Form 10-Q NEUSTAR INC For: Sep 30

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October 29, 2015 4:27 PM EDT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
FORM 10-Q
 
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-32548
 
NeuStar, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
52-2141938
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
21575 Ridgetop Circle
Sterling, Virginia 20166
(Address of principal executive offices) (zip code)
(571) 434-5400
(Registrant’s telephone number, including area code)
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
ý
 
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
There were 53,012,929 shares of Class A common stock, $0.001 par value, and 2,270 shares of Class B common stock, $0.001 par value, outstanding at October 26, 2015.


NEUSTAR, INC.
INDEX
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 
 
 
EX – 31.1
 
 
EX – 31.2
 
 
EX – 32.1
 
 
EX – 101 INSTANCE DOCUMENT
 
EX – 101 SCHEMA DOCUMENT
 
EX – 101 CALCULATION LINKBASE DOCUMENT
 
EX – 101 DEFINITION LINBASE DOCUMENT
 
EX – 101 LABELS LINKBASE DOCUMENT
 
EX – 101 PRESENTATION LINKBASE DOCUMENT
 


PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements
NEUSTAR, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
 
 
December 31,
2014
 
September 30,
2015
 
 
 
(unaudited)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
326,577

 
$
358,426

Restricted cash
2,191

 
2,379

Accounts receivable, net of allowance for doubtful accounts of $3,154 and $4,357, respectively
155,086

 
157,355

Unbilled receivables
13,084

 
13,864

Prepaid expenses and other current assets
24,392

 
30,747

Deferred costs
6,951

 
10,745

Income taxes receivable
15,956

 
6,516

Deferred income tax assets
10,380

 
20,845

Total current assets
554,617

 
600,877

Property and equipment, net
161,604

 
146,145

Goodwill
692,269

 
757,754

Intangible assets, net
302,622

 
297,594

Other assets, long-term
30,996

 
31,915

Total assets
$
1,742,108

 
$
1,834,285

See accompanying notes.


3

NEUSTAR, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
 
 
December 31,
2014
 
September 30,
2015
 
 
 
(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY



Current liabilities:



Accounts payable
$
8,439


$
8,519

Accrued expenses
94,771


101,091

Deferred revenue
73,908


84,503

Notes payable
7,972


7,972

Capital lease obligations
3,702


3,853

Other liabilities
23,125


22,711

Total current liabilities
211,917


228,649

Deferred revenue, long-term
27,017


24,238

Notes payable, long-term
775,318


769,337

Capital lease obligations, long-term
5,579


2,877

Deferred income tax liabilities, long-term
49,111


68,725

Other liabilities, long-term
53,683


64,920

Total liabilities
1,122,625


1,158,746

Commitments and contingencies
—


—

Stockholders’ equity:



Preferred stock, $0.001 par value; 100,000,000 shares authorized; no shares issued and outstanding as of December 31, 2014 and September 30, 2015
—


—

Class A common stock, par value $0.001; 200,000,000 shares authorized; 80,917,293 and 80,119,961 shares issued; and 55,080,441 and 53,365,032 shares outstanding at December 31, 2014 and September 30, 2015, respectively
81


80

Class B common stock, par value $0.001; 100,000,000 shares authorized; 3,082 and 2,270 shares issued and outstanding at December 31, 2014 and September 30, 2015, respectively
—


—

Additional paid-in capital
674,385


703,293

Treasury stock, 25,836,852 and 26,754,929 shares at December 31, 2014 and September 30, 2015, respectively, at cost
(898,520
)

(921,477
)
Accumulated other comprehensive loss
(1,645
)

(4,326
)
Retained earnings
845,182


897,969

Total stockholders’ equity
619,483


675,539

Total liabilities and stockholders’ equity
$
1,742,108


$
1,834,285

See accompanying notes.

4

NEUSTAR, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2015
 
2014
 
2015
Revenue
$
243,859

 
$
261,653

 
$
711,213

 
$
769,808

Operating expense:
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
62,801

 
67,108

 
182,256

 
198,817

Sales and marketing
47,937

 
48,911

 
146,565

 
146,587

Research and development
7,266

 
6,009

 
21,257

 
18,460

General and administrative
27,702

 
28,617

 
80,001

 
78,003

Depreciation and amortization
29,999

 
30,272

 
87,725

 
89,634

Restructuring charges
1,355

 
—

 
6,521

 
—

 
177,060

 
180,917

 
524,325

 
531,501

Income from operations
66,799

 
80,736

 
186,888

 
238,307

Other (expense) income:
 
 
 
 
 
 
 
Interest and other expense
(6,270
)
 
(6,775
)
 
(19,537
)
 
(19,978
)
Interest income
32

 
7

 
290

 
302

Income before income taxes
60,561

 
73,968

 
167,641

 
218,631

Provision for income taxes
12,388

 
23,686

 
50,938

 
77,077

Net income
$
48,173

 
$
50,282

 
$
116,703

 
$
141,554

Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.87

 
$
0.93

 
$
1.99

 
$
2.57

Diluted
$
0.84

 
$
0.91

 
$
1.94

 
$
2.52

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
55,494

 
54,123

 
58,548

 
55,153

Diluted
57,171

 
55,125

 
60,050

 
56,078

See accompanying notes.

5

NEUSTAR, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2015
 
2014
 
2015
Net income
$
48,173

 
$
50,282

 
$
116,703

 
$
141,554

Other comprehensive loss, net of tax:
 
 
 
 
 
 
 
Available for sale investments, net of tax:
 
 
 
 
 
 
 
Change in net unrealized gains, net of tax of $(14), $(32), $(33) and $(52), respectively
21

 
(50
)
 
120

 
(81
)
Reclassification for gains included in net income, net of tax of $5, $(9), $17 and $(24), respectively
(7
)
 
(15
)
 
(26
)
 
(38
)
Net change in unrealized gains on investments, net of tax
14

 
(65
)
 
94

 
(119
)
Foreign currency translation adjustment, net of tax:
 
 
 
 
 
 
 
Change in foreign currency translation adjustment, net of tax of $(319), $(1,642), $(156) and $(2,270), respectively
(596
)
 
(2,067
)
 
(802
)
 
(3,134
)
Reclassification adjustment included in net income, net of tax of $0, $100, $0 and $366, respectively
—

 
158

 
—

 
572

Foreign currency translation adjustment, net of tax
(596
)
 
(1,909
)
 
(802
)
 
(2,562
)
Other comprehensive loss, net of tax
(582
)
 
(1,974
)
 
(708
)
 
(2,681
)
Comprehensive income
$
47,591

 
$
48,308

 
$
115,995

 
$
138,873

See accompanying notes.

6

NEUSTAR, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Nine Months Ended 
 September 30,
 
2014
 
2015
Operating activities:
 
 
 
Net income
$
116,703

 
$
141,554

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
87,725

 
89,634

Stock-based compensation
47,292

 
28,111

Amortization of deferred financing costs and original issue discount on debt
2,527

 
2,561

Tax (benefit) shortfall from equity awards
(2,487
)
 
8,664

Deferred income taxes
(33,000
)
 
(2,301
)
Provision for doubtful accounts
4,913

 
5,982

Loss (gain) on disposal of assets
1,057

 
(678
)
Changes in operating assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable
(9,722
)
 
(7,644
)
Unbilled receivables
667

 
(777
)
Notes receivable
1,008

 
—

Prepaid expenses and other current assets
2,904

 
(4,406
)
Deferred costs
2,088

 
(1,357
)
Income taxes
6,169

 
(856
)
Other assets
1,247

 
(264
)
Other liabilities
10,683

 
3,457

Accounts payable and accrued expenses
(17,734
)
 
5,395

Deferred revenue
(47
)
 
(7,393
)
Net cash provided by operating activities
221,993

 
259,682

Investing activities:
 
 
 
Purchases of property and equipment
(45,413
)
 
(22,448
)
Business acquired, net of cash acquired
(120,698
)
 
(84,130
)
Net cash used in investing activities
(166,111
)
 
(106,578
)
Financing activities:
 
 
 
Decrease (increase) in restricted cash
114

 
(188
)
Proceeds from notes payable
175,000

 
—

Payments under notes payable obligations
(6,095
)
 
(6,094
)
Principal repayments on capital lease obligations
(2,490
)
 
(3,887
)
Proceeds from issuance of stock
6,517

 
7,676

Tax benefit (shortfall) from equity awards
2,487

 
(8,664
)
Repurchase of restricted stock awards and common stock
(209,275
)
 
(109,605
)
Net cash used in financing activities
(33,742
)
 
(120,762
)
Effect of foreign exchange rates on cash and cash equivalents
(1,126
)
 
(493
)
Net increase in cash and cash equivalents
21,014

 
31,849

Cash and cash equivalents at beginning of period
223,309

 
326,577

Cash and cash equivalents at end of period
$
244,323

 
$
358,426

See accompanying notes.

7
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015



1.
DESCRIPTION OF BUSINESS AND ORGANIZATION
NeuStar, Inc. (the Company or Neustar) is a neutral and trusted provider of real-time information services. The Company’s authoritative, hard-to-replicate data sets and proprietary analytics provide insights to help its clients promote and protect their businesses. The Company primarily serves marketing and security functions in the communications, financial services, media and advertising, retail and eCommerce, Internet, and technology industries. The Company’s integrated marketing solution enhances its clients’ ability to acquire and retain valuable customers across disparate platforms. The Company operates top-level domain names and provides services to help its clients optimize their web performance. The Company enables the exchange of essential operating information across multiple carriers to provision and manage services. The Company operates the user authentication and rights management system, which supports the digital content locker that consumers use to access their entertainment content. The Company provides the critical infrastructure that enables the dynamic routing of calls and text messages for communications service providers in the United States.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Information
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the full fiscal year. The consolidated balance sheet as of December 31, 2014 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting periods. Significant estimates and assumptions are inherent in the analysis and the measurement of deferred tax assets; the identification and quantification of income tax liabilities due to uncertain tax positions; and recoverability of goodwill. The Company bases its estimates on historical experience and assumptions that it believes are reasonable. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurements and Disclosure Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
•
Level 1. Observable inputs, such as quoted prices in active markets;
•
Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•
Level 3. Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level at which to classify them for each reporting period. Due to their short-term nature, the carrying amounts reported in the accompanying unaudited consolidated financial statements approximate the fair value for cash and cash

8
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


equivalents, accounts receivable, accounts payable and accrued expenses. The Company determines the fair value of its $325 million senior secured term loan facility (2013 Term Facility) using pricing service quotations as quoted by Bloomberg (Level 2) (see Note 5). The Company believes the carrying value of its revolving credit facility (2013 Revolving Facility) approximates the fair value of the debt as the term and interest rate approximates the market rate (Level 2) (see Note 5). The Company determines the fair value of its $300 million aggregate principal amount of 4.50% senior notes due 2023 (Senior Notes) using a secondary market price on the last trading day in each period as quoted by Bloomberg (Level 2) (see Note 5).
The estimated fair values of the Company’s financial instruments are as follows (in thousands):
 
December 31, 2014
 
September 30, 2015
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
Cash and cash equivalents
$
326,577

 
$
326,577

 
$
358,426

 
$
358,426

2013 Term Facility (including current portion, net of discount)
308,290

 
289,794

 
302,309

 
280,016

2013 Revolving Facility
175,000

 
175,000

 
175,000

 
175,000

Senior Notes (including current portion)
300,000

 
255,750

 
300,000

 
252,171

Restricted Cash
As of December 31, 2014 and September 30, 2015, cash of $2.2 million and $2.4 million, respectively, was restricted as collateral for certain of the Company’s outstanding letters of credit and for deposits on leased facilities.
Recent Accounting Pronouncements
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (Topic 805): Business Combinations, which requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The standard is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The guidance is to be applied prospectively to adjustments to provisional amounts that occur after the effective date of the guidance, with earlier application permitted for financial statements that have not been issued. The Company does not expect that the adoption of this ASU will have a significant impact its consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this standard, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB decided to defer by one year the effective dates of the standard. As a result, the standard will be effective for annual and interim periods beginning after December 15, 2017. Companies may adopt the standard as early as the original effective date (i.e. annual reporting periods beginning after December 15, 2016). Early adoption prior to that date is not permitted. The standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or a modified retrospective adoption, meaning the standard is applied only to the most current period presented. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The guidance is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Adoption prior to that date is permitted for financial statements that have not been previously issued. The adoption of ASU 2015-03 on the Company’s consolidated financial statements will result in a balance sheet reclassification of net deferred financing costs related to our 2013 Term Facility and Senior Notes (see Note 5). As of September 30, 2015, the Company’s deferred financing costs related to its 2013 Term Facility and Senior Notes were $13.9 million.

9
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


3.
ACQUISITIONS
.CO Internet Acquisition
On April 14, 2014, the Company acquired .CO Internet S.A.S (.CO Internet) and certain associated assets. .CO Internet is the exclusive operator of the worldwide registry for Internet addresses with the “.co” top-level domain. This acquisition expanded the Company’s registry services, which already included the .biz and .us top-level domains. As of December 31, 2014, the preliminary purchase price was $115.1 million and the goodwill balance was $36.6 million. The allocation of the purchase price was preliminary pending the finalization of acquired deferred income tax assets and assumed income and non-income-based tax liabilities. As of September 30, 2015, the adjusted purchase price was $118.1 million and the adjusted goodwill balance was $39.6 million.  The consolidated balance sheet as of December 31, 2014 has been retrospectively adjusted to include the effect of the measurement period adjustments.
Bombora Acquisition
On July 30, 2015, the Company acquired Bombora Technologies Pty Ltd (Bombora). Bombora is the registry services provider for the “.au” top-level domain and many other top-level domains. This acquisition expanded the Company's registry services, which includes the .biz, .us and .co top-level domains. Total consideration for this purchase, which is subject to certain customary working capital adjustments, included cash consideration of $87.4 million, of which $55.5 million was paid to the sellers at closing and $31.9 million was deposited into escrow pending the satisfaction of certain performance obligations. The transaction was accounted for under the acquisition method of accounting in accordance with the Business Combination Topic of the FASB ASC.
The total preliminary purchase price was $91.8 million, consisting of cash consideration of $87.4 million and contingent consideration of $4.4 million, which is the estimated fair value of such consideration as of the acquisition date. Of the total preliminary purchase price, the Company recorded $44.9 million of definite-lived intangible assets, $69.8 million of goodwill, and $22.9 million of net liabilities. The definite-lived intangible assets consist of $37.8 million of client relationships and $7.1 million of acquired technology. The Company is amortizing client relationships on a straight-line basis over an estimated useful life of 5 to 13 years. Acquired technology is being amortized on a straight-line basis over an estimated useful life of 3 to 5 years. The allocation of the purchase price is preliminary pending the finalization of the acquired company's working capital as of the closing and the fair value of acquired deferred income tax assets and assumed income and non-income based tax liabilities. The goodwill is not expected to be deductible for tax purposes. During the three and nine months ended September 30, 2015, the Company recorded $1.2 million and $2.0 million of acquisition costs in general and administrative expense related to this transaction.
Caller Authentication Assets Acquisition
On September 9, 2015, the Company announced it entered into a definitive agreement to acquire caller authentication assets from Transaction Network Services for approximately $220.0 million in cash. The Company expects the transaction will close in the fourth quarter of 2015, subject to the satisfaction of customary closing conditions.
4.
GOODWILL
Goodwill
The Company’s goodwill as of December 31, 2014 and September 30, 2015 is as follows (in thousands):
 
December 31,
2014 (1)
 
Acquisitions (2)
 
Adjustments (3)
 
Disposals (4)
 
Foreign Currency Translation
 
September 30,
2015
Gross goodwill
$
782,871

 
$
69,763

 
$
3,000

 
$
(1,236
)
 
$
(3,042
)
 
$
851,356

Accumulated impairments
(93,602
)
 
—

 
—

 
—

 
—

 
(93,602
)
Net goodwill
$
689,269

 
$
69,763

 
$
3,000


$
(1,236
)
 
$
(3,042
)
 
$
757,754

(1) Balance as originally reported at December 31, 2014, prior to the reflection of measurement period adjustments.

10
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


(2) During the nine months ended September 30, 2015, the Company acquired Bombora. Of the total purchase price, the Company recorded $69.8 million of goodwill (see Note 3).
(3) During the nine months ended September 30, 2015, the Company adjusted its preliminary valuation of acquired deferred tax assets and assumed income and non-income based tax liabilities related to its acquisition of .CO Internet (see Note 3).
(4) Reflects the goodwill associated with the Company’s sale of certain Data Services assets and liabilities used to deliver lawful intercept services.
5.
NOTES PAYABLE
Notes payable consist of the following (in thousands):
 
December 31,
2014
 
September 30,
2015
2013 Term Facility (net of discount)
$
308,290

 
$
302,309

2013 Revolving Facility
175,000

 
175,000

Senior Notes
300,000

 
300,000

Total
783,290

 
777,309

Less: current portion, net of discount
(7,972
)
 
(7,972
)
Long-term portion
$
775,318

 
$
769,337


2013 Credit Facilities
On January 22, 2013, the Company entered into a credit facility that provided for a $325 million senior secured term loan facility (2013 Term Facility) and a $200 million senior secured revolving credit facility (2013 Revolving Facility, and together with the 2013 Term Facility, the 2013 Credit Facilities). The 2013 Revolving Facility and 2013 Term Facility mature on January 22, 2018. As of September 30, 2015, outstanding borrowings under the 2013 Revolving Facility were $175.0 million and available borrowings under the same facility were $8.2 million, exclusive of outstanding letters of credit totaling $16.8 million.
The 2013 Credit Facilities provide for mandatory prepayments with the net cash proceeds of certain debt issuances, insurance receipts, and dispositions. The 2013 Term Facility also contains certain events of default, upon the occurrence of which, and so long as such event of default is continuing, the amounts outstanding may, at the option of the required lenders, accrue interest at an increased rate and payments of such outstanding amounts could be accelerated, or other remedies undertaken.
Senior Notes
On January 22, 2013, the Company closed an offering of $300 million aggregate principal amount of 4.50% senior notes due 2023. The Senior Notes are the general unsecured senior obligations of the Company and are guaranteed on a senior unsecured basis by certain of its domestic subsidiaries, or the Subsidiary Guarantors. Interest is payable on the Senior Notes semi-annually in arrears at an annual rate of 4.50%, on January 15 and July 15 of each year, beginning on July 15, 2013.
If the Company experiences certain changes of control together with a ratings downgrade, it will be required to offer to purchase all of the Senior Notes then outstanding at a purchase price equal to 101.00% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. If the Company sells certain assets and does not repay certain debt or reinvest the proceeds of such sales within certain time periods, it will be required to offer to repurchase the Senior Notes with such proceeds at 100.00% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.
The Senior Notes contain customary events of default, including among other things, payment default, failure to provide certain notices and defaults related to bankruptcy events. The Senior Notes also contain customary negative covenants.

11
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


6.
STOCKHOLDERS’ EQUITY
As of September 30, 2015, a total of 2,362,135 shares were available for grant or award under the Company’s stock incentive plans and a total of 336,100 shares were available to be issued under the Company’s Employee Stock Purchase Plan (ESPP). On May 27, 2015, at the Company’s annual meeting of stockholders, the Company’s stockholders approved a proposal to make an additional 3,000,000 shares available for grant under the Company’s stock incentive plans.
Stock-based compensation expense recognized for the three months ended September 30, 2014 and 2015 was $20.0 million and $10.4 million, respectively, and $47.3 million and $28.1 million for the nine months ended September 30, 2014 and 2015, respectively. As of September 30, 2015, total unrecognized compensation expense was estimated at $44.3 million, which the Company expects to recognize over a weighted average period of approximately 1.4 years. Total unrecognized compensation expense as of September 30, 2015 is estimated based on outstanding non-vested stock options, non-vested restricted stock awards, non-vested restricted stock units and non-vested performance vested restricted stock units (PVRSUs). Stock-based compensation expense may increase or decrease in future periods for subsequent grants or forfeitures.
Stock Options
The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock options granted. The following table summarizes the Company’s stock option activity:
 
Shares
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
(in millions)
 
Weighted-
Average
Remaining
Contractual
Life
(in years)
Outstanding at December 31, 2014
2,043,905

 
$
25.23

 
 
 
 
Granted
—

 
—

 
 
 
 
Exercised
(466,831
)
 
25.05

 
 
 
 
Forfeited
(147,025
)
 
29.43

 
 
 
 
Outstanding at September 30, 2015
1,430,049

 
$
24.86

 
$
3.8

 
3.2
Exercisable at September 30, 2015
1,140,045

 
$
24.46

 
$
3.1

 
2.5
The aggregate intrinsic value of options exercised for the nine months ended September 30, 2015 was $1.6 million.
Restricted Stock Awards
The following table summarizes the Company’s non-vested restricted stock activity for the nine months ended September 30, 2015:
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2014
39,194

 
$
27.21

 
 
Granted
—

 
—

 
 
Vested
(34,269
)
 
26.57

 
 
Forfeited
(4,925
)
 
31.64

 
 
Outstanding at September 30, 2015
—

 
$
—

 
$
—

The aggregate intrinsic value of restricted stock vested during the nine months ended September 30, 2015 was $1.0 million. During the nine months ended September 30, 2015, the Company repurchased 13,207 shares of common stock for an aggregate purchase price of approximately $0.4 million pursuant to the participants’ rights under the Company’s stock incentive plans to elect to use common stock to satisfy their minimum tax withholding obligations.

12
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


Performance Vested Restricted Stock Units
The fair value of a PVRSU is measured by reference to the closing market price of the Company’s common stock on the date of the grant. The Company recognizes the estimated fair value of PVRSUs, net of estimated forfeitures, as stock-based compensation expense over the vesting period, which considers each performance period or tranche separately, based upon the Company’s determination of the level of achievement of the performance target. As of September 30, 2015, the level of achievement of the performance target awards for the 2015 performance years was greater than 100.0% of target.
In the three and nine months ended September 30, 2015, the Company revised its estimate of the level of achievement of the performance target for the 2015 performance year to greater than 100.0% of target, resulting in an increase in stock-based compensation expense of approximately $0.4 million and $1.7 million, respectively. The Company’s consolidated net income for the three and nine months ended September 30, 2015 was $50.3 million and $141.6 million, respectively, and diluted net income per common share was $0.91 and $2.52 per share, respectively. If the Company had continued to use the previous estimate of achievement for each respective period, the as adjusted net income for the three and nine months ended September 30, 2015 would have been approximately $50.5 million and $142.7 million, respectively, and the as adjusted diluted net income per common share would have been approximately $0.92 and $2.54 per share, respectively.
The following table summarizes the Company’s non-vested PVRSU activity for the nine months ended September 30, 2015:
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Aggregate
Intrinsic
Value
(in millions)
Non-vested at December 31, 2014
1,810,952

 
$
37.76

 
 
Granted
931,331

 
27.14

 
 
Vested
(1,718,280
)
 
37.37

 
 
Forfeited
(128,868
)
 
31.07

 
 
Non-vested at September 30, 2015
895,135

 
$
28.42

 
$
25.0

The aggregate intrinsic value of PVRSUs vested during the nine months ended September 30, 2015 was approximately $45.8 million. The Company repurchased 683,127 shares of common stock for an aggregate purchase price of $18.2 million pursuant to the participants’ rights under the Company’s stock incentive plans to elect to use common stock to satisfy their minimum tax withholding obligations.
Restricted Stock Units
The following table summarizes the Company’s restricted stock units activity for the nine months ended September 30, 2015:
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2014
1,071,814

 
$
39.60

 
 
Granted
1,094,734

 
27.49

 
 
Vested
(233,035
)
 
40.94

 
 
Forfeited
(137,360
)
 
34.88

 
 
Outstanding at September 30, 2015
1,796,153

 
$
32.41

 
$
48.9

The aggregate intrinsic value of restricted stock units vested during the nine months ended September 30, 2015 was approximately $6.4 million. The Company repurchased 81,601 shares of common stock for an aggregate purchase price of $2.2 million pursuant to the participants’ rights under the Company’s stock incentive plans to elect to use common stock to satisfy their minimum tax withholding obligations.

13
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


Employee Stock Purchase Plan
The Company estimated the fair value of stock-based compensation expense associated with its ESPP using the Black-Scholes option pricing model, with the following weighted-average assumptions:
 
Three and
Nine Months Ended
September 30, 2015
Dividend yield
—
%
Expected volatility
35.41
%
Risk-free interest rate
0.05
%
Expected life of employee stock purchase plan options (in months)
6

Share Repurchase Program
On March 26, 2015, the Company announced that its Board of Directors authorized a $150 million share repurchase program. The program commenced on March 27, 2015 and will expire on March 25, 2016. Share repurchases under the program will be completed in accordance with guidelines specified under Rule 10b5-1 and Rule 10b-18 of the Securities and Exchange Act of 1934. All repurchased shares are retired. During the three and nine months ended September 30, 2015, the Company repurchased 1.6 million and 3.2 million shares, respectively, of its Class A common stock at an average price of $28.15 and $27.64 per share, respectively, for a total purchase price of $44.5 million and $88.8 million, respectively.
7.
BASIC AND DILUTED NET INCOME PER COMMON SHARE
The following table provides a reconciliation of the numerators and denominators used in computing basic and diluted net income per common share (in thousands, except per share data):
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2015
 
2014
 
2015
Computation of basic net income per common share:
 
 
 
 
 
 
 
Net income
$
48,173

 
$
50,282

 
$
116,703

 
$
141,554

Weighted average common shares and participating securities outstanding – basic
55,494

 
54,123

 
58,548

 
55,153

Basic net income per common share
$
0.87

 
$
0.93

 
$
1.99

 
$
2.57

Computation of diluted net income per common share:
 
 
 
 
 
 
 
Weighted average common shares and participating securities outstanding – basic
55,494

 
54,123

 
58,548

 
55,153

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock-based awards
1,677

 
1,002

 
1,502

 
925

Weighted average common shares outstanding – diluted
57,171

 
55,125

 
60,050

 
56,078

Diluted net income per common share
$
0.84

 
$
0.91

 
$
1.94

 
$
2.52

Diluted net income per common share reflects the potential dilution of common stock equivalents such as options and warrants, to the extent the impact is dilutive. Common stock options to purchase an aggregate of 1,432,591 and 754,059 shares were excluded from the calculation of the denominator for diluted net income per common share due to their anti-dilutive effect for the three months ended September 30, 2014 and 2015, respectively. Common stock options to purchase an aggregate of 1,104,392 and 776,001 shares were excluded from the calculation of the denominator for diluted net income per common share due to their anti-dilutive effect for the nine months ended September 30, 2014 and 2015, respectively.

14
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


8.
INTEREST AND OTHER EXPENSE
Interest and other expense consists of the following (in thousands):
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2015
 
2014
 
2015
Interest and other expense:
 
 
 
 
 
 
 
Interest expense
$
6,232

 
$
6,475

 
$
18,492

 
$
19,321

Loss (gain) on asset disposals
13

 
(23
)
 
1,070

 
(277
)
Foreign currency transaction loss
75

 
323

 
27

 
934

Other
(50
)
 
—

 
(52
)
 
—

Total interest and other expense
$
6,270

 
$
6,775

 
$
19,537

 
$
19,978

9.
INCOME TAXES
The Company’s effective tax rate increased to 35.3% for the nine months ended September 30, 2015 from 30.4% for the nine months ended September 30, 2014, primarily due to a discrete benefit for the domestic production activities deduction recorded during the nine months ended September 30, 2014, which was not applicable for the nine months ended September 30, 2015.
As of December 31, 2014 and September 30, 2015, the Company had unrecognized tax benefits of $13.6 million and $17.3 million, respectively, of which $12.8 million and $16.4 million, respectively, would affect the Company’s effective tax rate if recognized.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the three months ended September 30, 2014 and 2015, the potential interest and penalties recognized by the Company were insignificant. During the nine months ended September 30, 2014 and 2015, the Company recognized potential interest and penalties of $0.1 million and $2.3 million, respectively. Interest and penalties are primarily due to uncertain tax positions assumed in acquisitions. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.
The Company files income tax returns in the United States federal jurisdiction and in many state and foreign jurisdictions. The tax years 2008 through 2014 remain open to examination by the major taxing jurisdictions to which the Company is subject. The IRS has initiated an examination of the Company’s federal income tax returns for the years 2009 through 2012 and of the 2010 federal income tax return of Neustar Information Services, Inc. (formerly TARGUSInformation Corporation), a subsidiary of the Company. While the ultimate outcome of the audits is uncertain, management does not currently believe that the outcome will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
10.
SEGMENT INFORMATION
The Company engages in business activities as a single entity and the chief operating decision maker reviews consolidated operating results and allocates resources based on consolidated reports. The Company has a single operating segment.

15
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


Enterprise-Wide Disclosures
Revenue by geographical areas is based on the billing address of the Company’s clients. Geographic area revenue and service revenue from external clients for the three and nine months ended September 30, 2014 and 2015, and geographic area long-lived assets as of December 31, 2014 and September 30, 2015 are as follows (in thousands):
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2015
 
2014
 
2015
Revenue by geographical areas:
 
 
 
 
 
 
 
United States
$
229,052

 
$
240,652

 
$
664,023

 
$
713,696

International
14,807

 
21,001

 
47,190

 
56,112

Total revenue
$
243,859

 
$
261,653

 
$
711,213

 
$
769,808

 
 
 
 
 
 
 
 
Revenue by service:
 
 
 
 
 
 
 
Marketing Services
$
37,471

 
$
41,108

 
$
105,297

 
$
119,224

Security Services
35,942

 
43,150

 
100,486

 
123,243

Data Services
51,763

 
51,198

 
149,265

 
148,592

NPAC Services
118,683

 
126,197

 
356,165

 
378,749

Total revenue
$
243,859

 
$
261,653

 
$
711,213

 
$
769,808

 
December 31,
2014
 
September 30,
2015
Long-lived assets, net
 
 
 
United States
$
385,432

 
$
327,020

Colombia
78,786

 
72,085

Australia
—

 
44,624

Other
8

 
10

Total long-lived assets, net
$
464,226

 
$
443,739

11.
CONTINGENCIES
On July 15, 2014, the Oklahoma Firefighters Pension and Retirement System, or OFPRS, individually and on behalf of all other similarly situated stockholders, filed a putative class action complaint in the United States District Court for the Eastern District of Virginia, Alexandria Division, or the Alexandria Division, against the Company and certain of its senior executive officers.  The OFPRS complaint asserted claims for purported violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 on behalf of those who purchased the Company’s securities between April 19, 2013 and June 6, 2014, inclusive, and sought unspecified compensatory damages, costs and expenses, including attorneys’ and experts’ fees, and injunctive relief.
On October 7, 2014, the Alexandria Division issued an order appointing lead counsel and designating The Indiana Public Retirement System, or IPRS, as lead plaintiff.  On November 6, 2014, the IPRS filed an amended complaint and on December 8, 2014, the Company moved to dismiss IPRS’s amended complaint.  On December 22, 2014, IPRS filed its opposition to the Company’s motion to dismiss.  On December 29, 2014, the Company filed a reply brief to the IPRS opposition.  The Alexandria Division heard oral arguments on the motions on January 22, 2015 and on January 27, 2015, and issued an order granting the Company’s motion to dismiss IPRS’s amended complaint with prejudice.  On February 25, 2015, counsel for IPRS filed a notice of appeal.
On July 28, 2015, the IPRS, on behalf of itself and the proposed settlement class, on the one hand, and certain of the Company's senior executive officers on the other hand, entered into a Stipulation and Agreement of Settlement with the Alexandria Division, which sets forth the terms and conditions of the proposed settlement of the claims. The Alexandria Division granted preliminary approval on September 22, 2015. The final hearing before the Alexandria Division is scheduled

16
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


for December 3, 2015. As of September 30, 2015, the impact of the proposed settlement amount is not material to the Company's consolidated financial position and results of operations.
12.
SUPPLEMENTAL GUARANTOR INFORMATION
The following schedules present condensed consolidating financial information of the Company as of December 31, 2014 and September 30, 2015 and for the three and nine months ended September 30, 2014 and 2015 for (a) Neustar, Inc., the parent company; (b) certain of the Company’s 100% owned domestic subsidiaries (collectively, the Subsidiary Guarantors); and (c) certain wholly-owned domestic and foreign subsidiaries of the Company (collectively, the Non-Guarantor Subsidiaries). Investments in subsidiaries are accounted for using the equity method; accordingly, entries necessary to consolidate the parent company and all of the guarantor and non-guarantor subsidiaries are reflected in the eliminations column. Intercompany amounts that will not be settled between entities are treated as contributions or distributions for purposes of these condensed consolidated financial statements. The guarantees are full and unconditional and joint and several. A Subsidiary Guarantor will be released from its obligations under the Senior Notes when: (a) the Subsidiary Guarantor is sold or sells substantially all of its assets; (b) the Subsidiary Guarantor is designated as an unrestricted subsidiary as defined by the Senior Notes; (c) the Subsidiary Guarantor’s guarantee of indebtedness under the Senior Notes is released (other than discharge through repayment); or (d) the requirements for legal or covenant defeasance or discharge of the indenture have been satisfied.

17
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2014
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
297,565

 
$
19,606

 
$
9,406

 
$
—

 
$
326,577

Restricted cash
1,260

 
931

 
—

 
—

 
2,191

Accounts receivable, net
93,519

 
59,868

 
1,699

 
—

 
155,086

Unbilled receivables
3,115

 
9,652

 
317

 
—

 
13,084

Prepaid expenses and other current assets
20,322

 
3,526

 
544

 
—

 
24,392

Deferred costs
4,798

 
2,153

 
—

 
—

 
6,951

Income taxes receivable
18,935

 
—

 
7

 
(2,986
)
 
15,956

Deferred income tax assets
3,600

 
6,853

 
—

 
(73
)
 
10,380

Intercompany receivable
24,674

 
—

 
—

 
(24,674
)
 
—

Total current assets
467,788

 
102,589

 
11,973

 
(27,733
)
 
554,617

Property and equipment, net
149,024

 
12,566

 
14

 
—

 
161,604

Goodwill
95,388

 
565,425

 
31,456

 
—

 
692,269

Intangible assets, net
16,836

 
280,962

 
4,824

 
—

 
302,622

Net investments in subsidiaries
841,436

 
—

 
—

 
(841,436
)
 
—

Deferred income tax assets, long-term
—

 
—

 
284

 
(284
)
 
—

Other assets, long-term
29,059

 
1,917

 
20

 
—

 
30,996

Total assets
$
1,599,531

 
$
963,459

 
$
48,571

 
$
(869,453
)
 
$
1,742,108

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
7,025

 
$
1,332

 
$
82

 
$
—

 
$
8,439

Accrued expenses
72,423

 
20,243

 
2,105

 
—

 
94,771

Income taxes payable
—

 
2,986

 
—

 
(2,986
)
 
—

Deferred revenue
29,952

 
42,177

 
1,779

 
—

 
73,908

Notes payable
7,972

 
—

 
—

 
—

 
7,972

Capital lease obligations
3,702

 
—

 
—

 
—

 
3,702

Other liabilities
21,882

 
1,202

 
114

 
(73
)
 
23,125

Intercompany payable
—

 
12,267

 
12,407

 
(24,674
)
 
—

Total current liabilities
142,956

 
80,207

 
16,487

 
(27,733
)
 
211,917

Deferred revenue, long-term
8,592

 
18,425

 
—

 
—

 
27,017

Notes payable, long-term
775,318

 
—

 
—

 
—

 
775,318

Capital lease obligations, long-term
5,579

 
—

 
—

 
—

 
5,579

Deferred income tax liabilities, long-term
3,813

 
45,582

 
—

 
(284
)
 
49,111

Other liabilities, long-term
44,246

 
9,437

 
—

 
—

 
53,683

Total liabilities
980,504

 
153,651

 
16,487

 
(28,017
)
 
1,122,625

Total stockholders’ equity
619,027

 
809,808

 
32,084

 
(841,436
)
 
619,483

Total liabilities and stockholders’ equity
$
1,599,531

 
$
963,459

 
$
48,571

 
$
(869,453
)
 
$
1,742,108


18
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2015
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
322,403

 
$
23,546

 
$
12,477

 
$
—

 
$
358,426

Restricted cash
1,260

 
1,119

 
—

 
—

 
2,379

Accounts receivable, net
98,588

 
56,916

 
1,851

 
—

 
157,355

Unbilled receivables
2,706

 
10,454

 
704

 
—

 
13,864

Prepaid expenses and other current assets
25,825

 
3,588

 
1,334

 
—

 
30,747

Deferred costs
5,514

 
2,849

 
2,382

 
—

 
10,745

Income taxes receivable
10,489

 
—

 
—

 
(3,973
)
 
6,516

Deferred income tax assets
10,055

 
4,626

 
508

 
5,656

 
20,845

Intercompany receivable
28,605

 
—

 
—

 
(28,605
)
 
—

Total current assets
505,445

 
103,098

 
19,256

 
(26,922
)
 
600,877

Property and equipment, net
134,827

 
8,766

 
2,552

 
—

 
146,145

Goodwill
94,153

 
565,424

 
98,177

 
—

 
757,754

Intangible assets, net
14,522

 
237,005

 
46,067

 
—

 
297,594

Net investments in subsidiaries
890,807

 
—

 
—

 
(890,807
)
 
—

Other assets, long-term
28,274

 
1,157

 
2,484

 
—

 
31,915

Total assets
$
1,668,028

 
$
915,450

 
$
168,536

 
$
(917,729
)
 
$
1,834,285

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
6,452

 
$
1,330

 
$
737

 
$
—

 
$
8,519

Accrued expenses
76,812

 
20,611

 
3,668

 
—

 
101,091

Income taxes payable
—

 
2,689

 
1,284

 
(3,973
)
 
—

Deferred revenue
30,123

 
40,406

 
13,974

 
—

 
84,503

Notes payable
7,972

 
—

 
—

 
—

 
7,972

Capital lease obligations
3,299

 
—

 
554

 
—

 
3,853

Other liabilities
21,969

 
656

 
86

 
—

 
22,711

Intercompany payable
—

 
19,335

 
9,270

 
(28,605
)
 
—

Total current liabilities
146,627

 
85,027

 
29,573

 
(32,578
)
 
228,649

Deferred revenue, long-term
8,340

 
11,521

 
4,377

 
—

 
24,238

Notes payable, long-term
769,337

 
—

 
—

 
—

 
769,337

Capital lease obligations, long-term
2,853

 
—

 
24

 
—

 
2,877

Deferred income tax liabilities, long-term
21,794

 
39,317

 
12,258

 
(4,644
)
 
68,725

Other liabilities, long-term
50,110

 
9,014

 
5,796

 
—

 
64,920

Total liabilities
999,061

 
144,879

 
52,028

 
(37,222
)
 
1,158,746

Total stockholders’ equity
668,967

 
770,571

 
116,508

 
(880,507
)
 
675,539

Total liabilities and stockholders’ equity
$
1,668,028

 
$
915,450

 
$
168,536

 
$
(917,729
)
 
$
1,834,285



19
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
177,488

 
$
78,247

 
$
3,208

 
$
(15,084
)
 
$
243,859

Operating expense:
 
 
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
36,208

 
34,349

 
6,180

 
(13,936
)
 
62,801

Sales and marketing
34,481

 
14,338

 
236

 
(1,118
)
 
47,937

Research and development
6,716

 
548

 
2

 
—

 
7,266

General and administrative
25,027

 
2,388

 
317

 
(30
)
 
27,702

Depreciation and amortization
12,044

 
17,427

 
528

 
—

 
29,999

Restructuring charges
504

 
751

 
100

 
—

 
1,355

 
114,980

 
69,801

 
7,363

 
(15,084
)
 
177,060

Income from operations
62,508

 
8,446

 
(4,155
)
 
—

 
66,799

Other (expense) income:
 
 
 
 
 
 
 
 
 
Interest and other expense
(6,234
)
 
24

 
(60
)
 
—

 
(6,270
)
Interest income
23

 
4

 
5

 
—

 
32

Income (loss) before income taxes and equity loss in consolidated subsidiaries
56,297

 
8,474

 
(4,210
)
 
—

 
60,561

Provision (benefit) for income taxes
4,865

 
8,445

 
(922
)
 
—

 
12,388

Income (loss) before equity loss in consolidated subsidiaries
51,432

 
29

 
(3,288
)
 
—

 
48,173

Equity loss in consolidated subsidiaries
(3,259
)
 
(1,735
)
 
—

 
4,994

 
—

Net income (loss)
$
48,173

 
$
(1,706
)
 
$
(3,288
)
 
$
4,994

 
$
48,173

Comprehensive income (loss)
$
47,766

 
$
(1,516
)
 
$
(3,653
)
 
$
4,994

 
$
47,591




20
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
176,980

 
$
85,273

 
$
9,426

 
$
(10,026
)
 
$
261,653

Operating expense:
 
 
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
42,633

 
28,169

 
4,680

 
(8,374
)
 
67,108

Sales and marketing
34,789

 
15,452

 
272

 
(1,602
)
 
48,911

Research and development
5,479

 
526

 
4

 
—

 
6,009

General and administrative
25,633

 
2,543

 
491

 
(50
)
 
28,617

Depreciation and amortization
13,044

 
15,940

 
1,288

 
—

 
30,272

 
121,578

 
62,630

 
6,735

 
(10,026
)
 
180,917

Income from operations
55,402

 
22,643

 
2,691

 
—

 
80,736

Other (expense) income:
 
 
 
 
 
 
 
 
 
Interest and other expense
(6,719
)
 
112

 
(168
)
 
—

 
(6,775
)
Interest income
(7
)
 
5

 
9

 
—

 
7

Income before income taxes and equity income in consolidated subsidiaries
48,676

 
22,760

 
2,532

 
—

 
73,968

Provision (benefit) for income taxes
28,303

 
(5,727
)
 
1,110

 
—

 
23,686

Income before equity income in consolidated subsidiaries
20,373

 
28,487

 
1,422

 
—

 
50,282

Equity income in consolidated subsidiaries
29,909

 
296

 
—

 
(30,205
)
 
—

Net income
$
50,282

 
$
28,783

 
$
1,422

 
$
(30,205
)
 
$
50,282

Comprehensive income (loss)
$
51,887

 
$
28,837

 
$
(2,211
)
 
$
(30,205
)
 
$
48,308



21
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands)

 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
503,448

 
$
216,403

 
$
9,643

 
$
(18,281
)
 
$
711,213

Operating expense:
 
 
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
119,191

 
72,286

 
7,282

 
(16,503
)
 
182,256

Sales and marketing
106,716

 
39,413

 
2,083

 
(1,647
)
 
146,565

Research and development
19,716

 
1,515

 
26

 
—

 
21,257

General and administrative
73,251

 
6,478

 
403

 
(131
)
 
80,001

Depreciation and amortization
35,974

 
50,678

 
1,073

 
—

 
87,725

Restructuring charges
3,842

 
2,442

 
237

 
—

 
6,521

 
358,690

 
172,812

 
11,104

 
(18,281
)
 
524,325

Income from operations
144,758

 
43,591

 
(1,461
)
 
—

 
186,888

Other (expense) income:
 
 
 
 
 
 
 
 
 
Interest and other expense
(19,632
)
 
30

 
65

 
—

 
(19,537
)
Interest income
273

 
5

 
12

 
—

 
290

Income before income taxes and equity income (loss) in consolidated subsidiaries
125,399

 
43,626

 
(1,384
)
 
—

 
167,641

Provision for income taxes
26,254

 
24,501

 
183

 
—

 
50,938

Income before equity income (loss) in consolidated subsidiaries
99,145

 
19,125

 
(1,567
)
 
—

 
116,703

Equity income (loss) in consolidated subsidiaries
17,558

 
(91
)
 
—

 
(17,467
)
 
—

Net income (loss)
$
116,703

 
$
19,034

 
$
(1,567
)
 
$
(17,467
)
 
$
116,703

Comprehensive income (loss)
$
116,208

 
$
19,164

 
$
(1,910
)
 
$
(17,467
)
 
$
115,995



22
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
528,566

 
$
251,752

 
$
16,946

 
$
(27,456
)
 
$
769,808

Operating expense:
 
 
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
130,888

 
81,323

 
10,081

 
(23,475
)
 
198,817

Sales and marketing
107,635

 
42,492

 
247

 
(3,787
)
 
146,587

Research and development
15,976

 
2,470

 
14

 
—

 
18,460

General and administrative
69,663

 
7,743

 
791

 
(194
)
 
78,003

Depreciation and amortization
39,245

 
48,534

 
1,855

 
—

 
89,634

 
363,407

 
182,562

 
12,988

 
(27,456
)
 
531,501

Income from operations
165,159

 
69,190

 
3,958

 
—

 
238,307

Other (expense) income:
 
 
 
 
 
 
 
 
 
Interest and other expense
(20,004
)
 
142

 
(116
)
 
—

 
(19,978
)
Interest income
276

 
15

 
11

 
—

 
302

Income before income taxes and equity income in consolidated subsidiaries
145,431

 
69,347

 
3,853

 
—

 
218,631

Provision for income taxes
53,902

 
21,494

 
1,681

 
—

 
77,077

Income before equity income in consolidated subsidiaries
91,529

 
47,853

 
2,172

 
—

 
141,554

Equity income in consolidated subsidiaries
50,025

 
1,263

 
—

 
(51,288
)
 
—

Net income
$
141,554

 
$
49,116

 
$
2,172

 
$
(51,288
)
 
$
141,554

Comprehensive income (loss)
$
143,082

 
$
48,876

 
$
(1,797
)
 
$
(51,288
)
 
$
138,873









23
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands)

 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by (used in) operating activities
$
202,931

 
$
119,271

 
$
(607
)
 
$
(99,602
)
 
$
221,993

Investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
(44,283
)
 
(613
)
 
(517
)
 
—

 
(45,413
)
Business acquired, net of cash acquired
(120,698
)
 
—

 
—

 
—

 
(120,698
)
Net cash used in investing activities
(164,981
)
 
(613
)
 
(517
)
 
—

 
(166,111
)
Financing activities:
 
 
 
 
 
 
 
 
 
(Increase) decrease of restricted cash
—

 
111

 
3

 
—

 
114

Proceeds from notes payable
175,000

 
—

 
—

 
—

 
175,000

Payments under notes payable obligations
(6,095
)
 
—

 
—

 
—

 
(6,095
)
Principal repayments on capital lease obligations
(2,490
)
 
—

 
—

 
—

 
(2,490
)
Proceeds from issuance of stock
6,517

 
—

 
—

 
—

 
6,517

Excess tax benefits from stock-based compensation
2,482

 
—

 
5

 
—

 
2,487

Repurchase of restricted stock awards and common stock

(209,275
)
 
—

 
—

 
—

 
(209,275
)
(Distribution to) investment by parent
—

 
(101,920
)
 
2,318

 
99,602

 
—

Net cash (used in) provided by financing activities
(33,861
)
 
(101,809
)
 
2,326

 
99,602

 
(33,742
)
Effect of foreign exchange rates on cash and cash equivalents
(740
)
 
(44
)
 
(342
)
 
—

 
(1,126
)
Net increase in cash and cash equivalents
3,349

 
16,805

 
860

 
—

 
21,014

Cash and cash equivalents at beginning of period
214,959

 
1,075

 
7,275

 
—

 
223,309

Cash and cash equivalents at end of period
$
218,308

 
$
17,880

 
$
8,135

 
$
—

 
$
244,323



24
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2015


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by operating activities
$
167,116

 
$
126,758

 
$
86,315

 
$
(120,507
)
 
$
259,682

Investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
(20,615
)
 
(1,833
)
 
—

 
—

 
(22,448
)
Business acquired, net of cash acquired
—

 
—

 
(84,130
)
 
—

 
(84,130
)
Net cash used in investing activities
(20,615
)
 
(1,833
)
 
(84,130
)
 
—

 
(106,578
)
Financing activities:
 
 
 
 
 
 
 
 
 
Increase of restricted cash
—

 
(188
)
 
—

 
—

 
(188
)
Payments under notes payable obligations
(6,094
)
 
—

 
—

 
—

 
(6,094
)
Principal repayments on capital lease obligations
(3,887
)
 
—

 
—

 
—

 
(3,887
)
Proceeds from issuance of stock
7,676

 
—

 
—

 
—

 
7,676

Tax shortfall from equity awards
(8,664
)
 
—

 
—

 
—

 
(8,664
)
Repurchase of restricted stock awards and common stock
(109,605
)
 
—

 
—

 
—

 
(109,605
)
Distribution to parent
—

 
(120,384
)
 
(123
)
 
120,507

 
—

Net cash (used in) provided by financing activities
(120,574
)
 
(120,572
)
 
(123
)
 
120,507

 
(120,762
)
Effect of foreign exchange rates on cash and cash equivalents
(1,089
)
 
(413
)
 
1,009

 
—

 
(493
)
Net increase (decrease) in cash and cash equivalents
24,838

 
3,940

 
3,071

 
—

 
31,849

Cash and cash equivalents at beginning of period
297,565

 
19,606

 
9,406

 
—

 
326,577

Cash and cash equivalents at end of period
$
322,403

 
$
23,546

 
$
12,477

 
$
—

 
$
358,426




25

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements, including, without limitation, statements concerning the conditions in our industry, our operations and economic performance, and our business and growth strategy. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. These forward-looking statements are based on estimates and assumptions made by our management that we believe to be reasonable but are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those described in this report, in Part II, “Item 1A. Risk Factors” and in subsequent filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
Overview
During the third quarter, we expanded our competitive solutions in information services. We increased the number of domain name registries we manage with the acquisition of Bombora Technologies Pty Ltd, or Bombora, a registry services provider for a number of top-level domains including .au, .melbourne, .sydney, and over 100 new TLDs, including several registered to companies in the Fortune 500. In addition, we entered into a definitive agreement to acquire caller identification assets from Transaction Network Services, or TNS. This acquisition will enhance our authoritative identity capabilities. The transaction is expected to close in the fourth quarter of 2015, subject to the satisfaction of customary closing conditions. We also augmented our existing capabilities and entered into strategic partnerships.
During the third quarter, revenue increased 7% to $261.7 million as compared to $243.9 million in 2014. This increase in revenue was driven by a 20% increase in Security Services revenue to $43.2 million as compared to $35.9 million, a 10% increase in Marketing Services revenue to $41.1 million as compared to $37.5 million, and a 6% increase in NPAC Services revenue to $126.2 million as compared to $118.7 million. Data Services revenue decreased 1% to $51.2 million as compared to $51.8 million.
On March 26, 2015, the Federal Communications Commission, or FCC, approved a competitor to serve as the next Local Number Portability Administrator, or LNPA.  The FCC Order did not award a contract but authorized contract negotiations to begin. On April 6, 2015, we filed a Petition for Review asking the U.S. Court of Appeals for the District of Columbia Circuit to “hold unlawful, vacate, enjoin, and set aside” the FCC’s Order approving the North American Numbering Counsel’s recommendation. On June 19, 2015, the Court of Appeals granted the requests made by third-party petitioners to intervene in the case.  On July 21, 2015, the Court of Appeals dismissed the FCC’s motion to hold the case in abeyance pending further FCC action and ruled that the issues raised in the FCC’s motion to dismiss should be addressed in the parties’ briefs on the merits.  We filed our initial brief on September 21, 2015; the briefing schedule continues through December 17, 2015. Following final briefs, the Court of Appeals is expected to schedule Oral Arguments for early 2016 before making a decision later in the year.
On April 7, 2015, we amended our seven regional contracts with North American Portability Management, LLC, or NAPM. Under this amendment, we will provide LNPA services for an annual fixed fee of $496.1 million through at least September 30, 2016.  After September 30, 2016, the contracts will automatically renew for additional one-year terms unless NAPM provides a notice of non-renewal at least 90 days prior to the end of the then-current term.  Once a notice of non-renewal is provided, NAPM must also provide us with at least 180-days advance notice of its intention to terminate the contracts. Further, in addition to LNPA services, we will provide certain transition services on a cost-plus basis. We cannot be certain whether our LNPA services or transition services will be extended beyond September 30, 2016.
Prior to this amendment, we provided LNPA services under our contracts with NAPM for a fixed fee with a 6.5% annual price escalator. This contract was due to expire on June 30, 2015. The 2015 LNPA service fixed fee under the prior contract terms represents the impact of a 6.5% annual escalator on the 2014 LNPA service fixed fee of $465.8 million, resulting in a fixed fee of $248.1 million for the first half of 2015, or $496.1 million on an annualized basis. Under the April 7, 2015 amendment, the LNPA service fixed fee remains at the same annualized rate of $496.1 million for the duration of the amended term of the contracts which is at least through September 30, 2016. As a result, we do not expect the amendment to have an impact on our revenue growth rate through December 31, 2015.

26

Loss of the NPAC contracts on or after September 30, 2016 will have a material impact on our future operating results when compared to our current financial profile.  We expect to lose approximately $500 million of annual revenue and this loss will adversely impact our income from operations and operating margin.  Additionally, this loss may have a disproportionate material negative impact on our operating margin because of the largely fixed and shared cost structure that is designed to support all of our services.  We are unable to quantify the impact on our income from operations and operating margin at this time because the end date of the NPAC contract is uncertain and due to our largely fixed and shared cost structure.  Our disclosure will expand as we evaluate the cost structure that will be in place to support our ongoing business, as we approach September 30, 2016 or as we learn more about the timing of the NPAC contract termination.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based on our unaudited consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of these financial statements in accordance with U.S. GAAP requires us to utilize accounting policies and make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies as of the date of the financial statements and the reported amounts of revenue and expense during a fiscal period. The U.S. Securities and Exchange Commission, or SEC, considers an accounting policy to be critical if it is important to a company’s financial condition and results of operations, and if it requires significant judgment and estimates on the part of management in its application. We have discussed the selection and development of the critical accounting policies with the audit committee of our Board of Directors, and the audit committee has reviewed our related disclosures in this report.
Although we believe that our judgments and estimates are appropriate and reasonable, actual results may differ from those estimates. In addition, while we have used our best estimates based on the facts and circumstances available to us at the time, we reasonably could have used different estimates in the current period. Changes in the accounting estimates we use are reasonably likely to occur from period to period, which may have a material impact on the presentation of our financial condition and results of operations. If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations could be materially affected. See the information in our filings with the SEC from time to time, including Part II, “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, for certain matters that may bear on our results of operations.
The following discussion of selected critical accounting policies supplements the information relating to our critical accounting policies described in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2014.
Goodwill and Intangible Assets
We make significant estimates, assumptions, and judgments when valuing goodwill and other intangible assets in connection with the initial purchase price allocation of an acquired entity. These assumptions and estimates are based on historical experience, market conditions, and information obtained from the management of the acquired companies. Critical estimates in valuing certain intangible assets include, but are not limited to, historical and projected customer retention rates, estimated future cash flows and discount rates, and the expected use of the acquired assets. These factors are also considered in determining the useful life of the acquired intangible assets.
The fair value of our goodwill and intangible assets could be impacted by future adverse changes such as, but not limited to: (a) a significant adverse change in legal factors or in the business climate; (b) a substantial decline in our market capitalization, (c) an adverse action or assessment by a regulator; (d) unanticipated competition and loss of customer contracts; (e) loss of key personnel; (f) a realignment of our resources or restructuring in response to changes to industry and market conditions. Future adverse changes could cause the fair value of our reporting unit or intangible assets to fall below its respective carrying value, resulting in a potential impairment charge. In addition, changes in our organizational structure or how our management allocates resources and assesses performance could cause us to have more than one operating segment or reporting unit and require a reallocation and impairment analysis of our goodwill and intangible assets under a new organizational structure.
An impairment charge could have a material effect on our consolidated financial statements because of the significance of goodwill and intangible assets to our consolidated balance sheet. As of September 30, 2015, we had $757.8 million of goodwill and $297.6 million of intangible assets.

27

Stock-Based Compensation
We recognize stock-based compensation expense in accordance with the Compensation – Stock Compensation Topic of the FASB ASC which requires the measurement and recognition of compensation expense for stock-based awards granted to employees based on estimated fair values on the date of grant.
See Note 6 to our Financial Statements in Item 1 of Part I of this report for information regarding our assumptions related to stock-based compensation and the amount of stock-based compensation expense we incurred for the periods covered in this report.
We estimate the fair value of our restricted stock unit awards based on the fair value of our common stock on the date of grant. Our outstanding restricted stock unit awards are subject to service-based vesting conditions and performance-based vesting conditions. We recognize the estimated fair value of service-based awards, net of estimated forfeitures, as stock-based compensation expense over the vesting period on a straight-line basis. Awards with performance-based vesting conditions require the achievement of specific financial targets at the end of the specified performance period and are subject to the employee’s continued employment over the vesting period. We recognize the estimated fair value of performance-based awards, net of estimated forfeitures, as stock-based compensation expense over the vesting period, which considers each performance period or tranche separately, based upon our determination of the level of achievement of the performance targets. At each reporting period, we reassess the level of achievement of the performance targets for the related performance period. Determining the level of achievement of the performance targets involves judgment, and the estimate of stock-based compensation expense may be revised periodically based on changes in performance. If any performance goals specific to the restricted stock unit awards are not met, we do not recognize any compensation cost for such awards, and we reverse any such compensation costs to the extent previously recognized. In the three and nine months ended September 30, 2015, we revised our estimate of achievement of the performance target for the 2015 performance year, resulting in an increase in stock-based compensation expense of approximately $0.4 million and $1.7 million, respectively (see Note 6 to our Financial Statements in Item 1 of Part I of this report).

28

Consolidated Results of Operations
Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2015
The following table presents an overview of our results of operations for the three months ended September 30, 2014 and 2015:
 
Three Months Ended September 30,
 
2014
 
2015
 
2014 vs. 2015
 
$
 
$
 
$ Change
 
% Change
 
(unaudited)
(dollars in thousands, except per share data)
Revenue
$
243,859

 
$
261,653

 
$
17,794

 
7.3
 %
Operating expense:
 
 
 
 
 
 
 
Cost of revenue (excludes depreciation and amortization shown separately below)
62,801

 
67,108

 
4,307

 
6.9
 %
Sales and marketing
47,937

 
48,911

 
974

 
2.0
 %
Research and development
7,266

 
6,009

 
(1,257
)
 
(17.3
)%
General and administrative
27,702

 
28,617

 
915

 
3.3
 %
Depreciation and amortization
29,999

 
30,272

 
273

 
0.9
 %
Restructuring charges
1,355

 
—

 
(1,355
)
 
(100.0
)%
 
177,060

 
180,917

 
3,857

 
2.2
 %
Income from operations
66,799

 
80,736

 
13,937

 
20.9
 %
Other (expense) income:
 
 
 
 
 
 
 
Interest and other expense
(6,270
)
 
(6,775
)
 
(505
)
 
8.1
 %
Interest income
32

 
7

 
(25
)
 
(78.1
)%
Income before income taxes
60,561

 
73,968

 
13,407

 
22.1
 %
Provision for income taxes
12,388

 
23,686

 
11,298

 
91.2
 %
Net income
$
48,173

 
$
50,282

 
$
2,109

 
4.4
 %
Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.87

 
$
0.93

 
 
 
 
Diluted
$
0.84

 
$
0.91

 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
55,494

 
54,123

 
 
 
 
Diluted
57,171

 
55,125

 
 
 
 
Revenue
Revenue. Revenue increased $17.8 million driven by strong demand for our Security and Marketing Services and a $7.5 million increase in revenue from NPAC Services. Security Services revenue increased $7.2 million driven by an increase in revenue of $5.4 million from domain name registries and an increase in revenue of $1.8 million resulting from demand for our DNS services. In particular, the increase in revenue from domain name registries was driven by the addition of new top-level domains, of which $2.8 million is attributable to attributable to the acquisition of Bombora, which was completed in the third quarter of 2015. Revenue from our Marketing Services increased $3.6 million driven by increased demand for our services that help clients make informed and high impact decisions to promote their products and services. Data Services revenue decreased $0.6 million. In particular, revenue from carrier provisioning services decreased $3.0 million driven by the consolidation of the customer base and the completion of client projects. This decrease was partially offset by an increase in revenue from caller identification services and user authentication and rights management services.
Expense
Cost of revenue. Cost of revenue increased $4.3 million due to an increase of $2.9 million in costs related to our information technology and systems, an increase of $1.1 million in royalty costs and an increase of $0.4 million in personnel and personnel-related expense. The increase in costs related to our information technology and systems was driven by increased data processing, telecommunications, and maintenance costs.

29

Sales and marketing. Sales and marketing expense increased $1.0 million due to an increase of $0.6 million in personnel and personnel-related expense and an increase of $0.4 million in advertising and marketing costs. The increase in advertising and marketing costs was driven by an increase of $2.0 million in costs associated with advertising campaigns to drive brand awareness and other professional fees, partially offset by a decrease of $1.6 million in costs associated with NPAC-related campaigns.
Research and development. Research and development expense decreased $1.3 million due to a decrease of $1.1 million in personnel and personnel-related expense and a decrease of $0.1 million in maintenance and general facilities costs.
General and administrative. General and administrative expense increased $0.9 million due to an increase of $3.6 million in professional fees, partially offset by a decrease of $2.7 million in personnel and personnel-related costs. The increase in professional fees was driven by an increase in costs incurred to pursue new business opportunities and support corporate initiatives.
Depreciation and amortization. Depreciation and amortization expense increased $0.3 million due to an increase in amortization expense related to acquired intangible assets.
Restructuring expense. Restructuring expense decreased $1.4 million. Restructuring charges recorded during the three months ended September 30, 2014 were related to our 2014 restructuring program, which was implemented to align our resources to serve our clients more effectively. The plan was complete as of December 31, 2014.
Interest and other expense. Interest and other expense increased $0.5 million due an increase of $0.2 million in foreign currency transaction losses and an increase of $0.2 million in interest expense.
Interest income. Interest income for the three months ended September 30, 2015 was comparable to the interest income for the three months ended September 30, 2014.
Provision for income taxes. Our effective tax rate for the three months ended September 30, 2015 increased to 32.0% from 20.5% for the three months ended September 30, 2014 primarily due to a discrete benefit for our domestic production activities deduction recorded in the third quarter of 2014, which was not applicable for the three months ended September 30, 2015. Excluding discrete tax items, our effective tax rate was approximately 36.6% and 36.3% for the three months ended September 30, 2014 and 2015, respectively.

30


Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2015
The following table presents an overview of our results of operations for the nine months ended September 30, 2014 and 2015:
 
Nine Months Ended September 30,
 
2014
 
2015
 
2014 vs. 2015
 
$
 
$
 
$ Change
 
% Change
 
(unaudited)
(dollars in thousands, except per share data)
Revenue
$
711,213

 
$
769,808

 
$
58,595

 
8.2
 %
Operating expense:
 
 
 
 
 
 
 
Cost of revenue (excludes depreciation and amortization shown separately below)
182,256

 
198,817

 
16,561

 
9.1
 %
Sales and marketing
146,565

 
146,587

 
22

 
—
 %
Research and development
21,257

 
18,460

 
(2,797
)
 
(13.2
)%
General and administrative
80,001

 
78,003

 
(1,998
)
 
(2.5
)%
Depreciation and amortization
87,725

 
89,634

 
1,909

 
2.2
 %
Restructuring charges
6,521

 
—

 
(6,521
)
 
100.0
 %
 
524,325

 
531,501

 
7,176

 
1.4
 %
Income from operations
186,888

 
238,307

 
51,419

 
27.5
 %
Other (expense) income:
 
 
 
 
 
 
 
Interest and other expense
(19,537
)
 
(19,978
)
 
(441
)
 
2.3
 %
Interest income
290

 
302

 
12

 
4.1
 %
Income before income taxes
167,641

 
218,631

 
50,990

 
30.4
 %
Provision for income taxes
50,938

 
77,077

 
26,139

 
51.3
 %
Net income
$
116,703

 
$
141,554

 
$
24,851

 
21.3
 %
Net income per common share:
 
 
 
 
 
 
 
Basic
$
1.99

 
$
2.57

 
 
 
 
Diluted
$
1.94

 
$
2.52

 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
58,548

 
55,153

 
 
 
 
Diluted
60,050

 
56,078

 
 
 
 
Revenue
Revenue. Revenue increased $58.6 million driven by strong demand for our Security and Marketing Services and a $22.6 million increase in revenue from NPAC Services. Security Services revenue increased $22.8 million driven by an increase in revenue of $13.9 million from domain name registries and an increase in revenue of $8.9 million driven by demand for our DNS services. In particular, the increase in revenue from domain name registries was driven by the addition of new top-level domains, of which $8.0 million is attributable to certain acquisitions. Specifically, the incremental revenue from the acquisition of .CO in April 2014 contributed $5.2 million and incremental revenue from the acquisition of Bombora in July 2015 contributed $2.8 million. Revenue from our Marketing Services increased $13.9 million driven by increased demand for our services that help clients make informed and high impact decisions to promote their products and services. Data Services revenue decreased $0.7 million. In particular, revenue from carrier provisioning services decreased $5.4 million driven by consolidation of the customer base and the completion of client projects. This decrease was partially offset by an increase in revenue from caller identification services and user authentication and rights management services.
Expense
Cost of revenue. Cost of revenue increased $16.6 million due to an increase of $10.7 million in costs related to our information technology and systems, and an increase of $5.8 million in personnel and personnel-related expense. The increase in costs related to our information technology and systems was driven by increased data processing, telecommunications, and maintenance costs.

31

Sales and marketing. Sales and marketing expense was comparable to that incurred for the nine months ended September 30, 2014. In particular, personnel and personnel-related expense increased $1.9 million. This increase was partially offset by a decrease of $1.3 million in maintenance and general facilities costs and a decrease of $0.6 million in advertising and marketing costs. The decrease in advertising and marketing costs was driven by a decrease of $2.9 million in costs associated with NPAC-related campaigns, partially offset by an increase in costs associated with other professional fees to drive brand awareness.
Research and development. Research and development expense decreased $2.8 million due to a decrease of $2.4 million in personnel and personnel-related expense and a decrease of $0.4 million in maintenance and general facilities costs.
General and administrative. General and administrative expense decreased $2.0 million due to a decrease of $4.9 million in personnel and personnel-related expense and a decrease of $1.0 million in maintenance and other administrative costs, partially offset by an increase of $3.9 million in professional fees. The increase in professional fees was driven by an increase in costs incurred to pursue new business opportunities and support corporate initiatives. The decrease in maintenance and other administrative costs was driven by a gain of $2.1 million from the sale of certain assets and liabilities.
Depreciation and amortization. Depreciation and amortization expense increased $1.9 million due to an increase of $1.6 million in amortization expense related to acquired intangible assets. In addition, depreciation expense increased $0.3 million.
Restructuring expense. Restructuring expense decreased $6.5 million. Restructuring charges recorded during the nine months ended September 30, 2014 were related to our 2014 restructuring program, which was implemented to align our resources to serve our clients more effectively. The plan was complete as of December 31, 2014.
Interest and other expense. Interest and other expense increased $0.4 million due to a net decrease of $1.3 million in losses on asset disposals, offset by an increase of $0.9 million in foreign currency transaction losses and an increase of $0.8 million in interest expense.
Interest income. Interest income for the nine months ended September 30, 2015 was comparable to the interest income for the nine months ended September 30, 2014.
Provision for income taxes. Our effective tax rate for the nine months ended September 30, 2015 increased to 35.3% from 30.4% for the nine months ended September 30, 2014 primarily due to a discrete benefit for our domestic production activities deduction recorded during the nine months ended September 30, 2014, which was not applicable for the nine months ended September 30, 2015. Excluding discrete tax items, our annual effective tax rate was approximately 36.6% and 36.3% for the nine months ended September 30, 2014 and 2015, respectively.
Liquidity and Capital Resources
Our principal source of liquidity is cash provided by operating activities. Our principal uses of cash have been to fund acquisitions, share repurchases, capital expenditures, and debt service requirements. We anticipate that our principal uses of cash in the future will be for acquisitions, capital expenditures and debt service requirements. Total cash and cash equivalents were $358.4 million at September 30, 2015, an increase of $31.8 million from $326.6 million at December 31, 2014. This increase in cash and cash equivalents was due to cash provided by operations.
On March 5, 2015, S&P lowered our corporate credit rating due to an increase in perceived NPAC-related business risk. In particular, our corporate credit rating was lowered from BB to BB-, our 2013 Term Facility rating was lowered from BBB- to BB+, and our Senior Notes rating was lowered from BB- to B+. Downgrades in our credit ratings do not accelerate the scheduled maturity dates of our debt, or affect the interest rates charged on any of our debt, our debt covenant requirements, or cause any other operating issue.  We believe this downgrade will not have a significant impact on our operating results; however, if our credit ratings were to be further downgraded, our access to, and cost of, debt financing may be negatively impacted.
We believe that our existing cash and cash equivalents and cash from operations will be sufficient to fund our operations for the next twelve months.
Credit Facilities
On January 22, 2013, we entered into a credit facility that provided for a $325 million senior secured term loan facility, or 2013 Term Facility, and a $200 million senior secured revolving credit facility, or the 2013 Revolving Facility, and together with the 2013 Term Facility, the 2013 Credit Facilities. In addition, we closed an offering of $300 million aggregate principal

32

amount of senior notes, or Senior Notes. For further discussion of this debt, see Note 5 to our Financial Statements in Item 1 of Part I of this report.
Discussion of Cash Flows
Cash flows from operations
Net cash provided by operating activities for the nine months ended September 30, 2015 was $259.7 million, as compared to $222.0 million for the nine months ended September 30, 2014. This $37.7 million increase in net cash provided by operating activities was the result of an increase in net income of $24.9 million, an increase in non-cash adjustments of $23.9 million and a decrease in net changes in operating assets and liabilities of $11.1 million.
Non-cash adjustments increased $23.9 million, driven by an increase of $30.7 million in deferred income taxes, a net increase of $11.2 million in tax (benefit) shortfall from equity awards, an increase of $1.9 million in depreciation and amortization expense and an increase of $1.1 million in the provision for doubtful accounts. These total increases of $44.9 million in non-cash adjustments were partially offset by a decrease of $19.2 million in stock-based compensation and a decrease of $1.7 million in (gain) loss on asset disposals.
Net changes in operating assets and liabilities decreased $11.1 million primarily due to a decrease of $7.3 million in deferred revenue, a decrease of $7.3 million in prepaid expenses and other current assets, a decrease of $7.2 million in other liabilities, a decrease of $7.0 million in income taxes, a decrease of $3.4 million in deferred costs, a decrease of $1.5 million in other assets and a decrease of $1.0 million in notes receivable. These total decreases of $34.7 million in net changes in operating assets and liabilities were partially offset by an increase of $23.1 million in accounts payable and accrued expenses and $0.6 million in accounts and unbilled receivables.
Cash flows from investing
Net cash used in investing activities for the nine months ended September 30, 2015 was $106.6 million, as compared to $166.1 million for nine months ended September 30, 2014. This $59.5 million decrease in net cash used in investing activities was due to a decrease of $36.6 million in cash used for acquisitions and a decrease of $23.0 million in cash used for purchases of property and equipment.
Cash flows from financing
Net cash used in financing activities was $120.8 million for the nine months ended September 30, 2015, as compared to $33.7 million for the nine months ended September 30, 2014. This $87.0 million increase in net cash used in financing activities was due to a decrease in cash of $175.0 million from borrowings completed in the first quarter of 2014, a net decrease of $11.2 million in tax benefit (shortfall) from equity awards, an increase of $1.4 million in cash used in principal repayments on capital lease obligations and an increase of $0.3 million in restricted cash. These total net increases in net cash used in financing activities of $187.9 million were partially offset by a $99.7 million decrease in cash used for share repurchases and for the net down of employee shares and a $1.2 million increase in cash proceeds from the issuance of stock.
Recent Accounting Pronouncements
See Note 2 to our Financial Statements in Item 1 of Part 1 of this report for a discussion of the effects of recent accounting pronouncements.
Off-Balance Sheet Arrangements
None.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about our market risk, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Our exposure to market risk has not changed materially since December 31, 2014.
Item 4.
Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of September 30, 2015, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and were operating at the reasonable assurance level.
In addition, there were no changes in our internal control over financial reporting that occurred in the third quarter of 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1.
Legal Proceedings
On July 15, 2014, the Oklahoma Firefighters Pension and Retirement System, or OFPRS, individually and on behalf of all other similarly situated stockholders, filed a putative class action complaint in the United States District Court for the Eastern District of Virginia, Alexandria Division, or the Alexandria Division, against us and certain of our senior executive officers.  The OFPRS complaint asserted claims for purported violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 on behalf of those who purchased our securities between April 19, 2013 and June 6, 2014, inclusive, and sought unspecified compensatory damages, costs and expenses, including attorneys’ and experts’ fees, and injunctive relief.
On October 7, 2014, the Alexandria Division issued an order appointing lead counsel and designating The Indiana Public Retirement System, or IPRS, as lead plaintiff.  On November 6, 2014, the IPRS filed an amended complaint and on December 8, 2014, we moved to dismiss IPRS’s amended complaint.  On December 22, 2014, IPRS filed its opposition to our motion to dismiss.  On December 29, 2014, we filed a reply brief to the IPRS opposition.  The Alexandria Division heard oral arguments on the motions on January 22, 2015 and on January 27, 2015, and issued an order granting our motion to dismiss IPRS’s amended complaint with prejudice.  On February 25, 2015, counsel for IPRS filed a notice of appeal.
On July 28, 2015, the IPRS, on behalf of itself and the proposed settlement class, on the one hand, and certain of our senior executive officers on the other hand, entered into a Stipulation and Agreement of Settlement with the Alexandria Division, which sets forth the terms and conditions of the proposed settlement of the claims. The Alexandria Division granted preliminary approval on September 22, 2015. The final hearing before the Alexandria Division is scheduled for December 3, 2015. As of September 30, 2015, the impact of the proposed settlement amount is not material to our consolidated financial position and results of operations.
On April 6, 2015, we filed a Petition for Review asking the U.S. Court of Appeals for the District of Columbia Circuit to “hold unlawful, vacate, enjoin, and set aside” the FCC Order issued on March 27, 2015, approving a recommendation by the NANC for a competitor to serve as the next LNPA.  Among other things, we believe the FCC Order violates the notice and comment rulemaking requirements of the Administrative Procedure Act, violates the FCC’s rules by selecting an entity that is not impartial or neutral to serve as the next LNPA and is arbitrary, capricious, an abuse of discretion or otherwise contrary to law. On June 19, 2015, the Court of Appeals granted the requests made by third-party petitioners to intervene in the case.  On July 21, 2015, the Court of Appeals dismissed the FCC’s motion to hold the case in abeyance pending further FCC action and ruled that the issues raised in the FCC’s motion to dismiss should be addressed in the parties’ briefs on the merits.  We filed our initial brief on September 21, 2015; the briefing schedule continues through December 17, 2015.  Following final briefs, the Court of Appeals is expected to schedule Oral Arguments for early 2016 before making a decision later in the year.
Item 1A.
Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risks discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2014, filed with the SEC on February 13, 2015. The risks discussed in this Quarterly Report and in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks set forth below and described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.

33

When our seven contracts with North American Portability Management LLC are terminated, the timing of which is uncertain, our revenue and profitability may be materially adversely affected.
We cannot be certain whether our contracts to provide local number portability services will be extended beyond September 30, 2016.  Once the contracts terminate, our annual revenue will decrease by approximately $500 million.  As a result of the uncertain contract end date and due to our cost structure, which is organized by function, the impact of the termination of the contracts on our income from operations is not currently quantifiable.  At the time of termination, our revenue and profitability will be dependent upon the success of our remaining business.  If we are not able to replace this lost revenue and adjust our operating plans to support our remaining business, our total revenue and profitability may be materially adversely affected. 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
The following table is a summary of our repurchases of common stock during each of the three months in the quarter ended September 30, 2015:
Month
Total
Number of
Shares
Purchased
(1)
 
Average
Price Paid
per Share
 
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (2)(3)
 
Approximate
Dollar Value of
Shares that May
Yet Be  Purchased
Under the Plans or
Programs (3)
July 1 through July 31, 2015
523,226

 
$
28.81

 
522,607

 
$
90,655,782

August 1 through August 31, 2015
527,880

 
28.60

 
527,552

 
75,554,630

September 1 through September 30, 2015
535,507

 
27.04

 
531,512

 
61,166,822

Total
1,586,613

 
$
28.15

 
1,581,671

 
$
61,166,822

(1)
The number of shares purchased includes shares of common stock tendered by employees to us to satisfy the employees’ minimum tax withholding obligations arising as a result of the vesting of restricted stock grants under our stock incentive plan. We purchased these shares for their fair market value on the vesting date.
(2)
The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced plans or programs is 4,942 shares, all of which relate to shares surrendered to us by employees to satisfy the employees’ minimum tax withholding obligations arising as a result of the vesting of restricted stock grants under our incentive stock plans.
(3)
On March 26, 2015, we announced the adoption of a 2015 share repurchase program, which will expire on March 25, 2016. The 2015 program authorizes the repurchase of up to $150 million of Class A common shares.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
On October 28, 2015, we (a) filed with the Delaware Secretary of State a Certificate of Amendment to our Restated Certificate of Incorporation (the “Prior Charter” and, such certificate of amendment, the “Certificate of Amendment”) to

34

declassify our board of directors (the “Board”) beginning at the annual meeting of stockholders in 2017 (the “Amendment”) and (b) immediately after the filing of the Certificate of Amendment, we filed a Third Restated Certificate of Incorporation, which restates, but does not further amend, the Prior Charter to include the text of the Amendment. The Amendment was approved by our stockholders at our Annual Meeting of Stockholders held on May 27, 2015 (the “2015 Annual Meeting”).
Prior to the filing of the Certificate of Amendment, Article VI, Section B of the Prior Charter provided that the Board would be divided into three classes of directors, with one class of directors being elected each year. The Third Restated Charter provides that, commencing with the 2017 annual meeting of stockholders, directors standing for election will be elected for one year terms. Directors elected by stockholders prior to the 2017 annual meeting of stockholders will serve out their three respective year terms, and the entire Board will be elected annually commencing with the 2019 annual meeting of stockholders. A detailed description of the declassification amendments is set forth in our Definitive Proxy Statement for the 2015 Annual Meeting (the “2015 Proxy Statement”), which was filed with the Securities and Exchange Commission on April 17, 2015.
In connection with the foregoing, and as contemplated in the 2015 Proxy Statement, on October 28, 2015, the Board approved conforming amendments to Article III, Section 2 of our Amended and Restated Bylaws, relating to filling director vacancies, to remove references to a classified board.
The foregoing descriptions of the Certificate of Amendment, Third Restated Certificate of Incorporation and Amended and Restated Bylaws are qualified in their entirety by reference to the texts of the such documents, which are filed as Exhibits 3.1.1, 3.1.2, and 3.2, respectively, to this Quarterly Report on Form 10-Q.
Item 6.
Exhibits
See exhibits listed under the Exhibit Index below.

35

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 thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
NeuStar, Inc.
 
 
 
 
 
Date:
October 29, 2015
 
By:
 
/s/ Paul S. Lalljie
 
 
 
Paul S. Lalljie
 
 
 
Chief Financial Officer
 
 
 
(Principal Financial and Accounting Officer and Duly Authorized Officer)


36

EXHIBIT INDEX
 
Exhibit No.
 
Description
(2.1)
 
Asset Purchase Agreement, dated as of September 9, 2015, by and among NeuStar, Inc. and Transaction Network Services, Inc., incorporated herein by reference to exhibit 2.1 to our Current Report on Form 8-K, filed September 9, 2015.
 
 
 
3.1.1
 
Certificate of Amendment of Restated Certificate of Incorporation of Neustar, Inc.
 
 
 
3.1.2
 
Third Restated Certificate of Incorporation of Neustar, Inc.
 
 
3.2
 
Amended and Restated Bylaws of Neustar, Inc.
 
 
 
31.1
 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
31.2
 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
101.INS
 
XBRL Instance Document
 
 
101.SCH
 
XBRL Taxonomy Extension Schema
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation
 
 
101.DEF
 
XBRL Taxonomy Extension Definition
 
 
101.LAB
 
XBRL Taxonomy Extension Label
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation


37


Exhibit 3.1.1
CERTIFICATE OF AMENDMENT
OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
NEUSTAR, INC.

(a Delaware corporation)

Neustar, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”) does herby certify:
FIRST: The Board of Directors of the Corporation adopted a resolution setting forth a proposed amendment (the “Amendment”) to the Restated Certificate of Incorporation of the Corporation (the “Charter”), declaring said amendment to be advisable and calling for consideration thereof by the stockholders of the Corporation (the “Stockholders”).
SECOND:  Article VI, Section B of the Charter is hereby amended in its entirety by the Amendment as follows:
“Subject to the other provisions of this paragraph, the directors, other than directors that may be elected separately by one or more series of preferred stock, shall be and are divided into three classes, with directors elected for terms expiring at the third annual meeting of stockholders following their election. Subject to the rights of the holders of any series of preferred stock then outstanding, beginning with the annual meeting of stockholders held in 2017, directors shall be elected annually by the stockholders entitled to vote thereon for terms expiring at the next succeeding annual meeting of stockholders; provided however, that any director elected or appointed prior to the annual meeting of stockholders held in 2017 shall serve for the term to which such director has been elected or appointed. The term for each director elected at the 2013 annual meeting of stockholders shall expire at the 2016 annual meeting of stockholders; the term for each director elected at the 2014 annual meeting of stockholders shall expire at the 2017 annual meeting of stockholders; the term for each director elected at the 2015 annual meeting of stockholders shall expire at the 2018 annual meeting of stockholders; and the term of each director elected at the 2016 annual meeting of stockholders shall expire at the 2019 annual meeting of stockholders. The division of directors into classes shall terminate at the 2019 annual meeting of stockholders. Directors shall hold office until their respective successors are elected and qualified, subject to prior death, resignation, retirement, disqualification or removal from office. Subject to the rights of the holders of any series of preferred stock then outstanding, (i) any vacancies in the Board of Directors for any reason, and any directorships resulting from any increase in the number of directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum; (ii) any director elected to fill a newly created directorship that results from an increase in the number of directors shall be elected for a term expiring at the annual meeting of stockholders at which the term of the class to which such director has been elected expires or, following the termination of the division of directors into three classes, for a term expiring at the next succeeding annual meeting of stockholders following such director’s appointment as a director; and (iii) any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. Subject to the rights of the holders of any series of preferred stock then outstanding, directors serving in a class of directors elected for a term expiring at the third annual meeting of stockholders following




the election of such class may be removed only for cause and all other directors may be removed either for or without cause. Elections of directors need not be by written ballot.”
THIRD: The Amendment was duly adopted and approved in accordance with the provisions of Section 242 of the DGCL.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed this 28th day of October, 2015.

 
 
 
 
 
 
 
 
 
NEUSTAR, INC.
 
 
 
 
 
 
 
 
By:
 
/s/ Leonard J. Kennedy
 
 
 
Name: Leonard J. Kennedy
 
 
 
Title: Senior Vice President and General Counsel
                    







Exhibit 3.1.2
THIRD RESTATED CERTIFICATE OF INCORPORATION
OF
NEUSTAR, INC.
(a Delaware corporation) 
        NEUSTAR, INC., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of Delaware, hereby certifies as follows:
1.    The name of the corporation is NeuStar, Inc. NeuStar, Inc. was originally incorporated under the name "CIS ACQUISITION CORPORATION," and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on December 8, 1998.
2.    The Restated Certificate of Incorporation of this corporation was filed with the Secretary of State of the State of Delaware on June 28, 2005 and was subsequently amended by a Certificate of Amendment filed with the Secretary of State of the State of Delaware on October 28, 2015 (such Restated Certificate, as amended, the “Restated Certificate of Incorporation”).
3.    Pursuant to Section 245 of the General Corporation Law of the State of Delaware, this Third Restated Certificate of Incorporation restates and integrates, but does not further amend, the provisions of the Restated Certificate of Incorporation of this corporation.
4.    The text of the Restated Certificate of Incorporation as heretofore amended or supplemented is hereby restated in its entirety as follows:

ARTICLE I
NAME OF CORPORATION 
The name of this corporation (the "Corporation") is:
NeuStar, Inc.
ARTICLE II
REGISTERED OFFICE 
        The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle, zip code 19801. The name of the Corporation's registered agent at such address is The Corporation Trust Company.
ARTICLE III
PURPOSE 
        The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "Delaware Code").
ARTICLE IV
AUTHORIZED CAPITAL STOCK 
        A.    General.    The total authorized capital stock of the Corporation shall be: four hundred million (400,000,000) shares, consisting of three classes:
        1.     two hundred million (200,000,000) shares of Class A Common Stock, $0.001 par value per share (the "Class A Common Stock");

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        2.     one hundred million (100,000,000) shares of Class B Common Stock, $0.001 par value per share (the "Class B Common Stock" and, together with the Class A Common Stock, the "Common Stock"); and
        3.     one hundred million (100,000,000) shares of preferred stock, $0.001 par value per share, as may be issued from time to time, in one or more series, to be determined by the Board of Directors, each of said series to be distinctly designated (such shares, the "Preferred Stock").
        Upon this Certificate becoming effective, each share of common stock that is then outstanding shall be reclassified into 1.40 shares of Class B Common Stock. No certificate or scrip representing fractional shares of Class B Common Stock shall be issued in connection with such reclassification, and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder of the Corporation. Upon delivery of stock certificates in connection with such reclassification, each stockholder who would otherwise have been entitled to receive a fraction of a share of Class B Common Stock (after taking into account all stock certificates delivered by such stockholder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of Class B Common Stock multiplied by the purchase price of a share of Class A Common Stock offered to the public in the Corporation's initial public offering.
        B.    Common Stock.    The relative powers, preferences and rights of, and the qualifications, limitations and restrictions granted to and imposed upon, the Class A Common Stock and Class B Common Stock are as follows:
        1.    Dividends.    Whenever a dividend is paid to the holders of one class of Common Stock, the Corporation also shall pay an equal dividend to the holders of the other class of Common Stock; provided, however, that if a distribution of additional shares of Common Stock is to be paid to holders of Common Stock, such distribution shall be for an equal amount of shares, and holders of Class A Common Stock will be paid additional shares of Class A Common Stock and holders of Class B Common Stock will be paid additional shares of Class B Common Stock. Dividends shall be payable only as and when declared by the Board of Directors.
        2.    Reclassification.    Unless otherwise approved by the holders of a majority of each class of Common Stock voting separately, the Corporation shall not subdivide or combine one class of its Common Stock without subdividing or combining the other class of Common Stock, on an equal per share basis, and shall not reclassify one class of its Common Stock, unless the shares of each class are reclassified into identical securities.
        3.    Voting.    Except as required by law or as otherwise provided in this Restated Certificate of Incorporation, all holders of Common Stock shall vote together as a single class, and each holder of Common Stock shall be entitled to one vote per share of Class A Common Stock and one vote per share of Class B Common Stock; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock). The number of authorized shares of any class of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation, irrespective of Section 242(b)(2) of the Delaware General Corporation Law, without a separate class vote of the holders of such class.

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        4.    Liquidation and Mergers.    Unless otherwise approved by the holders of a majority of each class of Common Stock voting separately, the holders of Class A Common Stock and the holders of Class B Common Stock shall share equally, on a share for share basis, on any distribution of the Corporation's assets upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation, and shall have be entitled to receive the same consideration, on a share for share basis, in the event of any merger or consolidation in which shares of Common Stock of the Corporation are converted into cash, securities or other property.
        5.    Conversion.    
        a.    Voluntary Conversion.    Each holder of record of Class B Common Stock may, at any time or from time to time, in such holder's sole discretion and at such holder's option, convert any or all of such holder's shares of Class B Common Stock into fully paid and non-assessable Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock surrendered for conversion. Any such conversion may be effected by any holder of Class B Common Stock surrendering such holder's certificate or certificates for the Class B Common Stock to be converted, duly endorsed, at the office of the Corporation or any transfer agent for the Class B Common Stock, together with a written notice to the Corporation at such office that such holder elects to convert all or a specified number of shares of Class B Common Stock to be issued. If so required by the Corporation, any certificate for shares surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder of such shares or the duly authorized representative of such holder. Promptly thereafter, the Corporation shall issue and deliver to such holder or such holder's nominee or nominees, a certificate or certificates for the number of shares of Class A Common Stock to which such holder shall be entitled as herein provided. Such conversion shall be deemed to have been made at the close of business on the date of receipt by the Corporation or any such transfer agent of the documentation required to be delivered by the holder of such Class B Common Stock, and the person or persons entitled to receive the Class A Common Stock issuable on such conversion shall be treated for all purposes as the record holder or holders of such Class A Common Stock on that date.
        b.    Retirement of Class B Common Stock.    No additional shares of Class B Common Stock shall be issued or disposed of by the Corporation after the date hereof, except pursuant to a stock split or stock dividend or pursuant to the terms of any convertible security issued prior to the reclassification of the Corporation's Common Stock into Class B Common Stock pursuant to this Restated Certificate of Incorporation. Upon conversion of Class B Common Stock into Class A Common Stock, the Class B Common Stock so converted shall be retired and shall not be reissued.
        c.    Restriction on Transfer and Ownership of Shares.    The restrictions set forth in Article IV, Section D of the Corporation's Certificate of Incorporation ("Restriction on Transfer and Ownership of Shares") shall apply to all shares of capital stock of the Corporation except that, to the extent that Delaware law would prohibit the enforcement of such restrictions on the shares of Class B Common Stock issued upon reclassification of the Corporation's common stock effected pursuant to this Restated Certificate of Incorporation, such restrictions shall not apply to such shares. The Corporation is hereby authorized to place any required legend or make any other required notations in its books and records to reflect such restrictions.

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        d.    Tax Matters.    The issuance of certificates for shares of Class A Common Stock issuable upon the conversion of Class B Common Stock shall be made without charge to the converting holder for any tax imposed on the Corporation in respect of the issue thereof. The Corporation shall not, however, be required to pay any tax which may be payable with respect to any transfer involved in the issue and delivery of any certificate in a name other than that of the holder of the shares being converted, and the Corporation shall not be required to issue or deliver any such certificate unless and until the person requesting the issue thereof shall have paid to the Corporation the amount of such tax or has established to the satisfaction of the Corporation that such tax has been paid.
        C.    Preferred Stock.    The Board of Directors is authorized, subject to limitations prescribed by law and the provisions of this Article IV, to provide for the issuance of the shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers (including voting powers), preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.
        D.    Restriction on Transfer and Ownership of Shares.    
        1.    Definitions.    For the purpose of this Article IV, Section D, the following terms shall have the following meanings. Unless explicitly noted otherwise, any cross-reference to a "Section" within any of the sections of this Article IV, Section D shall be deemed to refer to other sections within this Article IV, Section D. The terms used in this Article IV, Section D shall have the meanings set forth below:
        "Aggregate Stock Ownership Limit" shall mean the number of shares of Capital Stock that would entitle a stockholder to nine and nine tenths percent (9.9%) of the aggregate voting power with respect to the election of directors or other matters submitted to the stockholders generally for their approval.
        "Beneficial Ownership" shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee). The terms "Beneficial Owner" and "Beneficially Own" shall have the correlative meanings. A Person shall be deemed the Beneficial Owner of and shall be deemed to Beneficially Own:
        a.     any securities that such Person beneficially owns, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Rule 13d-3 promulgated under the Exchange Act, in each case as in effect on the date hereof;
        b.     any securities that such Person has the right to vote, alone or in concert with others, pursuant to any agreement, arrangement or understanding; provided, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any security if the agreement, arrangement or understanding to vote such security (A) arises solely from a revocable proxy given to such Person in response to a public proxy solicitation made pursuant to and in accordance with the applicable rules and regulations promulgated under the Exchange Act, and (B) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report);
        c.     any securities that are beneficially owned, directly or indirectly, by any other Person with which such Person has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (other than voting pursuant to a revocable proxy as described in the proviso to clause b of this definition of "Beneficial Owner") or disposing of any securities of the Company.

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        "Capital Stock" shall mean all classes or series of capital stock of the Corporation, including without limitation Common Stock and Preferred Stock.
        "Divestiture Shares" means those shares of Capital Stock (rounded to the nearest whole share) that a Person is required to sell in order to comply with the stock ownership restrictions set forth in Section 3.a; provided, that if such Person holds more than one class of Capital Stock, Divestiture Shares must be of the same class as those shares acquired by such Person in the Transfer that triggered Section 3.b.
        "Excepted Holder" shall mean any stockholder of the Corporation for whom, to the extent consistent with the FCC Neutrality Requirements, an Excepted Holder Limit is created by the Corporation's Certificate of Incorporation, as amended from time to time, or by the Board of Directors pursuant to Section 3.h.
        "Excepted Holder Limit" shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board of Directors pursuant to Section 3.h and subject to adjustment pursuant to Section 3.k, the stock ownership limit applicable to such Excepted Holder as established by the Board of Directors pursuant to Section 3.h, which shall be consistent with the FCC Neutrality Requirements.
        "Excess Shares" means the number of shares Beneficially Owned by a Person in excess of the Aggregate Stock Ownership Limit.
        "FCC" means the Federal Communications Commission.
        "FCC Neutrality Requirements" means the neutrality requirements to which the Corporation is subject under the applicable laws, regulations, rules and orders of the FCC.
        "Initial Date" shall mean the closing date of the Initial Public Offering.
        "Initial Public Offering" shall mean the initial public offering of shares of the Corporation's Capital Stock pursuant to an effective registration statement under the Securities Act (other than a Form S-8 or successor form) covering the offer and sale of such shares, including an offering comprised of shares held solely by the Corporation's stockholders.
        "Market Price" on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such Capital Stock on such date. The "Closing Price" on any date shall mean the last reported sale price for such Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Capital Stock, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if such Capital Stock is not listed or admitted to trading on the NYSE, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Capital Stock is listed or admitted to trading or, if such Capital Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the NASDAQ or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such Capital Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Capital Stock selected by the Board of Directors of the Corporation or, in the event that no trading price is available for such Capital Stock, the fair market value of the Capital Stock, as determined in good faith by the Board of Directors of the Corporation.

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        "NASDAQ" means the National Association of Securities Dealers, Inc. Automated Quotation System.
        "NYSE" shall mean the New York Stock Exchange.
        "Person" shall mean an individual, corporation, partnership, estate, trust, association, joint stock company or other entity and also includes a "group" as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934.
        "Post-IPO TSP Stock Ownership Limit" shall mean the number of shares of Capital Stock that would entitle a stockholder to five percent (5.0%) of the aggregate voting power with respect to the election of directors or other matters submitted to the stockholders generally for their approval.
        "Prohibited Owner" shall mean any Person who Beneficially Owns or purports to Beneficially Own shares of Capital Stock which results or would result in a violation of the provisions of Section 3.a; provided, however, that no party to the Voting Trust Agreement or the Stockholders Agreement will be considered to be a "Prohibited Owner" as a result of being a party to either or both of the Voting Trust Agreement and the Stockholders Agreement. For purposes of this Article IV, Section D, the Corporation may enforce the provisions set forth herein directly against (a) the record owner of the shares of Capital Stock that are held on behalf of a Person whose Beneficial Ownership or purported Beneficial Ownership results or would result in a violation of the provisions of Section 3.a, (b) any other holder with dispositive power over such shares, including any bank, broker or other securities intermediary who holds such shares on behalf of such Person; or (c) if applicable, any Person who holds or purports to hold the right to vote the shares of Capital Stock, whether by virtue of a proxy, voting agreement or otherwise.
        "Restriction Termination Date" shall mean the first day after the Initial Date on which the Board of Directors determines that compliance with the restrictions and limitations on Beneficial Ownership and Transfers of shares of Capital Stock set forth herein is no longer required in order for the Corporation to comply with the FCC Neutrality Requirements.
        "Status Change" shall mean, with respect to any Person, any event, occurrence, transaction or other circumstance which results in such Person becoming a TSP or TSP Affiliate (whether due to an action taken by such Person or otherwise).
        "Stockholders Agreement" shall mean the Stockholders Agreement between the Corporation and certain of its stockholders, of even date herewith, as amended from time to time, including any successor agreement, if applicable.
        "Transfer" shall mean any issuance, acquisition, sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire or increase its percentage Beneficial Ownership of Capital Stock, including (i) any acquisition or disposition of any securities or rights convertible into or exchangeable for Capital Stock or any interest in Capital Stock or any exercise of any such conversion or exchange right, including an acquisition of such securities by the Corporation (ii) transfers of interests in other entities that result in changes in Beneficial Ownership of Capital Stock; in each case, whether voluntary or involuntary, whether owned of record or Beneficially Owned, and whether by operation of law or otherwise, and (iii) entering into a voting agreement or voting trust (other than the Voting Trust or the Stockholders Agreement). The terms "Transferring" and "Transferred" shall have the correlative meanings.
        "TSP" or "TSP Affiliate" means any of the following: (i) a telecommunications service provider, as that term is defined in 47 C.F.R. § 52.12(a)(1)(i) or successor regulations; (ii) an affiliate of a telecommunications service provider, as defined in 47 C.F.R. § 52.12(a)(1)(i) or

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successor regulations; and (iii) any Person deemed to be a TSP or TSP Affiliate by virtue of Section 3.e.
        "Voting Trust" shall mean the voting trust governed by the Amended and Restated Trust Agreement, dated September 24, 2004 (as amended from time to time, including any successor agreement if applicable, the "Voting Trust Agreement").
        "Voting Trustee" shall mean, collectively, the trustees for the Voting Trust appointed in accordance with its terms (including, if applicable, any successor trustees), and if the context requires, each such trustee individually.
        2.    Private Company Restrictions.    From the effective date of this provision until the earlier of (i) the Initial Date, and (ii) the Restriction Termination Date, the following restrictions on ownership and transfer of Capital Stock shall apply:
        a.    No Issuance to TSPs or TSP Affiliates:    The Corporation shall not issue shares of Capital Stock to any Person who is a TSP or TSP Affiliate without the written approval or consent of the FCC; provided, however, that in determining whether a Person is a TSP or TSP Affiliate, the Corporation shall be entitled to rely on representations, warranties, covenants and undertakings from such Person.
        b.    Basic Restriction.    No Person may Beneficially Own shares of Capital Stock in excess of the Aggregate Stock Ownership Limit (whether by virtue of a Transfer of shares of Capital Stock or otherwise), unless such Person's Excess Shares are Transferred to the Voting Trust.
        c.    Transfer in Voting Trust.    If any Transfer of shares of Capital Stock occurs which, if effective, would result in any Person Beneficially Owning shares of Capital Stock in excess of the Aggregate Stock Ownership Limit, then:
(i) such Person's Excess Shares shall be automatically Transferred to the Voting Trust in exchange for voting trust certificates; and 

(ii) such Person shall submit such number of shares of Capital Stock to the Voting Trust for registration in the name of the Voting Trust.
        d.    Notice.    Any Person who acquires or intends to acquire Beneficial Ownership of shares of Capital Stock that will cause such Person's Beneficial Ownership to exceed the Aggregate Stock Ownership Limit shall immediately give written notice to the Corporation of such event, or in the case of such a proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer on the Corporation.
        e.    Enforcement.    The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Section 2.
        f.    Non-Waiver.    No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.
        g.    Ambiguity.    In the case of an ambiguity in the application of any of the provisions of this Section 2, or any definition contained in Section 1, the Board of Directors shall have the power to determine the application of the provisions of this Section 2 or any such definition with respect to any situation based on the facts reasonably

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believed in good faith by it. In the event Section 2 requires an action by the Board of Directors and the Restated Certificate of Incorporation fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 1, 2 or 3.
        h.    Legend.    Each certificate for shares of Capital Stock shall bear a legend that states that there are certain restrictions on transfer of the Corporation's stock, about which the Corporation will furnish a full statement to any stockholder on request and without charge.
        i.    Status of Shares Held by the Voting Trustee.    
(i) Shares of Capital Stock held by the Voting Trustee shall continue to be issued and outstanding shares of Capital Stock of the Corporation. The Beneficial Owner shall have the power to dispose of the Excess Shares, and the rights to any dividends or other distributions in respect of the Excess Shares.

(ii) The Voting Trustee shall have all voting rights with respect to shares of Capital Stock held in the Voting Trust, subject to the terms and conditions set forth in the Voting Trust Agreement. Any dividend or other distribution paid to a Voting Trustee shall be paid with respect to such shares of Capital Stock held by the Voting Trustee to the applicable Beneficial Owner promptly following receipt by the Voting Trustee. Subject to Delaware law, effective as of the date that the shares of Capital Stock have been transferred to the Voting Trustee, the Voting Trustee shall have the authority: (A) to rescind as void any vote cast by a Beneficial Owner prior to the discovery by the Corporation that the shares of Capital Stock have been transferred to the Voting Trustee; and (B) to recast such vote in accordance with the terms and conditions of the Voting Trust Agreement; provided, however, that if the Corporation has already taken irreversible corporate action, then the Voting Trustee shall not have the authority to rescind and recast such vote.
        j.    Severability.    If any term or provision specified in this Section 2 is held by a court of competent jurisdiction to be in violation of any applicable law or public policy, and if such court should declare such term or provision to be illegal, invalid, unlawful, void, voidable or unenforceable as written, then such provision shall be given full force and effect to the fullest possible extent that it is legal, valid and enforceable, and the remainder of the terms and provisions herein shall be construed as if such illegal, invalid, unlawful, void, voidable or unenforceable term or provision were not contained herein.
        3.    Public Company Restrictions.    From the Initial Date until the Restriction Termination Date, the following restrictions on ownership and transfer of Capital Stock shall apply:
        a.    Basic Restrictions.    (i) No Person who is a TSP or TSP Affiliate, other than an Excepted Holder, shall Beneficially Own shares of Capital Stock equal to, or in excess of, the Post-IPO TSP Stock Ownership Limit, and (ii) no Excepted Holder shall Beneficially Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder.
        b.    Required Divestiture.    
(i) If (A) any Person experiences a Status Change that results in a violation of Section 3.a; or (B) any Transfer of shares of Capital Stock (whether or not such Transfer is the result of a transaction entered into through the facilities of the

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NASDAQ, NYSE or any other national securities exchange or automated inter-dealer quotation system) occurs which, if effective, would result in any Person becoming a Prohibited Owner, then (I) within five (5) business days after the Corporation has delivered written notice to such Person that it is a Prohibited Owner, such Person shall sell his, her or its Divestiture Shares; provided, that if the Corporation's notice indicates that the Corporation exercises its right under Section 3.b(ii) hereof, such Person shall sell such shares to the Corporation or its designee in accordance with the terms and conditions of Section 3(b)(ii); provided, further, that if the Corporation does not exercise its right under Section 3.b(ii), such Person shall only sell such Divestiture Shares to a third party whose ownership of the shares will not violate the ownership limitations set forth in Section 3.a; and (II) within five (5) business days after the sale discussed in Section 3.b(i) is consummated, such Person shall deliver written notice of such sale to the Corporation.

(ii) Upon the occurrence of the Status Change or the consummation of the Transfer that results in a violation of the ownership limitations set forth in Section 3.a, as the case may be, the Prohibited Owner shall be deemed to have offered his, her or its Divestiture Shares (free of any liens, or any voting restrictions or proxies) for sale to the Corporation, or its designee, at a price per share equal to the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer until the Prohibited Owner has notified the Corporation that the Divestiture Shares have been sold in accordance with Section 3.b(i).
        c.    Other Remedies for Breach.    If the Board of Directors, any duly authorized committee thereof (or, if permitted by the DGCL, any other Person designated by the Board of Directors or any duly authorized committee thereof) shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 3.a or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Capital Stock in violation of Section 3.a (whether or not such violation is intended), the Board of Directors or a committee thereof or other designees if permitted by the DGCL shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, refusing to register or otherwise give effect to such Transfer on the books of the Corporation, disregarding any vote of such shares of Capital Stock in accordance with Section 3.j, or instituting proceedings to enjoin such Transfer, vote or other event. Nothing in this Section 3 shall restrict the Corporation's authority, at its election, to purchase Divestiture Shares from a Prohibited Owner pursuant to Section 3.b(ii); provided, however, that to the extent that such purchase by the Corporation causes any Person' Beneficial Ownership to equal or exceed the Post-IPO TSP Stock Ownership Limit, such Person will be subject to the notice and certification requirements in Section 3.e; provided, further, however, that to the extent that such purchase by the Corporation causes any Person to become a Prohibited Owner due to the increase in such Person's percentage Beneficial Ownership, such Person will be subject to all the restrictions set forth herein, including the required divestiture provisions set forth in Section 3.b and the restrictions on voting Divestiture Shares set forth in Section 3.j.
        d.    Notice of Restricted Transfer.    Any Person who acquires, or attempts or intends to acquire, Beneficial Ownership of shares of Capital Stock that will or may violate

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Section 3.a shall immediately give written notice to the Corporation of such event, or in the case of such a proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall provide to the Corporation such other information as the Corporation may request relating to the Transfer or Transferee.
        e.    Owners Required To Provide Information.    From the Initial Date until the Restriction Termination Date:
(i) Every Beneficial Owner of shares equal to or in excess of the Post-IPO TSP Stock Ownership Limit, within five (5) business days after the Transfer that caused such Beneficial Owner's stock ownership to equal or exceed the Post-IPO TSP Stock Ownership Limit, shall give written notice to the Corporation certifying (A) the name and address of such owner, (B) the number of shares of Capital Stock Beneficially Owned; (C) a description of the manner in which such shares are held; and (D) that such Beneficial Owner is not a TSP or a TSP Affiliate. In addition, each such Beneficial Owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such Beneficial Ownership on the Corporation. In the event that such Beneficial Owner experiences a Status Change, such Beneficial Owner shall, within 5 business days of such Status Change, give written notice thereof to the Corporation (and such Beneficial Owner shall be subject to all restrictions to which a TSP or TSP Affiliate is subject, including without limitation Section 3.b and 3.c, effective as of the date of such Status Change).

(ii) At its discretion, the Board shall be entitled to treat any Person who fails to supply the written certification contemplated by Section 3.e(i) as a TSP or TSP Affiliate, and such Person shall then be treated as a TSP or TSP Affiliate hereunder, including being subject to all restrictions to which a TSP or TSP Affiliate is subject, including without limitation Section 3.b and 3.c. 

(iii) Each Person who is a Beneficial Owner of Capital Stock and each Person (including the stockholder of record) who is holding Capital Stock Beneficially Owned by another Person shall provide to the Corporation such information as the Corporation may reasonably request, in good faith, in order to ensure compliance with the restrictions on ownership and transfer set forth herein.
        f.    Remedies Not Limited.    Nothing contained in this Section 3 shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders, including any action to comply with the FCC Neutrality Requirements.
        g.    Ambiguity.    In the case of an ambiguity in the application of any of the provisions of this Section 3, or any definition contained in Section 1, the Board of Directors shall have the power to determine the application of the provisions of this Section 3 or any such definition with respect to any situation based on the facts reasonably believed in good faith by it. In the event Section 3 requires an action by the Board of Directors and the Restated Certificate of Incorporation fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 1, 2 or 3.
        h.    Exceptions.    

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(i) To the extent consistent with the FCC Neutrality Requirements, the Board of Directors, in its sole discretion, may exempt (prospectively or retroactively) a Person from the Post-IPO TSP Stock Ownership Limit, and may establish or increase an Excepted Holder Limit for such Person if the Board of Directors obtains such representations, covenants and undertakings from such Person, as well as any necessary approvals or other consents from any governmental authority (including without limitation the FCC) as the Board of Directors may deem necessary or appropriate in order to conclude that granting the exemption and/or establishing or increasing the Excepted Holder Limit, as the case may be, will not cause the Corporation to violate any of the FCC Neutrality Requirements. 

(ii) Prior to granting any exception pursuant to Section 3.h(i), the Board of Directors may require notice to or, if applicable, a ruling or approval from the FCC, or an opinion of counsel, in any case in form and substance satisfactory to the Board of Directors in its sole discretion. Notwithstanding the giving of such notice, or the receipt of any ruling or opinion, the Board of Directors may impose such conditions or restrictions as it deems appropriate in connection with granting such exception. The Board of Directors may terminate or provide for the automatic termination of the Excepted Holder Limit for any Person in the event that such Person fails to comply with such conditions or restrictions as are established by the Board of Directors pursuant to this Section 3.h(ii). 

(iii) Notwithstanding anything herein to the contrary, an underwriter or placement agent that participates in a public offering or a private placement of Capital Stock (or securities convertible into or exchangeable for Capital Stock) may Beneficially Own shares of Capital Stock (or securities convertible into or exchangeable for Capital Stock) in excess of the Post-IPO TSP Stock Ownership Limit (regardless of whether such underwriter or placement agent is a TSP or TSP Affiliate), but only to the extent necessary to facilitate such public offering or private placement and provided that the restrictions contained in Section 3.a will not be violated following the distribution by such underwriter or placement agent of such shares of Capital Stock.
        i.    Legend.    Each certificate for shares of Capital Stock shall bear substantially the following legend: "The shares represented by this certificate are subject to restrictions on ownership and transfer set forth in Article IV of the Corporation's Restated Certificate of Incorporation. In addition to certain further restrictions and except as expressly provided in the Corporation's Restated Certificate of Incorporation, no TSP or TSP Affiliate may Beneficially Own shares of the Corporation's Capital Stock equal to, or in excess of, five percent (5.0%) of the voting power of the Corporation, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable). Any Person who Beneficially Owns or attempts to Beneficially Own shares of Capital Stock which causes or will cause a Person to Beneficially Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the Corporation. If any of the restrictions on transfer or ownership are violated, the holder of the shares of Capital Stock represented hereby will be required to sell excess shares immediately either to the Corporation or its designee (at the Corporation's election) or to another Person whose Beneficial Ownership of such shares will not violate such restrictions on transfer or ownership. All capitalized terms in this legend have the meanings defined in the Corporation's Restated Certificate of Incorporation, as the same may be amended from time to time, a copy of which, including

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the restrictions on transfer and ownership, will be furnished to each holder of Capital Stock of the Corporation on request and without charge. Requests for such a copy may be directed to the Secretary of the Corporation at its principal office."
        j.    Prohibited Owner's Rights With Respect To Divestiture Shares.    
(i) General.    Divestiture Shares shall continue to be issued and outstanding shares of Capital Stock of the Corporation. 

(ii) No Voting Rights Relating to Divestiture Shares.    Subject to Delaware law, effective as of the date of the Transfer that triggered the application of Section 3.b, the Prohibited Holder shall not be entitled to vote any Divestiture Shares on any matters presented to the Corporation's stockholders for their approval and the Corporation shall disregard any vote cast by a Prohibited Owner in respect of Divestiture Shares; provided, however, that until such time as the Corporation receives notice that a Transfer, Status Change or other event has occurred that resulted in a Person Beneficially Owning shares of Capital Stock in violation of Section 3.a, the Corporation shall, subject to Delaware law, be entitled to rely on its share transfer and other stockholder records for purposes of preparing lists of stockholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of stockholders. 

(iii) Dividends and Sale Proceeds.    The Prohibited Owner shall have the right to receive dividends, if any, and the proceeds from the sale of such Divestiture Shares.
        k.    Change in Post-IPO TSP Stock Ownership Limit.    To the extent consistent with the FCC Neutrality Requirements, the Board of Directors may from time to time increase or decrease the Post-IPO TSP Stock Ownership Limit; provided, however, that stockholders shall receive notice of any such change, and a certificate of any such change shall be maintained and made available to any stockholder upon request; provided; further, that a decreased Post-IPO TSP Stock Ownership Limit will not be effective for any Person whose percentage ownership of Capital Stock is in excess of such decreased Post-IPO TSP Stock Ownership Limit until such time as such Person's percentage of Capital Stock equals or falls below the decreased Post-IPO TSP Stock Ownership Limit, but any further acquisition of Capital Stock in excess of the decreased Post-IPO TSP Stock Ownership Limit of Capital Stock will be in violation of the Post-IPO TSP Stock Ownership Limit.
        l.    NYSE or NASDAQ Transactions.    Nothing in this Section 3 shall preclude the settlement of any transaction entered into through the facilities of NASDAQ, NYSE or any other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Section 3 and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Section 3.
        m.    Enforcement.    The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Section 3.
        n.    Non-Waiver.    No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.
        o.    Severability.    If any term or provision specified in this Section 3 is held by a court of competent jurisdiction to be in violation of any applicable law or public policy,

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and if such court should declare such term or provision to be illegal, invalid, unlawful, void, voidable or unenforceable as written, then this Section 3 shall be deemed to include such provision to the fullest possible extent that it is legal, valid and enforceable, and the remainder of the terms and provisions herein shall be construed as if such illegal, invalid, unlawful, void, voidable or unenforceable term or provision were not contained herein.
ARTICLE V
BOARD POWER REGARDING BYLAWS 
        In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind the bylaws of the Corporation.
ARTICLE VI
ELECTION OF DIRECTORS 
        A.    Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, the number of directors constituting the entire Board of Directors of the Corporation shall be not less than three nor more than fifteen, as fixed from time to time by vote of a majority of the entire Board of Directors; provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office; provided, further, that the number of directors constituting the entire Board of Directors shall be seven until otherwise fixed by a majority of the entire Board of Directors.
        B.    Subject to the other provisions of this paragraph, the directors, other than directors that may be elected separately by one or more series of preferred stock, shall be and are divided into three classes, with directors elected for terms expiring at the third annual meeting of stockholders following their election. Subject to the rights of the holders of any series of preferred stock then outstanding, beginning with the annual meeting of stockholders held in 2017, directors shall be elected annually by the stockholders entitled to vote thereon for terms expiring at the next succeeding annual meeting of stockholders; provided however, that any director elected or appointed prior to the annual meeting of stockholders held in 2017 shall serve for the term to which such director has been elected or appointed. The term for each director elected at the 2013 annual meeting of stockholders shall expire at the 2016 annual meeting of stockholders; the term for each director elected at the 2014 annual meeting of stockholders shall expire at the 2017 annual meeting of stockholders; the term for each director elected at the 2015 annual meeting of stockholders shall expire at the 2018 annual meeting of stockholders; and the term of each director elected at the 2016 annual meeting of stockholders shall expire at the 2019 annual meeting of stockholders. The division of directors into classes shall terminate at the 2019 annual meeting of stockholders. Directors shall hold office until their respective successors are elected and qualified, subject to prior death, resignation, retirement, disqualification or removal from office. Subject to the rights of the holders of any series of preferred stock then outstanding, (i) any vacancies in the Board of Directors for any reason, and any directorships resulting from any increase in the number of directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum; (ii) any director elected to fill a newly created directorship that results from an increase in the number of directors shall be elected for a term expiring at the annual meeting of stockholders at which the term of the class to which such director has been elected expires or, following the termination of the division of directors into three classes, for a term expiring at the next succeeding annual meeting of stockholders following such director’s appointment as a director; and (iii) any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. Subject to the rights of the holders of any series of preferred stock then outstanding, directors serving in a class of directors elected for a term expiring at the third annual meeting of stockholders

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following the election of such class may be removed only for cause and all other directors may be removed either for or without cause. Elections of directors need not be by written ballot.
ARTICLE VII
LIABILITY 
        No director of the Corporation shall be personally liable to the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except for liability (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the Delaware Code or any amendment thereto or successor provision thereof, or (d) for any transaction from which the director derived an improper personal benefit. If the Delaware Code is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the Delaware Code, as so amended. Any repeal or modification of this provision shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification.
ARTICLE VIII
INDEMNIFICATION 
        A.    Right to Indemnification.    
        1.     Subject to the limitations set forth in Section A.2 of this Article VIII, each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any Proceeding, by reason of the fact that he or she is or was a director or an executive officer of the Corporation or is or was a director or executive officer of the Corporation serving at the request of the Corporation as a director, officer, trustee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (such person, an "Indemnitee"), whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, trustee or agent or in any other capacity while serving as a director, officer, trustee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith.
        2.     Notwithstanding any other provision in this Article VIII, the Corporation shall not be obligated under this Article VIII to make any indemnity in connection with any claim made against an Indemnitee:
        a.     to the extent expressly prohibited by applicable law;
        b.     for which payment has actually been made to Indemnitee under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, bylaw or agreement of the Corporation or any other company or organization on whose board Indemnitee serves at the request of the Corporation, except with respect to any deductible (or the equivalent) from or excess beyond the amount payable or paid under any insurance policy or other indemnity provision;
        c.     for an accounting of profits made (i) from the purchase and sale (or sale and purchase) by the Indemnitee of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of

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state statutory law or common law, or (ii) from any transactions prohibited under Section 306(a) of the Sarbanes-Oxley Act of 2002; or
        d.     in connection with any Proceeding (or any part of any Proceeding), including claims and counterclaims, initiated or brought voluntarily by the Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by such Indemnitee against the Corporation or its directors, officers, employees or other Indemnitees in their capacity as such, unless (i) the Proceeding is brought pursuant to Section C of this Article VIII with respect to the enforcement of rights to indemnification under this Article, (ii) the Board of Directors authorized the Proceeding (or such part of any Proceeding) prior to its initiation or (iii) the Corporation elects to provide the indemnification, in its sole discretion, pursuant to the powers vested in the Corporation under applicable law.
        B.    Right to Advancement of Expenses.    In addition to the right to indemnification conferred in Section B of this Article VIII, an Indemnitee shall also have the right to be paid by the Corporation the expenses (including attorney's fees) incurred in defending any such Proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an Indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such Indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such Indemnitee is not entitled to be indemnified for such expenses under this Section B or otherwise. Notwithstanding the foregoing, the Corporation shall not be required to advance any expenses to an Indemnitee in the event and to the extent that such Indemnitee has entered a plea of guilty in the applicable criminal Proceeding.
        C.    Right of Indemnitee to Bring Suit.    If a claim under Section A or B of this Article VIII is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (a) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that the Indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law, and (b) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that

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the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VIII or otherwise shall be on the Corporation.
        D.    Non-Exclusivity of Rights.    The rights to indemnification and to the advancement of expenses conferred in this Article VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation's Certificate of Incorporation, Bylaws, agreement, vote of stockholders or directors or otherwise.
        E.    Insurance.    The Corporation may maintain insurance, at its expense, to protect itself and/or any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.
        F.    Indemnification of Employees and Agents of the Corporation.    The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation (or any of its direct or indirect subsidiaries or affiliates) who does not qualify for indemnification as an Indemnitee under this Article VIII to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and executive officers of the Corporation.
        G.    Nature of Rights.    The rights conferred upon Indemnitees in this Article VIII shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the Indemnitee's heirs, executors and administrators. Any amendment, alteration or repeal of this Article VIII that adversely affects any right of an Indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.
        H.    Certain Definitions.    For purposes of this Article VIII, the following terms shall be defined as follows:
        1.     "executive officer" shall mean (a) any officer of the Corporation with a position of senior vice president (or, if applicable, executive vice president) or higher; or (b) any other officer of the Corporation who is expressly designated by a resolution of the Board of Directors as an "executive officer" for purposes of this Article (regardless of whether such person is designated as an executive officer for other purposes). If an individual is designated an "executive officer" by virtue of clause (a) or (b) of this Section H.1, and the Board of Directors subsequently ceases to designate such individual as an "executive officer," such individual shall continue to be treated as an "executive officer" with respect to any Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place a period when such individual was an "executive officer" pursuant to clause (a) or (b) of this Section H.1.
        2.     "Proceeding" includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative or legislative hearing or any other actual, threatened or completed proceeding, including any and all appeals, whether brought in the right of the Corporation or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was involved, or becomes or may become involved, as a party or otherwise, for which indemnification is not prohibited under Section A.2 of this Article VIII, including, but not limited to, actions, suits or proceedings in which Indemnitee may be or may have been involved as a party or otherwise, by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Corporation, or is or was serving, at the request of the Corporation, as a director, officer, employee or agent or fiduciary of any other entity, including,

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but not limited to, another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity, whether or not Indemnitee is serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Article VIII.
        I.    Constituent Corporations.    For the purposes of this Article VIII, references to the "Corporation" include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation, so that any person who is or was a director or officer, employee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity.
ARTICLE IX
CORPORATE POWER 
        The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE X
NO STOCKHOLDER ACTION BY WRITTEN CONSENT 
        No action required to be taken or which may be taken at any meeting of the stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing without a meeting to the taking of any action is denied.
ARTICLE XI
CREDITOR COMPROMISE OR ARRANGEMENT 
        Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.


        

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IN WITNESS WHEREOF, the undersigned has executed this Third Restated Certificate of Incorporation, which has been duly adopted in accordance with Section 245 of the Delaware General Corporation Law, on October 28, 2015.

 
 
 
 
 
 
 
 
 
NEUSTAR, INC.
 
 
 
 
 
 
 
 
By:
 
/s/ Lisa A. Hook
 
 
 
Name: Lisa A. Hook
 
 
 
Title: President and Chief Executive Officer


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Exhibit 3.2


AMENDED AND RESTATED BYLAWS
OF
NEUSTAR, INC.
Last amended October 28, 2015
ARTICLE I
OFFICES
The address of the registered office of NeuStar, Inc. (the “Corporation”) in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle. The name of the Corporation’s registered agent at such address is The Corporation Trust Company. The Corporation may also have such other offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time designate or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting.
(a) An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, if any, on such date, and at such time as may be determined by the Board of Directors. The Board of Directors may postpone, reschedule or cancel any annual meeting of the stockholders previously scheduled by the Board of Directors.
(b) Nominations of persons for election to the Board of Directors and the proposal of business other than nominations to be transacted by the stockholders may be made at an annual meeting of stockholders only (i) pursuant to the Corporation’s notice with respect to such meeting (or any supplement thereto), (ii) by or at the direction of the Board of Directors (or a committee thereof) or (iii) by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in the following paragraph is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this section. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to make nominations or propose other business (other than a proposal included in the Corporation’s proxy statement pursuant to and in compliance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at an annual meeting of stockholders.
(c) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the foregoing paragraph (i) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, (ii) such business must be a proper matter for stockholder action under the Delaware General Corporation Law, (iii) in the case of proposed business other than nominations, if the stockholder, or the beneficial owner (within the meaning of Section 13(d) of the Exchange Act) on whose behalf any such business is proposed, has provided the Corporation with a Solicitation Notice, as that term is defined in subclause (D)(v) of this paragraph, such stockholder or beneficial owner must have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required by law to carry any such proposal, and must have

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included in such proxy materials the Solicitation Notice, and (iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the stockholder or beneficial owner proposing such business must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this section. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation by the close of business (as that term is defined in paragraph (g) of this Section 1) not less than 90 or more than 120 days prior to the first anniversary (the “Anniversary”) of the date of the preceding year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the Anniversary, or if no Annual Meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement (as that term is defined in paragraph (g) of this Section 1) of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth (A) as to each person whom the stockholder proposes to nominate for election or reelection as a director (i) all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors in an election contest, or otherwise would be required, in each case pursuant to Regulation 14A under the Exchange Act, and (ii) such person’s written consent to being named in the proxy statement as nominee and to serve as a director if elected; (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of such business, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these Bylaws, the language of the proposed amendment), the reasons for conducting such business at the meeting and any substantial interest (within the meaning of Item 5 of Schedule 14A under the Exchange Act) in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made or the business is proposed (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the Corporation that are owned of record by such stockholder and such beneficial owner as of the date of the notice, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of the class and number of shares of the Corporation owned of record by the stockholder and such beneficial owner as of the record date for the meeting (except as otherwise provided in paragraph (d) of this Section 1), and (iii) a representation that the stockholder intends to appear in person or by proxy at the meeting to propose such nomination or business; (D) as to the stockholder giving the notice or, if the notice is given on behalf of a beneficial owner on whose behalf the nomination is made or the business is proposed, as to such beneficial owner, and if such stockholder or beneficial owner is an entity, as to each director, executive, managing member or control person of such entity (any such individual or control person, a “Control Person”): (i) the class and number of shares of the Corporation which are beneficially owned (as that term is defined in paragraph (g) of this Section 1) by such stockholder or beneficial owner and by any Control Person as of the date of the notice, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of the class and number of shares of the Corporation beneficially owned by such stockholder or beneficial owner and by any Control Person as of the record date for the meeting (except as otherwise provided in paragraph (d) of this Section 1), (ii) a description of any agreement, arrangement or understanding with respect to the nomination or other business between or among such stockholder, beneficial owner or Control Person and any other person, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder or beneficial owner) and a representation that the

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stockholder will notify the Corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting (except as otherwise provided in paragraph (d) of this Section 1), (iii) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder, beneficial owner or Control Person, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class of shares of the Corporation, or maintain, increase or decrease the voting power of the stockholder, beneficial owner or Control Person with respect to shares of the Corporation, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting (except as otherwise provided in paragraph (d) of this Section 1), (iv) a representation whether either such stockholder or beneficial owner intends to engage in a solicitation with respect to the nomination or business and, if so, the name of each participant (as defined in Item 4 of Schedule 14A under the Exchange Act) in such solicitation, and (v) in the case of proposed business other than nominations, a representation whether either such stockholder or beneficial owner intends or is part of a group that intends to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required by law to carry the proposal (an affirmative statement of such intent, a “Solicitation Notice”). The Corporation may require any proposed nominee for director to furnish such other information as the Corporation may reasonably request to determine the eligibility of such proposed nominee to serve as a director of the Corporation, including such information as would be necessary for the Corporation to determine whether the proposed nominee can be considered an independent director.
(d) Notwithstanding anything in paragraph (c) of this Section 1 to the contrary, if the record date for determining the stockholders entitled to vote at any meeting of stockholders is different from the record date for determining the stockholders entitled to notice of the meeting, a stockholder’s notice required by paragraph (c) of this Section 1 shall set forth a representation that the stockholder will notify the Corporation in writing within five business days after the record date for determining the stockholders entitled to vote at the meeting, or by the opening of business on the date of the meeting (whichever is earlier), of the information required under subclauses (C)(ii) and (D)(i) through (iii) of paragraph (c) of this Section 1 and such information when provided to the Corporation shall be current as of the record date for determining the stockholders entitled to vote at the meeting.

(e) The foregoing notice requirements of this Section 1 shall not apply to a stockholder if the stockholder has notified the Corporation of his or her intention to present a stockholder proposal at a meeting of stockholders only pursuant to and in compliance with Rule 14a-8 under the Exchange Act and such proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such meeting.
(f) Only persons nominated in accordance with the procedures set forth in this Section 1 shall be eligible to be elected at any meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this section. Except as otherwise required by law, the Chairman of the Board shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws, including whether a stockholder or beneficial owner solicited (or is part of a group which solicited) or did not solicit, as the case may be, proxies in in accordance with any Solicitation Notice delivered pursuant to subclause (D)(v) of paragraph (c) of this Section 1. If any proposed nomination or business was not made or proposed in compliance with these Bylaws, the chairman of the

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meeting shall have the power and duty to declare that such defectively proposed business or nomination shall not be presented for stockholder action at the meeting and shall be disregarded. Notwithstanding the foregoing provisions of this Section 1, unless otherwise required by law, if the stockholder does not provide the information required under subclauses (C)(ii) and (D)(i) through (iii) of paragraph (c) of this Section 1 to the Corporation within the time frames specified herein or if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting of stockholders to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation prior to the making of such nomination or proposal at such meeting by such stockholder stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders.
(g) For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and “close of business” shall mean 6:00 p.m. local time at the principal executive offices of the Corporation on any calendar day, whether or not the day is a business day. For purposes of subclause (D)(i) of paragraph (c) of this Section 1, shares shall be treated as “beneficially owned” by a person if the person beneficially owns such shares, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder or has or shares pursuant to any agreement, arrangement or understanding (whether or not in writing) (i) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both), (ii) the right to vote such shares, alone or in concert with others and/or (iii) investment power with respect to such shares, including the power to dispose of, or to direct the disposition of, such shares.

Section 2. Special Meetings.
(a) Special meetings of the stockholders, other than those required by law, may be called at any time by the Chairman of the Board, the Chief Executive Officer or the President or by the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board. For purposes of these Bylaws, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. The Board of Directors may postpone, reschedule or cancel any previously scheduled special meeting.
(b) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors (or any committee thereof) or (ii) by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this paragraph is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in Section 1 of this Article II. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder’s notice required by paragraph (c) of Section 1 of this Article II shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public

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announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
Section 3. Notice of Meetings. Notice of the place, if any, date, and time of all meetings of the stockholders, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for determining the stockholders entitled to notice of the meeting), and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given, not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, except as otherwise provided herein or required by law.
When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting in accordance with paragraph (a) of Section 3 of Article VI of these Bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date for notice of such adjourned meeting. At any adjourned or recessed meeting, any business may be transacted which might have been transacted at the original meeting.
Section 4. Quorum. At any meeting of the stockholders, the holders of a majority of all of the shares of the stock outstanding and entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law, the Corporation’s Certificate of Incorporation or these Bylaws. Where a separate vote by a class or classes or series is required, a majority of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting, or the holders of a majority of the shares entitled to vote thereon who are present, in person or by proxy, may adjourn the meeting to another place, if any, date, or time, or recess the meeting until a quorum is present or represented. Subject to applicable law, if a quorum initially is present at any meeting of stockholders, the stockholders may continue to transact business until adjournment or recess, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, but if a quorum is not present at least initially, no business other than adjournment or recess may be transacted.
Section 5. Organization. Such person as the Board of Directors may have designated or, in the absence of such a person, the Chairman of the Board or, in his or her absence, the Chief Executive Officer or President of the Corporation or, in his or her absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chairman of the meeting appoints.

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Section 6. Conduct of Business. The Board of Directors, and the chairman of any meeting of stockholders, each shall have the authority to adopt and enforce such rules or regulations for the conduct of meetings of stockholders and the safety of those in attendance as they shall deem necessary, appropriate or convenient. Subject to such rules and regulations, if any, the chairman of the meeting shall further have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing (i) an agenda or order of business for the meeting, (ii) rules and procedures for maintaining order at the meeting and the safety of those present, (iii) limitations on participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies and such other persons as the chairman of the meeting shall permit, (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof, (v) limitations on the time allotted for consideration of each agenda item and for questions and comments by participants, (vi) regulation of the manner of voting, including the opening and closing of the polls for balloting and matters which are to be voted on by ballot, and (vii) procedures (if any) requiring attendees to provide the Corporation advance notice of their intent to attend the meeting. The chairman of the meeting shall have the power, for any reason, from time to time, to adjourn any meeting of stockholders to another place, if any, date and time, or recess any meeting of stockholders, without notice other than announcement at the meeting except as provided in Section 3 of this Article II. The chairman of the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power and duty to declare that a nomination or other business was not properly brought before the meeting if the facts warrant (including if a determination is made, pursuant to Section 1(f) of this Article II, that a nomination or other business was not made or proposed, as the case may be, in accordance with Section 1 of this Article II), and if such chairman should so declare, such nomination shall be disregarded or such other business shall not be transacted. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.
Section 7. Proxies and Voting. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary of the Corporation. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the Corporation.
The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman of the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the

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duties of inspector with strict impartiality and according to the best of his or her ability. Every vote taken by ballots shall be counted by a duly appointed inspector or inspectors.
At all meetings of stockholders for the election of directors at which a quorum is present, each director up for election shall be elected by the vote of a majority of the votes cast; provided, however, that if as of the date that is five business days in advance of the date the Corporation files its definitive proxy statement with the Securities and Exchange Commission (regardless of whether such proxy statement is subsequently revised or supplemented) the number of nominees exceeds the number of directors to be elected, the directors (not exceeding the authorized number of directors as fixed by the Board of Directors in accordance with the Corporation’s Certificate of Incorporation) shall be elected by a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. For purposes of the foregoing sentence, “a majority of the votes cast” means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director. All other matters, unless otherwise required by law, the Corporation’s Certificate of Incorporation or these Bylaws, shall be determined by the vote of a majority of the votes cast, meaning that the number of shares voted “for” a matter must exceed the number of shares voted “against” that matter.
Section 8. Stock List. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder for a period of at least 10 days prior to the meeting in the manner provided by law.
The stock list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to examine the list and to vote at the meeting and the number of shares held by each of them.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Number of Directors; Qualifications. Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, the number of directors constituting the Whole Board shall be not less than three nor more than fifteen, as fixed from time to time by vote of a majority of the Whole Board; provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office. In the event that the service by any individual on the Corporation’s Board of Directors would cause the Corporation to violate any of the neutrality requirements to which the Corporation is subject under the applicable laws, regulations, rules and orders of the Federal Communications Commission, such individual shall not qualify to serve as a director of the Corporation and, if applicable, such individual shall cease to be a member of the Board of Directors immediately.
Section 2. Newly Created Directorships and Vacancies. Subject to the rights of the holders of any series of preferred stock then outstanding, any vacancies in the Board of Directors for any reason, and any directorships resulting from any increase in the number of directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum. Any director so chosen shall hold office until expiration of the term for which the director is elected and until such director’s successors shall be elected and qualified.
Section 3. Regular Meetings. Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required.


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Section 4. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer, the President or by a majority of the Whole Board and shall be held at such place, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director by whom it is not waived by mailing written notice not less than five days before the meeting or by telephone or by electronic transmission of the same not less than 24 hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.
Section 5. Quorum. At any meeting of the Board of Directors, a majority of the total number of the Whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.
Section 6. Participation in Meetings By Conference Telephone. Members of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.
Section 7. Conduct of Business. At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board of Directors may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or required by law, the Corporation’s Certificate of Incorporation or these Bylaws. Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Any person (whether or not then a director) may provide, whether through instruction to an agent or otherwise, that a consent will be effective at a future time (including a time determined upon the happening of an event), no later than 60 days after such instruction is given or such provision is made and such consent shall be deemed to have been given at such effective time so long as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its becoming effective.
Section 8. Compensation of Directors. The Board of Directors shall have the authority to fix the compensation of the directors. The directors may be paid such compensation, if any, for their service on the Board of Directors and its committees, and such reimbursement of expenses, as may be fixed or determined by the Board of Directors from time to time.
Section 9. Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors. The Board of Directors may exercise all of the powers and duties conferred by law except as provided by the Certificate of Incorporation or these Bylaws.

Section 10. Chairman of the Board. The Board of Directors may appoint one of its members as Chairman of the Board. The Chairman of the Board shall preside at meetings of directors and shall perform all other duties and have all powers which are commonly incident to the position of Chairman or which are delegated to him or her by the Board of Directors. If the Chairman of the Board is not present at a meeting of the Board of Directors, another director chosen by the Board of Directors shall preside. The Chairman of the Board shall hold such position until his or her successor is appointed or until his or her earlier resignation or removal. The Chairman of the Board may be removed from such position at any time, with or without cause, by the Board of Directors.

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Section 11. Resignations. Any director may resign from the Board of Directors at any time upon notice given in writing or by electronic transmission. The resignation shall take effect upon delivery to the Chairman of the Board, Chief Executive Officer, President or Secretary, unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. The acceptance of a resignation shall not be necessary to make it effective.
Section 12. Emergency Bylaws. In the event of any emergency, disaster or catastrophe, as referred to in Section 110 of the Delaware General Corporation Law, or other similar emergency condition, as a result of which a quorum of the Board of Directors or a standing committee of the Board of Directors cannot readily be convened for action, then the director or directors in attendance at the meeting shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of themselves or other directors to membership on any standing or temporary committees of the Board of Directors as they shall deem necessary and appropriate.
ARTICLE IV
COMMITTEES
Section 1. Committees of the Board of Directors. The Board of Directors may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.
Section 2. Conduct of Business. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law, the Corporation’s Certificate of Incorporation or these Bylaws. Adequate provision shall be made for notice to members of all meetings; one-third of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
ARTICLE V
OFFICERS
Section 1. Generally. The officers of the Corporation may consist of a Chief Executive Officer, a President, a Chief Operating Officer, one or more Vice Presidents, a Chief Financial Officer, a Secretary, one or more Assistant Secretaries, or Treasurer, and such other officers as may from time to time be appointed by the Board of Directors, each to have such authority, functions and duties as set forth in these Bylaws or as determined by the Board of Directors. In the event there are two or more Vice Presidents, then one or more may be designated as Executive Vice President, Senior Vice President, or other similar or dissimilar title. At the time of the election of officers, the directors may by resolution determine the order of their rank. Officers shall be elected by the Board of Directors, which shall consider that subject at

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its first meeting after every annual meeting of stockholders. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person, and an officer may serve concurrently as a member of the Board of Directors and as Chairman of the Board. The salaries of officers elected by the Board of Directors shall be fixed from time to time by the Board of Directors or by such officers as may be designated by resolution of the Board of Directors.
Section 2. Chief Executive Officer. Subject to the provisions of these Bylaws and to the direction of the Board of Directors, the Chief Executive Officer shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief executive or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all contracts and other instruments of the Corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation.
Section 3. President. The President shall perform all duties and have all powers which are commonly incident to the office of president or which are delegated to him or her by the Board of Directors. Subject to the direction of the Board of Directors and the Chief Executive Officer, the President shall have power to sign all stock certificates, contracts and other instruments of the Corporation which are authorized.
Section 4. Chief Operating Officer. The Chief Operating Officer shall have general responsibility for the management and control of the operations of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief operating officer or which are delegated to him or her by the Board of Directors. Subject to the direction of the Board of Directors and the Chief Executive Officer, the Chief Operating Officer shall have power to sign all contracts and other instruments of the Corporation which are authorized and shall have general supervision of all of the other officers (other than the Chief Executive Officer and the President), employees and agents of the Corporation.
Section 5. Vice President. Each Vice President shall have such powers and duties as may be delegated to him or her by the Board of Directors, the Chief Executive Officer or his or her direct or indirect supervisors.
Section 6. Chief Financial Officer. The Chief Financial Officer shall have the general care and custody of the funds and securities of the Corporation, and shall deposit or cause to be deposited all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected by the Corporation from time to time. He or she shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever. He or she shall exercise general supervision over expenditures and disbursements made by officers, agents and employees of the Corporation and the preparation of such records and reports in connection therewith as may be necessary or desirable. He or she shall, in general, perform all other duties incident to the office of Chief Financial Officer and such other duties as from time to time may be assigned to him or her by the Board of Directors or the Chief Executive Officer.
Section 7. Secretary. The Secretary shall attend all sessions of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for the standing committees when required by the Board of Directors. He or she shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors the Chief Executive Officer or these Bylaws. He or she shall keep in safe custody the seal of the Corporation, and when authorized by the Board of Directors, affix the same to any instrument requiring it,

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and when so affixed it shall be attested by his or her signature or by the signature of an Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature.
Section 8. Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, or if there be no such determination, the Assistant Secretary designated by the Board of Directors or the Chief Executive Officer, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors the Chief Executive Officer or the Chief Executive Officer’s direct or indirect supervisors may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall have charge of all funds of the Corporation and exercise such powers and perform such duties as may be incident to the office of a treasurer, including those customarily performed by persons occupying such office. A Treasurer shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as may be assigned from time to time by the Board of Directors, Chief Executive Officer, Chief Financial Officer or their direct or indirect supervisors.
Section 10. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.
Section 11. Removal. Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.
Section 12. Action with Respect to Securities of Other Entities. Unless otherwise directed by the Board of Directors, the Chief Executive Officer or any officer of the Corporation authorized by the Chief Executive Officer shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other entity in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other entity.
Section 13. Corporate Funds and Checks. The funds of the Corporation shall be kept in such depositories as shall be selected by the Corporation from time to time. All checks or other orders for the payment of money shall be signed by the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer or such other person or agent as may from time to time be authorized.
ARTICLE VI
STOCK
Section 1. Certificates of Stock. Shares of stock of the Corporation shall be represented by certificates; provided, however, that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Each holder of stock represented by certificates shall be entitled to a certificate signed by, or in the name of the Corporation by, the Chairman of the Board, President or a Vice President, and by the Secretary or an Assistant Secretary or the Treasurer, representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be by facsimile. The Board of Directors shall have the power to appoint one or more transfer agents and/or registrars for the transfer or registration of certificates of stock or uncertificated shares of any class, and may require stock certificates to be countersigned or registered by one or more of such transfer agents and/or registrars.

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Section 2. Transfers of Stock. Transfers of stock shall be made only upon the books of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article VI of these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate or uncertificated shares are issued therefor. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.
Section 3. Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may, except as otherwise required by law, fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights in respect of any change, conversion or exchange of stock or for any other purpose, the Board of Directors may fix a record date, which record date shall not be more than 60 days before such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.
Section 4. Lost, Stolen or Destroyed Certificates. In the event of the loss, theft or destruction of any certificate of stock, another certificate or uncertificated shares may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.

Section 5. Regulations. The issue, transfer, conversion and registration of shares of stock shall be governed by such regulations as the Board of Directors may establish.
Section 6. List of Stockholders Entitled to Vote. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 219 of the Delaware General Corporation Law or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders, except as otherwise provided by law.
Section 7. Dividends. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may at any regular or special meetings, declare dividends upon the stock of the Corporation

12



either (a) out of its surplus, as defined in and computed in accordance with Sections 154 and 244 of the Delaware General Corporation Law or (b) in case there shall be no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Before the declaration of any dividend, the Board of Directors may set apart, out of any funds of the Corporation available for dividends, such sum or sums as from time to time in their discretion may be deemed proper for working capital or as a reserve fund to meet contingencies or for such other purposes as shall be deemed conducive to the interests of the Corporation.
Section 8. Registered Stockholders. The Corporation may treat the registered owner of shares of stock of the Corporation as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner, and shall not be bound to recognize any equitable or other claims to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.
ARTICLE VII
NOTICES
Section 1. Notices. Notice to stockholders may be given personally, by mail, or by electronic transmission in accordance with Section 232 of the Delaware General Corporation Law. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Notice shall be deemed to have been given to all stockholders who share a post office or street or electronic mail address if notice is given in accordance with the “householding” rules set forth in Rule 14a-3(e) under the Exchange Act and Section 233 of the Delaware General Corporation Law. An affidavit of the Secretary or Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. Notice to the Corporation shall be deemed given when received by the Secretary of the Corporation.
Section 2. Waivers. A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness of notice.

ARTICLE VIII
MISCELLANEOUS
Section 1. Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
Section 2. Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Chief Financial Officer or by an Assistant Secretary.
Section 3. Reliance upon Books, Reports and Records. Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or

13



other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member or officer reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year. The fiscal year of the Corporation shall be as fixed by the Board of Directors.
Section 5. Time Periods. In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used (except as otherwise provided in these Bylaws), the day of the doing of the act shall be excluded, and the day of the event shall be included.
Section 6. Electronic Transmission. For purposes of these Bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
Section 7. Section Headings. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.
Section 8. Inconsistent Provisions; Changes in Delaware Law. If any provision of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the Delaware General Corporation Law or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect. If any of the provisions of the Delaware General Corporation Law referred to above are modified or superseded, the references to those provisions is to be interpreted to refer to the provisions as so modified or superseded.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall be authorized to indemnify and hold harmless each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any proceeding, by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was a director, officer, employee or agent of the Corporation serving at the request of the Corporation as a director, officer, trustee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, agent or trustee or in any other capacity while serving as a director, officer, employee, agent or trustee, and the Corporation may indemnify each such person to the fullest extent authorized by the Delaware General Corporation Law against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such person in connection with such proceeding.
ARTICLE X
AMENDMENTS
These Bylaws, or any of them, may be altered, amended or repealed, and new Bylaws may be made (i) by the Board of Directors, by the vote of a majority of the number of directors then in office as directors, acting at any meeting of the Board of Directors, or by written consent in accordance with Section 7 of Article III of these Bylaws, or (ii) by the stockholders, at any annual meeting of stockholders,

14



without previous notice, or at any special meeting of stockholders, provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of special meeting. Any Bylaws made or altered by the stockholders may be altered or repealed by either the Board of Directors or the stockholders.
ARTICLE XI
CONDUCT OF BUSINESS
In the conduct of its business and other corporate matters, the Corporation shall take such actions as are necessary to comply with the neutrality requirements to which the Corporation is subject under the applicable laws, regulations, rules and orders of the Federal Communications Commission. In the case of an ambiguity in the application of any of the provisions of this Article XI, the Board of Directors shall have the power to determine the application of the provisions of this Article XI with respect to any situation based on the facts reasonably believed in good faith by it. In the event Article XI requires an action by the Board of Directors and the Corporation’s Certificate of Incorporation and these Bylaws fail to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken.


15



Exhibit 31.1
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lisa A. Hook, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of NeuStar, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
 
October 29, 2015
 
/s/ Lisa A. Hook
 
 
 
 
 
Lisa A. Hook
 
 
President and Chief Executive Officer
 
 
(Principal Executive Officer)




Exhibit 31.2
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul S. Lalljie, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of NeuStar, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
 
October 29, 2015
 
/s/ Paul S. Lalljie
 
 
 
 
 
Paul S. Lalljie
 
 
Chief Financial Officer
 
 
(Principal Accounting Officer)




Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. 1350
Pursuant to 18 U.S.C. 1350, each of the undersigned certifies that, to the best of his/her knowledge:
1.
The quarterly report on Form 10-Q of NeuStar, Inc. for the quarter ended September 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
Information contained in such quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of NeuStar, Inc.
 
 
 
 
 
 
 
October 29, 2015
 
By:
 
/s/    Lisa A. Hook        
 
 
 
 
 
Lisa A. Hook
President and Chief Executive Officer
 
 
 
 
 
October 29, 2015
 
By:
 
/s/    Paul S. Lalljie        
 
 
 
 
 
Paul S. Lalljie
Chief Financial Officer
A signed original of this written statement has been provided to NeuStar, Inc. and will be retained by NeuStar, Inc. and furnished to the Securities and Exchange Commission or its staff upon request



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