Condensed Consolidating Financials (Notes)

3 Months Ended

Mar. 31, 2015

Condensed Financial Information [Abstract]

Condensed Financial Statements [Text Block]

Condensed Consolidating Financial Statements

In connection with the June 2014 Convertible Note issuance, j2 Global, Inc. entered into a supplemental indenture related to the Senior Notes, pursuant to which it fully and unconditionally guaranteed, on an unsecured basis, the full and punctual payment of the Senior Notes issued by its wholly owned subsidiary, j2 Cloud Services, Inc. j2 Cloud Services, Inc. is subject to restrictions on dividends in its existing indenture with respect to the Senior Notes and the credit facility with Union Bank. While substantially all of the Company’s assets (other than the net cash proceeds from the issuance of the Convertible Notes) are owned directly or indirectly by j2 Cloud Services, Inc., those contractual provisions do not meaningfully restrict j2 Cloud Services, Inc.’s ability to pay dividends to j2 Global, Inc.

The following condensed consolidating financial statements present, in separate columns, financial information for (i) j2 Global, Inc. (the “Parent”) on a parent-only basis, (ii) j2 Cloud Services, Inc., (iii) the non-guarantor subsidiaries on a combined basis, (iv) the eliminations and reclassifications necessary to arrive at the information for the Company on a consolidated basis, and (v) the Company on a consolidated basis. The condensed consolidating financial statements are presented in accordance with the equity method. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the Company’s share of subsidiaries’ cumulative results of operations, capital contributions, distributions and other equity changes. Intercompany charges (income) between the Parent and subsidiaries are recognized in the condensed consolidating financial statements during the period incurred and the settlement of intercompany balances is reflected in the condensed consolidating statement of cash flows based on the nature of the underlying transactions. Consolidating adjustments include consolidating and eliminating entries for investments in subsidiaries, intercompany activity and balances.

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited, in thousands except share and per share data)

	March 31, 2015
BALANCE SHEET	j2 Global, Inc.		j2 Cloud Services, Inc.		Non-guarantor Subsidiaries		Consolidating Adjustments			j2 Global Consolidated
ASSETS
Cash and cash equivalents	$	199,815	$	17,516	$	174,686	$	—		$	392,017
Short-term investments	41,880		43,819		60		—			85,759
Accounts receivable, net	326		12,059		70,187		—			82,572
Prepaid expenses and other current assets	737		14,472		9,505		(103		)	24,611
Deferred income taxes	896		—		1,250		—			2,146
Intercompany receivable	110,000		91,474		—		(201,474		)	—
Total current assets	353,654		179,340		255,688		(201,577		)	587,105
Long-term investments	52,619		9,099		—		—			61,718
Property and equipment, net	—		7,567		29,051		—			36,618
Trade names, net	—		10,199		95,655		—			105,854
Patent and patent licenses, net	—		850		22,118		—			22,968
Customer relationships, net	—		1,952		182,376		—			184,328
Goodwill	—		52,131		617,243		—			669,374
Other purchased intangibles, net	—		4,264		11,882		—			16,146
Investment in subsidiaries	839,108		909,081		8,717		(1,756,906		)	—
Other assets	9,061		3,063		2,001		—			14,125
Total assets	$	1,254,442	$	1,177,546	$	1,224,731	$	(1,958,483	)	$	1,698,236
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	4,798	$	23,185	$	53,025	$	—		$	81,008
Income taxes payable	2,959		103		—		(103		)	2,959
Deferred revenue, current	—		20,774		52,504		—			73,278
Capital lease, current	—		—		441		—			441
Deferred income taxes	43		—		142		—			185
Intercompany payable	48,268		—		153,206		(201,474		)	—

Total current liabilities	56,068		44,062		259,318			(201,577		)	157,871
Long term debt	348,942		246,324		—			—			595,266
Capital lease, non-current	—		—		66			—			66
Liability for uncertain tax positions	—		40,145		—			—			40,145
Deferred income taxes	24,685		—		38,424			—			63,109
Deferred revenue, non-current	—		7,009		1,896			—			8,905
Other long-term liabilities	1,071		898		15,946			—			17,915
Total liabilities	430,766		338,438		315,650			(201,577		)	883,277
Common stock, $0.01 par value.	474		—		—			—			474
Additional paid-in capital - common	275,420		233,836		421,684			(655,520		)	275,420
Retained earnings	547,697		595,691		519,047			(1,101,386		)	561,049
Accumulated other comprehensive loss	85		9,581		(31,650		)	—			(21,984		)
Total stockholders’ equity	823,676		839,108		909,081			(1,756,906		)	814,959
Total liabilities and stockholders’ equity	$	1,254,442	$	1,177,546	$	1,224,731		$	(1,958,483	)	$	1,698,236

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited, in thousands except share and per share data)

	December 31, 2014
BALANCE SHEET	j2 Global, Inc.		j2 Cloud Services, Inc.		Non-guarantor Subsidiaries		Consolidating Adjustments			j2 Global Consolidated
ASSETS
Cash and cash equivalents	$	226,790	$	36,810	$	170,063	$	—		$	433,663
Short-term investments	47,880		48,261		65		—			96,206
Accounts receivable, net	—		11,167		80,532		—			91,699
Prepaid expenses and other current assets	776		12,689		9,137		—			22,602
Deferred income taxes	1,271		—		742		—			2,013
Intercompany receivable	110,000		74,938		1,428		(186,366		)	—
Total current assets	386,717		183,865		261,967		(186,366		)	646,183
Long-term investments	55,452		5,056		—		—			60,508
Property and equipment, net	—		8,011		30,206		—			38,217
Trade names, net	—		10,231		95,320		—			105,551
Patent and patent licenses, net	—		886		24,041		—			24,927
Customer relationships, net	—		2,206		161,560		—			163,766
Goodwill	—		52,131		583,544		—			635,675
Other purchased intangibles, net	—		4,276		13,280		—			17,556
Investment in subsidiaries	826,289		900,681		8,716		(1,735,686		)	—
Other assets	9,328		1,368		2,123		—			12,819
Total assets	$	1,277,786	$	1,168,711	$	1,180,757	$	(1,922,052	)	$	1,705,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	2,834	$	28,414	$	64,062	$	—		$	95,310
Income taxes payable	—		—		—		—			—
Deferred revenue, current	—		23,091		40,366		—			63,457
Capital lease, current	—		—		258		—			258
Deferred income taxes	—		—		342		—			342
Intercompany payable	76,366		—		110,000		(186,366		)	—
Total current liabilities	79,200		51,505		215,028		(186,366		)	159,367
Long term debt	347,163		246,187		—		—			593,350
Capital lease, non-current	—		—		141		—			141

Liability for uncertain tax positions	—		37,551			—			—			37,551
Deferred income taxes	21,728		(1,837		)	42,069			—			61,960
Deferred revenue, non-current	—		8,187			1,995			—			10,182
Other long-term liabilities	744		829			20,843			—			22,416
Total liabilities	448,835		342,422			280,076			(186,366		)	884,967
Common stock, $0.01 par value	474		—			—			—			474
Additional paid-in capital - common	273,304		232,340			421,676			(654,016		)	273,304
Retained earnings	555,158		584,591			495,505			(1,081,670		)	553,584
Accumulated other comprehensive loss	15		9,358			(16,500		)	—			(7,127		)
Total stockholders’ equity	828,951		826,289			900,681			(1,735,686		)	820,235
Total liabilities and stockholders’ equity	$	1,277,786	$	1,168,711		$	1,180,757		$	(1,922,052	)	$	1,705,202

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Unaudited, in thousands except share and per share data)

	Three Months Ended March 31, 2015
	j2 Global, Inc.			j2 Cloud Services, Inc		Non-guarantor Subsidiaries			Consolidating Adjustments			j2 Global Consolidated
Revenues:
Total revenues	$	—		$	54,619	$	116,435		$	(9,801	)	$	161,253
Cost of revenues	—			15,528		22,394			(9,736		)	28,186
Gross profit	—			39,091		94,041			(65		)	133,067
Operating expenses:
Sales and marketing	—			9,780		27,875			(65		)	37,590
Research, development and engineering	—			3,855		4,592			—			8,447
General and administrative	4,179			6,850		35,471			—			46,500
Total operating expenses	4,179			20,485		67,938			(65		)	92,537
Operating income	(4,179		)	18,606		26,103			—			40,530
Equity earnings in subsidiaries	26,251			23,539		—			(49,790		)	—
Interest expense (income), net	2,588			5,107		2,618			—			10,313
Other expense (income), net	(12		)	339		(1,111		)	—			(784		)
Income before income taxes	19,496			36,699		24,596			(49,790		)	31,001
Income tax expense	(2,381		)	10,448		1,057			—			9,124
Net income	$	21,877		$	26,251	$	23,539		$	(49,790	)	$	21,877

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Unaudited, in thousands except share and per share data)

	Three Months Ended March 31, 2014
	j2 Global, Inc.		j2 Cloud Services, Inc			Non-guarantor Subsidiaries			Consolidating Adjustments			j2 Global Consolidated
Revenues:
Total revenues	$	—	$	51,193		$	96,634		$	(13,703	)	$	134,124
Cost of revenues	—		19,953			17,065			(13,630		)	23,388
Gross profit	—		31,240			79,569			(73		)	110,736
Operating expenses:
Sales and marketing	—		9,013			24,019			(73		)	32,959
Research, development and engineering	—		3,620			3,593			—			7,213
General and administrative	—		9,570			19,409			—			28,979
Total operating expenses	—		22,203			47,021			(73		)	69,151
Operating income	—		9,037			32,548			—			41,585
Equity earnings in subsidiaries	—		27,942			—			(27,942		)	—
Interest expense (income), net	—		5,103			(155		)	—			4,948
Other expense (income), net	—		(32		)	(287		)	—			(319		)
Income before income taxes	—		31,908			32,990			(27,942		)	36,956
Income tax expense	—		3,143			5,048			—			8,191
Net income	$	—	$	28,765		$	27,942		$	(27,942	)	$	28,765

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited, in thousands except share and per share data)

	Three Months Ended March 31, 2015
	j2 Global, Inc.		j2 Cloud Services, Inc.		Non-guarantor Subsidiaries			Consolidating Adjustments			j2 Global Consolidated
Net income	$	21,877	$	26,251	$	23,539		$	(49,790	)	$	21,877
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax expense (benefit)	—		—		(15,237		)	—			(15,237		)
Unrealized gain (loss) on available-for-sale investments, net of tax expense (benefit)	311		69		—			—			380
Other comprehensive income (loss), net of tax	311		69		(15,237		)	—			(14,857		)
Comprehensive income	$	22,188	$	26,320	$	8,302		$	(49,790	)	$	7,020

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited, in thousands except share and per share data)

	Three Months Ended March 31, 2014
	j2 Global, Inc.		j2 Cloud Services, Inc.			Non-guarantor Subsidiaries		Consolidating Adjustments			j2 Global Consolidated
Net income	$	—	$	28,765		$	27,942	$	(27,942	)	$	28,765
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax expense (benefit)	—		(248		)	1,085		—			837
Unrealized gain (loss) on available-for-sale investments, net of tax expense (benefit)	—		(2,649		)	9		—			(2,640		)
Other comprehensive income (loss), net of tax	—		(2,897		)	1,094		—			(1,803		)
Comprehensive income	$	—	$	25,868		$	29,036	$	(27,942	)	$	26,962

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

(Unaudited, in thousands except share and per share data)

	Three Months Ended March 31, 2015
	j2 Global, Inc.			j2 Cloud Services, Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments		j2 Global Consolidated
Net cash (used in) provided by operating activities	$	(8,106	)	$	6,745		$	47,077		$	—	$	45,716
Cash flows from investing activities:
Maturity of available-for-sale investments	21,994			7,000			—			—		28,994
Purchase of available-for-sale investments	(13,276		)	(6,543		)	—			—		(19,819		)
Purchases of property and equipment	—			(308		)	(2,648		)	—		(2,956		)
Acquisition of businesses, net of cash received	—			1,459			(73,674		)	—		(72,215		)
Purchases of intangible assets	—			(5		)	(322		)	—		(327		)
Investment in subsidiaries	—			—			—			—		—
Net cash (used in) provided by investing activities	8,718			1,603			(76,644		)	—		(66,323		)
Cash flows from financing activities:
Repurchases of common and restricted stock	(705		)	—			—			—		(705		)
Issuance of common stock under employee stock purchase plan	61			—			—			—		61
Exercise of stock options	65			—			—			—		65
Dividends paid	(14,110		)	—			—			—		(14,110		)
Excess tax benefits from share-based compensation	334			—			—			—		334
Deferred payments for acquisitions	—			(544		)	(1,812		)	—		(2,356		)
Other	—			—			(50		)	—		(50		)
Intercompany	(13,232		)	(27,098		)	40,330			—		—
Net cash (used in) provided by financing activities	(27,587		)	(27,642		)	38,468			—		(16,761		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(4,278		)	—		(4,278		)

Net change in cash and cash equivalents	(26,975		)	(19,294		)	4,623		—		(41,646		)
Cash and cash equivalents at beginning of period	226,790			36,810			170,063		—		433,663
Cash and cash equivalents at end of period	$	199,815		$	17,516		$	174,686	$	—	$	392,017

j2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

(Unaudited, in thousands except share and per share data)

	Three Months Ended March 31, 2014
	j2 Global, Inc.		j2 Cloud Services, Inc.			Non-guarantor Subsidiaries			Consolidating Adjustments		j2 Global Consolidated
Net cash provided by operating activities	$	—	$	(3,119	)	$	40,413		$	—	$	37,294
Cash flows from investing activities:
Maturity of certificates of deposit	—		8,210			—			—		8,210
Maturity of available-for-sale investments	—		24,105			5,600			—		29,705
Purchase of available-for-sale investments	—		(11,213		)	—			—		(11,213		)
Purchases of property and equipment	—		(454		)	(2,482		)	—		(2,936		)
Acquisition of businesses, net of cash received	—		—			(49,068		)	—		(49,068		)
Purchases of intangible assets	—		(591		)	(324		)	—		(915		)
Investment in subsidiaries	—		(1,021		)	1,021			—		—
Net cash (used in) provided by investing activities	—		19,036			(45,253		)	—		(26,217		)
Cash flows from financing activities:
Repurchases of common stock and restricted stock	—		(4,042		)	—			—		(4,042		)
Issuance of common stock under employee stock purchase plan	—		55			—			—		55
Exercise of stock options	—		4,926			—			—		4,926
Dividends paid	—		(12,418		)	—			—		(12,418		)
Excess tax benefits from share-based compensation	—		4,082			—			—		4,082
Deferred payments for acquisitions	—		—			(3,314		)	—		(3,314		)
Other	—		—			—			—		—
Intercompany	—		2,335			(2,335		)	—		—
Net cash (used in) provided by financing activities	—		(5,062		)	(5,649		)	—		(10,711		)
Effect of exchange rate changes on cash and cash equivalents	—		—			(99		)	—		(99		)

Net change in cash and cash equivalents	—		10,855		(10,588		)	—		267
Cash and cash equivalents at beginning of period	—		34,406		173,395			—		207,801
Cash and cash equivalents at end of period	$	—	$	45,261	$	162,807		$	—	$	208,068