LOS ANGELES, Aug. 5, 2009 (GLOBE NEWSWIRE) -- j2 Global Communications, Inc. (Nasdaq:JCOM) today reported financial results for the second quarter ended June 30, 2009.
SECOND QUARTER 2009 RESULTS
Total revenues for Q2 2009 increased 3% to a new quarterly record of $62.5 million compared to $60.7 million in Q2 2008.
Subscriber revenues for Q2 2009 increased 3% to $61 million compared to $59.5 million in Q2 2008.
During Q2 2009, the Company improved its gross margin to 81.4% from 80.7% in Q2 2008 and its operating margin to 44.1% from 39.7% in Q2 2008.
Net earnings per diluted share on a Non-GAAP basis, which excludes share based compensation and a Q2 2009 impairment of auction rate and related securities, for Q2 2009 increased 20% to $0.48 compared to $0.40 in Q2 2008. SFAS 123(R) expense (expensing for share-based compensation) impacted Q2 2009 net earnings and net earnings per diluted share by approximately $2.0 million and $0.04, net of tax, respectively.
During Q2 2009, the Company recorded a non-recurring pre-tax impairment charge on auction rate and related securities of $9.2 million. This reduced net earnings and net earnings per diluted share by approximately $8.4 million and $0.19 net of tax, respectively. As a result, GAAP earnings were $11.1 million and $16.7 million for Q2 2009 and Q2 2008 respectively. GAAP net earnings per diluted share were $0.25 and $0.37 for Q2 2009 and Q2 2008, respectively.
Key financial results for second quarter 2009 versus second quarter 2008 are as follows:
=======================================
Q2 2009 Q2 2008 % Change
=====================================================================
Subscriber Revenues $61.0 million $59.5 million 3%
=====================================================================
Total Revenues $62.5 million $60.7 million 3%
=====================================================================
Non-GAAP Earnings $21.6 million $18.1 million 19%
=====================================================================
Non-GAAP Net Earnings per
Diluted Share(1) $0.48 $0.40 20%
=====================================================================
(1) The estimated effective tax rate was approximately 30% and 32%
for Q2 2009 and Q2 2008, respectively.
"I am pleased with our continued execution against our business plan which emphasizes further improvement in our cost structure," said Hemi Zucker, j2 Global's chief executive officer. "The continued increase in our gross and operating margins, combined with our revenue growth, resulted in record quarterly non-GAAP operating income and earnings. In addition, we achieved record quarterly revenues and record six-month free cash flow. Our cash resources of nearly $200 million provide us ample financial flexibility to pursue multiple opportunities."
BUSINESS OUTLOOK
For fiscal 2009, j2 Global maintains its anticipation of modest revenue and earnings growth (net of expenses related to share-based compensation and impairment charges for auction rate and related securities), inclusive of acquisitions, versus 2008 despite the ongoing global economic crisis. The Company remains well positioned to take advantage of changing customer and market conditions while continuing its focus on efficient marketing, optimizing its cost structure and deploying its cash resources into higher yielding investments such as acquisitions.
About j2 Global Communications
Founded in 1995, j2 Global Communications, Inc. provides outsourced, value-added messaging and communications services to individuals and businesses around the world. j2 Global's network spans more than 3,300 cities in 46 countries on six continents. The Company offers faxing and voicemail solutions, document management solutions, Web-initiated conference calling, and unified-messaging and communications services. j2 Global markets its services principally under the brand eFax(r), eFax Corporate(r), Onebox(r), eVoice(r) and Electric Mail(r). As of December 31, 2008, j2 Global had achieved 13 consecutive fiscal years of revenue growth and seven consecutive fiscal years of positive and growing operating earnings. For more information about j2 Global, please visit www.j2global.com.
The j2 Global Communications, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3907
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this Press Release are "forward-looking statements" within the meaning of The Private Securities Litigation Act of 1995, particularly those contained in the "Business Outlook" portion regarding the Company's expected fiscal 2009 financial performance. These forward-looking statements are based on management's current expectations or beliefs and are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: Subscriber growth and retention; variability of revenue based on changing conditions in particular industries and the economy generally; protection of the Company's proprietary technology or infringement by the Company of intellectual property of others; the risk of adverse changes in the U.S. or international regulatory environments surrounding unified messaging and telecommunications, including but not limited to the imposition of additional taxation or regulatory-related fees; and the numerous other factors set forth in j2 Global's filings with the Securities and Exchange Commission ("SEC"). For a more detailed description of the risk factors and uncertainties affecting j2 Global, refer to the 2008 Annual Report on Form 10-K filed by j2 Global on February 25, 2009, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at www.sec.gov. The financial estimates provided in the "Business Outlook" portion of this press release regarding the Company's expected fiscal 2009 financial performance are based on limited information available to the Company at this time, which is subject to change. Although management's expectations may change after the date of this press release, the Company undertakes no obligation to revise or update these financial estimates.
j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
JUNE 30, DECEMBER 31,
2009 2008
------------ ------------
ASSETS
Cash and cash equivalents $ 192,576 $ 150,780
Short-term investments 21 14
Accounts receivable, net of allowances of
$3,104 and $2,896, respectively 13,905 14,083
Prepaid expenses and other current assets 8,497 6,683
Deferred income taxes 2,958 2,958
------------ ------------
Total current assets 217,957 174,518
Long-term investments 2,207 11,081
Property and equipment, net 16,551 18,938
Goodwill 81,151 72,783
Other purchased intangibles, net 38,526 36,791
Deferred income taxes 9,008 7,787
Other assets 109 142
------------ ------------
TOTAL ASSETS $ 365,509 $ 322,040
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 17,675 $ 16,915
Income taxes payable 1,451 1,800
Deferred revenue 13,168 13,680
------------ ------------
Total current liabilities 32,294 32,395
Accrued income tax liability 41,996 38,643
Other long-term liabilities 881 1,022
------------ ------------
Total liabilities 75,171 72,060
Commitments and contingencies -- --
Total stockholders' equity 290,338 249,980
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 365,509 $ 322,040
============ ============
j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues
Subscriber $ 61,049 $ 59,537 $ 120,689 $ 116,752
Other 1,415 1,140 2,166 2,573
---------- ---------- ---------- ----------
Total revenue 62,464 60,677 122,855 119,325
Cost of revenues
(including share-based
compensation of $331 and
$612 for the three and
six months of 2009,
respectively, and $212
and $387 for the three
and six months of 2008,
respectively) 11,600 11,725 22,992 23,356
---------- ---------- ---------- ----------
Gross profit 50,864 48,952 99,863 95,969
---------- ---------- ---------- ----------
Operating expenses:
Sales and marketing
(including share-based
compensation of $484 and
$861 for the three and
six months of 2009,
respectively, and $328
and $666 for the three
and six months of 2008,
respectively) 9,211 10,585 18,096 20,799
Research, development and
engineering (including
share-based compensation
of $221 and $417 for the
three and six months of
2009, respectively, and
$191 and $405 for the
three and six months of
2008, respectively) 2,880 3,011 5,823 6,158
General and
administrative
(including share-based
compensation of $1,870
and $3,311 for the three
and six months of 2009,
respectively, and $1,243
and $2,543 for the three
and six months of 2008,
respectively) 11,209 11,292 21,915 22,449
---------- ---------- ---------- ----------
Total operating expenses 23,300 24,888 45,834 49,406
---------- ---------- ---------- ----------
Operating earnings 27,564 24,064 54,029 46,563
Other-than-temporary
impairment losses (9,193) -- (9,193) --
Interest and other income,
net 315 563 457 1,891
---------- ---------- ---------- ----------
Earnings before income
taxes 18,686 24,627 45,293 48,454
Income tax expense 7,549 7,897 15,504 14,930
---------- ---------- ---------- ----------
Net earnings $ 11,137 $ 16,730 $ 29,789 $ 33,524
========== ========== ========== ==========
Basic net earnings per
common share $ 0.25 $ 0.38 $ 0.68 $ 0.73
========== ========== ========== ==========
Diluted net earnings per
common share $ 0.25 $ 0.37 $ 0.66 $ 0.71
========== ========== ========== ==========
Basic weighted average
shares outstanding 43,762,333 44,142,748 43,695,076 45,700,933
========== ========== ========== ==========
Diluted weighted
average shares
outstanding 45,044,005 45,688,869 44,806,260 47,026,104
========== ========== ========== ==========
j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
Six Months Ended
June 30,
2009 2008
-------- --------
Cash flows from operating activities:
Net earnings $ 29,789 $ 33,524
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 7,363 6,340
Share-based compensation 5,201 4,001
Excess tax benefits from share-based compensation (2,723) (443)
Provision for doubtful accounts 593 1,614
Deferred income taxes (1,221) (1,062)
Loss on disposal of fixed assets 15 28
Gain on trading securities (8) --
Other-than-temporary impairment losses 9,193 --
Decrease (increase) in:
Accounts receivable (516) (1,134)
Prepaid expenses and other current assets 436 1,576
Other assets 33 46
(Decrease) increase in:
Accounts payable and accrued expenses 579 5,106
Income taxes payable 189 (616)
Deferred revenue (777) (767)
Accrued income tax liability 3,354 3,067
Other 14 (29)
-------- --------
Net cash provided by operating activities 51,514 51,251
-------- --------
Cash flows from investing activities:
Sales of available-for-sale investments -- 36,170
Redemptions/Sales of held-to-maturity
investments -- 27,883
Purchases of property and equipment (938) (1,265)
Acquisition of businesses, net of cash received (11,910) (33,278)
Proceeds from sale of assets 1,011 --
Purchases of intangible assets (2,272) (1,664)
-------- --------
Net cash (used in) provided by investing
activities (14,109) 27,846
-------- --------
Cash flows from financing activities:
Repurchases of common stock -- (97,336)
Repurchase of restricted stock (92) (82)
Issuance of common stock under employee stock
purchase plan 61 112
Exercise of stock options 802 973
Excess tax benefits from share-based
compensation 2,723 443
-------- --------
Net cash provided by (used in) financing
activities 3,494 (95,890)
-------- --------
Effect of exchange rate changes on cash and cash
equivalents 897 1,357
-------- --------
Net increase (decrease) in cash and cash
equivalents 41,796 (15,436)
Cash and cash equivalents at beginning of period 150,780 154,220
-------- --------
Cash and cash equivalents at end of period $192,576 $138,784
======== ========
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED RECONCILIATION OF MODIFIED NET EARNINGS
THREE MONTHS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Modified net earnings are GAAP net earnings with the following
modifications (i) elimination of share-based compensation expense for
2009 and 2008; (ii) elimination of income tax expense associated with
share-based compensation expense. (iii) elimination of
other-than-temporary impairment losses (iv) elimination of income tax
expense associated with other-than-temporary impairment losses.
Modified net earnings and modified net earnings per share are not
meant as a substitute for measures determined under GAAP, but are
solely for informational purposes. The following table illustrates and
reconciles the GAAP net earnings with the aforementioned exclusions.
The Company believes that this non-GAAP financial information are
useful measures of operating performance because they exclude certain
non-recurring transactions outside the ordinary course of the
Company's business.
THREE MONTHS ENDED JUNE 30, 2009
--------------------------------------
Reported Non-GAAP Entries Non-GAAP
--------------------------------------
Revenues
Subscriber $ 61,049 $ -- $ 61,049
Other 1,415 -- 1,415
--------------------------------------
Total revenue 62,464 -- 62,464
Cost of revenues(1) 11,600 (331)(1) 11,269
--------------------------------------
Gross profit 50,864 331 51,195
--------------------------------------
Operating expenses:
Sales and marketing(1) 9,211 (484)(1) 8,727
Research, development and
engineering(1) 2,880 (221)(1) 2,659
General and administrative(1) 11,209 (1,870)(1) 9,339
--------------------------------------
Total operating expenses 23,300 (2,575) 20,725
--------------------------------------
Operating earnings 27,564 2,906 30,470
Other-than-temporary impairment
losses(3) (9,193) 9,193(3) --
Interest and other income, net 315 -- 315
-------------------
Earnings before income taxes 18,686 12,099 30,785
Income tax expense(2),(4) 7,549 1,668(2),(4) 9,217
--------------------------------------
Net earnings $ 11,137 $10,431 $ 21,568
======================================
Diluted net earnings per share $ 0.25 $ 0.48
========== ==========
Diluted weighted average
shares outstanding 45,044,005 45,044,005
========== ==========
(1) Share-based compensation
and related payroll tax
and employee compensation
expenses
Cost of revenues $ (331)
Sales and marketing (484)
Research, development and
engineering (221)
General and administrative (1,870)
-------
$(2,906)
=======
(2) Income tax adjustment, net
impact of the items above $ 892
=======
(3) Other-than-temporary
impairment losses $ 9,193
=======
(4) Income tax adjustment, net
impact of the item above $ 776
=======
THREE MONTHS ENDED JUNE 30, 2008
--------------------------------------
Reported Non-GAAP Entries Non-GAAP
--------------------------------------
Revenues
Subscriber $ 59,537 $ -- $ 59,537
Other 1,140 -- 1,140
--------------------------------------
Total revenue 60,677 -- 60,677
Cost of revenues(1) 11,725 (212)(1) 11,513
--------------------------------------
Gross profit 48,952 212 49,164
--------------------------------------
Operating expenses:
Sales and marketing(1) 10,585 (328)(1) 10,257
Research, development and
engineering(1) 3,011 (191)(1) 2,820
General and administrative(1) 11,292 (1,243)(1) 10,049
--------------------------------------
Total operating expenses 24,888 (1,762) 23,126
--------------------------------------
Operating earnings 24,064 1,974 26,038
Other-than-temporary impairment
losses(3) -- -- --
Interest and other income, net 563 -- 563
-------------------
Earnings before income taxes 24,627 1,974 26,601
Income tax expense(2),(4) 7,897 562(2) 8,459
--------------------------------------
Net earnings $ 16,730 $ 1,412 $ 18,142
======================================
Diluted net earnings per share $ 0.37 $ 0.40
======================================
Diluted weighted average
shares outstanding 45,688,869 45,688,869
========== ==========
(1) Share-based compensation
and related payroll tax
and employee compensation
expenses
Cost of revenues $ (212)
Sales and marketing (328)
Research, development and
engineering (191)
General and administrative (1,243)
-------
$(1,974)
=======
(2) Income tax adjustment, net
impact of the items above 562
=======
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED RECONCILIATION OF MODIFIED NET EARNINGS
SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Modified net earnings are GAAP net earnings with the following
modifications (i) elimination of share-based compensation expense for
2009 and 2008; (ii) elimination of income tax expense associated with
share-based compensation expense. (iii) elimination of
other-than-temporary impairment losses (iv) elimination of income tax
expense associated with other-than-temporary impairment losses.
Modified net earnings and modified net earnings per share are not
meant as a substitute for measures determined under GAAP, but are
solely for informational purposes. The following table illustrates and
reconciles the GAAP net earnings with the aforementioned exclusions.
The Company believes that this non-GAAP financial information are
useful measures of operating performance because they exclude certain
non-recurring transactions outside the ordinary course of the
Company's business.
SIX MONTHS ENDED JUNE 30, 2009
--------------------------------------
Reported Non-GAAP Entries Non-GAAP
Revenues
Subscriber $ 120,689 $ -- $ 120,689
Other 2,166 -- 2,166
--------------------------------------
Total revenue 122,855 -- 122,855
Cost of revenues(1) 22,992 (612)(1) 22,380
--------------------------------------
Gross profit 99,863 612 100,475
--------------------------------------
Operating expenses:
Sales and marketing(1) 18,096 (861)(1) 17,235
Research, development and
engineering(1) 5,823 (417)(1) 5,406
General and administrative(1) 21,915 (3,311)(1) 18,604
--------------------------------------
Total operating expenses 45,834 (4,589) 41,245
--------------------------------------
Operating earnings 54,029 5,201 59,230
Other-than-temporary impairment
losses(3) (9,193) 9,193(3) --
Interest and other income, net 457 -- 457
------------------- ----------
Earnings before income taxes 45,293 14,394 59,687
Income tax expense (2),(4) 15,504 2,346(2),(4) 17,850
--------------------------------------
Net earnings $ 29,789 $12,048 $ 41,837
======================================
Diluted net earnings per share $ 0.66 $ 0.93
========== ==========
Diluted weighted average shares
outstanding 44,806,260 44,806,260
========== ==========
(1) Share-based compensation
and related payroll tax
and employee compensation
expenses
Cost of revenues $ (612)
Sales and marketing (861)
Research, development and
engineering (417)
General and administrative (3,311)
-------
$(5,201)
=======
(2) Income tax adjustment, net
impact of the items above $ 1,570
=======
(3) Other-than-temporary
impairment losses $ 9,193
=======
(4) Income tax adjustment, net
impact of the item above $ 776
=======
SIX MONTHS ENDED JUNE 30, 2008
--------------------------------------
Reported Non-GAAP Entries Non-GAAP
--------------------------------------
Revenues
Subscriber $ 116,752 $ -- $ 116,752
Other 2,573 -- 2,573
--------------------------------------
Total revenue 119,325 -- 119,325
Cost of revenues(1) 23,356 (387)(1) 22,969
--------------------------------------
Gross profit 95,969 387 96,356
--------------------------------------
Operating expenses:
Sales and marketing(1) 20,799 (666)(1) 20,133
Research, development and
engineering(1) 6,158 (405)(1) 5,753
General and administrative(1) 22,449 (2,543)(1) 19,906
--------------------------------------
Total operating expenses 49,406 (3,614) 45,792
--------------------------------------
Operating earnings 46,563 4,001 50,564
Other-than-temporary impairment
losses(3) --
Interest and other income, net 1,891 -- 1,891
------------------- ----------
Earnings before income taxes 48,454 4,001 52,455
Income tax expense (2),(4) 14,930 1,158(2) 16,088
--------------------------------------
Net earnings $ 33,524 $ 2,843 $ 36,367
======================================
Diluted net earnings per share $ 0.71 $ 0.77
========== ==========
Diluted weighted average shares
outstanding 47,026,104 47,026,104
========== ==========
(1) Share-based compensation
and related payroll tax
and employee compensation
expenses
Cost of revenues $ (387)
Sales and marketing (666)
Research, development and
engineering (405)
General and administrative (2,543)
$(4,001)
=======
(2) Income tax adjustment, net
impact of the items above 1,158
=======
j2 Global Communications, Inc.
Free Cash Flows
Q1 Q2 Q3 Q4 YTD
-- -- -- -- ---
2009
----
Net cash provided by
operating activities 31,152 20,362 51,514
Less: Purchases of property
and equipment (721) (217) (938)
Add: Excess tax benefit from
share-based compensation 5 2,718 2,723
--------------------------------------
30,436 22,863 -- -- 53,299
--------------------------------------
2008
----
Net cash provided by
operating activities 27,411 23,840 15,676 23,789 90,716
Less: Purchases of property
and equipment (469) (796) (937) (305) (2,507)
Add: Excess tax benefit from
share-based compensation 239 204 212 910 1,565
--------------------------------------
27,181 23,248 14,951 24,394 89,774
--------------------------------------
2007
----
Net cash provided by
operating activities 26,659 23,113 18,656 25,779 94,207
Less: Purchases of property
and equipment (529) (2,506) (2,940) (4,340)(10,315)
Add: Excess tax benefit from
share-based compensation 2,163 780 517 1,271 4,731
--------------------------------------
28,293 21,387 16,233 22,710 88,623
--------------------------------------