UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________
FORM
10-Q
_____________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT
OF 1934
For
the quarterly period ended March 31, 2005
OR
o
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: 0-25965
______________
j2
GLOBAL COMMUNICATIONS, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware |
51-0371142 |
|
(State
or other jurisdiction |
(I.R.S.
Employer |
|
of
incorporation or organization) |
Identification
No.) |
6922
Hollywood Boulevard
Suite
500
Los
Angeles, California 90028
(Address
of principal executive offices)
(323)
860-9200
(Registrant’s
telephone number, including area code)
______________
Indicate
by check mark whether the registrant (1) has filed all reports required 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 the past
90 days.
Yes
x No
o
Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act).
Yes
x No
o
As of
April 14, 2005, the registrant had 23,715,522 shares of Common Stock
outstanding.
j2
GLOBAL COMMUNICATIONS, INC.
FOR
THE QUARTER ENDED MARCH 31, 2005
INDEX
| |
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PAGE |
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PART
I. |
|
FINANCIAL
INFORMATION |
|
| |
|
|
|
| |
Item
1. |
Financial
Statements |
|
| |
|
Condensed
Consolidated Balance Sheets (unaudited) |
3 |
| |
|
Condensed
Consolidated Statements of Operations (unaudited) |
4 |
| |
|
Condensed
Consolidated Statements of Cash Flows (unaudited) |
5 |
| |
|
Notes
to Condensed Consolidated Financial Statements (unaudited) |
6 |
| |
|
|
|
| |
Item
2. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations |
10 |
| |
|
|
|
| |
|
|
|
| |
Item
3. |
Quantitative
and Qualitative Disclosures About Market Risk |
15 |
| |
|
|
|
| |
Item
4. |
Controls
and Procedures |
16 |
| |
|
|
|
|
PART
II. |
|
OTHER
INFORMATION |
|
| |
|
|
|
| |
Item
1. |
Legal
Proceedings |
16 |
| |
|
|
|
| |
Item
6. |
Exhibits |
17 |
| |
|
|
|
| |
Signatures |
18 |
| |
|
|
|
| |
Index
of Exhibits |
19 |
| |
Exhibit
31(a) |
|
| |
Exhibit
31(b) |
|
| |
Exhibit
32(a) |
|
| |
Exhibit
32(b) |
|
PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements
|
j2
Global Communications, Inc. |
|
|
Condensed
Consolidated Balance Sheets |
|
|
(In
thousands) |
|
| |
|
|
|
|
|
| |
|
March
31, |
|
December
31, |
|
| |
|
2005 |
|
2004 |
|
| |
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
16,507 |
|
$ |
18,814 |
|
Short-term
investments |
|
|
54,125
|
|
|
47,225
|
|
Accounts
receivable, |
|
|
|
|
|
|
|
net
of allowances of $615 and $529, respectively |
|
|
9,940
|
|
|
8,227
|
|
Prepaid
expenses and other current assets |
|
|
2,578
|
|
|
2,873
|
|
|
Deferred
income taxes |
|
|
2,520
|
|
|
2,520
|
|
Total
current assets |
|
|
85,670
|
|
|
79,659
|
|
| |
|
|
|
|
|
|
|
Long-term
investments |
|
|
27,861
|
|
|
27,753
|
|
Property
and equipment, net |
|
|
13,609
|
|
|
12,386
|
|
Goodwill
|
|
|
20,344
|
|
|
20,173
|
|
Other
purchased intangibles, net |
|
|
17,707
|
|
|
11,256
|
|
Other
assets |
|
|
175
|
|
|
170
|
|
|
Deferred
income taxes |
|
|
1,520
|
|
|
1,520
|
|
|
Total
assets |
|
$ |
166,886 |
|
$ |
152,917 |
|
| |
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
6,364 |
|
$ |
5,324 |
|
Income
taxes payable |
|
|
1,838
|
|
|
192
|
|
Deferred
revenue |
|
|
5,428
|
|
|
5,378
|
|
|
Current
portion of long-term debt |
|
|
965
|
|
|
1,196
|
|
Total
current liabilities |
|
|
14,595
|
|
|
12,090
|
|
| |
|
|
|
|
|
|
|
|
Long-term
debt |
|
|
593
|
|
|
866
|
|
Total
liabilities |
|
|
15,188
|
|
|
12,956
|
|
| |
|
|
|
|
|
|
|
|
Total
stockholders' equity |
|
|
151,698
|
|
|
139,961
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
166,886 |
|
$ |
152,917 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
See
accompanying notes to condensed consolidated financial
statements |
|
j2
Global Communications, Inc. |
|
|
Condensed
Consolidated Statements of Operations |
|
|
(Unaudited,
in thousands except share and per share data) |
|
| |
|
|
|
|
|
| |
|
Three
Months Ended March 31, |
|
| |
|
2005 |
|
2004 |
|
Revenues: |
|
|
|
|
|
Subscriber |
|
$ |
31,275 |
|
$ |
22,062 |
|
|
Other |
|
|
949
|
|
|
880
|
|
| |
|
|
32,224
|
|
|
22,942
|
|
| |
|
|
|
|
|
|
|
|
Cost
of revenues |
|
|
6,497
|
|
|
4,805
|
|
| |
|
|
|
|
|
|
|
|
Gross
profit |
|
|
25,727
|
|
|
18,137
|
|
| |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Sales
and marketing |
|
|
5,462
|
|
|
3,779
|
|
Research,
development and engineering |
|
|
1,761
|
|
|
1,050
|
|
|
General
and administrative |
|
|
5,145
|
|
|
3,317
|
|
| |
|
|
|
|
|
|
|
|
Total
operating expenses |
|
|
12,368
|
|
|
8,146
|
|
| |
|
|
|
|
|
|
|
Operating
earnings |
|
|
13,359
|
|
|
9,991
|
|
| |
|
|
|
|
|
|
|
|
Interest
and other income, net |
|
|
597
|
|
|
186
|
|
| |
|
|
|
|
|
|
|
Earnings
before income taxes |
|
|
13,956
|
|
|
10,177
|
|
| |
|
|
|
|
|
|
|
|
Income
tax expense |
|
|
3,768
|
|
|
3,778
|
|
| |
|
|
|
|
|
|
|
|
Net
earnings |
|
$ |
10,188 |
|
$ |
6,399 |
|
| |
|
|
|
|
|
|
|
Net
earnings per common share: |
|
|
|
|
|
|
|
Basic |
|
$ |
0.43 |
|
$ |
0.28 |
|
Diluted |
|
$ |
0.40 |
|
$ |
0.25 |
|
| |
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
23,666,910 |
|
|
23,121,054 |
|
Diluted |
|
|
25,382,088 |
|
|
25,564,338 |
|
| |
|
|
|
|
|
|
|
|
See
accompanying notes to condensed consolidated financial
statements |
|
j2
Global Communications, Inc. |
|
|
Condensed
Consolidated Statements of Cash Flows |
|
|
(Unaudited,
in thousands) |
|
| |
|
|
|
|
|
| |
|
Three
Months Ended March 31, |
|
| |
|
2005 |
|
2004 |
|
Cash
flows from operating activities: |
|
|
|
|
|
Net
earnings |
|
$ |
10,188 |
|
$ |
6,399 |
|
Adjustments
to reconcile net earnings to net cash |
|
|
|
|
|
|
|
provided
by operating activities: |
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
1,689
|
|
|
1,028
|
|
Compensation
expense in exchange for note reduction |
|
|
—
|
|
|
43
|
|
Tax
benefit of stock option exercises |
|
|
1,273
|
|
|
369
|
|
Deferred
income taxes |
|
|
—
|
|
|
3,248
|
|
Changes
in assets and liabilities, net of effects of business
acquisitions: |
|
|
|
|
|
|
|
Decrease
(increase) in: |
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(1,531 |
) |
|
(1,237 |
) |
Prepaid
expenses |
|
|
247 |
|
|
374
|
|
Other
assets |
|
|
43
|
|
|
(312 |
) |
(Decrease)
increase in: |
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
|
157
|
|
|
(59 |
) |
Income
taxes payable |
|
|
1,646
|
|
|
—
|
|
|
Deferred
revenue |
|
|
50
|
|
|
399
|
|
|
Net
cash provided by operating activities |
|
|
13,762
|
|
|
10,252
|
|
| |
|
|
|
|
|
|
|
Cash
flows from investing activities: |
|
|
|
|
|
|
|
Net
redemptions (purchases) of available-for-sale investments |
|
|
3,950
|
|
|
(250 |
) |
Net
purchases of held-to-maturity investments |
|
|
(10,957 |
) |
|
(3,443 |
) |
Purchases
of property and equipment |
|
|
(2,473 |
) |
|
(319 |
) |
Acquisition
of businesses, net of cash received |
|
|
(3,587 |
) |
|
(6,020 |
) |
|
Purchases
of intangible assets |
|
|
(2,869 |
) |
|
(74 |
) |
|
Net
cash used in investing activities |
|
|
(15,936 |
) |
|
(10,106 |
) |
| |
|
|
|
|
|
|
|
Cash
flows from financing activities: |
|
|
|
|
|
|
|
Issuance
of common stock under employee |
|
|
|
|
|
|
|
stock
purchase plan |
|
|
124
|
|
|
114
|
|
Exercise
of stock options and warrants |
|
|
311
|
|
|
124
|
|
|
Repayment
of long-term debt |
|
|
(501 |
) |
|
(527 |
) |
|
Net
cash used in financing activities |
|
|
(66 |
) |
|
(289 |
) |
| |
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
|
(67 |
) |
|
—
|
|
| |
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents |
|
|
(2,307 |
) |
|
(143 |
) |
|
Cash
and cash equivalents at beginning of period |
|
|
18,814
|
|
|
32,882
|
|
|
Cash
and cash equivalents at end of period |
|
$ |
16,507 |
|
$ |
32,739 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
See
accompanying notes to condensed consolidated financial
statements |
j2
GLOBAL COMMUNICATIONS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2005
(UNAUDITED)
NOTE 1 -
BASIS OF PRESENTATION
j2 Global
Communications, Inc. (“j2 Global” or the “Company”) is a Delaware corporation
founded in 1995. By leveraging the power of the Internet, the Company provides
outsourced, value-added messaging and communications services to individuals and
businesses throughout the world. j2 Global offers faxing and voicemail
solutions; document management solutions; hosted email, email perimeter
protection services (i.e., virus protection and spam detection) and email
marketing services; call management and conference calling; and a bundled suite
of these services. j2 Global markets its services principally under the brand
names eFax®,
j2®,
jConnect®, eFax
Corporate®,
Onebox®,
Electric Mail®,
jBlast®, eFax
BroadcastTM,
eVoice®, M4
InternetTM,
jBlast®,
PaperMaster® and
others.
The
consolidated financial statements include the accounts of j2 Global and its
direct and indirect wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated in consolidation.
The
accompanying interim condensed consolidated financial statements and related
financial schedules are unaudited. The Company’s interim condensed consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) including those for
interim financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X issued by the Securities and Exchange
Commission (“SEC”). Accordingly, they do not include all of the information and
note disclosures required by GAAP for complete financial statements. These
statements are unaudited and, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been reflected in these condensed consolidated financial
statements. These consolidated financial statements should be read in
conjunction with the audited financial statements and related notes for the year
ended December 31, 2004 included in the Company’s Annual Report on
Form 10-K filed with the SEC on March 28, 2005.
The
results of operations for these interim periods are not necessarily indicative
of the operating results for the full year or for any future
period.
Certain
prior year reported amounts have been reclassified to conform with the current
year presentation. Included in these reclassifications were auction rate
securities in the amount of $14.0 million and $14.3 million as of December 31,
2003 and March 31, 2004, respectively, which have been reclassified from cash
equivalents to short-term investments in the accompanying consolidated statement
of cash flows. The reclassification had the effect of increasing the net
purchases of available-for-sale investments, increasing net cash used in
investing activities, and decreasing the net increase in cash and cash
equivalents by $0.3 million as previously reported on the consolidated statement
of cash flows for the three months ended March 31, 2004. In addition, certain
amounts in the accompanying consolidated balance sheet and statement of cash
flows have been reclassified since previously reported in our press release
dated April 18, 2005 based upon updated information, resulting in a decrease in
cash and cash equivalents of $3.4 million, an increase of $1.2 million in
short-term investments, a decrease of $0.3 million in accounts receivable and an
increase of $2.5 million in long-term investments.
Comprehensive
income includes all changes in equity (net assets) during a period from
non-owner sources. The change in accumulated other comprehensive income for all
periods presented resulted from foreign currency translation gains and losses.
Comprehensive income was approximately $10.0 million and $6.4 million for the
three months ended March 31, 2005 and 2004, respectively. Net translation losses
for the three months ended March 31, 2005 and 2004 were $159,000 and zero,
respectively.
NOTE 2 -
ACCOUNTING FOR STOCK OPTIONS
The
Company applies the intrinsic value-based method of accounting prescribed by
Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued
to Employees”, and related interpretations to account
for its
fixed plan stock options. These interpretations include Financial Accounting
Standards Board (“FASB”) Interpretation No. 44, “Accounting for Certain
Transactions involving Stock Compensation an interpretation of APB Opinion No.
25”, issued in March 2000. Under this method, compensation expense is generally
recorded on the date of grant only if the current market price of the underlying
stock exceeded the exercise price. SFAS No. 123, “Accounting for Stock-Based
Compensation”, established accounting and disclosure requirements using a fair
value-based method of accounting for stock-based employee compensation plans. As
allowed by SFAS No. 123, the Company has elected to continue to apply the
intrinsic value-based method of accounting described above, and has adopted the
disclosure requirements of SFAS No. 123.
The
Company accounts for option grants to non-employees using the guidance of SFAS
No. 123 and Emerging Issues Task Force (“EITF”) No. 96-18, whereby the fair
value of such options is determined using the Black-Scholes option pricing model
at the earlier of the date at which the non-employee’s performance is complete
or a performance commitment is reached.
The
Company applies APB Opinion No. 25 in accounting for stock options and,
accordingly, no compensation cost using the intrinsic value method has been
recognized for stock option grants in the accompanying financial statements. If
the fair value based method had been applied in measuring stock compensation
expense under SFAS No. 123, the pro forma effect on net earnings and net
earnings per share would have been as follows:
| |
|
|
|
Three
Months Ended March 31, |
|
| |
|
|
|
2005 |
|
2004 |
|
| |
|
|
|
(In
thousands, except per share data) |
|
|
Net
earnings, as reported |
$ |
10,188 |
|
$ |
6,399 |
|
Deduct:
Stock
based employee compensation |
|
|
|
|
|
|
|
|
|
|
expense
determined under the fair |
|
|
|
|
|
|
|
|
|
|
value-based
method for all awards, |
|
|
|
|
|
|
|
|
|
|
|
net
of related tax effect |
|
|
|
|
|
(674 |
) |
|
(488 |
) |
|
Pro
forma net earnings |
$ |
9,514 |
|
$ |
5,911 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Basic
net earnings per common share: |
|
|
|
|
|
|
|
As
reported |
|
|
|
|
$ |
0.43 |
|
$ |
0.28 |
|
|
Pro
forma |
|
|
|
|
$ |
0.40 |
|
$ |
0.26 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Diluted
net earnings per common share: |
|
|
|
|
|
|
|
As
reported |
|
|
|
|
$ |
0.40 |
|
$ |
0.25 |
|
|
Pro
forma |
|
|
|
|
$ |
0.38 |
|
$ |
0.23 |
|
In
December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”, which
stated SFAS 123R was effective for the interim or annual periods beginning after
June 15, 2005. However, on April 15, 2005, the SEC issued Final Rule No.
33-8568, “Amendment to Rule 4-01(a) of Regulation S-X Regarding the Compliance
Date for Statement of Financial Accounting Standards No. 123 (Revised 2004),
Share
Based Payment”. The
SEC’s new rule allows companies to implement SFAS 123R at the beginning of their
next fiscal year, instead of the next reporting period, that begins after June
15, 2005. SFAS 123R therefore becomes effective for the Company in the first
quarter of fiscal 2006. Statement 123R requires all share-based payments to
employees, including grants of employee stock options and purchases under
employee stock purchase plans, to be recognized as an operating expense in the
income statement. The cost is recognized over the requisite service period based
on fair values measured on grant dates, and the new standard may be adopted
using either the “modified prospective transition” method or the “modified
retrospective transition” method. The Company is currently evaluating the effect
that the adoption of SFAS 123R will have on the Company’s consolidated statement
of income and financial condition.
NOTE 3 -
USE OF ESTIMATES
The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
net revenue and expenses during the reporting period. On an ongoing basis,
management
evaluates
its estimates, including those related to revenue recognition, allowances for
doubtful accounts and the valuation of deferred income taxes, long-lived and
intangible assets and goodwill. These estimates are based on historical
experience and on various other factors that management believes to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results could differ from those
estimates.
NOTE 4 -
RECENT ACCOUNTING PRONOUNCEMENTS
In March
2004, the EITF reached a consensus on Issue No. 03-1, “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments”
(“EITF 03-1”). EITF 03-1 provides guidance for determining when an investment is
other-than-temporarily impaired to be applied in reporting periods beginning
after June 15, 2004 and contains disclosure requirements effective in annual
financial statements for fiscal years ending after December 15, 2003 for
investments accounted for under SFAS Nos. 115 and 124. For all other investments
within the scope of this Issue, the disclosures are effective for fiscal years
ending after June 15, 2004. In September 2004, the FASB delayed the accounting
provisions of EITF 03-1; however, the disclosure requirements remain effective.
The Company has evaluated the impact of the adoption of EITF 03-1 and does not
believe it will have a material effect on the Company’s financial condition or
results of operations.
In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets —
An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions”.
SFAS 153 eliminates the exception from fair value measurement for nonmonetary
exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29,
“Accounting for Nonmonetary Transactions,” and replaces it with an exception for
exchanges that do not have commercial substance. SFAS 153 specifies that a
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. This
standard is effective for fiscal periods beginning after June 15, 2005. The
Company is currently evaluating the effect that the adoption of SFAS 153 will
have on the Company’s consolidated statement of income and financial
condition.
NOTE 5 -
EARNINGS PER COMMON SHARE
Basic
earnings per share is computed on the basis of the weighted average number of
common shares outstanding. Diluted earnings per share is computed on the basis
of the weighted average number of common shares outstanding plus the effect of
outstanding stock options and warrants using the “treasury stock” method. The
components of basic and diluted earnings per share are as follows:
| |
|
|
|
Three
Months Ended March 31, |
|
| |
|
|
|
2005 |
|
2004 |
|
| |
|
|
|
(In
thousands, except share and per share data) |
|
|
Numerator
for basic and diluted net |
|
|
|
|
|
earnings
per common share: |
|
|
|
|
|
|
|
|
Net
earnings |
$ |
10,188 |
|
$ |
6,399 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
Weighted
average outstanding shares of |
|
|
|
|
|
|
common
stock |
|
|
|
|
|
23,666,910
|
|
|
23,121,054
|
|
|
Dilutive
effect of: |
|
|
|
|
|
|
Employee
stock options |
|
|
|
|
|
1,505,298
|
|
|
2,184,999
|
|
|
Warrants |
|
|
|
|
|
209,880
|
|
|
258,285
|
|
|
Common
stock and common stock equivalents |
|
25,382,088
|
|
|
25,564,338
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Net
earnings per share: |
|
|
|
|
|
|
|
Basic |
|
|
|
|
$ |
0.43 |
|
$ |
0.28 |
|
|
Diluted |
|
|
|
|
$ |
0.40 |
|
$ |
0.25 |
|
NOTE 6 -
ACQUISITION
In
January 2005, the Company purchased substantially all of the assets and
operations of a European provider of fax-to-email and unified messaging
services. The purchase price, including acquisition costs, for this acquisition
was $3.6 million, payable in cash at closing. The transaction has been accounted
for using the purchase method and, accordingly, the results of operations for
this acquisition have been included in the consolidated results of the Company
since the date of acquisition. The excess of the purchase price over the fair
value of identifiable net liabilities acquired amounted to $4.0 million. As of
the date of this report, the Company has not completed the allocation of excess
purchase price between goodwill and identifiable intangible assets. The results
of operations for this acquisition during periods prior to the acquisition date
were not material to the Company’s consolidated results of operations and
accordingly, pro forma results of operations have not prepared.
NOTE 7 -
GOODWILL AND PURCHASED INTANGIBLE ASSETS
Goodwill
represents the excess of the purchase price over the fair value of the net
tangible and identifiable intangible assets acquired in a business combination.
Intangible assets resulting from the acquisitions of entities accounted for
using the purchase method of accounting are estimated by management based on the
fair value of assets acquired. Identifiable intangible assets subject to
amortization are being amortized using the straight-line method over estimated
useful lives ranging from two to twenty years.
The
changes in carrying amount of goodwill and other intangible assets for the three
months ended March 31, 2005 are as follows (in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Balance
as of January 1, 2005 |
|
Additions |
|
Amortization |
|
Foreign
Exchange Translation |
|
Balance
as of March 31, 2005 |
|
Goodwill |
|
$ |
20,173 |
|
$ |
200 |
|
$ |
— |
|
$ |
(29 |
) |
$ |
20,344 |
|
Intangible
assets with indefinite lives |
|
|
1,409
|
|
|
—
|
|
|
— |
|
|
— |
|
|
1,409
|
|
Intangible
assets subject to amortization |
|
|
9,847
|
|
|
2,869
|
|
|
(409 |
) |
|
(54 |
) |
|
12,253
|
|
|
Other
- unallocated (refer to Note 6) |
|
|
— |
|
|
4,045
|
|
|
—
|
|
|
—
|
|
|
4,045
|
|
|
Total |
|
$ |
31,429 |
|
$ |
7,114 |
|
$ |
(409 |
) |
$ |
(83 |
) |
$ |
38,051 |
|
Intangible
assets with indefinite lives relate primarily to a trade name. As of March 31,
2005, intangible assets subject to amortization relate primarily to the
following (in thousands):
| |
|
Weighted-Average
|
|
|
|
|
|
|
|
| |
|
Amortization
|
|
Historical
|
|
Accumulated
|
|
|
|
| |
|
period
|
|
cost
|
|
amortization
|
|
Net
|
|
Patents |
|
|
10.35
years |
|
$ |
9,414 |
|
$ |
731 |
|
$ |
8,683 |
|
Technology |
|
|
2.47
years |
|
|
2,920
|
|
|
2,830
|
|
|
90
|
|
Customer
relationships |
|
|
4.86
years |
|
|
2,356
|
|
|
523
|
|
|
1,833
|
|
|
Trade
name |
|
|
20
years |
|
|
1,710
|
|
|
63
|
|
|
1,647
|
|
|
Total |
|
|
|
|
$ |
16,400 |
|
$ |
4,147 |
|
$ |
12,253 |
|
Amortization
expense, included in general and administrative expense, during the three-month
periods ended March 31, 2005 and 2004 approximated $409,000 and $78,000,
respectively.
Amortization expense is estimated to approximate $1.7 million, $1.6 million,
$1.5 million, $1.5 million and $1.2 million for fiscal years 2005 through 2009,
respectively.
NOTE 8 -
INCOME TAXES
Income
tax expense amounted to approximately $3.8 million and $3.8 million for the
three months ended March 31, 2005 and 2004, respectively. During the quarter
ended March 31, 2004, deferred income taxes decreased by $3.2 million primarily
due to the offset of the Company’s tax liability against available net operating
loss and tax credit carry-forwards.
Income
tax expense for the three months ended March 31, 2005 is based on our worldwide
estimated effective annual tax rate of approximately 27%.
NOTE 9 -
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid
for interest during the three-month periods ended March 31, 2005 and 2004
approximated $22,000 and $19,000, respectively, substantially all of which
related to long-term debt.
The
Company paid zero cash and approximately $330,000, respectively, for income
taxes during the three-month periods ended March 31, 2005 and 2004.
Through
the three months ended March 31, 2005 and 2004, the Company recorded the tax
benefit from the exercise of non-qualifying stock options and disqualifying
dispositions of incentive stock options as a reduction of its income tax
liability and an increase in equity in the amount of approximately $1.3 million
and $0.4 million, respectively.
Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
ORGANIZATION
AND DESCRIPTION OF BUSINESS
j2 Global
Communications, Inc. (“j2 Global”, “our” or “we”) is a Delaware corporation
founded in 1995. By
leveraging the power of the Internet, we provide outsourced, value-added
messaging and communications services to individuals and businesses throughout
the world. We offer faxing and voicemail solutions; document management
solutions; hosted email, email perimeter protection services (i.e., virus
protection and spam detection) and email marketing services; call management and
conference calling; and a bundled suite of these services. We market our
services principally under the brand names eFax®,
j2®,
jConnect®, eFax
Corporate®,
Onebox®,
Electric Mail®,
jBlast®, eFax
BroadcastTM,
eVoice®, M4
InternetTM,
jBlast®,
PaperMaster® and
others.
We
deliver many of our services through our global telephony/Internet Protocol
(“IP”) network, which covers more than 1,500 cities in 23 countries across five
continents. We have created this network, and continuously seek to expand it,
through negotiating with U.S. and foreign telecommunications and co-location
providers for telephone numbers (also referred to as Direct Inward Dial numbers
or “DIDs”), Internet bandwidth and co-location space for our equipment. We
maintain and seek to grow an inventory of telephone numbers to be assigned to
new customers. Most of these numbers are “local” (as opposed to toll-free),
which enables us to provide our paying subscription customers telephone numbers
with a geographic identity.
Our core
services include fax, voicemail, email, call management and conference calling
and a bundled suite of these services. These are business services that make our
customers more efficient, more mobile, more cost-effective and more secure than
traditional alternatives. We generate substantially all of our revenue from
subscribers that pay activation, subscription and usage fees. We also generate
revenue from advertising and revenue share on premium rate DIDs issued to
non-paid subscribers (sometimes referred to as “Free” subscribers). Of the more
than 9.0 million telephone numbers (or DIDs) deployed as of March 31, 2005,
approximately 598,000 were serving paying subscribers, with the balance deployed
to Free subscribers.
We
operate in one reportable segment: value-added messaging and communications
services, which provides for the delivery of fax, voice and email messages via
the telephone and/or Internet networks. Our services are distributed worldwide
primarily over the telephone and Internet networks, and thus, we do not consider
our operations subject to any geographic segment reporting.
We
generate a substantial portion of our revenues from subscribers that pay us for
activation, subscription and usage fees. Activation and subscription fees are
referred to as “fixed” revenues, while usage fees are referred to as “variable”
revenues. We also generate a small percentage of our overall revenue from
advertising and international “calling party pays” arrangements to Free
subscribers. These Free advertising-supported subscribers also serve as a source
for attracting new paid subscribers. This process of migrating
advertising-supported customers to paid services is part of our life cycle
management program. Through this program, we monitor usage levels of
advertising-supported
customers, send them promotional up-sell messages and cull out subscribers that
do not adhere to the limitations on our Free services set forth in our customer
agreements.
During
the past three years, we have derived a substantial portion of our revenues from
the sale of our eFax and jConnect paid services, including eFax
Corporate®, eFax
Plus® and
jConnect Premier®. These
services are deployed through a DID. As a result, we believe that paying DIDs
and the revenues associated therewith are an important metric for understanding
our business. It has been and continues to be our objective to increase the
number of paying DIDs through a variety of distribution channels, marketing
arrangements and enhanced brand awareness. In addition, we continuously seek to
increase revenues through a combination of stimulating use by our customers of
usage-based services, introduction of new services and instituting appropriate
price increases to our fixed monthly subscription and other fees.
The
following table sets forth key operating metrics of our Company for the three
months ended March 31, 2005 and 2004:
| |
|
March
31, |
|
| |
|
2005 |
|
2004 |
|
| |
|
(In
thousands) |
|
| |
|
|
|
|
|
Free
service telephone numbers |
|
|
8,449
|
|
|
5,843
|
|
|
Paying
telephone numbers |
|
|
598
|
|
|
435
|
|
|
Total
active telephone numbers |
|
|
9,047
|
|
|
6,278
|
|
| |
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31, |
| |
|
|
2005 |
|
|
2004 |
|
|
|
(In
thousands except percentages and average revenue per paying telephone
number) |
Subscriber
revenues: |
|
|
|
|
|
|
|
Fixed
|
|
$ |
22,773 |
|
$ |
16,021 |
|
|
Variable |
|
|
8,502
|
|
|
6,041
|
|
|
Total
subscriber revenues |
|
$ |
31,275 |
|
$ |
22,062 |
|
| |
|
|
|
|
|
|
|
Percentage
of total subscriber revenues: |
|
|
|
|
|
|
|
Fixed
|
|
|
72.8 |
% |
|
72.6 |
% |
Variable |
|
|
27.2 |
% |
|
27.4 |
% |
| |
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
DID
based |
|
$ |
30,186 |
|
$ |
21,664 |
|
|
Non-DID
based |
|
|
2,038
|
|
|
1,278
|
|
|
Total
revenues |
|
$ |
32,224 |
|
$ |
22,942 |
|
| |
|
|
|
|
|
|
|
Average
monthly revenue per paying |
|
|
|
|
|
|
|
|
telephone
number(1) |
|
$ |
16.85 |
|
$ |
16.68 |
|
| |
|
|
|
|
|
|
|
| (1)See
calculation of average monthly revenue per paying telephone number at the
end of this section, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. |
|
|
|
|
DISCUSSION
OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In the
ordinary course of business, we have made a number of estimates and assumptions
relating to the reporting of results of operations and financial condition in
the preparation of our financial statements. Actual results could differ
significantly from those estimates under different assumptions and conditions.
During the three months ended March 31, 2005, there have been no changes in the
Company’s critical accounting policies described in the Company’s Annual Report
on Form 10-K filed with the SEC on March 28, 2005.
RESULTS
OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2005 AND
2004
Revenues
Subscriber
Revenues.
Subscriber revenues consist of both a fixed monthly recurring subscription
component and a variable component which is driven by the actual usage of the
service offerings. We have only tracked this ratio since fiscal year 2003 so
data is not available prior to 2003. Over the past nine quarters, the fixed
portion of our subscriber revenues has consistently contributed approximately
70% to our subscriber revenues. Subscriber revenues were $31.3 million and $22.1
million for the three months ended March 31, 2005 and 2004, respectively. The
increase in subscriber revenues was due to an increase in our base of paying
subscribers. The increase in our base of paid subscribers was primarily the
result of new sign-ups derived from subscribers coming directly to our websites,
Free-to-Paid subscriber upgrades, small to mid-sized corporate sales, direct
large enterprise and government sales and direct marketing spend for Paid
subscribers, net of cancellations.
Other
Revenues. Other
revenues were $949,000 and $880,000 for the three months ended March 31, 2005
and 2004, respectively. Other revenues consist primarily of advertising revenues
generated by delivering email messages and banners on behalf of advertisers to
our Free customers and the sale of our PaperMaster Pro document management
software. The increase in other revenues was due primarily to an increase in
PaperMaster software sales, offset slightly by a decrease in advertising
revenues due to a continued decline in email advertising prices due to market
conditions, notwithstanding an overall increase in the number of Free telephone
numbers deployed.
For the
past three years, 90% or more of our total revenues have been produced by our
DID based services. DID based revenues increased from $21.7 million to $30.2
million for the three-month periods ended March 31, 2004 and 2005,
respectively. The primary reason is the increase in the number of paid
DIDs over this period. We would expect that DID based revenues will continue to
be a dominant driver of total revenues.
Cost
of Revenues. Cost of
revenues are primarily comprised of costs associated with data and voice
transmission, telephone numbers, customer service, on-line processing fees and
equipment depreciation. Cost of revenues was $6.5 million, or 20% of total
revenues, and $4.8 million, or 21% of total revenues, for the three months ended
March 31, 2005 and 2004, respectively. The increase in cost of revenues was due
primarily to costs incurred in building and expanding our network
infrastructure, enhancing and growing our customer support services and
incurring increased variable transmission costs associated with a larger
subscriber base and increased usage. Cost of revenues as a percentage of
revenues decreased as a result of increases in revenues over the same periods
with a relatively stable level of cost of revenues.
Operating
Expenses
Sales
and Marketing. Our
sales and marketing costs consist primarily of payments to sales and marketing
personnel, advertising expenses and other business development related expenses.
Sales and marketing expenses were $5.5 million, or 17% of total revenues, and
$3.8 million, or 16% of total revenues, for the three months ended March 31,
2005 and 2004, respectively. The increase in sales and marketing expenses was
due primarily to increased Internet-based advertising and partner marketing
spend and additional marketing personnel. Our Internet-based advertising
relationships consist primarily of fixed cost and performance-based
(cost-per-impression, cost-per-click and cost-per-acquisition) advertising
relationships with an array of online service providers. Throughout 2004 and the
first quarter of 2005, we experienced upward pricing pressure for certain
Internet-based advertising.
Research,
Development and Engineering. Our
research, development and engineering costs consist primarily of
personnel-related expenses. Research, development and engineering costs were
$1.8 million, or 5% of total revenues, and $1.0 million, or 5% of total
revenues, for the three months ended March 31, 2005 and 2004, respectively. The
increase in research, development and engineering costs was primarily due to an
increase in personnel costs to maintain our existing services, accommodate our
service enhancements, develop and implement additional service features and
functionality and continue to bolster our infrastructure security. Research,
development and engineering costs as a percentage of revenues remained fairly
consistent year-over-year. For the
rest
of 2005, we expect research, development and engineering costs as a percentage
of revenues to grow as we intend to increase spending to further develop and
implement additional service features and functionality.
General
and Administrative. Our
general and administrative costs consist primarily of personnel-related
expenses, depreciation and amortization, bad debt expense and insurance costs.
General and administrative costs were $5.1 million, or 16% of total revenues,
and $3.3 million, or 14% of total revenues, for the three months ended March 31,
2005 and 2004, respectively. The increase in general and administrative expenses
was primarily attributable to a combination of increased depreciation and
amortization due to additional property and equipment and intangible assets,
increased bad debt expense due to a growing customer base, additional personnel
due to internal growth and acquisitions, and increased professional and
consulting fees primarily related to compliance with the Sarbanes-Oxley Act of
2002.
Interest
and Other Income, Net. Our
interest and other income, net is generated primarily from interest income
earned on cash, cash equivalents and short- and long-term investments, offset
primarily by interest expense on long-term debt. Interest and other income, net
amounted to $597,000 and $186,000 for the three months ended March 31, 2005 and
2004, respectively. The increase in interest and other income, net was primarily
due to higher cash and investment balances and higher interest rates
period-over-period.
Income
Taxes. Our
effective tax rate is based on pre-tax income, statutory tax rates, tax
regulations and different tax rates in the various jurisdictions in which we
operate. Income tax expense amounted to approximately $3.8 million and $3.8
million for the three months ended March 31, 2005 and 2004, respectively. Income
tax expense for the three months ended March 31, 2005 is based on a worldwide
estimated effective annual tax rate for 2005 of approximately 27%. Our effective
annual tax rate was approximately 33% for 2004. Our estimated effective annual
tax rate for 2005 decreased to approximately 27% due to an increased percentage
of our income being sourced in lower tax jurisdictions.
Liquidity
and Capital Resources
At March
31, 2005, we had cash and cash equivalents of $16.5 million, short-term
investments of $54.1 million and $27.9 million of long-term investments. Our
investments are comprised primarily of readily marketable corporate debt
securities, U.S. government agency securities, and auction rate debt and
preferred securities. For financial statement presentation, we classify our
investments as short-term and long-term based upon their maturity dates.
Short-term investments primarily mature within one year of the date of the
financial statements and long-term investments mature between one and two years
from March 31, 2005. We classify auction rate securities as short-term
investments as the established interest rate reset periods are less than one
year.
Our
primary sources of liquidity are cash flows generated from operations, together
with cash and cash equivalents and short-term investments. We generate our cash
primarily from payments received from our subscribers, offset by cash payments
we make to third parties for their services, employee compensation and capital
expenditures. Net cash provided by operating activities was $13.8 million and
$10.3 million for the three months ended March 31, 2005 and 2004, respectively.
More than two-thirds of our subscribers pay us by credit card and therefore our
receivables from subscribers settle quickly. Allocations of our total cash and
cash equivalents and short- and long-term investments on hand will generally
vary during any given reporting period based on our short-term working capital
requirements and return on investment opportunities. Our cash and cash
equivalents and short-term investments were $70.6 million at March 31,
2005.
Net cash
used in investing activities was approximately $15.9 million and $10.1 million
for the three months ended March 31, 2005 and 2004, respectively. For the first
quarter of 2005, net cash used in investing activities was primarily
attributable to net purchases of investments, acquisition of a business,
purchases of intangible assets and purchases of property and equipment. For the
first quarter of 2004, net cash used in investing activities was primarily
comprised of acquisition of businesses and purchases of
investments.
Net
cash used in financing activities was approximately $66,000 and $289,000
for the three months ended March 31, 2005 and 2004, respectively. For the first
quarters of 2005 and 2004, net cash used in financing activities was primarily
comprised of repayments of long-term debt, offset by proceeds from the exercise
of stock options and common shares issued under our employee stock purchase
plan.
For 2004
and in prior years, our cash payments related to the accrual of income tax
expense were substantially offset by net operating losses and tax credit
carryforwards. As of December 31, 2004, our usable federal NOLs and tax credit
carryforwards were approximately $2.3 million and $2.3 million, respectively,
and our usable state NOLs and tax credit carryforwards were approximately $10.2
million and $192,000, respectively. These usable federal and state NOLs were
substantially exhausted in the first quarter of 2005. As a result, for 2005 we
expect the amount of our cash tax payments primarily to depend upon the number
of stock options exercised, which generally reduce taxable income.
We
currently anticipate that our existing cash and cash equivalents and short-term
investment balances will be sufficient to meet our anticipated needs for working
capital and capital expenditures for at least the next 12 months.
FORWARD-LOOKING
INFORMATION
In
addition to historical information, the foregoing Management’s Discussion and
Analysis of Financial Condition and Results of Operations contains
forward-looking statements. These forward-looking statements involve risks,
uncertainties and assumptions. The actual results may differ materially from
those anticipated in these forward-looking statements as a result of many
factors, including but not limited to those discussed below, the results of any
acquisition we may complete and the factors discussed in the section in this
Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures
About Market Risk”. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management’s opinions only as of the
date hereof. We undertake no obligation to revise or publicly release the
results of any revision to these forward-looking statements. Readers should
carefully review the risk factors described below, those identified in the “Risk
Factors” section of our Annual Report on Form 10-K filed with the Securities and
Exchange Commission (“SEC”) on March 28, 2005 and the risk factors set forth in
other documents we file from time to time with the SEC.
Some
factors that could cause actual results to differ materially from those
anticipated in these forward-looking statements include, but are not limited to,
our ability to:
| o |
Sustain
growth or profitability; |
| o |
Continue
to maintain, expand and retain our customer
base; |
| o |
Compete
with other similar providers with regard to price, service and
functionality; |
| o |
Cost-effectively
procure large quantities of telephone numbers in desired locations in the
United States and abroad; |
| o |
Achieve
business and financial objectives in light of burdensome
telecommunications or Internet regulation; |
| o |
Obtain
large quantities of non-paying users on a cost effective basis, and
effectively derive revenues from those users through advertising to them
and selling them paid services; |
| o |
Successfully
manage our cost structure, including but not limited to our
telecommunication and personnel related
expenses; |
| o |
Successfully
adapt to technological changes in the messaging, communications and
document management industries; |
| o |
Successfully
protect our intellectual property and avoid infringing upon the
proprietary rights of others; |
| o |
Adequately
manage growth in terms of managerial and operational
resources; |
| o |
Maintain
and upgrade our systems and infrastructure to deliver acceptable levels of
service quality and security of customer data and
messages; |
| o |
Introduce
new services and achieve acceptable levels of returns-on-investment for
those new services; and |
| o |
Recruit
and retain key personnel. |
|
Calculation
of Average Revenue per Paying Telephone Number: |
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Three
Months Ended March 31, |
|
| |
|
2005 |
|
2004 |
|
| |
|
(In
thousands except average monthly revenue per paying telephone
number) |
|
| |
|
|
|
|
|
DID
based revenues |
|
$ |
30,186 |
|
$ |
21,664 |
|
| |
|
|
|
|
|
|
|
|
Less
other revenues |
|
|
1,065
|
|
|
781
|
|
| |
|
|
|
|
|
|
|
|
Total
paying telephone number revenues |
|
$ |
29,121 |
|
$ |
20,883 |
|
| |
|
|
|
|
|
|
|
Average
paying telephone number monthly |
|
|
|
|
|
|
|
revenue
(total divided by number of months) |
|
$ |
9,707 |
|
$ |
6,961 |
|
| |
|
|
|
|
|
|
|
Number
of paying telephone numbers |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Beginning
of period |
|
|
554
|
|
|
400
|
|
End
of period |
|
|
598
|
|
|
435
|
|
| |
|
|
|
|
|
|
|
Average
of period |
|
|
576
|
|
|
418
|
|
| |
|
|
|
|
|
|
|
Average
monthly revenue per paying telephone number(1) |
|
$ |
16.85 |
|
$ |
16.68 |
|
| |
|
|
|
|
|
|
|
|
(1)Due
to rounding, individual numbers may not recalculate. |
|
|
|
Item
3. Quantitative and Qualitative Disclosures About Market Risk
The
following discussion of the market risks we face contains forward-looking
statements. Forward-looking statements are subject to risks and uncertainties.
Actual results could differ materially from those discussed in the
forward-looking statements.
We
believe that our exposure to market risk related to changes in interest rates
and foreign currency exchange rates is not significant, primarily because our
indebtedness under financing arrangements has fixed interest rates and our
transactions are substantially denominated in US Dollars. During the balance of
2005 and in future years, we believe we will expand our international customer
base and, as a result, we expect a greater level of foreign
currency market risk.
We invest
our cash primarily in high-grade interest-bearing securities. Our return on
these investments is subject to interest rate fluctuations.
We do not
have derivative financial instruments for hedging, speculative or trading
purposes.
Item
4. Controls
and Procedures
(a)
Evaluation of Disclosure Controls and Procedures
As of the
end of the period covered by this report, j2 Global’s management, with the
participation of Scott M. Jarus, our co-President and principal executive
officer and R. Scott Turicchi, our Chief Financial Officer and principal
financial officer, carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934). Based upon that
evaluation, Messrs. Jarus and Turicchi concluded that these disclosure controls
and procedures were effective as of the end of the period covered in this
report.
(b)
Changes in Internal Controls
There was
no change in internal control over financial reporting that occurred during the
first quarter of 2005 that has materially affected or is reasonably likely to
materially affect j2 Global’s internal control over financial reporting except
that in January 2005, the Company implemented a new accounting software
application and certain business processes and accounting procedures have been
modified as a result of this new system. In addition, the Company purchased a
new fixed asset tracking system which it will be implementing throughout 2005.
This system will improve the Company’s visibility into the physical location of
its assets and their valuation at any moment in time.
PART
II. OTHER INFORMATION
Item
1. Legal
Proceedings
We are
not currently aware of any legal proceedings or claims that we believe are
likely to have a material adverse effect on our business, prospects, financial
condition, results of operations or cash flows. However, we have initiated
litigation against two companies for infringing our patents. These lawsuits are
described below:
j2
Global v. Venali, Inc.
In
February 2004, we filed suit against Venali, Inc. (“Venali”) in the United
States District Court for the Central District of California, alleging that
Venali infringed and continues to infringe two of our patents. In October 2004,
we amended our complaint to include allegations that Venali also infringed and
continues to infringe an additional two of our patents. We are seeking a
reasonable royalty for the infringement of all four patents, treble damages for
the willful infringement of the first two patents, attorney’s fees, interest and
costs. In November 2004, Venali counterclaimed for a declaratory judgment of
invalidity and non-infringement of all four patents, attorney’s fees, interest
and costs. The case is now in discovery.
j2
Global v. CallWave, Inc.
In August
2004, we filed suit against CallWave, Inc. (“CallWave”) in the United States
District Court for the Central District of California, alleging that CallWave
infringed and continues to infringe one of our patents. In December 2004 and
again in April 2005, we amended our complaint to add allegations that CallWave
also infringed and continues to infringe three additional patents. We are
seeking a reasonable royalty for the infringement of all three patents, treble
damages for the willful infringement of two of these patents, attorney’s fees,
interest and costs. In January 2005, CallWave filed an answer to our first
amended complaint, in which it denied infringing the patents, asserted
affirmative defenses and requested a declaration of non-infringement and
invalidity of the patents and attorneys’ fees and costs. The case is now in
discovery.
Item
6. Exhibits
| |
31(a) |
Rule
13a-14(a) Certification by Chief Executive Officer in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
| |
31(b) |
Rule 13a-14(a) Certification by Chief
Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act
of 2002 |
| |
|
|
| |
32(a) |
Section
1350 Certification by Chief Executive Officer in accordance with Section
906 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
| |
32(b) |
Section 1350 Certification by Chief Financial
Officer in accordance with Section 906 of the Sarbanes-Oxley Act of
2002. |
Items
2, 3, 4 and 5 are not applicable and have been omitted.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| |
|
|
| |
j2
Global Communications, Inc. |
|
|
|
| Date: May 9, 2005 |
By: |
/s/ R. Scott Turicchi |
| |
R. Scott Turicchi |
| |
Chief
Financial Officer (Principal Financial
Officer) |
| |
|
|
| |
|
|
|
|
| Date: May 9, 2005 |
By: |
/s/ Greggory
Kalvin |
| |
Greggory Kalvin |
| |
Chief Accounting Officer
(Principal Accounting Officer) |
INDEX TO EXHIBITS
|
|
Exhibit Number |
Description |
| |
|
|
| |
31(a) |
Rule
13a-14(a) Certification by Chief Executive Officer in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
| |
31(b) |
Rule 13a-14(a) Certification by Chief
Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act
of 2002 |
| |
|
|
| |
32(a) |
Section
1350 Certification by Chief Executive Officer in accordance with Section
906 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
| |
32(b) |
Section 1350 Certification by Chief Financial
Officer in accordance with Section 906 of the Sarbanes-Oxley Act of
2002. |