j2 Global Communications Inc (JCOM, Financial) filed Quarterly Report for the period ended 2010-03-31.
J2 Global Communications Inc has a market cap of $1.04 billion; its shares were traded at around $23.04 with a P/E ratio of 13.8 and P/S ratio of 4.2. JCOM is in the portfolios of RS Investment Management, Jim Simons of Renaissance Technologies LLC, Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors.
At March 31, 2010, we had cash and investments of $264.4 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. At March 31, 2010, cash and investments consisted of cash and cash equivalents of $184.0 million, short-term investments of $38.4 million and long-term investments of $42.0 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 long-term investments consist primarily of corporate and auction rate debt and preferred securities. The auction rate debt and preferred securities are illiquid due to failed auctions or following failed auctions were converted into other illiquid securities. During the second quarter of 2009, we determined that as a result of continued deterioration of the creditworthiness of the issuers of these securities that we intend to sell these securities. Accordingly, we reclassified these securities to available-for-sale. In addition, we determined that these securities were other-than-temporarily impaired and recorded an impairment of $9.2 million to the condensed consolidated statement of operations. During the fourth quarter of 2009, we determined that one auction rate security was other-than-temporarily impaired and recorded an impairment loss of $0.2 million to the consolidated statement of operations. During the fourth quarter of 2009, we sold an auction rate security which was previously determined to be other than temporarily impaired and recognized a gain on the sale in the amount of $1.8 million which was recorded within interest and other income in the consolidated statement of operations. Based on our ability to access our cash and other short-term investments, our expected operating cash flows and our other sources of cash, we do not anticipate the lack of liquidity of these investments to affect our ability to operate our business as usual. There have been no significant changes in the maturity dates and average interest rates for our investment portfolio and debt obligations subsequent to March 31, 2010.
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 $34.7 million and $31.2 million for the three months ended March 31, 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 $2.6 million and $7.2 million at March 31, 2010 and December 31, 2009, respectively. More than two-thirds 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 $222.4 million at March 31, 2010.
As of March 31, 2010, we had investments in debt securities with effective maturities greater than one year of approximately $42.0 million. Such investments had a weighted average yield of approximately 3.57%. As of March 31, 2010 and December 31, 2009, we had cash and cash equivalent investments in time deposits and money market funds with maturities of 90 days or less of $184 million and $197.4 million respectively. Based on our cash and cash equivalents and short and long-term investment holdings as of March 31, 2010, an immediate 100 basis point decline in interest rates would decrease our annual interest income by approximately $2.6 million.
Foreign exchange gains and losses were not material to our earnings for the three months ended March 31, 2010, amounting to approximately $(0.9) million for the quarter. As of March 31, 2010, cumulative translation adjustments included in other comprehensive income amounted to approximately $(2.8) million.
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J2 Global Communications Inc has a market cap of $1.04 billion; its shares were traded at around $23.04 with a P/E ratio of 13.8 and P/S ratio of 4.2. JCOM is in the portfolios of RS Investment Management, Jim Simons of Renaissance Technologies LLC, Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
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 $10.3 million, or 17% of total revenues, and $11.4 million, or 19% of total revenues, for the three months ended March 31, 2010 and 2009, respectively. The decrease in cost of revenues was primarily due to increased efficiency of network operations and customer service.At March 31, 2010, we had cash and investments of $264.4 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. At March 31, 2010, cash and investments consisted of cash and cash equivalents of $184.0 million, short-term investments of $38.4 million and long-term investments of $42.0 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 long-term investments consist primarily of corporate and auction rate debt and preferred securities. The auction rate debt and preferred securities are illiquid due to failed auctions or following failed auctions were converted into other illiquid securities. During the second quarter of 2009, we determined that as a result of continued deterioration of the creditworthiness of the issuers of these securities that we intend to sell these securities. Accordingly, we reclassified these securities to available-for-sale. In addition, we determined that these securities were other-than-temporarily impaired and recorded an impairment of $9.2 million to the condensed consolidated statement of operations. During the fourth quarter of 2009, we determined that one auction rate security was other-than-temporarily impaired and recorded an impairment loss of $0.2 million to the consolidated statement of operations. During the fourth quarter of 2009, we sold an auction rate security which was previously determined to be other than temporarily impaired and recognized a gain on the sale in the amount of $1.8 million which was recorded within interest and other income in the consolidated statement of operations. Based on our ability to access our cash and other short-term investments, our expected operating cash flows and our other sources of cash, we do not anticipate the lack of liquidity of these investments to affect our ability to operate our business as usual. There have been no significant changes in the maturity dates and average interest rates for our investment portfolio and debt obligations subsequent to March 31, 2010.
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 $34.7 million and $31.2 million for the three months ended March 31, 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 $2.6 million and $7.2 million at March 31, 2010 and December 31, 2009, respectively. More than two-thirds 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 $222.4 million at March 31, 2010.
As of March 31, 2010, we had investments in debt securities with effective maturities greater than one year of approximately $42.0 million. Such investments had a weighted average yield of approximately 3.57%. As of March 31, 2010 and December 31, 2009, we had cash and cash equivalent investments in time deposits and money market funds with maturities of 90 days or less of $184 million and $197.4 million respectively. Based on our cash and cash equivalents and short and long-term investment holdings as of March 31, 2010, an immediate 100 basis point decline in interest rates would decrease our annual interest income by approximately $2.6 million.
Foreign exchange gains and losses were not material to our earnings for the three months ended March 31, 2010, amounting to approximately $(0.9) million for the quarter. As of March 31, 2010, cumulative translation adjustments included in other comprehensive income amounted to approximately $(2.8) million.
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