- | ----------- | -
|                                                      |                                                                                    |                                                     
|                                                      |                                                                                    | Year Ended December 31,                             
|                                                      |                                                                                    |                                                     
|                                                      |                                                                                    | 1997                                                 |                                           | 1998        |             | 1999       
|                                                      |                                                                                    |                                                      |                                           |             |             |            
|Cash flows from operating activities:                 |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net income                                                                         |                                                      | $                                         | 4,231,000   |             |             | $           | 11,235,000  |             |              | $           | 26,886,000  |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Adjustments to reconcile net income to net cash provided by
	operating activities: |                                                      |                                           |             |             |             |             |             |             |              |             |             |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Depreciation and amortization                        |                                           |             | 2,432,000   |             |             |             | 3,754,000   |              |             |             | 12,223,000  |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Provision for uncollectible accounts receivable      |                                           |             | 8,082,000   |             |             |             | 2,247,000   |              |             |             |            |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Deferred income taxes                                |                                           |             | (13,226,000 | )           |             |             | (27,317,000 | )            |             |             | (95,823,000 | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Tax benefit associated with stock plans              |                                           |             |            |             |             |             | 5,607,000   |              |             |             | 34,843,000  |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Changes in operating assets and liabilities:                                       |                                                      |                                           |             |             |             |             |             |             |              |             |             |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Increase in accounts receivable                      |                                           |             | (1,287,000  | )           |             |             | (19,083,000 | )            |             |             | (9,288,000  | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Increase in income taxes receivable                  |                                           |             |            |             |             |             |            |              |             |             | (16,193,000 | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Increase in prepaids and other assets                |                                           |             | (69,000     | )           |             |             | (2,996,000  | )            |             |             | (4,808,000  | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Increase in accounts payable and accrued liabilities |                                           |             | 3,845,000   |             |             |             | 21,861,000  |              |             |             | 22,655,000  |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Increase (decrease) in income taxes payable          |                                           |             | 5,042,000   |             |             |             | 367,000     |              |             |             | (4,364,000  | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                    | Increase in deferred revenue                         |                                           |             | 32,099,000  |             |             |             | 67,743,000  |              |             |             | 232,445,000 |            
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|                                                      |                                                                                    |                                                      | Net cash provided by operating activities |             |             | 41,149,000  |             |             |             | 63,418,000   |             |             |             | 198,576,000 |  
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|Cash flows from investing activities:                 |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Purchase of furniture and equipment                                                |                                                      |                                           | (3,240,000  | )           |             |             | (13,070,000 | )           |              |             | (52,778,000 | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Redemption (purchase) of short-term investments, net                               |                                                      |                                           | (40,200,000 | )           |             |             | (77,990,000 | )           |              |             | 9,479,000   |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Acquisition of businesses, net of cash acquired                                    |                                                      |                                           |            |             |             |             |            |             |              |             | (3,936,000  | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Purchase of long-term investments                                                  |                                                      |                                           |            |             |             |             | (13,590,000 | )           |              |             | (11,656,000 | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from maturity of long-term investments                                    |                                                      |                                           |            |             |             |             |            |             |              |             | 9,350,000   |            
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|                                                      |                                                                                    |                                                      | Net cash used in investing activities     |             |             | (43,440,000 | )           |             |             | (104,650,000 | )           |             |             | (49,541,000 | )
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|Cash flows from financing activities:                 |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net transactions with SAIC                                                         |                                                      |                                           | (14,045,000 | )           |             |             | 3,516,000   |             |              |             | 25,411,000  |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from issuance of common stock                                             |                                                      |                                           | 52,405,000  |             |             |             |            |             |              |             |            |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Dividend paid                                                                      |                                                      |                                           | (10,000,000 | )           |             |             |            |             |              |             |            |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Repayment of capital lease obligations                                             |                                                      |                                           | (463,000    | )           |             |             | (842,000    | )           |              |             | (834,000    | )          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Issuance of common stock pursuant to stock plans                                   |                                                      |                                           |            |             |             |             | 10,274,000  |             |              |             | 10,115,000  |            
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|                                                      |                                                                                    |                                                      | Net cash provided by financing activities |             |             | 27,897,000  |             |             |             | 12,948,000   |             |             |             | 34,692,000  |  
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|Net increase (decrease) in cash and cash
	equivalents |                                                                                    |                                                      | 25,606,000                                |             |             |             | (28,284,000 | )           |             |              | 183,727,000 |            
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and cash equivalents, beginning of period        |                                                                                    |                                                      | 15,540,000                                |             |             |             | 41,146,000  |             |             |              | 12,862,000  |            
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            
|Cash and cash equivalents, end of period              |                                                                                    | $                                                    | 41,146,000                                |             |             | $           | 12,862,000  |             |             | $            | 196,589,000 |            
|                                                      |                                                                                    |                                                      |                                           |             |             |             |             |             |             |              |             |            

The accompanying notes are an integral part of these financial
statements

F-6



---



##### Table of Contents



Network Solutions, Inc.

Notes to Financial Statements

Note 1  Company and Summary of Significant
Accounting Policies

Network Solutions is the exclusive registry and the leading
registrar for second level domain names within the .com,
.net, .organd .edutop level domains
pursuant to a series of agreements with the Internet Corporation
for Assigned Names and Numbers (ICANN) and the
Department of Commerce. As a registry, we maintain the master
directory of all second level domain names in the .com,
.netand .orgtop level domains. We own and
maintain the shared registration system that allows all
registrars, including us, to enter new second level domain names
into the master directory and to submit modifications, transfers,
 re-registrations and deletions for existing second level domain
names. As a registrar, we market second level domain name
registration services that enable registrants to establish their
identities on the web. In addition, we market a portfolio of
value-added products and services to help our customers maximize
the value of that identity throughout its life cycle. Network
Solutions also provides Internet Technology Services, focusing on
 network engineering, network and systems security and network
management solutions.

Agreements with ICANN

On November 10, 1999, a series of wide-ranging agreements
were entered into relating to the domain name system. These
agreements consist of the following:



| |   |                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A registry agreement between Network Solutions and ICANN under
	which Network Solutions will continue to act as the exclusive
	registry for the .com, .netand .orgtop
	level domains through November 9, 2003.            
|
| |  | A revised registrar accreditation agreement between ICANN and all
	 registrars registering names in the .com, .netand
	 .orgdomains.                                                                                      
|
| |  | A revised registrar license and agreement between Network
	Solutions as registry and all registrars registering names in the
	 .com, .netand .orgdomains using Network
	Solutions proprietary shared registration system.
|
| |  | An amendment to the Memorandum of Understanding between the U.S.
	government and ICANN.                                                                                                                                   

Under these agreements, Network Solutions has recognized ICANN as
 the not-for-profit corporation described in Amendment 11 to
 the Cooperative Agreement, has become an ICANN-accredited
registrar and has agreed to operate the registry in accordance
with the provisions of the registry agreement and the consensus
policies established by ICANN in accordance with the terms of
that agreement. Network Solutions will be an accredited registrar
 through November 9, 2004 with a right to renew
indefinitely. As the registry, Network Solutions will continue to
 charge registrars $9 per registration-year until
January 15, 2000. Thereafter, the fee will be $6 per
registration-year unless increased to cover increases in registry
 costs under the circumstances described in the registry
agreement.

The term of the registry agreement extends until November 9,
 2003, except that, if the ownership of Network Solutions
registry and registrar operations is separated within
18 months as described in the agreement, the registry
agreement term would be extended until November 9, 2007.

Network Solutions has agreed to pay annual fees set by ICANN at
levels currently not to exceed $2 million for Network
Solutions registrar and $250,000 for the Network
Solutions registry.

F-7



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 1  Company and Summary of Significant
Accounting Policies  (Continued)

Cooperative Agreement

In December 1992, Network Solutions entered into the
cooperative agreement with the National Science Foundation under
which Network Solutions was to provide Internet domain name
registration services for five top level domains: .com,
.net, .org, .eduand .gov. These
registration services include the initial two year domain name
registration and annual re-registration, and throughout the
registration term, maintenance of and unlimited modifications to
individual domain name records and updates to the master file of
domain names. The cooperative agreement became effective
January 1, 1993. It included a three-month
phase-in period, a five-year operational period,
commencing April 1, 1993 and ending March 31, 1998, and
 a six-month flexibility period through September 30,
1998. Effective September 9, 1998, the Department of
Commerce took over the administration of the cooperative
agreement from the National Science Foundation. In
October 1998, the cooperative agreement was amended to
extend the flexibility period until September 30, 2000.
 In November 1999, we entered into the series of agreements with
ICANN and the Department of Commerce relating to our Internet
domain name registration services.

The original terms of the cooperative agreement provided for a
cost reimbursement plus fixed-fee contract (with an initial fee
of 8%). Effective September 14, 1995, the National Science
Foundation and Network Solutions amended the cooperative
agreement to require Network Solutions to begin charging end
users a services fee of $50 per year for each domain name in
 the .com, .netand .orgtop level domains.
Until April 1, 1998, registrants paid a services fee of $100
 for two years of domain name services upon each initial
registration and an annual re-registration fee of $50 per
year thereafter. The National Science Foundation paid the
registration fees for domain names within the .eduand .govtop level domains through March 31, 1997.
Commencing April 1, 1997, Network Solutions agreed with the
National Science Foundation to provide domain name registration
services within the .eduand .govtop level domains
 free of charge. As of October 1, 1997, Network Solutions no
 longer registers or administers domain names in the .gov
top level domain.

Under the terms of the September 14, 1995 amendment to the
cooperative agreement, 30% of the registration fees collected by
Network Solutions was required to be set aside for the
enhancement of the intellectual infrastructure of the Internet
(set aside funds) and, as such, was not recognized as revenue by
Network Solutions. The set aside funds, plus any interest earned,
 were disbursed at the direction of the National Science
Foundation. As of December 31, 1998, Network Solutions had
disbursed all set aside funds collected and associated interest
to the National Science Foundation.

On March 12, 1998, the National Science Foundation and
Network Solutions amended the cooperative agreement to eliminate
the 30% set aside requirement effective April 1, 1998 and to
 reduce the registration fees by a corresponding amount. Initial
registrations on and after April 1, 1998 are charged $70 for
 two years of registration services and an annual re-registration
 fee of $35 per year thereafter. This amendment had no
effect on the revenue currently recognized on each registration,
$70 for initial registrations and $35 for re-registrations, since
 Network Solutions previously did not recognize revenue on the
30% set aside funds. Accordingly, while the revenue to Network
Solutions on a per registration basis did not change, the amount
charged to customers declined.

For purposes of Network Solutions statements of cash flows,
 amounts relating to these restricted assets and the Internet
fund liability have been excluded in their entirety.

F-8



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 1  Company and Summary of Significant
Accounting Policies  (Continued)

Revenue Recognition

Registration fees for registration services provided by Network
Solutions are recognized on a straight-line basis over the life
of the registration term. Network Solutions records revenue net
of an estimated provision for uncollectible accounts receivable
(Note 3).

Substantially all of Network Solutions Internet Technology
Services revenue is derived from professional services, which are
 generally provided to clients on a time and expense basis and is
 recognized as services are performed.

In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin 101 (SAB 101), Revenue
Recognition in Financial Statements which summarizes
certain of the staffs views on revenue recognition. Network
 Solutions revenue recognition policies have been and
continue to be in accordance with SAB 101.

Deferred Revenue

Deferred revenue primarily represents the unearned portion of
revenue related to the unexpired term of registration fees, net
of an estimate for uncollectible accounts receivable
(Note 3).

Cash and Cash Equivalents

Network Solutions considers all highly liquid investments with an
 original maturity of three months or less to be cash
equivalents.

Short and Long-Term Investments

Short and long-term investments in marketable securities are
classified as available-for-sale and are reported at fair value,
with unrealized gains and losses, net of tax, recorded in
stockholders equity. Fair value is determined based upon
the quoted market prices of the securities as of the balance
sheet date. Unrealized gains and losses are reflected in other
comprehensive income.

Financial Instruments

The recorded value of Network Solutions financial
instruments, which include short and long-term investments,
accounts receivable and accounts payable, approximates market
value. Concentration of credit risks with respect to registration
 receivables is limited due to the wide variety and number of
customers, as well as their dispersion across geographic areas.
Network Solutions has no derivative financial instruments.

Furniture and Equipment

Furniture and equipment are stated at cost. Depreciation on
furniture, office and computer equipment is calculated
principally using a declining-balance method over the useful
lives of three to seven years. Equipment under capital leases is
amortized using a declining-balance method over the shorter of
the assets useful lives or lease term, ranging from two to
three years. Leasehold improvements are amortized using the
straight-line method over the shorter of the lease term or the
estimated useful lives of the assets, generally six years (see
Note 4  Furniture and Equipment).

F-9



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 1  Company and Summary of Significant
Accounting Policies  (Continued)

Goodwill

Goodwill represents the excess of the purchase cost over the fair
 value of net assets acquired in Network Solutions
acquisition by Science Applications International Corporation, or
 SAIC, in 1995, and in the acquisition of ImageCafe, Inc. by
Network Solutions in November 1999. The goodwill resulting
from these transactions is amortized over five years and three
years, respectively, using the straight-line method. Amortization
 expense of $686,000, $543,000 and $846,000 for years ended
December 31, 1997, 1998 and 1999, respectively, was included
 in selling, general and administrative expenses.

Stock Splits

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.

On December 31, 1998, Network Solutions Board of
Directors approved a two-for-one stock split of the shares of
Class A common stock and Class B common stock, to be
effected in the form of a 100% stock dividend on shares of
Class A common stock and Class B common stock
outstanding on February 26, 1999. The stock dividend was
distributed on March 23, 1999.

Share and per share information for all periods presented in the
accompanying financial statements have been adjusted to reflect
these stock splits.

Software Development Costs

Effective 1998, the Company adopted the American Institute of
Certified Public Accountants Statement of Position
98-1(SOP 98-1), Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use.
Under the Companys previous accounting policy, costs for
internal use software, whether developed or obtained, were
generally expensed as incurred. In compliance with SOP 98-1, the
Company expenses costs incurred in the preliminary project stage
and, thereafter, capitalizes costs incurred in the developing or
obtaining of internal use software. Certain costs, such as
maintenance and training, are expensed as incurred. Capitalized
costs are amortized over a period of 3 to 6 years.

Advertising Costs

Advertising production costs are expensed upon commencement of
the advertising campaign. Television, Internet banner and print
advertising costs are expensed in the period the advertising is
delivered.

Income Taxes

Deferred taxes are accounted for under SFAS No. 109,
Accounting for Income Taxes, whereby deferred tax
assets and liabilities are recognized for the expected future tax
 consequences of temporary differences between financial
statement reporting and income tax purposes. A valuation
allowance is recorded if it is more likely than not
that some portion of or all of a deferred tax asset will not be
realized.

F-10



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)



Note 1  Company and Summary of Significant
Accounting Policies  (Continued)


Prior to Network Solutions initial public offering, Network
 Solutions filed tax returns as part of SAICs consolidated
tax group. Tax expense during this period had been determined as
if Network Solutions was a separate taxpayer and was charged to
Network Solutions by SAIC. Effective October 1, 1997,
Network Solutions is no longer part of SAICs consolidated
tax group for federal income tax purposes and prepares its income
 tax returns as a separate entity.

Stock Based Compensation

Network Solutions accounts for its stock option and employee
stock purchase plans in accordance with the provisions of
Accounting Principles Board Opinion (APB) No. 25,
Accounting for Stock Issued to Employees. No
compensation cost has been recognized by Network Solutions for
its employee stock plans. The SFAS No. 123, Accounting
 for Stock-Based Compensation, provides an alternative
accounting method to APB No. 25 and requires additional pro
forma disclosures (Note 10). Network Solutions expects to
continue to account for its employee stock plans in accordance
with the provisions of APB No. 25.

Segment Data

During 1998, Network Solutions adopted SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 supersedes SFAS No. 14,
 Financial Reporting for Segments of a Business
Enterprise, replacing the industry segment
approach with the management approach. The management
 approach designates internal reporting that is used by
management for making operating decisions and assessing
performance as the source of an entitys reportable
segments. SFAS No. 131 also requires disclosures about
products and services, geographic areas and major customers. The
adoption of SFAS No. 131 did not affect results of
operations, financial position or segment information disclosures
 of Network Solutions due to the nature and relative magnitude of
 its business activities for 1998 and 1999.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make reasonable estimates and assumptions, based upon all known
facts and circumstances that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual
results could differ from those estimates.

Note 2  Common Stock

1999 Secondary Stock Offering and Stock Reclassification

On February 12, 1999, Network Solutions completed a
secondary stock offering in which a total of 9,160,000 shares of
Class A common stock were sold. Concurrent with the
offering, SAIC converted 9,000,000 shares of Class B common
stock into 9,000,000 shares of Class A common stock sold in
the offering. The remaining 160,000 shares of Class A common
 stock were sold by other selling stockholders after they
exercised the applicable stock options simultaneously with the
closing of the offering. Network Solutions was not a selling
stockholder, and, therefore, did not receive any proceeds from
the stock offering other than proceeds from options exercised as
part of the offering.

F-11



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)



Note 2  Common Stock  (Continued)


After the offering, SAIC owned approximately 89% of the combined
voting power and approximately 45% of the economic interest of
the outstanding common stock.

On June 3, 1999, SAIC, the sole Class B common stock
stockholder, converted the remaining Class B common stock
into an identical number of shares of Class A common stock.
As a result, SAICs voting power changed from 89% to 45%,
consistent with the number of Class A shares owned after the
 conversion. On June 17, 1999, Network Solutions filed an
Amended and Restated Certificate of Incorporation whereby its
Class A common stock, par value $0.001 per share, and
Class B Common stock, par value $0.001 per share, were
reclassified as a single class of common stock, par value $0.001
per share, the Common Stock. At the time of the
reclassification of the Class A common stock and
Class B common stock to Common Stock, there were 33,312,594
shares of Class A common stock and no shares of Class B
 common stock outstanding.

1997 Recapitalization and Initial Public Offering

On June 26, 1997, the Board of Directors amended the
Certificate of Incorporation to provide for two classes of common
 stock, designated as Class A and Class B. The holders
of Class A and Class B common stock generally have
identical rights except that holders of Class A common stock
 are entitled to one vote per share while holders of Class B
 common stock are entitled to ten votes per share. Each share of
Class B common stock is convertible at the holders
option into one share of Class A common stock.

On October 1, 1997, Network Solutions completed an initial
public offering of 7,590,000 shares of its $.001 par value
Class A common stock, including 990,000 shares resulting
from the exercise of certain over allotment provisions. Network
Solutions net proceeds from the initial public offering,
including over allotment, were $52.5 million based on
Network Solutions direct sale of 6,440,000 shares of
Class A common stock.

Prior to the offering, Network Solutions was a wholly-owned
subsidiary of SAIC. In conjunction with the initial public
offering, SAIC converted 1,150,000 shares (including 150,000 over
 allotment shares) of Class B common stock into 1,150,000
shares of Class A common stock and directly sold the shares
as a selling stockholder. Upon completion of the offering, SAIC
owned 100% of the outstanding Class B common stock
representing 75.9% of Network Solutions equity and 96.9% of
 the combined voting power of Network Solutions outstanding
 Class B and Class A common stock.

On August 21, 1997, Network Solutions Board of
Directors declared a $10,000,000 dividend to be paid to SAIC upon
 consummation of the initial public offering. This dividend was
paid to SAIC on October 1, 1997.

F-12



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 3  Accounts Receivable

Accounts receivable consist of the following amounts as of
December 31:

|                                            |                                             |      |             |            |  |   |             |            | 
|------------------------------------------- | ------------------------------------------- | ---- | ----------- | ---------- |  | - | ----------- | ---------- | 
|                                            |                                             | 1998 |             | 1999      
|                                            |                                             |      |             |           
|Billed                                      |                                             | $    | 42,679,000  |            |  | $ | 79,340,000  |           
|                                           
|                                           
|                                           
|                                           
|Unbilled                                    |                                             |      | 5,695,000   |            |  |   | 1,296,000   |           
|                                            |                                             |      |             |            |  |   |             |           
|                                            | Total accounts receivable before allowances |      |             | 48,374,000 |  |   |             | 80,636,000 | 
|                                           
|                                           
|                                           
|                                           
|Less  Allowance for uncollectible accounts |                                             |      | (25,746,000 | )          |  |   | (48,720,000 | )         
|                                            |                                             |      |             |            |  |   |             |           
|Accounts receivable, net                    |                                             | $    | 22,628,000  |            |  | $ | 31,916,000  |           
|                                            |                                             |      |             |            |  |   |             |           

Unbilled receivables consist of registration fees and time and
material contract costs which have been incurred but which have
not yet been billed.

Effective April 1, 1998, Network Solutions consolidates and
then amortizes only the net deferred revenue balance as net
revenue over the registration term. Through March 1998, in
accounting for registration fees, Network Solutions initially
recorded the gross amount of the registration fee to accounts
receivable and deferred revenue. The allowance for estimated
uncollectible accounts was recorded against both accounts
receivable and deferred revenue balances. From the deferred
revenue and allowance balances, Network Solutions recorded
revenue and its provision for uncollectible accounts on a
straight-line basis over the registration term.

The provision for uncollectible accounts receivable, which was
separately recorded and deducted from gross registration fees in
determining net registration revenue through March 1998, was
 $7,782,000 and $2,168,000 respectively, for the years ended
December 31, 1997 and 1998. An additional $300,000 and
$79,000 of bad debt expense was recorded in 1997 and 1998,
respectively, for the write-off of Internet Technology Services
receivables.

Note 4  Furniture and Equipment

Furniture and equipment consist of the following amounts as of
December 31:

|                                                |                                  |      |            |            |  |   |             |            | 
|----------------------------------------------- | -------------------------------- | ---- | ---------- | ---------- |  | - | ----------- | ---------- | 
|                                                |                                  | 1998 |            | 1999      
|                                                |                                  |      |            |           
|Furniture and office equipment                  |                                  | $    | 833,000    |            |  | $ | 2,058,000   |           
|                                               
|                                               
|                                               
|                                               
|Computer equipment and software                 |                                  |      | 19,400,000 |            |  |   | 64,677,000  |           
|                                               
|                                               
|                                               
|                                               
|Leasehold improvements                          |                                  |      | 2,018,000  |            |  |   | 8,294,000   |           
|                                                |                                  |      |            |            |  |   |             |           
|                                                | Furniture and equipment, at cost |      |            | 22,251,000 |  |   |             | 75,029,000 | 
|                                               
|                                               
|                                               
|                                               
|Less: Accumulated depreciation and amortization |                                  |      | (6,246,000 | )          |  |   | (17,623,000 | )         
|                                                |                                  |      |            |            |  |   |             |           
|Furniture and equipment, net                    |                                  | $    | 16,005,000 |            |  | $ | 57,406,000  |           
|                                                |                                  |      |            |            |  |   |             |           

Furniture and equipment includes $2,386,000 of computer equipment
 acquired during 1997 under capital lease agreements.
Amortization expense related to capital leases totaled $915,000,
$1,028,000 and $304,000 in 1997, 1998 and 1999, respectively.
Depreciation and amortization expense related to furniture and
equipment, for the years ended December 31, 1997, 1998 and
1999 was $1,746,000, $3,211,000 and $11,377,000, respectively.

F-13



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 5  Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following
amounts as of December 31:

|                 |                                             |      |            |            |  |   |            |            | 
|---------------- | ------------------------------------------- | ---- | ---------- | ---------- |  | - | ---------- | ---------- | 
|                 |                                             | 1998 |            | 1999      
|                 |                                             |      |            |           
|Accounts payable |                                             | $    | 7,647,000  |            |  | $ | 3,283,000  |           
|                
|                
|                
|                
|Accrued expenses |                                             |      | 16,717,000 |            |  |   | 39,449,000 |           
|                
|                
|                
|                
|Accrued payroll  |                                             |      | 3,923,000  |            |  |   | 10,225,000 |           
|                 |                                             |      |            |            |  |   |            |           
|                 | Total accounts payable and accrued expenses |      | $          | 28,287,000 |  |   | $          | 52,957,000 | 
|                 |                                             |      |            |            |  |   |            |           

Note 6  Leases

Future minimum lease payments, including fixed escalation
increases for office space and equipment under capital and
operating leases with initial or remaining noncancelable lease
terms in excess of one year as of December 31, 1999 are:

|                                               |                              |         |          |           |  |   |           |            | 
|---------------------------------------------- | ---------------------------- | ------- | -------- | --------- |  | - | --------- | ---------- | 
|                                               |                              | Capital |          | Operating
|Year Ending December 31:                       |                              | Leases  |          | Leases   
|                                               |                              |         |          |          
|2000                                           |                              | $       | 252,000  |           |  | $ | 8,195,000 |           
|                                              
|                                              
|                                              
|                                              
|2001                                           |                              |         |         |           |  |   | 6,133,000 |           
|                                              
|                                              
|                                              
|                                              
|2002                                           |                              |         |         |           |  |   | 4,007,000 |           
|                                              
|                                              
|                                              
|                                              
|2003                                           |                              |         |         |           |  |   | 1,421,000 |           
|                                              
|                                              
|                                              
|                                              
|2004                                           |                              |         |         |           |  |   | 358,000   |           
|                                               |                              |         |          |           |  |   |           |           
|                                               | Total minimum lease payments |         | $        | 252,000   |  |   | $         | 20,114,000 | 
|                                               |                              |         |          |           |  |   |           |           
|Less: Amounts representing interest            |                              |         | (5,000   | )         |  |   |           |           
|                                               |                              |         |          |           |  |   |           |           
|Present value of minimum lease payments        |                              |         | 247,000  |           |  |   |           |           
|                                              
|                                              
|                                              
|                                              
|Less: Current portion                          |                              |         | (247,000 | )         |  |   |           |           
|                                               |                              |         |          |           |  |   |           |           
|Long-term portion of capital lease obligations |                              | $       |         |           |  |   |           |           
|                                               |                              |         |          |           |  |   |           |           

In December 1992, Network Solutions entered into a lease
agreement for Network Solutions headquarters in Herndon,
Virginia. Subsequent to the acquisition, SAIC subleased the
facilities to Network Solutions under a lease expiring
November 2002. During 1997, Network Solutions leased a
second facility in Herndon whose lease term expires in
July 2002. In April and September 1999, Network
Solutions leased two additional facilities in Herndon with lease
terms expiring in March 2004 and November 2002,
respectively.

Operating lease expense for the years ended December 31,
1997, 1998 and 1999 was $2,188,000, $3,533,000 and $6,031,000,
respectively. Network Solutions generated rental income from
subleases of $291,000 and $215,000 for the years ended
December 31, 1997 and 1998, respectively. No rental income
from subleases was recorded for the year ended December 31,
1999.

Note 7  Transactions with SAIC

Network Solutions was acquired by SAIC on March 10, 1995 in
a stock-for-stock transaction accounted for as a purchase. The
financial statements for the years ended December 31, 1997,
1998 and 1999 include significant transactions with other SAIC
business units involving functions and services (such as cash
management, tax administration, accounting, legal, data
processing, payroll and

F-14



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 7  Transactions with SAIC 
(Continued)



Prior to July 1, 1999, employees of Network Solutions were
eligible to participate in various SAIC benefit plans, including
stock, bonus and retirement plans, subject to the applicable
eligibility requirements. SAIC charges Network Solutions directly
 for the costs of such employee benefit plans. Charges related to
 the administration of the SAIC benefit plans in which employees
of Network Solutions participate, are included within the SAIC
corporate services fee.

Amounts charged and allocated to Network Solutions for these
functions and services for the years ended December 31,
1997, 1998 and 1999 were $1,126,000, $1,447,000 and $1,000,000,
respectively, and are principally included in selling, general
and administrative expenses.

Sales as a subcontractor to SAIC for the years ended
December 31, 1997, 1998 and 1999 were $2,445,000, $525,000
and $234,000, respectively. In addition, because Network
Solutions was included in SAICs consolidated tax returns
for periods from acquisition until the initial public offering,
Network Solutions was obligated to make payment for its tax
liability to SAIC in accordance with the tax sharing arrangement
(Note 8).

The due to SAIC balance represents the cumulative net activity of
 all transactions between Network Solutions and SAIC and is
primarily composed of direct reimbursement of salaries, payroll
taxes and employee benefits funded upon processing by SAIC.
Network Solutions reflects this activity in the statements of
cash flows on a net basis because of the quick turnover, the
large amounts and the short maturities of these related party
cash transactions.

Note 8  Provision for Income Taxes

The results of Network Solutions since its acquisition by SAIC
until its initial public offering were included in SAICs
consolidated tax returns. Subsequent to the initial public
offering, Network Solutions is no longer part of SAICs
consolidated tax group for federal income tax purposes and
prepares its income tax returns as a separate entity.

F-15



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)



Note 8  Provision for Income Taxes 
(Continued)


The provision for income taxes consists of the following:

|                           |         |                         |           |             |             |      |           |             |             |   |            |             |             |  
|-------------------------- | ------- | ----------------------- | --------- | ----------- | ----------- | ---- | --------- | ----------- | ----------- | - | ---------- | ----------- | ----------- | -
|                           |         |                        
|                           |         | Year Ended December 31,
|                           |         |                        
|                           |         | 1997                    |           | 1998        |             | 1999
|                           |         |                         |           |             |             |     
|Current:                   |         |                         |           |             |             |      |           |             |             |   |            |            
|                          
|                          
|                          
|                          
|                           | Federal |                         | $         | 13,931,000  |             |      | $         | 29,559,000  |             |   | $          | 95,540,000  |            
|                          
|                          
|                          
|                          
|                           | State   |                         |           | 2,766,000   |             |      |           | 5,867,000   |             |   |            | 18,977,000  |            
|                           |         |                         |           |             |             |      |           |             |             |   |            |            
|                           |         | Total current provision |           |             | 16,697,000  |      |           |             | 35,426,000  |   |            |             | 114,517,000 |  
|                           |         |                         |           |             |             |      |           |             |             |   |            |            
|Deferred:                  |         |                         |           |             |             |      |           |             |             |   |            |            
|                          
|                          
|                          
|                          
|                           | Federal |                         |           | (11,035,000 | )           |      |           | (22,792,000 | )           |   |            | (79,948,000 | )          
|                          
|                          
|                          
|                          
|                           | State   |                         |           | (2,191,000  | )           |      |           | (4,525,000  | )           |   |            | (15,880,000 | )          
|                           |         |                         |           |             |             |      |           |             |             |   |            |            
|                           |         | Total deferred benefit  |           |             | (13,226,000 | )    |           |             | (27,317,000 | ) |            |             | (95,828,000 | )
|                           |         |                         |           |             |             |      |           |             |             |   |            |            
|Provision for income taxes |         | $                       | 3,471,000 |             |             | $    | 8,109,000 |             |             | $ | 18,689,000 |            
|                           |         |                         |           |             |             |      |           |             |             |   |            |            

Deferred tax assets are comprised of the following temporary
differences as of December 31:

|                                                |                          |      |            |            |  |   |             |             | 
|----------------------------------------------- | ------------------------ | ---- | ---------- | ---------- |  | - | ----------- | ----------- | 
|                                                |                          | 1998 |            | 1999      
|                                                |                          |      |            |           
|Deferred revenue                                |                          | $    | 46,943,000 |            |  | $ | 133,398,000 |            
|                                               
|                                               
|                                               
|                                               
|Provision for uncollectible accounts receivable |                          |      | 8,409,000  |            |  |   | 17,986,000  |            
|                                               
|                                               
|                                               
|                                               
|Tax on accumulated other comprehensive income   |                          |      |           |            |  |   | (22,223,000 | )          
|                                               
|                                               
|                                               
|                                               
|Other                                           |                          |      | (13,000    | )          |  |   | 33,000      |            
|                                                |                          |      |            |            |  |   |             |            
|                                                | Total deferred tax asset |      | $          | 55,339,000 |  |   | $           | 129,194,000 | 
|                                                |                          |      |            |            |  |   |             |            

Network Solutions has not established a current valuation
allowance for its deferred tax assets since, in the opinion of
management, it is more likely than not that all of the deferred
tax assets will be realized. The deferred tax assets relate
primarily to registration fees which are taxable upon initial
registration but are recognized in the financial statements over
the registration term.

A reconciliation of the provision for income taxes to the amount
computed by applying the statutory federal income tax rate of 35%
 to income before income taxes is provided below:

|                                               |  |                         |           |      |  |      |           |  |  |   |            | 
|---------------------------------------------- |  | ----------------------- | --------- | ---- |  | ---- | --------- |  |  | - | ---------- | 
|                                               |  |                        
|                                               |  | Year Ended December 31,
|                                               |  |                        
|                                               |  | 1997                    |           | 1998 |  | 1999
|                                               |  |                         |           |      |  |     
|Federal tax at statutory rate                  |  | $                       | 2,696,000 |      |  | $    | 6,771,000 |  |  | $ | 15,952,000 | 
|                                              
|                                              
|                                              
|                                              
|State income taxes, net of federal tax benefit |  |                         | 374,000   |      |  |      | 1,015,000 |  |  |   | 2,230,000  | 
|                                              
|                                              
|                                              
|                                              
|Nondeductible goodwill amortization            |  |                         | 240,000   |      |  |      | 213,000   |  |  |   | 331,000    | 
|                                              
|                                              
|                                              
|                                              
|Other                                          |  |                         | 161,000   |      |  |      | 110,000   |  |  |   | 176,000    | 
|                                               |  |                         |           |      |  |      |           |  |  |   |            | 
|Provision for income taxes                     |  | $                       | 3,471,000 |      |  | $    | 8,109,000 |  |  | $ | 18,689,000 | 
|                                               |  |                         |           |      |  |      |           |  |  |   |            | 

Network Solutions paid income taxes of $31,235,000 and
$100,223,000 during the years ended December 31, 1998 and
1999, respectively.

F-16



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 9  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:

|                         |                     |             |            |               |  |           |            |            |  |   |      |      | 
|------------------------ | ------------------- | ----------- | ---------- | ------------- |  | --------- | ---------- | ---------- |  | - | ---- | ---- | 
|                         |                     | Income      |            | Shares        |  | Per Share
|                         |                     | (Numerator) |            | (Denominator) |  | Amount   
|                         |                     |             |            |               |  |          
|1997 Earnings Per Share: |                     |             |            |               |  |           |            |            |  |   |      |     
|                        
|                        
|                        
|                        
|Basic                    |                     | $           | 4,231,000  |               |  |           | 53,220,000 |            |  | $ | 0.08 |     
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|Dilutive securities:     |                     |             |            |               |  |           |            |            |  |   |      |     
|                        
|                        
|                        
|                        
|                         | Outstanding options |             |            |              |  |           |            | 712,000    |  |   |      |      | 
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|                         | Diluted             |             | $          | 4,231,000     |  |           |            | 53,932,000 |  |   | $    | 0.08 | 
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|1998 Earnings Per Share: |                     |             |            |               |  |           |            |            |  |   |      |     
|                        
|                        
|                        
|                        
|Basic                    |                     | $           | 11,235,000 |               |  |           | 63,914,000 |            |  | $ | 0.18 |     
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|Dilutive securities:     |                     |             |            |               |  |           |            |            |  |   |      |     
|                        
|                        
|                        
|                        
|                         | Outstanding options |             |            |              |  |           |            | 2,880,000  |  |   |      |      | 
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|                         | Diluted             |             | $          | 11,235,000    |  |           |            | 66,794,000 |  |   | $    | 0.17 | 
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|1999 Earnings Per Share: |                     |             |            |               |  |           |            |            |  |   |      |     
|                        
|                        
|                        
|                        
|Basic                    |                     | $           | 26,886,000 |               |  |           | 66,687,000 |            |  | $ | 0.40 |     
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|Dilutive securities:     |                     |             |            |               |  |           |            |            |  |   |      |     
|                        
|                        
|                        
|                        
|                         | Outstanding options |             |            |              |  |           |            | 3,230,000  |  |   |      |      | 
|                         |                     |             |            |               |  |           |            |            |  |   |      |     
|Diluted                  |                     | $           | 26,886,000 |               |  |           | 69,917,000 |            |  | $ | 0.38 |     
|                         |                     |             |            |               |  |           |            |            |  |   |      |     

Common shares issued are weighted for the period the shares were
outstanding and incremental shares assumed issued under the
treasury stock method for dilutive earnings per share are
weighted for the period the underlying options were outstanding.

Note 10  Employee Benefit Plans

1996 Stock Incentive Plan

The 1996 Stock Incentive Plan, or Incentive Plan, of Network
Solutions was adopted by the Board of Directors on
September 18, 1996. The Incentive Plan provides for awards
in the form of restricted shares, stock units, stock appreciation
 rights, and stock options (including incentive stock options and
 nonstatutory stock options). A total of 9,225,000 shares of
Common Stock have been initially reserved for issuance under the
Incentive Plan. The number of shares are increased by 2% of the
total number of Common Stock outstanding at the end of the most
recent calendar year. Through December 31, 1999, an
additional 4,934,000 shares were eligible for issuance and have
subsequently been reserved for a combined total of 14,159,000
eligible shares under the Incentive Plan.

F-17



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 10  Employee Benefit Plans 
(Continued)

Following is a summary of stock option activity pursuant to
Network Solutions Incentive Plan:

|                             |  |        |            |                  |  |   |       | 
|---------------------------- |  | ------ | ---------- | ---------------- |  | - | ----- | 
|                             |  | Shares |            |                 
|                             |  | Under  |            | Weighted Average
|                             |  | Option |            | Exercise Price  
|                             |  |        |            |                 
|Balance at December 31, 1996 |  |        | 4,902,000  |                  |  | $ | 3.25  | 
|                            
|                            
|                            
|                            
|Granted                      |  |        | 2,402,000  |                  |  | $ | 3.56  | 
|                            
|                            
|                            
|                            
|Exercised                    |  |        |           |                  |  |   |      | 
|                            
|                            
|                            
|                            
|Cancelled                    |  |        | (146,000   | )                |  | $ | 3.50  | 
|                             |  |        |            |                  |  |   |       | 
|Balance at December 31, 1997 |  |        | 7,158,000  |                  |  | $ | 3.34  | 
|                            
|                            
|                            
|                            
|Granted                      |  |        | 2,718,000  |                  |  | $ | 10.98 | 
|                            
|                            
|                            
|                            
|Exercised                    |  |        | (3,040,000 | )                |  | $ | 3.26  | 
|                            
|                            
|                            
|                            
|Cancelled                    |  |        | (1,414,000 | )                |  | $ | 4.63  | 
|                             |  |        |            |                  |  |   |       | 
|Balance at December 31, 1998 |  |        | 5,422,000  |                  |  | $ | 6.87  | 
|                            
|                            
|                            
|                            
|Granted                      |  |        | 4,624,000  |                  |  | $ | 43.54 | 
|                            
|                            
|                            
|                            
|Exercised                    |  |        | (1,757,000 | )                |  | $ | 5.28  | 
|                            
|                            
|                            
|                            
|Cancelled                    |  |        | (597,000   | )                |  | $ | 23.57 | 
|                             |  |        |            |                  |  |   |       | 
|Balance at December 31, 1999 |  |        | 7,692,000  |                  |  | $ | 27.97 | 
|                             |  |        |            |                  |  |   |       | 

Granted stock options generally become exercisable one year after
 the date of the grant, vest 30%, 30%, 20% and 20%, respectively,
 on each anniversary date of the grant and have a term of five
years. All options granted to date have been nonstatutory stock
options except for 404,000 incentive stock options granted in
1996. During 1999, Network Solutions granted 27,576 restricted
shares to two executives. No other restricted shares, stock units
 or stock appreciation rights have been granted to date.

The following table summarizes the status of Network
Solutions stock options outstanding and exercisable at
December 31, 1999:

|                |  |        |           |               |  |               |      |        |  |          |       |  |  |  |         |  |  |   |       | 
|--------------- |  | ------ | --------- | ------------- |  | ------------- | ---- | ------ |  | -------- | ----- |  |  |  | ------- |  |  | - | ----- | 
|                |  |        |           |               |  |              
|                |  |        |           | Stock Options |  | Stock Options
|                |  |        |           | Outstanding   |  | Exercisable  
|                |  |        |           |               |  |              
|                |  |        |           | Weighted      |  |               |      |       
|                |  |        |           | Average       |  | Weighted      |      |        |  | Weighted
|                |  |        |           | Remaining     |  | Average       |      |        |  | Average 
|Range of        |  |        |           | Contractual   |  | Exercise      |      |        |  | Exercise
|Exercise Prices |  | Shares |           | Life          |  | Price         |      | Shares |  | Price   
|                |  |        |           |               |  |               |      |        |  |         
|$ 3.50$  3.50  |  |        | 1,440,000 |               |  |               | 2.16 |        |  | $        | 3.50  |  |  |  | 300,000 |  |  | $ | 3.50  | 
|               
|               
|               
|               
|$ 3.72$ 10.84  |  |        | 1,364,000 |               |  |               | 3.31 |        |  | $        | 7.73  |  |  |  | 222,000 |  |  | $ | 6.47  | 
|               
|               
|               
|               
|$11.75$ 29.69  |  |        | 1,352,000 |               |  |               | 4.28 |        |  | $        | 23.80 |  |  |  | 29,000  |  |  | $ | 12.41 | 
|               
|               
|               
|               
|$30.25$ 38.63  |  |        | 1,301,000 |               |  |               | 4.38 |        |  | $        | 33.47 |  |  |  | 132,000 |  |  | $ | 35.31 | 
|               
|               
|               
|               
|$39.41$ 46.00  |  |        | 1,378,000 |               |  |               | 4.24 |        |  | $        | 45.00 |  |  |  | 94,000  |  |  | $ | 46.00 | 
|               
|               
|               
|               
|$47.00$129.34  |  |        | 857,000   |               |  |               | 4.86 |        |  | $        | 72.14 |  |  |  |        |  |  |   |      | 
|                |  |        |           |               |  |               |      |        |  |          |       |  |  |  |         |  |  |   |       | 
|$ 3.50$129.34  |  |        | 7,692,000 |               |  |               | 3.78 |        |  | $        | 27.97 |  |  |  | 777,000 |  |  | $ | 15.22 | 
|                |  |        |           |               |  |               |      |        |  |          |       |  |  |  |         |  |  |   |       | 

F-18



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 10  Employee Benefit Plans 
(Continued)

Employee Stock Purchase Plan

Effective January 7, 1998, Network Solutions adopted an
Employee Stock Purchase Plan to provide substantially all full
time employees an opportunity to purchase shares of its Common
Stock through payroll deductions of up to 10% of eligible
compensation. Semiannually, on June 30 and December 31,
 participant account balances are used to purchase stock at the
lesser of 85 percent of the fair market value on the trading
 day before the participation period starts or the trading day
preceding the day on which the participation period ends. A total
 of 1,000,000 shares were initially reserved for purchase under
the plan. For the years ended December 31, 1998 and 1999,
60,000 and 26,000 shares were purchased under this plan,
respectively.

Network Solutions 401(k) Retirement Plan

Effective July 1, 1999, Network Solutions sponsors an
employee savings plan that qualifies as a deferred salary
arrangement under Section 401(k) of the Internal Revenue
Code. Participating employees may defer up to 18% of their
compensation, subject to certain regulatory limitations. Employee
 contributions are invested, at the employees direction,
among a variety of investment alternatives, including Network
Solutions Common Stock. Network Solutions matches employee
contributions at a rate of 50% up to a maximum of 3% of
compensation. Employee contributions are fully vested, whereas
vesting in matching Company contributions occurs at a rate of 25%
 per year of employment. During the period from July 1, 1999
 through December 31, 1999, the Companys matching
contribution was $308,000 in cash. Matching contributions are
subsequently invested in Network Solutions Common Stock.

Pro Forma Disclosures

The weighted average fair value of the options granted using the
Black Scholes model during 1997, 1998 and 1999 amounted to $1.17,
 $7.46 and $33.96, respectively for the Network Solutions
Incentive Plan. The following weighted average assumptions were
used in calculating the option fair values.

|                        |  |                         |       |      |  |      |       |   |  |  |        |  
|----------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ------ | -
|                        |  |                        
|                        |  | Network Solutions Stock
|                        |  | Options                
|                        |  |                        
|                        |  | 1997                    |       | 1998 |  | 1999
|                        |  |                         |       |      |  |     
|Expected life (years)   |  |                         | 4.0   |      |  |      | 4.0   |   |  |  | 4.0    |  
|                       
|                       
|                       
|                       
|Risk-free interest rate |  |                         | 6.25  | %    |  |      | 5.1   | % |  |  | 5.48   | %
|                       
|                       
|                       
|                       
|Volatility              |  |                         | 20.79 | %    |  |      | 90.73 | % |  |  | 115.65 | %
|                       
|                       
|                       
|                       
|Dividend yield          |  |                         | 0.00  | %    |  |      | 0.00  | % |  |  | 0.00   | %

Under the above model, the total value of Network Solutions
 employee stock purchase program and stock options granted in
1997, 1998 and 1999 was $2,809,000, $20,322,000, and
$154,624,000, respectively, all of which would be amortized
ratably on a pro forma basis over the respective option terms.
Had Network Solutions recorded compensation costs for these plans
 in accordance with SFAS No. 123, Network Solutions
pro forma income would have been $3,510,000, $9,236,000 and
$8,075,000, respectively, for the years ended December 31,
1997, 1998 and 1999. Pro forma earnings per share on a diluted
basis would have been $0.07, $0.14 and $0.12, respectively, for
the years ended December 31, 1997, 1998 and 1999.

F-19



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 11  Comprehensive Income

The changes in the components of accumulated other comprehensive
income, net of income taxes, for the years ended
December 31, 1998 and 1999 is as follows:

|                  |  |            |         |               |  |            |         |               |  |   |            |  |  |   |            | 
|----------------- |  | ---------- | ------- | ------------- |  | ---------- | ------- | ------------- |  | - | ---------- |  |  | - | ---------- | 
|                  |  |            |         |              
|                  |  | 1998       |         | 1999         
|                  |  |            |         |              
|                  |  | Unrealized |         | Accumulated   |  | Unrealized |         | Accumulated  
|                  |  | Gains      |         | Other         |  | Gains      |         | Other        
|                  |  | On         |         | Comprehensive |  | On         |         | Comprehensive
|                  |  | Securities |         | Income        |  | Securities |         | Income       
|                  |  |            |         |               |  |            |         |              
|Pre-tax amount    |  | $          | 618,000 |               |  | $          | 618,000 |               |  | $ | 53,588,000 |  |  | $ | 54,206,000 | 
|                 
|                 
|                 
|                 
|Income tax        |  |            | 259,000 |               |  |            | 259,000 |               |  |   | 21,964,000 |  |  |   | 22,223,000 | 
|                  |  |            |         |               |  |            |         |               |  |   |            |  |  |   |            | 
|Net of tax amount |  | $          | 359,000 |               |  | $          | 359,000 |               |  | $ | 31,624,000 |  |  | $ | 31,983,000 | 
|                  |  |            |         |               |  |            |         |               |  |   |            |  |  |   |            | 

Note 12  Commitments and Contingencies

On June 27, 1997, SAIC received a Civil Investigative
Demand, or CID, from the U.S. Department of Justice
issued in connection with an investigation to determine whether
there is, has been, or may be any antitrust violation under the
Sherman Act relating to its Internet registration services. On
January 28, 2000, the Department of Justice formally
notified us that the investigation had been closed. No
enforcement action was taken.

On August 17, 1998, Network Solutions received notice from
the Commission of the European Communities, or EC, of
 an investigation concerning Network Solutions Premier
Program agreements in Europe. On January 26, 2000, the EC
formally notified Network Solutions that its investigation had
been closed. No enforcement action was taken.

In 1997, a group of six plaintiffs filed the Thomas, et al.,
v. Network Solutions, et al, suit against us and the National
 Science Foundation in the United States District Court, District
 of Columbia, challenging the legality of fees defendants charge
for the registration of domain names on the Internet and seeking
restitution of fees collected from domain name registrants in an
amount in excess of $100 million, damages, and injunctive
and other relief. On August 28, 1998, the District Court
dismissed the entire case, issuing a final judgment in the
matter. In October 1998, the plaintiffs appealed the
courts dismissal of their claims. On May 14, 1999, the
 Court of Appeals ruled in our favor by unanimously affirming the
 District Courts decision. On October 12, 1999, the
plaintiffs filed a Petition for a Writ of Certiorari with the
U.S. Supreme Court. On January 18, 2000, the U.S. Supreme
Court denied the plaintiffs petition.

In 1997, PG Media, Inc., a New York-based corporation, filed a
lawsuit against us in the United States District Court, Southern
District of New York alleging that we had restricted access to
the Internet by not adding PG Medias requested 490 top
level domains to the Internet root zone in violation of the
Sherman Act. PG Media appealed to the Second Circuit Court of
Appeals and on January 21, 2000, the Court of Appeals issued
 its opinion in our favor.

As of March 13, 2000, we were a defendant in eight active
lawsuits involving domain name disputes between trademark owners
and domain name holders. We are drawn into such disputes, in
part, as a result of claims by trademark owners that we are
legally required, upon request by a trademark owner, to terminate
 the right we granted to a domain name holder to register a
domain name which is alleged to be similar to the trademark in
question. Although 68 out of approximately 9,500 of these
situations have resulted in suits actually naming us as a
defendant, as of March 13,

F-20



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)

Note 12  Commitments and Contingencies 
(Continued)



Network Solutions is involved in various investigations, claims
and lawsuits arising in the normal conduct of business, none of
which, in managements opinion will materially harm Network
Solutions business. Legal proceedings in which Network
Solutions is involved have resulted and likely will result in,
and any future legal proceedings can be expected to result in,
substantial legal and other expenses and a diversion of the
efforts of Network Solutions personnel.

Note 13  Subsequent Events

Proposed Acquisition of Network Solutions by VeriSign Inc.

On March 7, 2000, VeriSign Inc., the leading provider of
Internet trust services, and Network Solutions, Inc. 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 stockholders. After the merger, VeriSign will own
approximately 60% of the combined company while Network Solutions
 stockholders will own approximately 40% of the combined company.
 The transaction is expected to close in the third quarter of
2000, subject to customary conditions, including obtaining
necessary regulatory and stockholders approvals.

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. After the offering, SAIC owns approximately
23% of Network Solutions outstanding Common Stock.

Litigation

On March 15, 2000, a group of eight plaintiffs filed suit
against the U.S. Department of Commerce, the National Science
Foundation and us 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.
 Although none of the defendants have yet been served with the
complaint, we are aware that the same attorney who challenged us
in a similar action known as Thomas, et al. v. Network
Solutions, et al., has 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, § 8 and the Fifth

F-21



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)



Note 13  Subsequent Events  (Continued)


Amendment of the U.S. Constitution, the Independent Offices
Appropriations Act (31 U.S.C. § 9701), the
Administrative Procedure Act, the Sherman Act, and the California
 Unfair Competition Act, § 17200. We believe that the
complaint lacks merit and we intend to vigorously defend
ourselves as we did in response to the Thomas case.

F-22



---



##### Table of Contents



Network Solutions, Inc.


Notes to Financial Statements  (Continued)



Note 13  Subsequent Events  (Continued)


Schedule II

Valuation and Qualifying Accounts and Reserves

|                             |                                      |            |   |                    |  |            |   |             |  |             |   |             |     |  |   |             |     |  |   |            | 
|---------------------------- | ------------------------------------ | ---------- | - | ------------------ |  | ---------- | - | ----------- |  | ----------- | - | ----------- | --- |  | - | ----------- | --- |  | - | ---------- | 
|                             |                                      |            |   |                    |  |            |   |            
|Column A                     |                                      | Column B   |   | Column C Additions |  | Column D   |   | Column E   
|                             |                                      |            |   |                    |  |            |   |            
|                             |                                      |            |   |                    |  | Charged to |   |             |  |            
|                             |                                      | Balance at |   | Charged to         |  | other      |   |             |  |            
|                             |                                      | beginning  |   | costs and          |  | accounts  |   | Deductions |  | Balance at 
|Description                  |                                      | of year    |   | expenses           |  | describe   |   | describe    |  | end of year
|                             |                                      |            |   |                    |  |            |   |             |  |            
|Year ended December 31, 1997 |                                      |            |   |                    |  |            |   |             |  |             |   |             |     |  |   |             |     |  |   |           
|                            
|                            
|                            
|                            
|                             | Allowance for uncollectible accounts |            | $ | 15,439,000         |  |            | $ | 8,082,000   |  |             | $ | 35,368,000  | (1) |  | $ | 41,033,000  | (2) |  | $ | 17,856,000 | 
|Year ended December 31, 1998 |                                      |            |   |                    |  |            |   |             |  |             |   |             |     |  |   |             |     |  |   |           
|                            
|                            
|                            
|                            
|                             | Allowance for uncollectible accounts |            | $ | 17,856,000         |  |            | $ | 2,247,000   |  |             | $ | 68,480,000  | (1) |  | $ | 62,837,000  | (2) |  | $ | 25,746,000 | 
|Year ended December 31, 1999 |                                      |            |   |                    |  |            |   |             |  |             |   |             |     |  |   |             |     |  |   |           
|                            
|                            
|                            
|                            
|                             | Allowance for uncollectible accounts |            | $ | 25,746,000         |  |            |   |            |  |             | $ | 310,519,000 | (1) |  | $ | 287,545,000 | (2) |  | $ | 48,720,000 | 




|    |                                                                                                 
|--- | ------------------------------------------------------------------------------------------------
|(1) | Charged to allowance for deferred revenue (See
	Notes 1 and 3 of Notes to Financial Statements).
|   
|(2) | Amounts are write-offs of uncollectible accounts
	receivable.                                   

F-23