j2 Global Reports Q4 and Year End 2010 Results and Provides 2011 Outlook

/ Source: GlobeNewswire

Record Quarterly and Annual Revenues

Record Quarterly and Annual Non-GAAP EPS

LOS ANGELES, Feb. 15, 2011 (GLOBE NEWSWIRE) -- j2 Global Communications, Inc. (Nasdaq:JCOM) today reported financial results for the fourth quarter and year ended December 31, 2010.

FOURTH QUARTER 2010 RESULTS

During the quarter the Company added over 500,000 paying DIDs, bringing its total to more than 1.9 million.

Subscriber revenues increased 17% to a quarterly record $70.3 million compared to $60.2 million in Q4 2009.

Total revenues increased 17% to a quarterly record $71.0 million compared to $60.9 million in Q4 2009.

GAAP net earnings per diluted share increased 49% to $0.58 compared to $0.39 for Q4 2009.

Non-GAAP net earnings per diluted share(3) increased 33% to a quarterly record $0.60 compared to $0.45 for Q4 2009. 

Free cash flow(4) for Q4 2010 was $21.6 million after impact of approximately $3.3 million, net of tax, transaction and transition-related costs, compared to $22.2 million for Q4 2009.

Key financial results for fourth quarter 2010 versus fourth quarter 2009 are as follows:

(1) The estimated GAAP effective tax rate was approximately 14% for Q4 2010 and 31% for Q4 2009. The Q4 2010 GAAP rate was reduced by increased foreign income taxed at a lower rate, full year R&D credit recognized in Q4 and the book, but not tax, gain on sale of auction rate securities.

(2) The estimated Non-GAAP effective tax rate was approximately 18% for Q4 2010 and 31% for Q4 2009. The Q4 2010 Non-GAAP rate was reduced by increased foreign income taxed at a lower rate and full year R&D credit recognized in Q4.

(3) For Q4 2010, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, certain acquisition-related integration costs and gain on sale of auction rate securities, in each case, net of tax, totaling $0.02. For Q4 2009, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, disposal of long-lived asset and gain on auction rate securities, in each case, net of tax, totaling $0.06.

(4) Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus excess tax benefit from share-based compensation. Free cash flow for the quarter was impacted by approximately $3.3 million, net of tax, of transition and acquisition-related costs.

FULL YEAR 2010 RESULTS

Subscriber revenues increased 4% to an annual record $252.5 million compared to $241.9 million in 2009.

Total revenues increased 4% to an annual record $255.4 million compared to $245.6 million in 2009.

GAAP net earnings per diluted share increased 22% to $1.81 compared to $1.48 for 2009. 

Non-GAAP net earnings per diluted share(7) for 2010 increased 6% to an annual record $1.96 compared to $1.85 for 2009. 

Free cash flow(8) for 2010 was $108.8 million, an increase of 7% compared to $101.6 million for 2009.

Key annual financial results for 2010 versus 2009 are as follows:

(5)   The estimated GAAP effective tax rate was approximately 24.9% for 2010 and 31.7% for 2009. The 2010 GAAP rate was reduced by increased foreign income taxed at a lower rate, a decrease in reserves for uncertain tax positions and a change in valuation allowance.

(6)   The estimated Non-GAAP effective tax rate was approximately 26.3% for 2010 and 29.6% for 2009. The 2010 Non-GAAP rate was reduced by increased foreign income taxed at a lower rate and a decrease in reserves for uncertain tax positions.

(7)   For 2010, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, certain acquisition-related integration costs and gain on sale of auction rate securities, in each case, net of tax, totaling $0.15. For 2009, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, impairment of auction rate securities, disposal of long-lived asset and gain on auction rate securities, in each case, net of tax, totaling $0.37.

(8)   Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus excess tax benefit from share-based compensation. In addition, the amount shown for 2010 excludes the impact of a $14.2 million payment to the IRS in settlement of an audit for transfer pricing covering tax years 2004 through 2008 which was fully accrued for in prior periods. Including this settlement amount, the Company's free cash flow for the year was $94.6 million. Free cash flow for the year was impacted by approximately $3.4 million, net of tax, of transition and acquisition-related costs.

The Company ended the year with approximately $87 million in cash and investments compared to $244 million as of December 31, 2009. During fiscal 2010 the Company deployed approximately $249 million of cash and investments in connection with business acquisitions.

"We are very proud of our accomplishments in 2010 and look forward to continued improved growth in revenues and earnings in 2011," said Hemi Zucker, j2 Global's chief executive officer. "The Company achieved record revenues, earnings and cash flow, added 630,000 paid DIDs and acquired eight businesses.  At the same time, we improved our customer retention levels and expanded our geographic coverage by 23% to more than 4,300 cities world-wide. We are also excited at the prospects of our new cloud-based business lines: KeepItSafe™, a data backup service, and Campaigner®, an email marketing offering."

BUSINESS OUTLOOK

For fiscal 2011, j2 Global expects revenues between $320 and $340 million and Non-GAAP net earnings per diluted share between $2.21 and $2.42, exclusive of between $9 and $11 million of share-based compensation expense and between $5 and $8 million of acquisition-related transition costs.

It is anticipated that the normalized tax rate for 2011 (exclusive of the release of certain FIN 48 reserves) will be between 28% and 30%.

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 4,300 cities in 49 countries on six continents. The Company offers Internet fax, voice and email solutions. j2 Global markets its services principally under the brand names eFax®, MyFax®, eFax Corporate®, Onebox®, eVoice®, Campaigner®, Electric Mail® and KeepItSafe™. As of December 31, 2010, j2 Global had achieved 15 consecutive fiscal years of revenue growth. For more information about j2 Global, please visit www.j2global.com.

The j2 Global Communications, Inc. logo is available at

"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 2011 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 messaging and communications, including but not limited to the imposition or increase of taxes 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 2009 Annual Report on Form 10-K filed by j2 Global on February 23, 2010, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at . The forward-looking statements provided in this press release and particularly those contained in the "Business Outlook" portion regarding the Company's expected fiscal 2011 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 statements.

CONTACT: Jeff Adelman j2 Global Communications, Inc. 323-372-3617 press@j2global.com