8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report  (Date of earliest event reported)   May 7, 2014

j2 Global, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 0-25965 (Commission File Number) 51-0371142 (IRS Employer Identification No.)

6922 Hollywood Blvd.

Suite 500

Los Angeles, California  90028

(Address of principal executive offices)

(323) 860-9200

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 AND 7.01.   RESULTS OF OPERATIONS AND FINANCIAL CONDITION AND REGULATION FD DISCLOSURE

On May 8, 2014, j2 Global, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of fiscal 2014.  In the press release, the Company also reaffirmed its previously issued financial estimates for fiscal 2014 of revenues between $580 and $600 million and Adjusted non-GAAP earnings per diluted share of between $3.23 and $3.47.

The Company also announced that it has declared a quarterly cash dividend of $0.27 per common share. The dividend will be paid on June 3, 2014, to all shareholders of record as of the close of business on May 19, 2014. Future dividends will be subject to approval by the Company’s Board of Directors.

Also on May 8, 2014, at 5:00 p.m. Eastern Time, the Company hosted its first quarter 2014 earnings conference call and Webcast. Via the Webcast, the Company presented portions of its May 2014 Investor Presentation, which contains a summary of the Company’s financial results for the fiscal quarter ended March 31, 2014, reaffirmed financial estimates for the fiscal year 2014, and certain other financial and operating information regarding the Company. A copy of this presentation is furnished as Exhibit 99.2 to this Form 8-K.

NOTE: This information is being furnished under both Item 2.02 (Results of Operations and Financial Condition) and Item 7.01 (Regulation FD Disclosure) of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 5.07.                      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

(a)            On May 7, 2014, the Company held its 2014 Annual Meeting of Stockholders (the “Annual Meeting”) in Los Angeles, California.

(b)           Below are the voting results for the matters submitted to the Company's stockholders for a vote at the Annual Meeting:

(1)    The election of the following six director nominees to serve for the ensuing year and until their successors are elected and qualified. All nominees were elected as directors with the following vote:

Nominee	For	Against	Abstain	Broker Non-Votes
Douglas Y. Bech	36,725,239	656,547	113,393	4,958,351
Robert J. Cresci	31,125,892	6,255,848	113,439	4,958,351
W. Brian Kretzmer	37,180,608	201,246	113,325	4,958,351
Richard S. Ressler	36,887,929	493,969	113,281	4,958,351
Stephen Ross	37,263,822	118,165	113,192	4,958,351
Michael P. Schulhof	36,903,753	478,118	113,308	4,958,351

(2)    A proposal to ratify the appointment of BDO USA, LLP to serve as the Company’s independent auditors for fiscal 2014. This proposal was approved with the following vote:

For 42,317,632

Against 24,580

Abstain 111,318

Broker Non-Votes 0

(3)    A proposal to approve, in an advisory vote, the compensation of the named executive officers.  This proposal was approved with the following vote:

For 36,182,168

Against 1,190,926

Abstain 122,085

Broker Non-Votes 4,958,351

ITEM 9.01.                      FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

Exhibit Number	Description
99.1	Press Release dated May 8, 2014.
99.2	May 2014 Investor Presentation.

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 hereunto duly authorized.

	j2 Global, Inc. (Registrant)
Date:     May 8, 2014	By:	/s/ Jeffrey D. Adelman
		Jeffrey D. Adelman Vice President, General Counsel and Secretary

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release dated May 8, 2014.
99.2	May 2014 Investor Presentation.

EX-99.1

EXHIBIT 99.1

j2 Reports Q1 2014 Results

Achieves Record First Quarter Revenues (up 18.0% vs. Q1 2013), EBITDA (up 18.9% vs. Q1 2013) and Adjusted Non-GAAP EPS (up 13.4% vs. Q1 2013)

Announces Eleventh Consecutive Quarterly Dividend Increase

LOS ANGELES -- j2 Global, Inc. (NASDAQGS: JCOM) today reported financial results for the first quarter ended March 31, 2014 and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.27 per share.

FIRST QUARTER 2014 RESULTS

Quarterly revenues increased 18.0% to a record $134.1 million compared to $113.6 million for Q1 2013.  

Earnings per diluted share(1) for the quarter increased 22.4% to $0.60 compared to $0.49 for Q1 2013.  Adjusted Non-GAAP earnings per diluted share(1)(2) for the quarter increased 13.4% to $0.76 compared to $0.67 for Q1 2013.

Quarterly EBITDA(3) increased 18.9% to a Q1 record $57.3 million compared to $48.2 million for Q1 2013.

Q1 2014 free cash flow(4) was $38.4 million, the same as for Q1 2013, and reflects a $7.3 million payment during Q1 2014 for an accrued Q1 2013 acquisition-related Digital Media obligation.

j2 ended the quarter with approximately $315 million in cash and investments after deploying $52.4 million for acquisitions during the quarter and j2’s regular quarterly dividend.

Key financial results for Q1 2014 versus Q1 2013 are set forth in the following table (in millions, except per share). Reconciliations of earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

	Q1 2014	Q1 2013	% Change
Revenues	$134.1 million	$113.6 million		18.0%
Earnings per Diluted Share (1)	$0.60	$0.49		22.4%
Adjusted Non-GAAP Earnings per Diluted Share (1) (2)	$0.76	$0.67		13.4%
EBITDA (3)	$57.3 million	$48.2 million		18.9%
Free Cash Flow (4)	$38.4 million	$38.4 million		-%

“The first quarter was very strong for j2, with Business Cloud Services revenues growing by 11.1% and Digital Media revenues growing by 45.7%, each versus Q1 2013,” said Hemi Zucker, CEO of j2 Global. “In addition, our Cloud Backup business has surpassed the $50 million annual revenue run-rate milestone faster than anticipated while making a significantly larger contribution to our EBITDA margins than anticipated.”

BUSINESS OUTLOOK

j2 is reaffirming the following previously announced fiscal 2014 financial estimates: Revenues of between $580 and $600 million and Adjusted Non-GAAP earnings per diluted share of between $3.23 and $3.47.

Adjusted Non-GAAP earnings per diluted share for 2014 excludes share-based compensation of between $10 and $12 million, amortization of acquired intangibles and the impact of any currently unanticipated items, and adds back $1.5 million to reflect the impact of the fair value adjustment to deferred revenues purchased in the Livedrive acquisition, in each case net of tax.

It is anticipated that the normalized tax rate for 2014 (exclusive of the release of reserves for uncertain tax positions) will be between 27% and 29%.

DIVIDEND

j2’s Board of Directors has approved a second quarter cash dividend of $0.27 per common share, a 12.5% increase versus the dividend paid in Q2 2013.  This is j2’s eleventh consecutive quarterly dividend increase since its first quarterly dividend in September 2011.  The dividend will be paid on June 3, 2014 to all shareholders of record as of the close of business on May 19, 2014.  Future dividends will be subject to Board approval.

Notes:

(1)	The estimated GAAP effective tax rates were approximately 22.2% for Q1 2014 and 19.5% for Q1 2013.  The estimated Adjusted Non-GAAP effective tax rates were approximately 27.1% for Q1 2014 and 25.0% for Q1 2013.
(2)	For Q1 2014, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, amortization of acquired intangibles and additional tax expense (benefit) from prior years, and adds back the impact of the fair value adjustment to deferred revenues purchased in the Livedrive acquisition, in each case net of tax, totaling $0.16. For Q1 2013, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs and amortization of acquired intangibles, in each case net of tax, totaling $0.18. Adjusted Non-GAAP earnings per diluted share amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
(3)	EBITDA is defined as earnings before interest and other expense, net; income tax expense; depreciation and amortization; and the items used to reconcile EPS to Adjusted Non-GAAP EPS referred to in Note (2) above.  EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
(4)	Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus excess tax benefit from share-based compensation. Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

About j2 Global

j2 Global, Inc. (NASDAQ: JCOM) provides Internet services through two divisions: Business Cloud Services and Digital Media. The Business Cloud Services Division offers Internet fax, virtual phone, hosted email, email marketing, online backup, unified communications and CRM solutions. It markets its services principally under the brand names eFax®, eVoice®, FuseMail®, Campaigner®, KeepItSafe®, Livedrive® and Onebox®, and operates a messaging network spanning 49 countries on six continents. The Digital Media Division offers technology, gaming and lifestyle content through its digital properties, which include PCMag.com, IGN.com, AskMen.com, Toolbox.com and others. The Digital Media Division also operates NetShelter® Powered by BuyerBase®, an advanced digital ad targeting platform, and Ziff Davis B2B, a leading provider of research to enterprise buyers and leads to IT vendors. As of December 31, 2013, j2 had achieved 18 consecutive fiscal years of revenue growth. For more information about j2, please visit www.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 Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2014 financial performance. 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: ability to grow non-fax revenues, profitability and cash flows; ability to identify, close and successfully transition acquisitions; 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, including but not limited to the imposition or increase of taxes or regulatory-related fees; 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 2013 Annual Report on Form 10-K filed by j2 Global on March 3, 2014, 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 Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2014 financial performance 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, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

	MARCH 31,		DECEMBER 31,
	2014		2013
ASSETS
Cash and cash equivalents	$	208,068	$	207,801
Short-term investments		71,300		90,789
Accounts receivable,
net of allowances of $3,714 and $4,105, respectively		63,666		67,245
Prepaid expenses and other current assets		24,343		20,064
Deferred income taxes		2,110		3,126
Total current assets		369,487		389,025
Long-term investments		35,698		47,351
Property and equipment, net		38,829		31,200
Goodwill		483,255		457,422
Other purchased intangibles, net		246,263		223,533
Deferred income taxes		1,369		1,845
Other assets		3,383		3,413
TOTAL ASSETS	$	1,178,284	$	1,153,789
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	$	54,084	$	69,570
Income taxes payable		4,837		1,569
Deferred revenue		49,606		36,326
Liability for uncertain tax positions		5,711		5,535
Deferred income taxes		344		1,892
Total current liabilities		114,582		114,892
Long-term debt		245,796		245,670
Liability for uncertain tax positions		38,504		38,329
Deferred income taxes		34,703		35,833
Deferred revenue		12,460		11,189
Other long-term liabilities		3,873		1,458
Total liabilities		449,918		447,371
Commitments and contingencies		—		—
Stockholders' Equity:
Preferred stock		—		—
Common stock		467		461
Additional paid-in capital		227,149		216,872
Retained earnings		498,318		484,850
Accumulated other comprehensive income (loss)		2,432		4,235
Total stockholders' equity		728,366		706,418
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,178,284	$	1,153,789

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	THREE MONTHS ENDED MARCH 31,
	2014			2013
Revenues	$	134,124		$	113,617
Cost of revenues (including share-based compensation of $154 for the three months of 2014 and $214 for the three months of 2013)		23,388			20,235
Gross profit		110,736			93,382
Operating expenses:
Sales and marketing (including share-based compensation of $491 for the three months of 2014 and $418 for the three months of 2013)		32,959			29,638
Research, development and engineering (including share-based compensation of $140 for the three months of 2014 and $106 for the three months of 2013)		7,213			6,746
General and administrative (including share-based compensation of $1,599 for the three months of 2014 and $1,610 for the three months of 2013)		28,979			24,011
Total operating expenses		69,151			60,395
Income from operations		41,585			32,987
Interest expense (income), net		4,948			4,877
Other expense (income), net		(319	)		(161	)
Income before income taxes		36,956			28,271
Income tax expense		8,191			5,500
Net income		28,765			22,771
Less net loss attributable to noncontrolling interest		—			(151	)
Net income attributable to j2 Global, Inc. common shareholders	$	28,765		$	22,922
Basic net income per common share:
Net income attributable to j2 Global, Inc. common shareholders	$	0.61		$	0.50
Diluted net income per common share:
Net income attributable to j2 Global, Inc. common shareholders	$	0.60		$	0.49
Basic weighted average shares outstanding		46,365,158			45,160,140
Diluted weighted average shares outstanding		46,765,732			45,668,167

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

	THREE MONTHS ENDED MARCH 31,
	2014			2013
Cash flows from operating activities:
Net income	$	28,765		$	22,771
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		13,137			8,762
Accretion and amortization of discount and premium of investments		352			453
Amortization of financing costs and discounts		162			150
Share-based compensation		2,384			2,348
Excess tax benefit from share-based compensation		(4,082	)		(280	)
Provision for doubtful accounts		732			833
Deferred income taxes		(211	)		(1,446	)
Decrease (increase) in:
Accounts receivable		8,452			2,495
Prepaid expenses and other current assets		(1,657	)		(139	)
Other assets		107			357
(Decrease) increase in:
Accounts payable and accrued expenses		(16,228	)		160
Income taxes payable		4,723			2,138
Deferred revenue		205			92
Liability for uncertain tax positions		351			1,294
Other liabilities		102			60
Net cash provided by operating activities		37,294			40,048
Cash flows from investing activities:
Maturity of certificate of deposit		8,210			22,106
Purchase of certificates of deposit		—			(8,165	)
Sales of available-for-sale investments		29,705			31,932
Purchases of available-for-sale investments		(11,213	)		(35,244	)
Purchases of property and equipment		(2,936	)		(1,933	)
Purchases of intangible assets		(915	)		(333	)
Acquisition of business		(49,068	)		(62,771	)
Net cash used in investing activities		(26,217	)		(54,408	)
Cash flows from financing activities:
Debt issuance costs		—			(47	)
Repurchases of stock		(4,042	)		(2,069	)
Issuance of stock, net of costs		4,981			2,081
Excess tax benefit from share-based compensation		4,082			280
Dividends paid		(12,418	)		(10,684	)
Acquisition of business		(3,314	)		—
Net cash used in financing activities		(10,711	)		(10,439	)
Effect of exchange rate changes on cash and cash equivalents		(99	)		(755	)
Net increase (decrease) in cash and cash equivalents		267			(25,554	)
Cash and cash equivalents at beginning of period		207,801			218,680
Cash and cash equivalents at end of period	$	208,068		$	193,126

j2 GLOBAL, INC.

RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES

THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition-related integration costs; (3) elimination of amortization of patents and intangible assets that we acquired; (4) elimination of additional income tax and indirect tax expense and benefit from prior years and (5) elimination of income tax provision associated with share-based compensation and the associated payroll tax expense, certain acquisition-related integration costs, amortization of patents and intangible assets that we acquired and additional indirect tax expense and benefit from prior years.

	THREE MONTHS ENDED MARCH 31, 2014																		THREE MONTHS ENDED MARCH 31, 2013
													(4)
							(2)						Additional												(2)
							Acquisition-						Tax Expense												Acquisition-
				(1) Share-based			related Integration			(3)			(Benefit) from			Adjusted						(1) Share-based			related Integration			(3)			Adjusted
	GAAP			Compensation			Costs			Amortization			Prior Years			Non-GAAP			GAAP			Compensation			Costs			Amortization			Non-GAAP
Revenues	$	134,124			—			541			—			—		$	134,665		$	113,617			—			(44	)		—		$	113,573
Cost of revenues		23,388			(154	)		—			(424	)		—			22,810			20,235			(214	)		(88	)		—			19,933
Operating expenses:
Sales and marketing		32,959			(491	)		(19	)		—			—			32,449			29,638			(418	)		(992	)		—			28,228
Research, development and engineering		7,213			(140	)		—			—			—			7,073			6,746			(106	)		(579	)		—			6,061
General and administrative		28,979			(1,599	)		1,061			(9,960	)		(713	)		17,768			24,011			(1,610	)		(2,479	)		(6,722	)		13,200
Interest expense (income), net		4,948			—			—			—			—			4,948			4,877			—			—			—			4,877
Other expense (income), net		(319	)		—			—			—			—			(319	)		(161	)		—			—			—			(161	)
Income tax provision(5)		8,191			824			(284	)		3,431			1,362			13,524			5,500			774			1,763			2,311			10,348
Net income attributable to j2 Global, Inc. common stockholders	$	28,765			1,560			(217	)		6,953			(649	)	$	36,412		$	22,922			1,574			2,331			4,411		$	31,238
Net income per share attributable to j2 Global, Inc. common stockholders*:
Basic	$	0.61			0.03			(0.01	)		0.15			(0.01	)	$	0.77		$	0.50			0.03			0.05			0.10		$	0.68
Diluted	$	0.60			0.03			(0.01	)		0.15			(0.01	)	$	0.76		$	0.49			0.03			0.05			0.10		$	0.67

* The reconciliation of net income per share from GAAP to adjusted non-GAAP may not foot since each is calculated independently.

The Company discloses adjusted non-GAAP Earnings Per Share ("EPS") as supplemental non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this adjusted non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance. Accordingly, the Company believes that the presentation of this adjusted non-GAAP financial measure provides useful information to investors.

Adjusted non-GAAP EPS is not in accordance with, or an alternative to, net income per share and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, this adjusted non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.

j2 GLOBAL, INC.

NET INCOME TO EBITDA RECONCILIATION

THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(UNAUDITED, IN THOUSANDS)

The following table sets forth a reconciliation of EBITDA to net income, the most directly comparable GAAP financial measure.

	THREE MONTHS ENDED MARCH 31,
	2014			2013
Net income	$	28,765		$	22,771
Plus:
Other expense (income), net		(319	)		(161	)
Interest expense (income), net		4,948			4,877
Income tax expense		8,191			5,500
Depreciation and amortization		13,139			8,794
Reconciliation of GAAP to adjusted non-GAAP financial measures:
Share-based compensation and the associated payroll tax expense		2,384			2,348
Acquisition-related integration costs		(501	)		4,094
Additional indirect tax expense from prior years		713			—
EBITDA	$	57,320		$	48,223

EBITDA as calculated above represents earnings before interest and other expense, net, income tax expense, depreciation and amortization and the items used to reconcile GAAP to adjusted non-GAAP financial measures, including (1) share-based compensation, (2) certain acquisition-related integration costs and (3) additional indirect tax expense from prior years.  We disclose EBITDA as a supplemental non-GAAP financial performance measure as we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of EBITDA provides useful information to investors.

EBITDA is not in accordance with, or an alternative to, net income, and may be different from non-GAAP measures used by other companies. In addition, EBITDA is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

j2 GLOBAL, INC.

NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

	Q1			Q2			Q3			Q4			YTD
2014
Net cash provided by operating activities	$	37,294											$	37,294
Less: Purchases of property and equipment		(2,936	)											(2,936	)
Add: Excess tax benefit from share-based compensation		4,082												4,082
Free cash flows	$	38,440		$	—		$	—		$	—		$	38,440
2013
Net cash provided by operating activities	$	40,048		$	68,973		$	25,859		$	58,444		$	193,324
Less: Purchases of property and equipment		(1,933	)		(4,056	)		(5,126	)		(7,511	)		(18,626	)
Add: Excess tax benefit (deficit) from share-based compensation		280			1,301			1,590			(476	)		2,695
Free cash flows	$	38,395		$	66,218		$	22,323		$	50,457		$	177,393

The Company discloses Free Cash Flows as supplemental non-GAAP financial performance measure, as it believes it is a useful metrics by which to compare the performance of its business from period to period. The Company also understands that this non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance.  Accordingly, the Company believes that the presentation of this non-GAAP financial measure provides useful information to investors.

Free Cash Flows is not in accordance with, or an alternative to, Cash Flows from Operating Activities, and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, the non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.

EX-99.2

EXHIBIT 99.2