j2 Global Reports 2004 Financial Results - Exceeds Revenue and EPS Guidance

j2 Global Reports 2004 Financial Results - Exceeds Revenue and EPS Guidance

2004 Revenues Are $106.3 Million With EPS of $1.24 Per Share

LOS ANGELES, Feb. 3 /PRNewswire-FirstCall/ -- j2 Global Communications, Inc. (NASDAQ:JCOM), a leading provider of outsourced, value-added messaging and communications services, today reported financial results for the fourth quarter and year ended December 31, 2004.

ANNUAL RESULTS

For the fiscal year 2004, total revenues increased 48% to $106.3 million compared to $71.6 million in fiscal 2003.

Earnings before income taxes for 2004 grew to $47.2 million from $27.7 million for fiscal 2003, a 71% increase. Net earnings for 2004 were $31.6 million compared with $35.8 million for fiscal 2003.

Earnings before income taxes per diluted share for 2004 increased to $1.86 from $1.10 in 2003. Net earnings per diluted share for 2004 were $1.24 compared to $1.42 in 2003. Net earnings in 2004 are based upon a 33% tax rate compared to a tax rate of (29%) in 2003. The 2003 tax rate reflects a tax benefit from the Company's net operating loss carry-forwards.

Key financial results for fiscal year 2004 versus fiscal year 2003 are as follows:

2004 2003
Revenues $106.3 million $71.6 million
Earnings Before Income Taxes $47.2 million $27.7 million
Net Earnings $31.6 million $35.8 million
Earnings Before Income Taxes Per Share $1.86 $1.10
Net Earnings Per Share $1.24 $1.42
Free Cash Flow (1) $44.3 million $29.1 million

(1) Net cash provided by operating activities, less purchases of
property and equipment.



QUARTERLY RESULTS


Total revenues for Q4 2004 were $29.8 million compared to $20.5 million for Q4 2003, a 46% increase.

Earnings before income taxes for Q4 2004 were $13.2 million compared to $8.6 million for Q4 2003, a 54% increase. Net earnings for Q4 2004 were $9.6 million compared to $17.6 million in Q4 2003.

Earnings before income taxes per diluted share for Q4 2004 increased to $0.51 compared to $0.34 in Q4 2003. Net earnings per diluted share for Q4 2004 were $0.37 compared to $0.69 in Q4 2003. Net earnings in Q4 2004 are based upon a 28% tax rate compared to a tax rate of (104%) in Q4 2003. The Q4 2003 tax rate reflects a tax benefit from the Company's net operating loss carry-forwards.

The Company ended the year with approximately $93.8 million in cash and investments as compared to $63.8 million as of December 31, 2003.

Key financial results for the fourth quarter of 2004 versus the fourth quarter of 2003 are as follows:

Q4 Q4
2004 2003
Revenues $29.8 million $20.5 million
Earnings Before Income Taxes $13.2 million $8.6 million
Net Earnings $9.6 million $17.6 million
Earnings Before Income Taxes Per Share $0.51 $0.34
Net Earnings Per Share $0.37 $0.69
Free Cash Flow (1) $10.9 million $9.3 million

(1) Net cash provided by operating activities, less purchases of property
and equipment.





"2004 was an excellent year for j2 Global, both financially and operationally," said Scott Jarus, president of j2 Global. "We significantly increased our international network and marketing programs, made substantial penetration into large corporate accounts through our enterprise sales team, enhanced our patent portfolio, and expanded the breadth of our online marketing relationships."

2005 BUSINESS OUTLOOK

"We have a goal of continuing to grow our revenues annually by approximately 40 percent, and to maintain a 40 percent, or better, operating margin," said R. Scott Turicchi, chief financial officer. "We believe these targets are consistent with our historical performance and reflect our intention to invest in future service offerings and marketing programs."

For fiscal year 2005, the Company anticipates that its revenues will be in the range of $145 million to $148 million and its net earnings per diluted share will be in the range of $1.70 to $1.75. This earnings estimate assumes an effective annual tax rate for 2005 in the range of 25% to 28%.

The net earnings per share guidance above does not reflect the potential impact of the Company being required to expense stock-based compensation in its net earnings, other than in accordance with currently effective accounting standards.

A summary of this fiscal 2005 financial guidance is set forth in the table below:

Fiscal Year
2005
Revenues $145 - $148 million
Net Earnings Per Share (1) $1.70 - $1.75

(1) Per share guidance is based upon fully diluted shares of 25.8 million
as of January 31, 2005.





The Company expects Q1 2005 revenues to approximate $32.2 million and Q1 2005 net earnings per diluted share to approximate $0.39.

A summary of this Q1 2005 financial guidance is set forth in the table below:

Q1 2005
Revenues $32.2 million
Net Earnings Per Share (1) $0.39

(1) Per share guidance is based upon fully diluted shares of 25.8 million
as of January 31, 2005.



About j2 Global Communications


Founded in 1995, j2 Global Communications, Inc., provides outsourced, value-added messaging and communications services to individuals and businesses around the world. j2 Global's network spans more than 1,500 cities in 22 countries on five continents. The Company offers faxing and voicemail solutions, document management solutions, Web-initiated conference calling, and unified-messaging and communications services. j2 Global markets its services principally under the brand names eFax(R), j2(R), jConnect(R), JFAX(R), eFax Corporate(R), Onebox(R), Electric Mail(R), jBlast(R), eFax Broadcast(TM), eVoice(TM), PaperMaster(R), Consensus(TM), M4 Internet(R) and Protofax(R). As of December 31, 2004, j2 Global had achieved 31 consecutive quarters of revenue growth and 12 consecutive quarters of positive earnings. For more information about j2 Global, please visit www.j2global.com.

Contacts
Christine Brodeur Jeff Adelman
Socket Media, Inc. j2 Global Communications, Inc.
310-559-0540 323-372-3617
c.brodeur@socketmedia.compress@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 Act of 1995, particularly those contained in the "Business Outlook" portion. 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 usage-based revenue based on changing conditions in particular industries and the economy generally; ability to obtain telephone numbers in sufficient quantities on acceptable terms; 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 unified messaging and telecommunications; and 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 Annual Report on Form 10-K filed by j2 Global on March 15, 2004, 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 guidance provided in the "Business Outlook" portion of this press release is 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 this guidance.

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

THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2004 2003 2004 2003

Revenues
Subscriber $29,050 $19,518 $103,160 $68,085
Advertising 669 805 2,745 2,707
Licensing and Other 80 151 438 830

Total revenue 29,799 20,474 106,343 71,622

Cost of revenues 4,448 3,572 16,514 13,323

Gross profit 25,351 16,902 89,829 58,299

Operating expenses:
Sales and marketing 5,226 2,898 18,501 11,171
Research, development
and engineering 1,517 1,140 5,249 4,195
General and
administrative 5,506 4,387 20,043 15,683

Total operating
expenses 12,249 8,425 43,793 31,049

Operating earnings 13,102 8,477 46,036 27,250

Other income, net 140 150 1,183 419

Earnings before income
taxes 13,242 8,627 47,219 27,669

Income tax expense 3,652 (8,999) 15,612 (8,137)

Net earnings $9,590 $17,626 $31,607 $35,806

Basic net earnings
per share $0.41 $0.76 $1.36 $1.58

Diluted net earnings
per share $0.37 $0.69 $1.24 $1.42

Basic weighted average
shares outstanding 23,566,518 23,074,027 23,312,744 22,731,894

Diluted weighted average
shares outstanding 25,809,247 25,670,034 25,431,131 25,183,088



j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

DECEMBER 31, DECEMBER 31,
2004 2003
ASSETS
Cash and cash equivalents $39,890 $46,882
Short-term investments 26,149 8,539
Accounts receivable, net 8,227 5,877
Prepaid expenses and other 2,873 2,571
Deferred income taxes 2,148 10,004

Total current assets 79,287 73,873

Long-term investments 27,753 8,408
Property and equipment, net 12,386 6,594
Goodwill 20,173 15,616
Other purchased intangibles, net 11,256 2,320
Other assets 170 329
Deferred income taxes 2,295 5,716

TOTAL ASSETS $153,320 $112,856

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $5,516 $4,010
Deferred revenue 5,378 4,698
Deferred income taxes 403 --
Current portion of long-term debt 1,196 1,022

Total current liabilities 12,493 9,730

Long-term debt 866 221

Total liabilities 13,359 9,951

Total stockholders' equity 139,961 102,905

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $153,320 $112,856



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

THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2004 2003 2004 2003

Cash flows from operating activities:
Net earnings $9,590 $17,626 $31,607 $35,806
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation and
amortization 1,094 924 4,549 3,910
Compensation in exchange
for note reduction 43 42 173 172
Tax benefit of non-
qualifying stock option
exercises 930 6,334 2,949 7,060
Deferred income taxes 2,990 (15,720) 11,678 (15,720)
Decrease (increase) in:
Accounts receivable 627 (49) (1,705) (606)
Interest receivable 9 1 13 (26)
Prepaid expenses (21) 521 1,088 1,063
Other assets (637) (950) (997) (1,089)
(Decrease) increase in:
Accounts payable 291 421 1,466 26
Deferred revenue (131) 1,007 500 2,033

Net cash provided by
operating activities 14,785 10,157 51,321 32,629

Cash flows from investing activities:
Redemption (purchase) of
investments (12,353) (8,734) (36,870) (16,947)
Purchases of property and
equipment (3,883) (906) (6,981) (3,566)
Proceeds from sale of
equipment -- -- -- 73
Acquisition of business, net
of cash received (46) 218 (8,607) (757)
Payment of accrued exit
costs (155) -- (503)
Purchase of intangible
assets (514) -- (5,374) (200)
Repayment of note
receivable, net -- 1 -- 540

Net cash used in investing
activities (16,951) (9,421) (58,335) (20,857)

Cash flows from financing activities:
Issuance of common shares
issued under Employee
Stock Purchase Plan 111 122 436 392
Exercise of stock options
and warrants 390 58 1,464 2,964
Repayments of long-term debt
and capital leases (853) (347) (1,972) (1,023)

Net cash provided by (used
in) financing activities (352) (167) (72) 2,333

Effect of exchange rate on cash and
cash equivalents 65 -- 94 --

Net increase in cash (2,453) 569 (6,992) 14,105

Cash and cash equivalents, beginning
of period 42,343 46,313 46,882 32,777

Cash and cash equivalents, end of
period $39,890 $46,882 $39,890 $46,882



j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED RECONCILIATION OF FREE CASH FLOW
(IN THOUSANDS)

Free Cash Flow amount is not meant as a substitute for GAAP, but is solely
for information purposes. The following table illustrates the adjustments
and reconciles Free Cash Flow data to that reported in the financial
statements.

THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2004 2003 2004 2003

Net cash provided by operating
activities $14,785 $10,157 $51,321 $32,629

Deduct:
Purchases of property and
equipment (3,883) (906) (6,981) (3,566)

Free Cash Flow (1) $10,902 $9,251 $44,340 $29,063

(1) Free Cash Flow represents cash flow from operations calculated in
accordance with generally accepted accounting principles ("GAAP")
after deducting purchases of property and equipment. The Company
believes that Free Cash Flow is a useful measure of operating
performance because it better reflects the resources generated that
could be utilized for strategic opportunities including, among
others, to invest in the business, make strategic acquisitions,
strengthen the balance sheet and repurchase stock. Free Cash Flow is
not determined in accordance with GAAP and should not be considered
as an alternative to historical financial results presented in
accordance with GAAP.



Source: j2 Global Communications, Inc.

CONTACT: Christine Brodeur of Socket Media, Inc., +1-310-559-0540,
c.brodeur@socketmedia.com, for j2 Global Communications, Inc.; or Jeff Adelman
of j2 Global Communications, Inc., +1-323-372-3617, press@j2global.com

Web site: http://www.j2global.com/


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