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ADDING and REPLACING j2 Global Reports Q2 2014 Results

Add after last paragraph of release: Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income tables.

The corrected release reads:

J2 GLOBAL REPORTS Q2 2014 RESULTS

Achieves Record Quarterly Revenues; 12.0% Growth in Cloud Service Revenues vs. Q2 2013; 17.2% Growth in Digital Media Revenues vs. Q2 2013

Increases Dividend for Twelfth Consecutive Quarter to $0.2775 per Share

j2 Global, Inc. (NASDAQ-GS:JCOM) today reported financial results for the second quarter ended June 30, 2014 and announced that its Board of Directors has declared a quarterly cash dividend of $0.2775 per share, j2’s twelfth consecutive quarterly dividend increase.

SECOND QUARTER 2014 RESULTS

Business Cloud Services revenues(1) increased 12.0% to a record $105.3 million compared to $94.0 million for Q2 2013. Digital Media revenues increased 17.2% to a record $38.2 million compared to $32.6 for Q2 2013. Intellectual Property (IP) Licensing revenues decreased to $1.2 million from $14.7 million for Q2 2013, due primarily to the Company securing a $27 million license agreement in Q3 2013 that increased revenues that quarter by $12.6 million from past damages (the “Q2 2013 License Agreement”).(2)

Consolidated revenues for the quarter increased 2.3% to a record $144.7 million compared to $141.4 million in Q2 2013. Adjusted Non-GAAP revenues for the quarter increased 14.4% to $145.7 million compared to $127.4 million in Q2 2013.(3)

Earnings per diluted share(4) for the quarter decreased (5.2)% to $0.73 compared to $0.77 for Q2 2013, due primarily to approximately $0.17 from the Q2 2013 License Agreement. Adjusted Non-GAAP earnings per diluted share(4)(5) for the quarter increased 10.5% to $0.84 compared to $0.76 for Q2 2013.

EBITDA(6) for the quarter increased 18.4% to $63.7 million compared to $53.8 million for Q2 2013.

Free cash flow(7) for the quarter increased 38% to $54.1 million compared to $39.2 million for Q2 2013.

j2 ended the quarter with $708.5 million in cash and investments after issuing convertible senior notes with net proceeds of $391.4 million and deploying $53.5 million for acquisitions during the quarter and j2’s regular quarterly dividend payment.

Key GAAP financial results for Q2 2014 versus Q2 2013 are set forth in the following table (in millions, except per share).

                 
      Q2 2014     Q2 2013     % Change
Revenues                    
Cloud Services     $105.3 million     $94.0 million       12.0%
Digital Media     $38.2 million     $32.6 million       17.2%
IP Licensing     $1.2 million     $14.7 million       (91.8)%
Total:     $144.7 million     $141.4 million       2.3%
Earnings per Diluted Share (4)     $0.73     $0.77       (5.2)%
         

Key Adjusted Non-GAAP financial results for Q2 2014 versus Q2 2013 are set forth in the following table (in millions, except per share). Reconciliations of revenues, earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

                 
      Q2 2014     Q2 2013     % Change
Adjusted Non-GAAP Revenues                    
Cloud Services     $106.3 million     $94.0 million       13.1%
Digital Media     $38.2 million     $31.2 million       22.4%
IP Licensing     $1.2 million     $2.2 million       (45.5)%
Total:     $145.7     $127.4       14.4%
Adjusted Non-GAAP Earnings per Diluted Share (4) (5)     $0.84     $0.76       10.5%
EBITDA (6)     $63.7 million     $53.8 million       18.4%
Free Cash Flow (7)     $54.1 million     $39.2 million       38%
         

“This was a great quarter,” said Hemi Zucker, j2’s CEO. “We grew our Digital Media revenues(3) by 22.4% and our Cloud Services revenues(3) by 13.1%, each versus Q2 2013. We made significant progress on several key strategic priorities, including further reducing our churn rate and continuing to increase our non-fax business – which now comprises more than 52% of our revenues – while simultaneously growing our fax business. In addition, our cost containment in our Cloud Services and Digital Media businesses allowed us to flow through more than 50% of incremental revenues in those businesses to EBITDA. With more than $700 million in cash and investments on hand, we are in a strong position.”

BUSINESS OUTLOOK

j2 is reaffirming its previously announced fiscal 2014 revenues estimate of between $580 and $600 million.

In Q2 2014, j2 issued $402.5 million in convertible senior notes, which will adversely impact 2014 earnings per diluted share by approximately $0.10. Notwithstanding this impact, j2 is reaffirming its previously announced fiscal 2014 Adjusted Non-GAAP earnings per diluted share estimate of between $3.23 and $3.47.

Adjusted Non-GAAP earnings per diluted share for 2014 excludes share-based compensation of between $10 and $12 million, amortization of acquired intangibles and the impact of any currently unanticipated items, and adds back $1.5 million to reflect the impact of the fair value adjustment to deferred revenues purchased in the Livedrive acquisition, in each case net of tax.

It is anticipated that the Adjusted Non-GAAP tax rate for 2014 will be between 27% and 29%.

DIVIDEND

j2’s Board of Directors has approved a cash dividend of $0.2775 per common share, a 12.1% increase versus the dividend paid in Q3 2013. This is j2’s twelfth consecutive quarterly dividend increase since its first quarterly dividend in September 2011. The dividend will be paid on September 2, 2014 to all shareholders of record as of the close of business on August 18, 2014. Future dividends will be subject to Board approval.

Notes:

(1)   Defined as Business Cloud Services segment revenues less IP Licensing revenues.
 
(2) For more information on the Q2 2013 License Agreement please refer to j2’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2013. For Q2 2013, approximately $0.3 million of non-patent, licensing revenues have been reclassified to Cloud Services revenue.
 
(3) For Q2 2014, Adjusted Non-GAAP revenues adds back to Cloud Services revenues the approximate $1.5 million fair value adjustment to deferred revenues purchased in the Livedrive acquisition. For Q2 2013, Adjusted Non-GAAP revenues excludes $12.6 million of Business Cloud Services segment revenues from the Q2 2013 License Agreement (see Note 2), and $1.3 million of Digital Media revenues from certain acquisition and related exit costs.
 
(4) The estimated GAAP effective tax rates were approximately 10.9% for Q2 2014 and 24.7% for Q2 2013. The estimated Adjusted Non-GAAP effective tax rates were approximately 27.1% for Q2 2014 and 24.2% for Q2 2013.
 
(5) For Q2 2014, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, amortization of acquired intangibles and additional tax expense (benefit) from prior years, and adds back the impact of the fair value adjustment to deferred revenues purchased in the Livedrive acquisition, in each case net of tax, totaling $0.12. For Q2 2013, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, amortization of acquired intangibles and earnings attributable to the Q2 2013 License Agreement, in each case net of tax, totaling $(0.01). Adjusted Non-GAAP earnings per diluted share amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
 
(6) EBITDA is defined as earnings before interest and other expense, net; income tax expense; depreciation and amortization; and the items used to reconcile EPS to Adjusted Non-GAAP EPS referred to in Note (5) above. EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
 
(7) 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 Q2 2013 excludes $27 million received under the Q2 2013 License Agreement. Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

About j2 Global

j2 Global, Inc. (NASDAQ:JCOM) provides Internet services through two divisions: Business Cloud Services and Digital Media. The Business Cloud Services Division offers Internet fax, virtual phone, hosted email, email marketing, online backup, unified communications and CRM solutions. It markets its services principally under the brand names eFax®, eVoice®, FuseMail®, Campaigner®, KeepItSafe®, Livedrive® and Onebox®, and operates a messaging network spanning 50 countries on six continents. The Digital Media Division offers technology, gaming and lifestyle content through its digital properties, which include PCMag.comIGN.com, AskMen.com, Toolbox.com and others. The Digital Media Division also operates NetShelter® Powered by BuyerBase®, an advanced digital ad targeting platform, and Ziff Davis B2B, a leading provider of research to enterprise buyers and leads to IT vendors. As of December 31, 2013, j2 had achieved 18 consecutive fiscal years of revenue growth. For more information about j2, please visit www.j2global.com.

“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 Reform Act of 1995, particularly those contained in the “Business Outlook” portion regarding the Company’s expected fiscal 2014 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: ability to successfully diversify and grow our business, including both the Business Cloud Services and Digital Media Divisions; ability to identify, close and successfully integrate acquisitions; risks of geographic expansion; risks that markets we choose to enter fail to achieve desired levels of growth and profitability prospects; 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’s filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting j2, refer to the 2013 Annual Report on Form 10-K filed by j2 on March 3, 2014, and the other reports filed by j2 from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release and particularly those contained in the “Business Outlook” portion regarding the Company’s expected fiscal 2014 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.

 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
     
 
JUNE 30, DECEMBER 31,
  2014   2013
 
ASSETS
Cash and cash equivalents $ 591,881 $ 207,801
Short-term investments 61,687 90,789

Accounts receivable, net of allowances of $3,937 and $4,105, respectively

70,830 67,245
Prepaid expenses and other current assets 33,841 20,064
Deferred income taxes   3,232   3,126
Total current assets 761,471 389,025
 
Long-term investments 54,934 47,351
Property and equipment, net 40,662 31,200
Goodwill 514,539 457,422
Other purchased intangibles, net 254,833 223,533
Deferred income taxes - 1,845
Other assets   13,378   3,413
 
TOTAL ASSETS $ 1,639,817 $ 1,153,789
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 65,586 $ 69,570
Income taxes payable 4,727 1,569
Deferred revenue 57,315 36,326
Liability for uncertain tax positions - 5,535
Deferred income taxes 1,683 1,892
Other current liabilities   909  
Total current liabilities 130,220 114,892
 
Long-term debt 589,603 245,670
Liability for uncertain tax positions 42,650 38,329
Deferred income taxes 66,095 35,833
Deferred revenue 11,742 11,189
Other long-term liabilities   5,915   1,458
Total liabilities 846,225 447,371
 
Commitments and contingencies
 
Stockholders' Equity:
Preferred stock
Common stock 468 461
Additional paid-in capital 266,122 216,872
Retained earnings 520,351 484,850
Accumulated other comprehensive income   6,651   4,235
Total stockholders' equity   793,592   706,418
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,639,817 $ 1,153,789
 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
   
 
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
  2014     2013     2014     2013  
 
Cloud Service Revenue $ 105,340 $ 94,036 $ 204,241 $ 184,054
Digitial Media Revenue 38,221

(1)

32,592

(1)

71,515

(1)

55,471

(1)

IP Licensing Revenue 1,183 14,733 3,112 15,453
       
Revenues 144,744 141,361 278,868 254,978
 
Cost of revenues (including share-based compensation of $27 and $181 for the three and six months of 2014, respectively, and $205 and $419 for the three and six months of 2013, respectively)   25,559     22,679     48,947     42,914  
Gross profit   119,185     118,682     229,921     212,064  
 
Operating expenses:
Sales and marketing (including share-based compensation of $426 and $917 for the three and six months of 2014, respectively, and $432 and $850 for the three and six months of 2013, respectively) 35,329 35,213 68,288 64,851
 
Research, development and engineering (including share-based compensation of $222 and $362 for the three and six months of 2014, respectively, and $102 and $208 for the three and six months of 2013, respectively) 7,601 6,388 14,814 13,134
 
General and administrative (including share-based compensation of $1,288 and $2,888 for the three and six months of 2014, respectively, and $1,596 and $3,206 for the three and six months of 2013, respectively) 31,418 24,474 60,397 48,485
       
Total operating expenses   74,348     66,075     143,499     126,470  
 
Income from operations 44,837 52,607 86,422 85,594
Interest expense (income), net 5,682 4,859 10,630 9,736
Other expense (income), net   (186 )   (42 )   (505 )   (203 )
Income before income taxes 39,341 47,790 76,297 76,061
Income tax expense   4,292     11,823     12,483     17,323  
Net income 35,049 35,967 63,814 58,738
Less net loss attributable to noncontrolling interest       (73 )       (224 )
Net income attributable to j2 Global, Inc. common shareholders $ 35,049   $ 36,040   $ 63,814   $ 58,962  
 
Basic net income per common share:
Net income attributable to j2 Global, Inc. common shareholders $ 0.73   $ 0.78   $ 1.34   $ 1.28  
 
Diluted net income per common share:
Net income attributable to j2 Global, Inc. common shareholders $ 0.73   $ 0.77   $ 1.33   $ 1.26  
 
 
Basic weighted average shares outstanding   46,745,596     45,428,230     46,556,428     45,294,925  
 
Diluted weighted average shares outstanding   47,067,767     46,018,245     46,911,574     45,881,465  
 
 

(1)

Amount excludes inter-segment revenue between Business Cloud and Digital Media
 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
       
 
SIX MONTHS ENDED JUNE 30,
  2014     2013  
 
Cash flows from operating activities:
Net income $ 63,814 $ 58,738

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 28,455 18,241
Accretion and amortization of discount and premium on investments 654 820
Amortization of financing costs and discounts 641 300
Share-based compensation 4,347 4,683
Excess tax benefit from share-based compensation (4,803 ) (1,581 )
Provision for doubtful accounts 1,810 1,279
Deferred income taxes (780 ) (542 )
Decrease (increase) in:
Accounts receivable 5,691 2,886
Prepaid expenses and other current assets (3,151 ) 929
Other assets (3 ) 487
(Decrease) increase in:
Accounts payable and accrued expenses (3,616 ) 4,998
Income taxes payable (320 ) 212
Deferred revenue 364 14,049
Liability for uncertain tax positions (1,213 ) 3,512
Other liabilities   (84 )   10  
Net cash provided by operating activities   91,806     109,021  
 
Cash flows from investing activities:
Maturity of certificate of deposit 14,520 31,120
Purchase of certificates of deposit (13,861 )
Sales of available-for-sale investments 51,929 67,261
Purchases of available-for-sale investments (45,043 ) (91,729 )
Purchases of property and equipment (4,023 ) (5,989 )
Purchases of intangible assets (3,899 ) (1,261 )
Acquisition of business   (79,546 )   (81,150 )
Net cash used in investing activities   (66,062 )   (95,609 )
 
Cash flows from financing activities:
Issuance of long term debt 402,500
Debt issuance costs (11,069 ) (47 )
Repurchases of stock (4,733 ) (2,266 )
Issuance of stock, net of costs 5,316 6,630
Excess tax benefit from share-based compensation 4,803 1,581
Dividends paid (25,302 ) (21,762 )
Acquisition of business (13,473 )
Other   (163 )    
Net cash provided by (used in) financing activities   357,879     (15,864 )
 
Effect of exchange rate changes on cash and cash equivalents   457     (1,302 )
 
Net increase (decrease) in cash and cash equivalents 384,080 (3,754 )
Cash and cash equivalents at beginning of period   207,801     218,680  
Cash and cash equivalents at end of period $ 591,881   $ 214,926  
 
 
j2 GLOBAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                         
 
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition-related integration costs and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) elimination of amortization of patents and intangible assets that we acquired; (4) elimination of additional income tax benefit from prior years; (5) elimination of revenue associated with past damages under a single $27 million license agreement; and (6) elimination of income tax provision associated with share-based compensation and the associated payroll tax expense, certain acquisition-related integration costs and fair value adjustments to deferred revenue, amortization of patents and intangible assets that we acquired, additional income tax benefit from prior years and revenue associated with past damages under a single $27 million

 

 
THREE MONTHS ENDED JUNE 30, 2014 THREE MONTHS ENDED JUNE 30, 2013
 
 
 

(2)

(4)

(2)

Acquisition- Additional Acquisition-

(1)

related Tax Expense

(1)

related

(5)

Share-based Integration

(3)

(Benefit) from Adjusted Share-based Integration

(3)

Patent Adjusted

GAAP

Compensation

Costs

Amortization

Prior Years

Non-GAAP

GAAP

Compensation

Costs

Amortization

Settlement

Non-GAAP

 
Revenues $ 144,744 985 $ 145,729 $ 141,361 (1,348 ) (12,572 ) $ 127,441
 
Cost of revenues 25,559 (27 ) (855 ) 24,677 22,679 (205 ) 22,474
 
Operating expenses:
Sales and marketing 35,329 (426 ) (41 ) 34,862 35,213 (432 ) (2,061 ) 32,720
Research, development and engineering 7,601 (222 ) 7,379 6,388 (102 ) - 6,286
General and administrative 31,418 (1,288 ) (589 ) (11,435 ) 18,106 24,474 (1,596 ) (1,270 ) (7,223 ) 14,385
 
Interest expense (income), net 5,682 (439 ) 5,243 4,859 4,859
Other expense (income), net (186 ) (186 ) (42 ) (42 )
 
Income tax provision (6) 4,292 696 649 3,982 5,487 15,106 11,823 779 843 2,470 (4,614 ) 11,301
 

Net income attributable to j2 Global, Inc. common stockholders

$ 35,049 1,267 1,405 8,308 (5,487 ) $ 40,542 $ 36,040 1,556 1,140 4,753 (7,958 ) $ 35,531
 

Net income per share attributable to j2 Global, Inc. common stockholders*:

Basic $ 0.73 0.03 0.03 0.18 (0.12 ) $ 0.85 $ 0.78 0.03 0.03 0.10 (0.18 ) $ 0.77
Diluted $ 0.73 0.03 0.03 0.18 (0.12 ) $ 0.84 $ 0.77 0.03 0.02 0.10 (0.17 ) $ 0.76
 
 
 
* The reconciliation of net income per share from GAAP to adjusted non-GAAP may not foot since each is calculated independently.
 

The Company discloses adjusted non-GAAP Earnings Per Share ("EPS") as supplemental non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this adjusted non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance. Accordingly, the Company believes that the presentation of this adjusted non-GAAP financial measure provides useful information to investors.

 
Adjusted non-GAAP EPS is not in accordance with, or an alternative to, net income per share and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, this adjusted non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.
 
 
j2 GLOBAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                           
 
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition-related integration costs and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) elimination of amortization of patents and intangible assets that we acquired; (4) elimination of additional income tax and indirect tax expense and benefit from prior years; (5) elimination of revenue associated with past damages under a single $27 million license agreement; and (6) elimination of income tax provision associated with share-based compensation and the associated payroll tax expense, certain acquisition-related integration costs and fair value adjustments to deferred revenue, amortization of patents and intangible assets that we acquired, additional indirect tax expense and benefit from prior years and elimination of revenue associated with past damages under a single $27 million license agreement.
 
 
SIX MONTHS ENDED JUNE 30, 2014 SIX MONTHS ENDED JUNE 30, 2013
 
 
 
(2) (4) (2)
Acquisition- Additional Acquisition-
(1) related Income Tax (1) related (5)
Share-based Integration (3) Benefit from Adjusted Share-based Integration (3) Patent Adjusted

GAAP

Compensation

Costs

Amortization

Prior Years

Non-GAAP

GAAP

Compensation

Costs

Amortization

Settlement

Non-GAAP

 
Revenues $ 278,868 1,526 $ 280,394 $ 254,978 (1,392 ) (12,572 ) $ 241,014
 
Cost of revenues 48,947 (181 ) (1,279 ) 47,487 42,914 (419 ) (88 ) 42,407
 
Operating expenses:
Sales and marketing 68,288 (917 ) (60 ) 67,311 64,851 (850 ) (3,053 ) 60,948
Research, development and engineering 14,814 (362 ) 14,452 13,134 (208 ) (579 ) 12,347
General and administrative 60,397 (2,887 ) 472 (21,395 ) (713 ) 35,874 48,485 (3,206 ) (3,749 ) (13,945 ) 27,585
 
Interest expense (income), net 10,630 (439 ) 10,191 9,736 9,736
Other expense (income), net (505 ) (505 ) (203 ) (203 )
 
Income tax provision (6) 12,483 1,520 365 7,413 6,849 28,630 17,323 1,553 2,606 4,781 (4,614 ) 21,649
 

Net income attributable to j2 Global, Inc. common stockholders

$ 63,814 2,827 1,188 15,261 (6,136 ) $ 76,954 $ 58,962 3,130 3,471 9,164 (7,958 ) $ 66,769
 

Net income per share attributable to j2 Global, Inc. common stockholders*:

Basic $ 1.34 0.06 0.03 0.33 (0.12 ) $ 1.62 $ 1.28 0.07 0.08 0.20 (0.18 ) $ 1.45
Diluted $ 1.33 0.06 0.03 0.33 (0.12 ) $ 1.60 $ 1.26 0.07 0.08 0.20 (0.17 ) $ 1.43
 
 
 
* The reconciliation of net income per share from GAAP to adjusted non-GAAP may not foot since each is calculated independently.
 
The Company discloses adjusted non-GAAP Earnings Per Share ("EPS") as supplemental non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this adjusted non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance. Accordingly, the Company believes that the presentation of this adjusted non-GAAP financial measure provides useful information to investors.
 
Adjusted non-GAAP EPS is not in accordance with, or an alternative to, net income per share and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, this adjusted non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.
 
 
j2 GLOBAL, INC.
NET INCOME TO EBITDA RECONCILIATION
THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED, IN THOUSANDS)
       
 
The following table sets forth a reconciliation of EBITDA to net income, the most directly comparable GAAP financial measure.
 
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
  2014     2013     2014     2013  
 
Net income $ 35,049 $ 35,967 $ 63,814 $ 58,738
Plus:
Other expense (income), net (186 ) (42 ) (505 ) (203 )
Interest expense (income), net 5,682 4,859 10,630 9,736
Income tax expense 4,292 11,823 12,483 17,323
Depreciation and amortization 15,317 9,454 28,455 18,248
Reconciliation of GAAP to adjusted non-GAAP financial measures:
Patent Settlement (12,572 ) (12,572 )
Share-based compensation and the associated payroll tax expense 1,963 2,335 4,347 4,683
Acquisition-related integration costs 1,615 1,983 1,114 6,077
Additional indirect tax expense from prior years           713      
EBITDA $ 63,732   $ 53,807   $ 121,051   $ 102,030  
 
 
EBITDA as calculated above represents earnings before interest and other expense, net, income tax expense, depreciation and amortization and the items used to reconcile GAAP to adjusted non-GAAP financial measures, including (1) share-based compensation, (2) certain acquisition-related integration costs and (3) additional indirect tax expense from prior years. We disclose EBITDA as a supplemental non-GAAP financial performance measure as we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of EBITDA provides useful information to investors.
 
EBITDA is not in accordance with, or an alternative to, net income, and may be different from non-GAAP measures used by other companies. In addition, EBITDA is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
 
 
j2 GLOBAL, INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
         
 

Q1

Q2

Q3

Q4

YTD

2014

Net cash provided by operating activities $ 37,294 $ 54,512 $ 91,806
Less: Purchases of property and equipment (2,936 ) (1,087 ) (4,023 )
Add: Excess tax benefit from share-based compensation   4,082       721               4,803  
Free cash flows $ 38,440     $ 54,146     $ -     $ -     $ 92,586  
 
 

2013

Net cash provided by operating activities $ 40,048 $ 68,973 $ 25,859 $ 58,444 $ 193,324
Less: Purchases of property and equipment (1,933 ) (4,056 ) (5,126 ) (7,511 ) (18,626 )
Add: Excess tax benefit (deficit) from share-based compensation 280 1,301 1,590 (476 ) 2,695
Less: Patent Settlement   -       (27,000 )     -       -       (27,000 )
Free cash flows $ 38,395     $ 39,218     $ 22,323     $ 50,457     $ 150,393  
 
 
The Company discloses Free Cash Flows as supplemental non-GAAP financial performance measure, as it believes it is a useful metrics by which to compare the performance of its business from period to period. The Company also understands that this non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance.

Accordingly, the Company believes that the presentation of this non-GAAP financial measure provides useful information to investors.

 
Free Cash Flows is not in accordance with, or an alternative to, Cash Flows from Operating Activities, and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, the non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.

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@ThingsExpo Stories
Software AG helps organizations transform into Digital Enterprises, so they can differentiate from competitors and better engage customers, partners and employees. Using the Software AG Suite, companies can close the gap between business and IT to create digital systems of differentiation that drive front-line agility. We offer four on-ramps to the Digital Enterprise: alignment through collaborative process analysis; transformation through portfolio management; agility through process automation and integration; and visibility through intelligent business operations and big data.
There will be 50 billion Internet connected devices by 2020. Today, every manufacturer has a propriety protocol and an app. How do we securely integrate these "things" into our lives and businesses in a way that we can easily control and manage? Even better, how do we integrate these "things" so that they control and manage each other so our lives become more convenient or our businesses become more profitable and/or safe? We have heard that the best interface is no interface. In his session at Internet of @ThingsExpo, Chris Matthieu, Co-Founder & CTO at Octoblu, Inc., will discuss how these devices generate enough data to learn our behaviors and simplify/improve our lives. What if we could connect everything to everything? I'm not only talking about connecting things to things but also systems, cloud services, and people. Add in a little machine learning and artificial intelligence and now we have something interesting...
Last week, while in San Francisco, I used the Uber app and service four times. All four experiences were great, although one of the drivers stopped for 30 seconds and then left as I was walking up to the car. He must have realized I was a blogger. None the less, the next car was just a minute away and I suffered no pain. In this article, my colleague, Ved Sen, Global Head, Advisory Services Social, Mobile and Sensors at Cognizant shares his experiences and insights.
We are reaching the end of the beginning with WebRTC and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will want to use their existing identities, but these will have credentials already that are (hopefully) irreversibly encoded. In his session at Internet of @ThingsExpo, Peter Dunkley, Technical Director at Acision, will look at how this identity problem can be solved and discuss ways to use existing web identities for real-time communication.
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at Internet of @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, will share some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, an Open Source Cloud Communications company that helps the shift from legacy IN/SS7 telco networks to IP-based cloud comms. An early investor in multiple start-ups, he still finds time to code for his companies and contribute to open source projects.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. It also ensured scalability and better service for customers, including MUY! Companies, one of the country's largest franchise restaurant companies with 232 Pizza Hut locations. This is one example of WebRTC adoption today, but the potential is limitless when powered by IoT. Attendees will learn real-world benefits of WebRTC and explore future possibilities, as WebRTC and IoT intersect to improve customer service.
The Internet of Things (IoT) promises to create new business models as significant as those that were inspired by the Internet and the smartphone 20 and 10 years ago. What business, social and practical implications will this phenomenon bring? That's the subject of "Monetizing the Internet of Things: Perspectives from the Front Lines," an e-book released today and available free of charge from Aria Systems, the leading innovator in recurring revenue management.
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges.
There’s Big Data, then there’s really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at 6th Big Data Expo®, Hannah Smalltree, Director at Treasure Data, to discuss how IoT, Big Data and deployments are processing massive data volumes from wearables, utilities and other machines.
All major researchers estimate there will be tens of billions devices – computers, smartphones, tablets, and sensors – connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be!
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at Internet of @ThingsExpo, Erik Lagerway, Co-founder of Hookflash, will walk through the shifting landscape of traditional telephone and voice services to the modern P2P RTC era of OTT cloud assisted services.
While great strides have been made relative to the video aspects of remote collaboration, audio technology has basically stagnated. Typically all audio is mixed to a single monaural stream and emanates from a single point, such as a speakerphone or a speaker associated with a video monitor. This leads to confusion and lack of understanding among participants especially regarding who is actually speaking. Spatial teleconferencing introduces the concept of acoustic spatial separation between conference participants in three dimensional space. This has been shown to significantly improve comprehension and conference efficiency.
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Innodisk is a service-driven provider of industrial embedded flash and DRAM storage products and technologies, with a focus on the enterprise, industrial, aerospace, and defense industries. Innodisk is dedicated to serving their customers and business partners. Quality is vitally important when it comes to industrial embedded flash and DRAM storage products. That’s why Innodisk manufactures all of their products in their own purpose-built memory production facility. In fact, they designed and built their production center to maximize manufacturing efficiency and guarantee the highest quality of our products.
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. Over the summer Gartner released its much anticipated annual Hype Cycle report and the big news is that Internet of Things has now replaced Big Data as the most hyped technology. Indeed, we're hearing more and more about this fascinating new technological paradigm. Every other IT news item seems to be about IoT and its implications on the future of digital business.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. Download Slide Deck: ▸ Here
BSQUARE is a global leader of embedded software solutions. We enable smart connected systems at the device level and beyond that millions use every day and provide actionable data solutions for the growing Internet of Things (IoT) market. We empower our world-class customers with our products, services and solutions to achieve innovation and success. For more information, visit www.bsquare.com.
With the iCloud scandal seemingly in its past, Apple announced new iPhones, updates to iPad and MacBook as well as news on OSX Yosemite. Although consumers will have to wait to get their hands on some of that new stuff, what they can get is the latest release of iOS 8 that Apple made available for most in-market iPhones and iPads. Originally announced at WWDC (Apple’s annual developers conference) in June, iOS 8 seems to spearhead Apple’s newfound focus upon greater integration of their products into everyday tasks, cross-platform mobility and self-monitoring. Before you update your device, here is a look at some of the new features and things you may want to consider from a mobile security perspective.