Ziff Davis (ZD) 8-K Achieves Record Quarterly and Nine Month Revenues Increases Quarterly Dividend by 2.5% to $0.205 Per Share

j2 Global Reports Third Quarter 2011 Results

Achieves Record Quarterly and Nine Month Revenues
Increases Quarterly Dividend by 2.5% to $0.205 Per Share

LOS ANGELES —November 2, 2011—j2 Global Communications, Inc. [NASDAQGS:JCOM] today reported financial results for the third quarter ended September 30, 2011 and announced that its Board of Directors has declared an increase of its quarterly cash dividend to $0.205 per share.

The Company achieved record quarterly and nine-month GAAP revenues of $86.0 million and $245.1 million, respectively. The Company also achieved record quarterly and nine-month fixed subscriber revenues* of $70.4 million and $197.1 million, respectively. In addition, the Company generated record nine-month free cash flow(3) of $117.4 million.

THIRD QUARTER 2011 RESULTS

GAAP revenues increased 37.0% to $86.0 million compared to $62.8 million in Q3 2010.

Non-GAAP net earnings per diluted share(1) (2) increased 36.2% to $0.64 from $0.47 in Q3 2010. GAAP net earnings per diluted share increased 25.6% to $0.54 for Q3 2011 from $0.43 for Q3 2010.

Free cash flow(3) for Q3 2011 increased 39.6% to $37.2 million compared to $26.7 million in Q3 2010.

The Company ended the quarter with $193.8 million in cash and investments.

Key financial results for third quarter 2011 versus third quarter 2010 are as follows:

	Q3 2011	Q3 2010	% Change
GAAP Revenues	$86.0 million	$62.8 million	37.0%
Non-GAAP Net Earnings per Diluted Share(1)(2)	$0.64	$0.47	36.2%
GAAP Net Earnings per Diluted Share(1)	$0.54	$0.43	25.6%
Free Cash Flow (3)	$37.2 million	$26.7 million	39.6%

(1)	The estimated Non-GAAP effective tax rate was approximately 23.4% for Q3 2011 and 28.8% for Q3 2010. The estimated GAAP effective tax rate was approximately 30.6% for Q3 2011 and 28.5% for Q3 2010.
(2)	Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, certain transition-related costs, taxes associated with the sale of a tradename and the reversal of uncertain income tax positions due to expired statutes of limitations, in each case net of tax.
(3)	Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus excess tax benefit (deficiency) from share-based compensation.

“I am particularly excited about three accomplishments this quarter,” said Hemi Zucker, j2 Global’s chief executive officer. “First, is the continued growth of our fixed subscriber revenue, which serves as a stable base upon which the rest of our business is built. Second, I am extremely proud of the efficiency with which the Company has integrated the recent acquisitions of Venali® and Data Haven and migrated and upgraded the my1voice™ customers to eVoice®. Our success with the Protus® acquisition and migration enhances our confidence to pursue larger acquisitions which is facilitated our cash and investment position of nearly $200 million. Third, we are continuing to see increased success with our cross selling programs, which we intend to expand in 2012.”

BUSINESS OUTLOOK

j2 Global is reaffirming its previously issued financial estimates for fiscal 2011. Non-GAAP revenues is expected to be between $335 and $345 million and Non-GAAP net earnings per diluted share is expected to be between $2.46 and $2.56, exclusive in each case, where applicable, of approximately $9 million of share-based compensation expense, approximately $4 million of transition-related costs and the impact of a Q1 2011 one-time, non-cash, change in estimate relating to deferred revenues.

It is anticipated that the normalized Non-GAAP effective tax rate for fiscal 2011 (exclusive of the release of certain FIN 48 reserves) will be between 25% and 27%.

DIVIDEND

The Company’s Board of Directors has approved the declaration of a quarterly cash dividend to its shareholders of $0.205 per common share, a 2.5% increase versus last quarter’s dividend. The dividend will be paid on November 28, 2011 to all shareholders of record as of the close of business on November 14, 2011. Future dividends will be subject to Board approval.

* Fixed subscriber revenues represent revenues derived from both recurring and activation subscriber fees.

About j2 Global Communications

Founded in 1995, j2 Global Communications, Inc. (NASDAQ: JCOM) provides cloud based, value-added communication, messaging and data backup services to individuals and businesses around the world. With offices in eight cities worldwide, j2 Global's network spans more than 4,600 cities in 49 countries on six continents. The Company's websites appear in numerous languages, including Dutch, French, German, Spanish, English and more. Payments are accepted in currencies that include the U.S. Dollar, British Pound, Canadian Dollar, Japanese Yen, Euro, Hong Kong Dollar and more. j2 Global provides live sales and customer service support in multiple languages, including English, Spanish, Dutch, German, French, Cantonese and more. j2 Global markets its services principally under the brands eFax®, eVoice®, FuseMail®, Campaigner®, KeepItSafe® and Onebox®. As of December 31, 2010, j2 Global had achieved 15 consecutive fiscal years of revenue growth. For more information about j2 Global, please visit www.j2global.com.

Contact:	Jeff Adelman
	j2 Global Communications, Inc.
	323-372-3617
	press@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” and “Dividend” portions regarding the Company’s expected fiscal 2011 financial performance and regarding any future dividend payments. These forward-looking statements are based on management’s current expectations or beliefs and are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: subscriber growth and retention; variability of revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the Company of intellectual property of others; the risk of adverse changes in the U.S. or international regulatory environments surrounding messaging and communications, including but not limited to the imposition or increase of taxes or regulatory-related fees; sufficient cash flows and liquidity to pay future dividends and the Board approving any such dividends; and the numerous other factors set forth in j2 Global’s filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting j2 Global, refer to the 2010 Annual Report on Form 10-K filed by j2 Global on February 28, 2011, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release and particularly those contained in the “Business Outlook” and “Dividend” portions regarding the Company’s expected fiscal 2011 financial performance and regarding any future dividend payments 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 COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)

	SEPTEMBER 30,			DECEMBER 31,
	2011			2010
ASSETS
Cash and cash equivalents	$	134,190		$	64,752
Short-term investments		29,005			14,035
Accounts receivable,
net of allowances of $3,527 and $2,588, respectively		17,723			17,423
Prepaid expenses and other current assets		16,145			15,196
Deferred income taxes		3,160			4,096
Total current assets		200,223			115,502
Long-term investments		30,635			8,175
Property and equipment, net		14,335			13,567
Goodwill		279,007			281,848
Other purchased intangibles, net		100,369			99,954
Deferred income taxes		11,677			12,967
Other assets		659			610
TOTAL ASSETS	$	636,905		$	532,623
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	$	22,903		$	25,112
Income taxes payable		2,343			1,798
Deferred revenue		27,275			16,938
Liability for uncertain tax positions		297			13,471
Deferred income taxes		680			573
Total current liabilities		53,498			57,892
Liability for uncertain tax positions		27,897			24,391
Deferred income taxes		20,042			15,293
Other long-term liabilities		3,072			3,302
Total liabilities		104,509			100,878
Commitments and contingencies		—			—
Stockholders' Equity:
Preferred stock		—			—
Common stock		553			537
Additional paid-in capital		194,649			164,769
Treasury stock		(112,671	)		(112,671	)
Retained earnings		452,489			381,145
Accumulated other comprehensive loss		(2,624	)		(2,035	)
Total stockholders' equity		532,396			431,745
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	636,905		$	532,623

j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2011		2010		2011		2010
Revenues
Subscriber	$	85,622	$	62,066	$	243,788	$	182,173
Other		405		712		1,299		2,196
Total revenue		86,027	62,778			245,087		184,369
Cost of revenues (including share-based compensation of $246 and
$736 for the three and nine months of 2011, respectively, and $304
and $963 for the three and nine months of 2010, respectively)		15,002	10,732			45,952		31,378
Gross profit		71,025	52,046			199,135		152,991
Operating expenses:
Sales and marketing (including share-based compensation of
$350 and $1,049 for the three and nine months of 2011,
respectively, and $464 and $1,460 for the three and nine months
of 2010, respectively)		15,073	10,878			44,929		32,327
Research, development and engineering (including share-based
compensation of $110 and $367 for the three and nine months of
2011, respectively, and $204 and $645 for the three and nine
months of 2010, respectively)		4,105		3,008		12,714		8,810
General and administrative (including share-based compensation
of $1,542 and $4,532 for the three and nine months of 2011,
respectively, and $1,805 and $5,699 for the three and nine
months of 2010, respectively)		15,403	10,921			44,037		34,263
Total operating expenses		34,581	24,807			101,680		75,400
Operating earnings		36,444	27,239			97,455		77,591
Interest and other income (expense), net		290		491		262		1,750
Earnings before income taxes		36,734	27,730			97,717		79,341
Provision for income taxes		11,236		7,896		12,770		23,161
Net earnings	$	25,498	$	19,834	$	84,947	$	56,180
Basic net earnings per common share	$	0.55	$	0.44	$	1.84	$	1.26
Diluted net earnings per common share	$	0.54	$	0.43	$	1.81	$	1.23
Basic weighted average shares outstanding		45,993,328	44,716,366			45,498,763		44,488,561
Diluted weighted average shares outstanding		46,455,584	45,939,172			46,108,890		45,738,389

j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)

	NINE MONTHS ENDED SEPTEMBER 30,
	2011			2010
Cash flows from operating activities:
Net earnings	$	84,947		$	56,180
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization		14,892			10,973
Amortization of discount or premium of investments		600			670
Share-based compensation		6,672			8,767
Excess tax benefit from share-based compensation		(13,246	)		(164	)
Provision for doubtful accounts		4,963			1,542
Deferred income taxes		5,394			(815	)
Decrease (increase) in:
Accounts receivable		(7,074	)		(1,354	)
Prepaid expenses and other current assets		3,811			1,097
Other assets		153			(262	)
(Decrease) increase in:
Accounts payable and accrued expenses		(1,112	)		2,350
Income taxes payable		8,885			(11,426	)
Deferred revenue		9,723			(422	)
Liability for uncertain tax positions		(9,668	)		6,339
Other		293			677
Net cash provided by operating activities		109,233			74,152
Cash flows from investing activities:
Maturity of certificates of deposit		—			31,653
Purchase of certificate of deposit		(8,000	)		—
Sales of available-for-sale investments		20,127			9,019
Purchases of available-for-sale investments		(50,192	)		(52,921	)
Purchases of property and equipment		(5,075	)		(1,273	)
Purchases of intangible assets		(2,616	)		(6,953	)
Acquisition of businesses, net of cash received		(3,244	)		(36,546	)
Proceeds from sale of assets		4			—
Net cash used in investing activities		(48,996	)		(57,021	)
Cash flows from financing activities:
Repurchases of common stock and restricted stock		(1,273	)		(4,175	)
Issuance of common stock under employee stock purchase plan		110			85
Exercise of stock options		7,001			2,349
Excess tax benefit from share-based compensation		13,246			164
Dividends paid		(9,463	)		—
Net cash provided by (used in) financing activities		9,621			(1,577	)
Effect of exchange rate changes on cash and cash equivalents		(420	)		(265	)
Net increase in cash and cash equivalents		69,438			15,289
Cash and cash equivalents at beginning of period		64,752			197,411
Cash and cash equivalents at end of period	$	134,190		$	212,700

j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED RECONCILIATION OF MODIFIED NET EARNINGS
THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Modified net earnings are GAAP net earnings with the following modifications: (1) elimination of share-based compensation expense; (2) elimination of payroll taxes associated with share-based compensation; (3) elimination of certain acquisition and related exit costs and (4) elimination of income tax expense or benefit associated with share-based compensation, the associated payroll taxes, certain acquisition and related exit costs, a change to our liability of uncertain tax position due to expiration of statues of limitations and taxes related to trade name sale.

Modified net earnings and modified net earnings per share are not meant as a substitute for measures determined under GAAP, but are solely for informational purposes. The following table illustrates and reconciles the GAAP net earnings with the aforementioned exclusions. The Company believes that this non-GAAP financial information are useful measures of operating performance because they exclude certain non-cash or non-ordinary course transactions.

	THREE MONTHS ENDED SEPTEMBER 30, 2011								THREE MONTHS ENDED SEPTEMBER 30, 2010
	Reported		Non-GAAP Entries				Non-GAAP		Reported		Non-GAAP Entries				Non-GAAP
Revenues
Subscriber	$	85,622	$	-			$	85,622	$	62,066	$	-			$	62,066
Other		405		-				405		712		-				712
Total revenue		86,027		-				86,027		62,778		-				62,778
Cost of revenues		15,002		(273	)	(1), (3)		14,729		10,732		(304	)	(1)		10,428
Gross profit		71,025		273				71,298		52,046		304				52,350
Operating expenses:
Sales and marketing		15,073		(350	)	(1)		14,723		10,878		(464	)	(1)		10,414
Research, development and engineering		4,105		(178	)	(1), (3)		3,927		3,008		(204	)	(1)		2,804
General and administrative		15,403		(1,667	)	(1), (2), (3)		13,736		10,921		(1,826	)	(1), (2)		9,095
Total operating expenses		34,581		(2,195	)			32,386		24,807		(2,494	)			22,313
Operating earnings		36,444		2,468				38,912		27,239		2,798				30,037
Interest and other income (expense), net		290		-				290		491		-				491
Earnings before income taxes		36,734		2,468				39,202		27,730		2,798				30,528
Provision for income taxes		11,236		(2,059	)	(4)		9,177		7,896		883		(4)		8,779
Net earnings	$	25,498	$	4,527			$	30,025	$	19,834	$	1,915			$	21,749
Diluted net earnings per share	$	0.54					$	0.64	$	0.43					$	0.47
Diluted weighted average shares outstanding		46,455,584						46,455,584		45,939,172						45,939,172
(1) Share-based compensation expense:
Cost of revenues			$	(246	)						$	(304	)
Sales and marketing				(350	)							(464	)
Research, development and engineering				(110	)							(204	)
General and administrative				(1,542	)							(1,805	)
			$	(2,248	)						$	(2,777	)
(2) Payroll taxes associated with share-based compensation
Cost of revenues			$	-							$	-
Sales and marketing				-								-
Research, development and engineering				-								-
General and administrative				(108	)							(21	)
			$	(108	)						$	(21	)
(3) Acquisition and exit costs:
Cost of revenues			$	(27	)						$	-
Sales and marketing				-								-
Research, development and engineering				(68	)							-
General and administrative				(17	)							-
			$	(112	)						$	-
(4) Income tax adjustment, net impact of the items above
Share-based compensation expense				696								877
Payroll taxes associated with share-based compensation				33								6
Acquisition and exit costs				35								-
Change in uncertain income tax position due to expiration of statutes of limitations				1,069								-
Trade name sale				(3,892	)							-
			$	(2,059	)						$	883

j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED RECONCILIATION OF MODIFIED NET EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Modified net earnings are GAAP net earnings with the following modifications: (1) elimination of the impact to revenues resulting from a change in estimate of deferred revenue; (2) elimination of share-based compensation expense; (3) elimination of payroll taxes associated with share-based compensation; (4) elimination of certain acquisition and related exit costs and (5) elimination of income tax expense or benefit associated with the change in estimate of deferred revenue, shared-based compensation and associated payroll taxes, certain acquisition and related exit costs, a change to our liability of uncertain tax position due to expiration of statues of limitations and taxes related to trade name sale. Modified net earnings and modified net earnings per share are not meant as a substitute for measures determined under GAAP, but are solely for informational purposes. The following table illustrates and reconciles the GAAP net earnings with the aforementioned exclusions. The Company believes that this non-GAAP financial information are useful measures of operating performance because they exclude certain non-cash or non-ordinary course transactions.

	NINE MONTHS ENDED SEPTEMBER 30, 2011								NINE MONTHS ENDED SEPTEMBER 30, 2010
	Reported		Non-GAAP Entries				Non-GAAP		Reported		Non-GAAP Entries				Non-GAAP
Revenues
Subscriber	$	243,788	$	10,325		(1)	$	254,113	$	182,173	$	-			$	182,173
Other		1,299		-				1,299		2,196		-				2,196
Total revenue		245,087		10,325				255,412		184,369		-				184,369
Cost of revenues		45,952		(1,108	)	(2), (3), (4)		44,844		31,378		(963	)	(2)		30,415
Gross profit		199,135		11,433				210,568		152,991		963				153,954
Operating expenses:
Sales and marketing		44,929		(1,819	)	(2), (3), (4)		43,110		32,327		(1,460	)	(2)		30,867
Research, development and engineering		12,714		(1,103	)	(2), (3), (4)		11,611		8,810		(645	)	(2)		8,165
General and administrative		44,037		(6,113	)	(2), (3), (4)		37,924		34,263		(6,073	)	(2), (3), (4)		28,190
Total operating expenses		101,680		(9,035	)			92,645		75,400		(8,178	)			67,222
Operating earnings		97,455		20,468				117,923		77,591		9,141				86,732
Interest and other income (expense), net		262		-				262		1,750		-				1,750
Earnings before income taxes		97,717		20,468				118,185		79,341		9,141				88,482
Provision for income taxes		12,770		16,899		(5)		29,669		23,161		2,849		(5)		26,010
Net earnings	$	84,947	$	3,569			$	88,516	$	56,180	$	6,292			$	62,472
Diluted net earnings per share	$	1.81					$	1.89	$	1.23					$	1.37
Diluted weighted average shares outstanding		46,108,890						46,108,890		45,738,389						45,738,389
(1) Change in estimate of deferred revenue			$	10,325							$	-
(2) Share-based compensation expense:
Cost of revenues			$	(736	)						$	(963	)
Sales and marketing				(1,049	)							(1,460	)
Research, development and engineering				(367	)							(645	)
General and administrative				(4,532	)							(5,699	)
			$	(6,684	)						$	(8,767	)
(3) Payroll taxes associated with share-based compensation
Cost of revenues			$	(6	)						$	-
Sales and marketing				(6	)							-
Research, development and engineering				(5	)							-
General and administrative				(160	)							(169	)
			$	(177	)						$	(169	)
(4) Acquisition and exit costs:
Cost of revenues			$	(366	)						$	-
Sales and marketing				(764	)							-
Research, development and engineering				(731	)							-
General and administrative				(1,421	)							(205	)
			$	(3,282	)						$	(205	)
(5) Income tax adjustment, net impact of the items above
Change in estimate of deferred revenue			$	2,707							$	-
Share-based compensation expense				2,055								2,738
Payroll taxes associated with share-based compensation				51								51
Acquisition and exit costs				850								60
Change in uncertain income tax position due to expiration of statutes of limitations				15,128								-
Trade name sale				(3,892	)							-
			$	16,899							$	2,849

j2 Global Communications, Inc.
Free Cash Flows
(in Thousands)

	Q1			Q2			Q3			Q4			YTD
2011
Net cash provided by operating activities	$	38,153		$	42,398		$	28,682					$	109,233
Less: Purchases of property and equipment		(625	)		(1,860	)		(2,590	)					(5,075	)
Add: Excess tax (deficiency) benefit from share-based compensation		679			1,443			11,124						13,246
Free cash flows	$	38,207		$	41,981		$	37,216		$	-		$	117,404
2010
Net cash provided by operating activities	$	34,688		$	12,317		$	27,147		$	22,233		$	96,385
Less: Purchases of property and equipment		(86	)		(495	)		(692	)		(569	)		(1,842	)
Add: Excess tax (deficiency) benefit from share-based compensation		(406	)		374			196			(102	)		62
Add: IRS settlement*		-			14,223			-			-			14,223
Free cash flows	$	34,196		$	26,419		$	26,651		$	21,562		$	108,828

* Free cash flows of $26.4 million for Q2 2010 were before the effects of our IRS settlement. In the second quarter, we successfully settled our audit for transfer pricing for the years of 2004 to 2008 for $14.2 million, which was fully accrued for in prior periods. Taking this settlement into consideration, our free cash flow for the quarter was $12.2 million.

2009
Net cash provided by operating activities	$	31,152		$	20,362		$	26,469		$	23,850		$	101,833
Less: Purchases of property and equipment		(721	)		(217	)		(767	)		(1,546	)		(3,251	)
Add: Excess tax benefit (deficiency) from share-based compensation		5			2,718			403			(63	)		3,063
	$	30,436		$	22,863		$	26,105		$	22,241		$	101,645
2008
Net cash provided by operating activities	$	27,411		$	23,840		$	15,676		$	23,789		$	90,716
Less: Purchases of property and equipment		(469	)		(796	)		(937	)		(305	)		(2,507	)
Add: Excess tax benefit from share-based compensation		239			204			212			910			1,565
	$	27,181		$	23,248		$	14,951		$	24,394		$	89,774