j2 Global Communications Inc (JCOM, Financial) filed Quarterly Report for the period ended 2010-09-30.
J2 Global Communications Inc has a market cap of $1.27 billion; its shares were traded at around $27.69 with a P/E ratio of 17.2 and P/S ratio of 5.2. J2 Global Communications Inc had an annual average earning growth of 19.8% over the past 5 years.JCOM is in the portfolios of RS Investment Management, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Cost of revenues is primarily comprised of costs associated with data and voice transmission, telephone numbers, network operations, customer service, on-line processing fees and equipment depreciation. Cost of revenues was $10.7 million, or 17% of total revenues, and $11.3 million, or 18% of total revenues, for the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, cost of revenues was $31.4 million, or 17% of total revenues, and $34.2 million, or 19% of total revenues, respectively. The decrease in cost of revenues was primarily due to increased efficiency of network operations and reduced depreciation.
General and Administrative . Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization, share-based compensation expense, bad debt expense and insurance costs. General and administrative costs were $10.9 million, or 17% of total revenues, and $11.7 million, or 19% of total revenues, for the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, general and administrative costs were $34.3 million, or 19% of total revenues, and $33.6 million, or 18% of total revenues, respectively. The decrease in expense for the three months ended September 30, 2010 compared to the same period in the prior year was primarily due to decreased customer refunds and credits and bad debt expense. The increase in expense for the nine months ended September 30, 2010 compared to the same period in the prior year was primarily due to increased amortization of capitalized patent costs, compensation costs and office rent offset by decreased customer refunds and credits and bad debt expense.
Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing) and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize. When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized. Income tax expense amounted to approximately $7.9 million and $7.4 million for the three months ended September 30, 2010 and 2009, respectively. Income tax expense for the nine months ended September 30, 2010 and 2009 was $23.2 million and $22.9 million, respectively. Our effective tax rate was approximately 28.5% compared to 27.6% and 29.2% compared to 31.8% for the three and nine months ended September 30, 2010 and 2009, respectively. The increase in expense for the three month period ended September 30, 2010 compared to the same period in the prior year was primarily due to an increase in the accrual for uncertain income tax positions during the third quarter 2010. The increase in expense for the nine month period ended September 30, 2010 compared to the same period in the prior year was primarily due to an increase in the accrual for uncertain income tax positions during the third quarter 2010 offset by us effectively settling a portion of our on-going IRS audit and an increase in foreign income as a percentage of total income.
At September 30, 2010, we had cash and investments of $272.3 million compared to cash and investments of $243.7 million at December 31, 2009. The increase in cash and investments resulted primarily from cash provided by operations offset by cash used in connection with business acquisitions and the repurchase of stock. At September 30, 2010, cash and investments consisted of cash and cash equivalents of $212.7 million, short-term investments of $16.2 million and long-term investments of $43.4 million. Our investments are comprised primarily of readily marketable corporate debt securities, money market funds and certificates of deposits. For financial statement presentation, we classify our investments primarily as available-for-sale, thus, they are reported as short and long-term based upon their maturity dates. Short-term investments mature within one year of the date of the financial statements and long-term investments mature one year or more from the date of the financial statements. We retain a substantial portion of our cash in foreign jurisdictions for future reinvestment. If we were to repatriate funds held overseas, we would incur U.S. income tax on the repatriated amount at an approximate blended federal and state rate of 40%.
Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents and short-term investments. Net cash provided by operating activities was $74.2 million and $78.0 million for the nine months ended September 30, 2010 and 2009, respectively. Our operating cash flows resulted primarily from cash received from our subscribers offset by cash payments we made to third parties for their services, employee compensation and tax payments. Certain tax payments are prepaid during the year and included within prepaid expenses and other current assets on the consolidated balance sheet. Our prepaid tax payments were $1.8 million and $7.2 million at September 30, 2010 and December 31, 2009, respectively. A significant portion of our subscribers pay us via credit cards and therefore our receivables from subscribers generally settle quickly. Our cash and cash equivalents and short-term investments were $228.9 million at September 30, 2010.
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J2 Global Communications Inc has a market cap of $1.27 billion; its shares were traded at around $27.69 with a P/E ratio of 17.2 and P/S ratio of 5.2. J2 Global Communications Inc had an annual average earning growth of 19.8% over the past 5 years.JCOM is in the portfolios of RS Investment Management, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Other Revenues. Other revenues were $0.7 million and $0.8 million for the three months ended September 30, 2010 and 2009, respectively. Other revenues were $2.2 million and $2.9 million for the nine month period ended September 30, 2010 and 2009, respectively. Other revenues consist primarily of patent licensing revenues, patent sale-related revenues and advertising revenues generated by delivering email messages to our free customers on behalf of advertisers. The decrease in other revenues resulted primarily from a reduction in patent related revenues due to a patent sale which occurred during the second quarter 2009 and reduced advertising as customers have lowered spending.Cost of revenues is primarily comprised of costs associated with data and voice transmission, telephone numbers, network operations, customer service, on-line processing fees and equipment depreciation. Cost of revenues was $10.7 million, or 17% of total revenues, and $11.3 million, or 18% of total revenues, for the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, cost of revenues was $31.4 million, or 17% of total revenues, and $34.2 million, or 19% of total revenues, respectively. The decrease in cost of revenues was primarily due to increased efficiency of network operations and reduced depreciation.
General and Administrative . Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization, share-based compensation expense, bad debt expense and insurance costs. General and administrative costs were $10.9 million, or 17% of total revenues, and $11.7 million, or 19% of total revenues, for the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, general and administrative costs were $34.3 million, or 19% of total revenues, and $33.6 million, or 18% of total revenues, respectively. The decrease in expense for the three months ended September 30, 2010 compared to the same period in the prior year was primarily due to decreased customer refunds and credits and bad debt expense. The increase in expense for the nine months ended September 30, 2010 compared to the same period in the prior year was primarily due to increased amortization of capitalized patent costs, compensation costs and office rent offset by decreased customer refunds and credits and bad debt expense.
Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing) and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize. When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized. Income tax expense amounted to approximately $7.9 million and $7.4 million for the three months ended September 30, 2010 and 2009, respectively. Income tax expense for the nine months ended September 30, 2010 and 2009 was $23.2 million and $22.9 million, respectively. Our effective tax rate was approximately 28.5% compared to 27.6% and 29.2% compared to 31.8% for the three and nine months ended September 30, 2010 and 2009, respectively. The increase in expense for the three month period ended September 30, 2010 compared to the same period in the prior year was primarily due to an increase in the accrual for uncertain income tax positions during the third quarter 2010. The increase in expense for the nine month period ended September 30, 2010 compared to the same period in the prior year was primarily due to an increase in the accrual for uncertain income tax positions during the third quarter 2010 offset by us effectively settling a portion of our on-going IRS audit and an increase in foreign income as a percentage of total income.
At September 30, 2010, we had cash and investments of $272.3 million compared to cash and investments of $243.7 million at December 31, 2009. The increase in cash and investments resulted primarily from cash provided by operations offset by cash used in connection with business acquisitions and the repurchase of stock. At September 30, 2010, cash and investments consisted of cash and cash equivalents of $212.7 million, short-term investments of $16.2 million and long-term investments of $43.4 million. Our investments are comprised primarily of readily marketable corporate debt securities, money market funds and certificates of deposits. For financial statement presentation, we classify our investments primarily as available-for-sale, thus, they are reported as short and long-term based upon their maturity dates. Short-term investments mature within one year of the date of the financial statements and long-term investments mature one year or more from the date of the financial statements. We retain a substantial portion of our cash in foreign jurisdictions for future reinvestment. If we were to repatriate funds held overseas, we would incur U.S. income tax on the repatriated amount at an approximate blended federal and state rate of 40%.
Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents and short-term investments. Net cash provided by operating activities was $74.2 million and $78.0 million for the nine months ended September 30, 2010 and 2009, respectively. Our operating cash flows resulted primarily from cash received from our subscribers offset by cash payments we made to third parties for their services, employee compensation and tax payments. Certain tax payments are prepaid during the year and included within prepaid expenses and other current assets on the consolidated balance sheet. Our prepaid tax payments were $1.8 million and $7.2 million at September 30, 2010 and December 31, 2009, respectively. A significant portion of our subscribers pay us via credit cards and therefore our receivables from subscribers generally settle quickly. Our cash and cash equivalents and short-term investments were $228.9 million at September 30, 2010.
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