NSR Nestor Health.

Reports Strong Profitability and Reaffirms Guidance for Full Year 2009 STERLING, Va., July 30 /PRNewswire-FirstCall/ -- Neustar, Inc. (NYSE: NSR), a provider of essential clearinghouse services to the communications and Internet industries, today announced consolidated results for the quarter ended June 30, 2009, and reaffirmed its prior guidance for full year 2009 announced on January 28, 2009. (Logo: http://www.newscom.com/cgi-bin/prnh/20090722/NSLOGO ) Summary of Second Quarter Results Revenue for the quarter totaled $115.8 million, a 4% decrease from $120.2 million in the second quarter of 2008. Net income for the quarter totaled $24.5 million, or $0.32 per diluted share, compared to net income of $22.9 million, or $0.30 per diluted share, in the second quarter of 2008. EBITDA for the quarter totaled $49.4 million, or $0.65 per diluted share, compared to $50.3 million, or $0.67 per diluted share, in the corresponding quarter of 2008. Discussion of Second Quarter Results As anticipated, Neustar's year-over-year quarterly revenue decline was driven primarily by previously announced amendments to the pricing terms of its contracts to provide telephone number portability services in the United States, which were effective as of January 1, 2009. This decline was partially offset by a year-over-year quarterly revenue increase from Ultra Services. -- Addressing revenue decreased 2% to $31.5 million, primarily due to a decrease in revenue under our contracts to provide telephone number portability services in the United States, primarily offset by the growth from Ultra Services. -- Interoperability revenue decreased 16% to $13.9 million, primarily due to decreases in revenue from both Order Management Services and our contracts to provide telephone number portability services in the United States. -- Infrastructure and other revenue decreased 1% to $70.3 million, primarily due to a decrease in revenue under our contracts to provide telephone number portability services in the United States. Total operating expense for the quarter decreased 6% to $75.7 million from $80.2 million for the second quarter of 2008. As of June 30, 2009, cash, cash equivalents and short-term investments totaled $267.5 million, an increase of $105.9 million from December 31, 2008. This increase is partially due to a $41.3 million reclassification of certain investments from long-term to short-term. Management Commentary Jeff Ganek, Neustar's chairman and chief executive officer, said, "While the global economy struggles to recover, we have broadened our leadership in the marketplace. Building upon our long-term growth strategy, we have recently solidified our management team, expanded our innovative services to meet the market needs and brought our customers enhanced benefits." Paul Lalljie, Neustar's chief financial officer, added, "Our second quarter results highlight the strength of our business model and our continuing focus on operating efficiencies. Despite unpredictable demand for some of our services and challenging markets, we have seen recent opportunities in many of the markets we serve and are managing the business to capture them. Our year-to-date performance meets our stated objectives and provides us with the momentum we need to reaffirm our prior guidance for the full year 2009." Reconciliation of Non-GAAP Financial Measures In this press release, Neustar presents certain non-GAAP financial data. To place this data in an appropriate context, the following is a reconciliation of net income to EBITDA for the three and six months ended June 30, 2008 and 2009: Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2008 2009 2008 2009 ---- ---- ---- ---- (in thousands, except per share data) (unaudited) Net income $22,856 $24,466 $18,396 $48,819 Add: Depreciation and amortization 10,286 9,332 20,406 18,577 Less: Other expense (income) 1,633 (297) 483 (1,532) Add: Provision for income taxes 15,499 15,873 32,138 31,534 ------ ------ ------ ------ EBITDA $50,274 $49,374 $71,423 $97,398 ======= ======= ======= ======= EBITDA per diluted share $0.67 $0.65 $0.93 $1.29 ===== ===== ===== ===== Weighted average diluted common shares outstanding 75,112 75,427 77,159 75,359 EBITDA and EBITDA per diluted share are not measures of financial performance under GAAP and have no standardized measurement prescribed by GAAP. Management believes that both measures enhance our investors' understanding of our financial performance and the comparability of the company's operating results to prior periods, as well as against the performance of other companies. However, these non-GAAP financial measures may not be comparable with similar non-GAAP financial measures used by other companies and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The company provides the foregoing historical reconciliations to the most directly comparable GAAP financial measures to allow investors to appropriately consider each non-GAAP financial measure. In this press release and from time to time, Neustar describes what its net income, EBITDA and other financial measures would have been in the absence of the $29.0 million goodwill impairment charge recorded in the first quarter of 2008 related to the company's NGM business segment, as well as the resulting net income and EBITDA per diluted share amounts associated with those measures. Neustar has provided this information because the company believes that it gives investors a better understanding of the impact the goodwill impairment charge had on the company's results for the six months, and serves as useful data by which to compare the company's operational performance to the prior period in 2008 and future periods. Absent the $29.0 million goodwill impairment charge, net income for the six months ended June 30, 2008 would have been $47.4 million, or $0.61 per diluted share. Furthermore, absent the $29.0 million goodwill impairment charge, EBITDA for the six months ended June 30, 2008 would have been $100.4 million, or $1.30 per diluted share. Conference Call As announced on July 14, 2009, Neustar will conduct an investor conference call to discuss the company's results today at 4:30 p.m. (Eastern Time). Prior to the call, investors may access the conference call over the Internet via the Investor Relations tab of the company's website (http://www.neustar.biz/). Those listening via the Internet should go to the site 15 minutes early to register, download and install any necessary audio software. The conference call is also accessible via telephone by dialing (888) 727-7637 (international callers dial (913) 312-1226). For those who cannot listen to the live broadcast, a replay will be available through Midnight (Eastern Time) Thursday, August 6, 2009 by dialing (888) 203-1112 (international callers dial (719) 457-0820) and entering replay PIN 9119340, or by going to the Investor Relations tab of the company's website (http://www.neustar.biz/). Neustar will take live questions from securities analysts and institutional portfolio managers; the complete call is open to all other interested parties on a listen-only basis. This press release and the financial tables, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures that may be used periodically by management when discussing the company's financial results with investors and analysts, are available on the company's website under the Investor Relations tab. About Neustar: Neustar (NYSE:NSR) solves complex communications challenges by making networks smarter(TM). We provide market-leading and innovative solutions and directory services that enable trusted communication across networks, applications and enterprises around the world. Visit Neustar online at http://www.neustar.biz/. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements about our expectations, beliefs and business results in the future. We have attempted, whenever possible, to identify these forward-looking statements using words such as "may," "will," "should," "projects," "estimates," "expects," "plans," "intends," "anticipates," "believes" and variations of these words and similar expressions. Similarly, statements herein that describe our business strategy, prospects, opportunities, outlooks, objectives, plans, intentions or goals are also forward-looking statements. We cannot assure you that our expectations will be achieved or that any deviations will not be material. Forward-looking statements are subject to many assumptions, risks and uncertainties that may cause future results to differ materially from those anticipated. These potential risks and uncertainties include, among others, the uncertainty of future revenue and profitability and potential fluctuations in quarterly operating results due to such factors as disruptions to our clearinghouse operations, modifications to our material contracts, our ability to successfully integrate and support the operations of businesses we acquire, our ability to redeem auction rate securities, increasing competition, market acceptance of our existing services, our ability to successfully develop and market new services, the uncertainty of whether new services will achieve market acceptance or result in any revenue, and business, regulatory and statutory changes in the communications industry. More information about potential factors that could affect our business and financial results is included in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2008 and subsequent periodic and current reports. All forward-looking statements are based on information available to us on the date of this press release, and we undertake no obligation to update any of the forward-looking statements after the date of this press release. NEUSTAR, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2008 2009 2008 2009 ---- ---- ---- ---- (unaudited) Revenue: Addressing $32,268 $31,527 $62,429 $64,018 Interoperability 16,551 13,889 32,991 28,196 Infrastructure and other 71,390 70,348 142,202 136,738 ------ ------ ------- ------- Total revenue 120,209 115,764 237,622 228,952 Operating expense: Cost of revenue (excluding depreciation and amortization shown separately below) 26,811 28,336 51,300 56,179 Sales and marketing 20,219 19,239 38,943 38,746 Research and development 7,754 4,514 15,302 8,827 General and administrative 15,151 14,301 31,633 27,802 Depreciation and amortization 10,286 9,332 20,406 18,577 Impairment of goodwill - - 29,021 - --- --- ------ --- 80,221 75,722 186,605 150,131 ------ ------ ------- ------- Income from operations 39,988 40,042 51,017 78,821 Other (expense) income: Interest and other expense (2,866) (427) (3,324) (1,651) Interest and other income 1,233 724 2,841 3,183 ----- --- ----- ----- Income before income taxes 38,355 40,339 50,534 80,353 Provision for income taxes 15,499 15,873 32,138 31,534 ------ ------ ------ ------ Net income $22,856 $24,466 $18,396 $48,819 ======= ======= ======= ======= Net income per common share: Basic $0.31 $0.33 $0.25 $0.66 ===== ===== ===== ===== Diluted $0.30 $0.32 $0.24 $0.65 ===== ===== ===== ===== Weighted average common shares outstanding: Basic 73,214 74,314 74,799 74,225 ====== ====== ====== ====== Diluted 75,112 75,427 77,159 75,359 ====== ====== ====== ====== NEUSTAR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, June 30, 2008 2009 ---- ---- ASSETS (audited) (unaudited) Current assets: Cash, cash equivalents and short-term investments $161,653 $267,547 Restricted cash 496 477 Accounts and unbilled receivables, net 72,635 63,907 Prepaid expenses and other current assets 18,205 17,759 Income taxes receivable 4,621 2,138 Deferred tax assets 11,079 10,589 ------ ------ Total current assets 268,689 362,417 Property and equipment, net 64,160 67,037 Goodwill and intangible assets, net 134,661 130,800 Other non-current assets 47,412 6,207 Deferred tax assets, long-term 4,244 5,042 ----- ----- Total assets $519,166 $571,503 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $59,103 $51,396 Deferred revenue 32,530 38,398 Notes payable and capital lease obligations 10,123 10,826 Accrued restructuring reserve 1,867 595 Other liabilities 430 460 --- --- Total current liabilities 104,053 101,675 Deferred revenue, long-term 11,657 9,737 Notes payable and capital lease obligations, long-term 11,933 8,858 Accrued restructuring reserve, long-term 1,589 1,264 Other liabilities, long-term 3,281 4,090 ----- ----- Total liabilities 132,513 125,624 Total stockholders' equity 386,653 445,879 ------- ------- Total liabilities and stockholders' equity $519,166 $571,503 ======== ======== http://www.newscom.com/cgi-bin/prnh/20090722/NSLOGO http://photoarchive.ap.org/ DATASOURCE: Neustar, Inc. CONTACT: Investor Relations, Brandon Pugh, +1-571-434-5659, , or Media Contact, John Schneidawind, +1-571-434-5596, , both of NeuStar, Inc. Web Site: http://www.neustar.biz/

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