NEUSTAR INC - FORM 10-Q - May 10, 2017

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EX-32.1 - EXHIBIT 32.1 - NEUSTAR INCexhibit321q12017.htm
EX-31.2 - EXHIBIT 31.2 - NEUSTAR INCexhibit312q12017.htm
EX-31.1 - EXHIBIT 31.1 - NEUSTAR INCexhibit311q12017.htm

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 March 31, 2017
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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth 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
 
¨
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          ¨
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 55,775,082 shares of Class A common stock, $0.001 par value, and 1,864 shares of Class B common stock, $0.001 par value, outstanding at May 8, 2017.


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 LINKBASE 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,
2016
 
March 31,
2017
 
 
 
(unaudited)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
45,773

 
$
47,048

Restricted cash
2,283

 
2,141

Accounts receivable, net of allowance for doubtful accounts of $6,572 and $7,743, respectively
207,595

 
188,930

Unbilled receivables
19,795

 
15,618

Prepaid expenses and other current assets
41,680

 
35,867

Deferred costs
11,469

 
10,909

Income taxes receivable
13,586

 
612

Total current assets
342,181

 
301,125

Property and equipment, net
145,821

 
149,363

Goodwill
1,168,982

 
1,172,792

Intangible assets, net
423,957

 
405,429

Other assets, long-term
17,771

 
16,670

Total assets
$
2,098,712

 
$
2,045,379

See accompanying notes.


4

NEUSTAR, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
 
 
December 31,
2016
 
March 31,
2017
 
 
 
(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY



Current liabilities:



Accounts payable
$
21,095


$
22,569

Accrued expenses
134,545


97,959

Deferred revenue
91,188


96,035

Notes payable
103,725


89,219

Capital lease obligations
1,457


470

Other liabilities
11,632


9,306

Total current liabilities
363,642


315,558

Deferred revenue, long-term
22,437


22,850

Notes payable, long-term
702,946


642,750

Deferred income tax liabilities, long-term
35,088


41,131

Other liabilities, long-term
53,298


53,257

Total liabilities
1,177,411


1,075,546

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, 2016 and March 31, 2017
—


—

Class A common stock, par value $0.001; 200,000,000 shares authorized; 82,136,230 and 83,548,071 shares issued; and 54,896,659 and 55,769,589 shares outstanding at December 31, 2016 and March 31, 2017, respectively
82


84

Class B common stock, par value $0.001; 100,000,000 shares authorized; 1,864 and 1,864 shares issued and outstanding at December 31, 2016 and March 31, 2017, respectively
—


—

Additional paid-in capital
771,450


789,597

Treasury stock, 27,239,571 and 27,778,482 shares at December 31, 2016 and March 31, 2017, respectively, at cost
(933,581
)

(951,550
)
Accumulated other comprehensive (loss) income
(1,785
)

1,124

Retained earnings
1,085,135


1,130,578

Total stockholders’ equity
921,301


969,833

Total liabilities and stockholders’ equity
$
2,098,712


$
2,045,379

See accompanying notes.

5

NEUSTAR, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 
Three Months Ended 
 March 31,
 
2016
 
2017
Revenue
$
287,298

 
$
293,186

Operating expense:
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
91,351

 
87,916

Sales and marketing
55,323

 
56,557

Research and development
7,549

 
6,672

General and administrative
27,518

 
28,360

Depreciation and amortization
38,482

 
34,927

Restructuring charges
2,664

 
27

Separation costs
—

 
1,789

 
222,887

 
216,248

Income from operations
64,411

 
76,938

Other (expense) income:
 
 
 
Interest and other expense
(17,111
)
 
(12,271
)
Interest income
174

 
72

Income before income taxes
47,474

 
64,739

Provision for income taxes
16,099

 
19,296

Net income
$
31,375

 
$
45,443

Net income per common share:
 
 
 
Basic
$
0.58

 
$
0.82

Diluted
$
0.57

 
$
0.80

Weighted average common shares outstanding:
 
 
 
Basic
53,953

 
55,311

Diluted
54,940

 
57,022

See accompanying notes.

6

NEUSTAR, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 
 
Three Months Ended 
 March 31,
 
2016
 
2017
Net income
$
31,375

 
$
45,443

Other comprehensive income, net of tax:
 
 
 
Available for sale investments, net of tax:
 
 
 
Change in net unrealized gains, net of tax
(57
)
 
55

Reclassification for gains included in net income, net of tax
—

 
(13
)
Net change in unrealized gains on investments, net of tax
(57
)
 
42

 
 
 
 
Foreign currency translation adjustment, net of tax
2,798

 
2,867

Other comprehensive income, net of tax
2,741

 
2,909

Comprehensive income
$
34,116

 
$
48,352

See accompanying notes.

7

NEUSTAR, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Three Months Ended 
 March 31,
 
2016
 
2017
Operating activities:
 
 
 
Net income
$
31,375

 
$
45,443

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
38,482

 
34,927

Stock-based compensation
9,876

 
9,469

Amortization of deferred financing costs and original issue discount on debt
4,545

 
3,177

Tax benefit from equity awards
(323
)
 
—

Deferred income taxes
10,020

 
3,860

Provision for doubtful accounts
1,800

 
1,800

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(23,716
)
 
16,857

Unbilled receivables
3,598

 
4,183

Prepaid expenses and other current assets
(8,179
)
 
6,549

Deferred costs
(854
)
 
784

Income taxes
4,520

 
12,974

Other assets
652

 
1,123

Other liabilities
1,257

 
(2,743
)
Accounts payable and accrued expenses
(44,308
)
 
(34,087
)
Deferred revenue
2,477

 
101

Net cash provided by operating activities
31,222

 
104,417

Investing activities:
 
 
 
Purchases of property and equipment
(9,870
)
 
(15,361
)
Net cash used in investing activities
(9,870
)
 
(15,361
)
Financing activities:
 
 
 
(Increase) decrease in restricted cash
(256
)
 
142

Payments under notes payable obligations
(26,881
)
 
(77,439
)
Principal repayments on capital lease obligations
(1,459
)
 
(987
)
Proceeds from issuance of stock
150

 
4,315

Tax benefit from equity awards
323

 
—

Repurchase of restricted stock awards and common stock
(12,469
)
 
(13,604
)
Net cash used in financing activities
(40,592
)
 
(87,573
)
Effect of foreign exchange rates on cash and cash equivalents
(13
)
 
(208
)
Net (decrease) increase in cash and cash equivalents
(19,253
)
 
1,275

Cash and cash equivalents at beginning of period
89,097

 
45,773

Cash and cash equivalents at end of period
$
69,844

 
$
47,048

See accompanying notes.

8
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017



1.
DESCRIPTION OF BUSINESS AND ORGANIZATION
NeuStar, Inc. (the Company or Neustar) helps clients grow and guard their business with the most complete understanding of how to connect people, places, and things using its authoritative OneIDTM system. As the leader in connection science, the Company uses its expertise in real-time addressing, authentication, and analytics to provide marketing, risk security, registry, and communications solutions to over 11,000 clients. The Company’s cloud-based platforms and differentiated data sets offer informative, real-time analytics, which enable clients to make actionable, data-driven decisions. The Company provides chief marketing officers a comprehensive suite of services to plan their media spend, identify and locate desired customers, invest effectively in marketing campaigns, deliver relevant offers and measure the performance of these activities. Security professionals use the Company’s solutions to maximize web performance and protect against malicious attacks. The Company enables the exchange of essential operating information across multiple carriers to provision and manage services, assisting clients with fast and accurate order processing and immediate routing of customer inquiries. The Company provides communications service providers in the United States critical infrastructure that enables the dynamic routing of calls and text messages.
On December 14, 2016, the Company entered into an Agreement and Plan of Merger (the Merger Agreement), with Aerial Topco, L.P. (the Parent), and Aerial Merger Sub, Inc., a subsidiary of Parent (Merger Sub), pursuant to which, subject to the satisfaction or waiver of the conditions therein, Merger Sub will merge with and into Neustar. As a result of the merger, the Company will become a wholly-owned subsidiary of Parent. Parent and Merger Sub were formed by Golden Gate Private Equity, Inc. and GIC Special Investments Pte Ltd. On March 14, 2017, the Company’s stockholders voted in favor of the adoption of the Merger Agreement. The merger, which is expected to close no later than the end of the third quarter of 2017, is subject to the receipt of required regulatory approvals from the Committee on Foreign Investment in the United States and the Federal Communications Commission as well as the satisfaction or waiver of other customary closing conditions.
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 three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the full fiscal year. The consolidated balance sheet as of December 31, 2016 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, 2016 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.
Reclassifications
Within the consolidated statement of comprehensive income for the three months ended March 31, 2016, the company reclassified $2.8 million from net change in unrealized gains on investments, net of tax to foreign currency translation adjustment, net of tax and reclassified $0.1 million from foreign currency translation adjustment, net of tax to net change in unrealized gains on investments, net of tax.

9
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


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 equivalents, accounts receivable, accounts payable and accrued expenses. The Company determines the fair value of its term loan facilities, the 2013 Term Facility (as defined in Note 4), the 2015 Incremental Term Facility (as defined in Note 4) and the Amended 2013 Term Facility (as defined in Note 4), using pricing service quotations as quoted by Bloomberg (Level 2). The Company believes the carrying value of its Amended 2013 Revolving Facility (as defined in Note 4) approximates the fair value of the debt as the term and interest rate approximates the market rate (Level 2). The Company determines the fair value of its Senior Notes using a secondary market price on the last trading day in each period as quoted by Bloomberg (Level 2).
The estimated fair values of the Company’s financial instruments are as follows (in thousands):
 
December 31, 2016
 
March 31, 2017
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
2013 Amended Term Facility (including current portion, net of discount)
$
437,815

 
$
439,480

 
$
411,363

 
$
411,884

Amended 2013 Revolving Facility
85,000

 
85,000

 
35,000

 
35,000

Senior Notes (including current portion)
300,000

 
305,733

 
300,000

 
308,250

Restricted Cash
As of December 31, 2016 and March 31, 2017, cash of $2.3 million and $2.1 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 - Adopted
In March 2016, the FASB issued Accounting Standards Update (ASU) 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The Company adopted the standard on January 1, 2017. On a prospective basis, the Company began recognizing excess tax benefits on stock compensation as income tax benefits on its consolidated statements of operations and within operating activities on the consolidated statements of cash flows. During the three months ended March 31, 2017, the Company recognized excess tax benefits of $2.8 million. The Company elected to continue to estimate the number of awards expected to be forfeited. Payments to satisfy income tax withholding obligations continue to be reported as a financing activity on the consolidated statements of cash flows. The Company’s adoption of this standard did not have a material impact on its consolidated financial statements.
Recent Accounting Pronouncements - Not Yet Effective
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 deferred the

10
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


effective dates of the standard by one year. 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). 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.
In preparation for the adoption of the new accounting standard on January 1, 2018, the Company reviewed a representative sample of its client contracts and is evaluating the provisions contained therein in light of the five-step model specified by the new guidance. That five-step model includes: (1) determination of whether a contract exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The Company is also evaluating the impact of the new standard on its current practices, such as accounting for sales commissions.  Under this new guidance, sales commission expenditures will be recorded as an asset and recognized as an operating expense over the period that the Company expects to recover the costs. Currently, the Company expenses sales commissions as incurred. The Company has not yet quantified the potential impact of this or other potential impacts of the new guidance.  The Company is also continuing to evaluate the approach that it will use when transitioning to this new guidance. 
In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires that long-term lease arrangements be recognized on the balance sheet. The standard is effective for interim and annual periods beginning after December 31, 2018, and early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard clarifies how certain cash receipts and cash payments should be classified on the statement of cash flows. The standard is effective for interim and annual reporting periods beginning after December 15, 2017, although early adoption is permitted. The Company currently intends to adopt this standard on January 1, 2018 and is currently evaluating the impact of adoption on its consolidated financial statements.
In February 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard simplifies the accounting for goodwill impairment by requiring impairment charges to be based on the first step in the current two-step impairment test under ASC 350. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
3.
GOODWILL
The change in the carrying amount of the Company’s goodwill from December 31, 2016 to March 31, 2017 is as follows (in thousands):
 
December 31,
2016
 
Foreign Currency Translation
 
March 31,
2017
Gross goodwill
$
1,262,584

 
$
3,810

 
$
1,266,394

Accumulated impairments
(93,602
)
 
—

 
(93,602
)
Net goodwill
$
1,168,982

 
$
3,810

 
$
1,172,792


11
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


4.
NOTES PAYABLE
Notes payable consist of the following (in thousands):
 
December 31,
2016
 
March 31,
2017
Amended 2013 Term Facility (net of discount)
$
437,815

 
$
411,363

Amended 2013 Term Facility deferred financing fees
(5,016
)
 
(4,218
)
Amended 2013 Revolving Facility
85,000

 
35,000

Amended 2013 Revolving Facility deferred financing fees
(916
)
 
(325
)
Senior Notes
300,000

 
300,000

Senior Notes deferred financing fees
(10,212
)
 
(9,851
)
Total
806,671

 
731,969

Less: current portion, net of discount
(103,725
)
 
(89,219
)
Long-term portion
$
702,946

 
$
642,750

Credit Facilities and Senior Notes
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). In addition, the Company closed an offering of $300 million aggregate principal amount of senior notes (Senior Notes).
On December 9, 2015, the Company amended the 2013 Credit Facilities to provide for (i) the permissibility of an incremental term facility, (ii) the addition of a senior secured leverage financial maintenance covenant; (iii) streamlined conditions for the incurrence of an incremental term facility to be used for a permitted acquisition; (iv) a required escrow and prepayment (such prepayment to be for the benefit of the incremental facility lenders) by the Company under certain specified circumstances; and (v) certain tax related changes favorable to the Company to the terms of the Credit Agreement and related security agreement.
On September 28, 2016, the Company entered into the third amendment to the 2013 Credit Facilities to (i) extend the maturity date of the 2013 Revolving Facility (the Amended 2013 Revolving Facility) to January 22, 2019, (ii) consolidate the remaining principal balance outstanding under the 2013 Term Facility and the 2015 Incremental Term Facility into a single term loan facility of $499 million and extend the maturity date of the consolidated term loans to January 22, 2019 (the Amended 2013 Term Facility, and together with the Amended 2013 Revolving Facility, the Amended 2013 Credit Facilities), (iii) set the annual amortization percentage of the Amended 2013 Term Facility at 22% through December 31, 2017 and 10% thereafter and (iv) lower the eurodollar rate margin and base rate margin for the Amended 2013 Term Facility to (a) if the Consolidated Leverage Ratio (as defined in the Credit Agreement) is less than 2 to 1 after March 1, 2017, 3% and 2%, respectively, and (b) if the Consolidated Leverage Ratio is 2 to 1 or greater, 3.25% and 2.25%, respectively.
The Company may voluntarily prepay the borrowings under the Amended 2013 Credit Facilities at any time in minimum amounts of $1 million or an integral multiple of $500,000 in excess thereof. The Amended 2013 Credit Facilities provide for mandatory prepayments with the net cash proceeds of certain debt issuances, insurance receipts, and dispositions. The Amended 2013 Credit Facilities also contain 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.
As of March 31, 2017, outstanding borrowings under the Amended 2013 Revolving Facility were $35.0 million and available borrowings under the same facility were $147.0 million, exclusive of outstanding letters of credit totaling $18.0 million.
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.

12
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


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.
Future Principal Payments
Future principal payments under the Amended 2013 Credit Facilities and the Senior Notes as of March 31, 2017, are as follows (in thousands):
2017
$
82,318

2018
49,889

2019
319,369

2020
—

2021
—

Thereafter
300,000

Total future principal payments
$
751,576

5.
STOCKHOLDERS’ EQUITY
As of March 31, 2017, a total of 6,358,400 shares were available for grant or award under the Company’s stock incentive plans and a total of 87,716 shares were available to be issued under the Company’s Employee Stock Purchase Plan.
Stock-based compensation expense recognized for the three months ended March 31, 2016 and 2017 was $9.9 million and $9.5 million, respectively. As of March 31, 2017, total unrecognized compensation expense was estimated at $47.0 million, which the Company expects to recognize over a weighted average period of approximately 1.3 years. Total unrecognized compensation expense as of March 31, 2017 is estimated based on outstanding non-vested stock options, 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, 2016
987,984

 
$
25.55

 
 
 
 
Granted
—

 
—

 
 
 
 
Exercised
(356,814
)
 
24.33

 
 
 
 
Forfeited
—

 
—

 
 
 
 
Outstanding at March 31, 2017
631,170

 
$
26.24

 
$
1.5

 
2.4
Exercisable at March 31, 2017
524,830

 
$
26.21

 
$
1.1

 
2.0
The aggregate intrinsic value of options exercised for the three months ended March 31, 2017 was $3.3 million.

13
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


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.
The following table summarizes the Company’s non-vested PVRSU activity for the three months ended March 31, 2017:
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Aggregate
Intrinsic
Value
(in millions)
Non-vested at December 31, 2016
1,166,939

 
$
23.25

 
 
Granted
512,569

 
33.25

 
 
Vested
(437,508
)
 
23.72

 
 
Forfeited
(288,091
)
 
24.25

 
 
Non-vested at March 31, 2017
953,909

 
$
28.11

 
$
31.6

The aggregate intrinsic value of PVRSUs vested during the three months ended March 31, 2017 was approximately $14.6 million. The Company repurchased 169,979 shares of common stock for an aggregate purchase price of $5.7 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 three months ended March 31, 2017:
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2016
2,226,948

 
$
27.13

 
 
Granted
45,750

 
33.15

 
 
Vested
(617,519
)
 
29.22

 
 
Forfeited
(37,435
)
 
25.02

 
 
Outstanding at March 31, 2017
1,617,744

 
$
26.55

 
$
53.6

The aggregate intrinsic value of restricted stock units vested during the three months ended March 31, 2017 was approximately $20.5 million. The Company repurchased 238,630 shares of common stock for an aggregate purchase price of $7.9 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.

14
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


6.
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 
 March 31,
 
2016
 
2017
Computation of basic net income per common share:
 
 
 
Net income
$
31,375

 
$
45,443

Weighted average common shares and participating securities outstanding – basic
53,953

 
55,311

Basic net income per common share
$
0.58

 
$
0.82

Computation of diluted net income per common share:
 
 
 
Weighted average common shares outstanding – basic
53,953

 
55,311

Effect of dilutive securities:
 
 
 
Stock-based awards
987

 
1,711

Weighted average common shares outstanding – diluted
54,940

 
57,022

Diluted net income per common share
$
0.57

 
$
0.80

Diluted net income per common share reflects the potential dilution of common stock equivalents such as options, to the extent the impact is dilutive. An aggregate of 1,900,569 and 94,408 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 March 31, 2016 and 2017, respectively.
7.
INTEREST AND OTHER EXPENSE
Interest and other expense consists of the following (in thousands):
 
Three Months Ended 
 March 31,
 
2016
 
2017
Interest and other expense:
 
 
 
Interest expense
$
16,566

 
$
11,646

Gain on asset disposals
—

 
(14
)
Foreign currency transaction loss
545

 
639

Total interest and other expense
$
17,111

 
$
12,271

8.
INCOME TAXES
The Company’s effective tax rate, including discrete tax benefits of $3.2 million, decreased to 29.8% for the three months ended March 31, 2017 from 33.9% for the three months ended March 31, 2016, primarily due to the adoption of ASU 2016-09 in the first quarter of 2017. As a result of the adoption of this standard, the Company recognizes excess tax benefits on stock compensation as a discrete item within income tax benefits on its consolidated statements of operations. Prior to the adoption of this standard, excess tax benefits were recognized in additional paid-in capital on the Company’s consolidated balance sheet.
As of December 31, 2016 and March 31, 2017, the Company had unrecognized tax benefits of $7.5 million and $7.8 million, respectively, of which $6.9 million and $7.2 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 March 31, 2016 and 2017, potential interest and penalties were insignificant. Interest and penalties are primarily

15
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


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 2010 through 2015 remain open to examination by the major taxing jurisdictions to which the Company is subject. During 2017, the IRS completed an examination of the 2012 federal income tax return of Neustar, Inc. and its subsidiaries. No adjustments were made as a result of the audit.
The Company anticipates that the amount of reasonably possible unrecognized tax benefits that could decrease over the next 12 months due to the expiration of certain statutes of limitations and settlement of tax audits is not material to the Company’s consolidated financial statements.
9.
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.
Enterprise-Wide Disclosures
Revenue by geographical areas is based on the billing addresses of the Company’s clients. Geographic area revenue and service revenue from external clients for the three months ended March 31, 2016 and 2017, and geographic area property and equipment as of December 31, 2016 and March 31, 2017 are as follows (in thousands):
 
Three Months Ended 
 March 31,
 
2016
 
2017
Revenue by geographical areas:
 
 
 
United States
$
264,692

 
$
269,786

International
22,606

 
23,400

Total revenue
$
287,298

 
$
293,186

 
 
 
 
Revenue by service:
 
 
 
Marketing Services
$
57,671

 
$
65,039

Security Services
48,647

 
46,875

Data Services
53,156

 
53,005

NPAC Services
127,824

 
128,267

Total revenue
$
287,298

 
$
293,186

 
December 31,
2016
 
March 31,
2017
Property and equipment, net
 
 
 
United States
$
143,560

 
$
147,453

Australia
1,378

 
1,057

Other
883

 
853

Total property and equipment, net
$
145,821

 
$
149,363


16
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


10.
SUPPLEMENTAL GUARANTOR INFORMATION
The following schedules present condensed consolidating financial information of the Company as of December 31, 2016 and March 31, 2017 and for the three months ended March 31, 2016 and 2017 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 consolidated financial statements. The guarantees, as outlined in Note 4, 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 MONTHS ENDED MARCH 31, 2016 AND 2017


CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2016
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
21,871

 
$
15,037

 
$
8,865

 
$
—

 
$
45,773

Restricted cash
1,260

 
1,023

 
—

 
—

 
2,283

Accounts receivable, net
100,686

 
102,565

 
4,344

 
—

 
207,595

Unbilled receivables
3,829

 
14,652

 
1,314

 
—

 
19,795

Prepaid expenses and other current assets
32,799

 
7,039

 
1,842

 
—

 
41,680

Deferred costs
2,232

 
5,964

 
3,273

 
—

 
11,469

Income taxes receivable
17,481

 
—

 
1,007

 
(4,902
)
 
13,586

Intercompany receivable
9,990

 
1,365

 
—

 
(11,355
)
 
—

Total current assets
190,148

 
147,645

 
20,645

 
(16,257
)
 
342,181

Property and equipment, net
133,759

 
9,636

 
2,426

 
—

 
145,821

Goodwill
94,153

 
968,116

 
106,713

 
—

 
1,168,982

Intangible assets, net
10,967

 
368,068

 
44,922

 
—

 
423,957

Net investments in subsidiaries
1,490,889

 
—

 
—

 
(1,490,889
)
 
—

Other assets, long-term
11,686

 
3,206

 
2,879

 
—

 
17,771

Total assets
$
1,931,602

 
$
1,496,671

 
$
177,585

 
$
(1,507,146
)
 
$
2,098,712

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
10,733

 
$
9,578

 
$
784

 
$
—

 
$
21,095

Accrued expenses
84,782

 
41,458

 
8,305

 
—

 
134,545

Income taxes payable
—

 
4,902

 
—

 
(4,902
)
 
—

Deferred revenue
24,503

 
48,753

 
17,932

 
—

 
91,188

Notes payable
103,725

 
6,849

 
3,141

 
(9,990
)
 
103,725

Capital lease obligations
1,457

 
—

 
—

 
—

 
1,457

Other liabilities
6,564

 
4,936

 
132

 
—

 
11,632

Intercompany payable
938

 
—

 
427

 
(1,365
)
 
—

Total current liabilities
232,702

 
116,476

 
30,721

 
(16,257
)
 
363,642

Deferred revenue, long-term
8,426

 
8,360

 
5,651

 
—

 
22,437

Notes payable, long-term
702,946

 
—

 
—

 
—

 
702,946

Deferred income tax liabilities, long-term
9,493

 
19,616

 
5,979

 
—

 
35,088

Other liabilities, long-term
41,411

 
5,313

 
6,574

 
—

 
53,298

Total liabilities
994,978

 
149,765

 
48,925

 
(16,257
)
 
1,177,411

Total stockholders’ equity
936,624

 
1,346,906

 
128,660

 
(1,490,889
)
 
921,301

Total liabilities and stockholders’ equity
$
1,931,602

 
$
1,496,671

 
$
177,585

 
$
(1,507,146
)
 
$
2,098,712


18
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2017
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
32,012

 
$
7,333

 
$
7,703

 
$
—

 
$
47,048

Restricted cash
1,260

 
881

 
—

 
—

 
2,141

Accounts receivable, net
104,585

 
78,639

 
5,706

 
—

 
188,930

Unbilled receivables
2,159

 
12,484

 
975

 
—

 
15,618

Prepaid expenses and other current assets
27,268

 
6,397

 
2,202

 
—

 
35,867

Deferred costs
2,327

 
4,923

 
3,659

 
—

 
10,909

Income taxes receivable
4,125

 
—

 
1,866

 
(5,379
)
 
612

Intercompany receivable
9,893

 
1,365

 
—

 
(11,258
)
 
—

Total current assets
183,629

 
112,022

 
22,111

 
(16,637
)
 
301,125

Property and equipment, net
138,540

 
8,799

 
2,024

 
—

 
149,363

Goodwill
94,153

 
968,116

 
110,523

 
—

 
1,172,792

Intangible assets, net
10,345

 
349,902

 
45,182

 
—

 
405,429

Net investments in subsidiaries
1,441,413

 
—

 
—

 
(1,441,413
)
 
—

Other assets, long-term
10,440

 
3,193

 
3,037

 
—

 
16,670

Total assets
$
1,878,520

 
$
1,442,032

 
$
182,877

 
$
(1,458,050
)
 
$
2,045,379

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
11,245

 
$
11,176

 
$
148

 
$
—

 
$
22,569

Accrued expenses
67,718

 
24,674

 
5,567

 
—

 
97,959

Deferred revenue
26,258

 
49,262

 
20,515

 
—

 
96,035

Notes payable
89,219

 
6,731

 
3,162

 
(9,893
)
 
89,219

Capital lease obligations
470

 
—

 
—

 
—

 
470

Income taxes payable
—

 
5,379

 
—

 
(5,379
)
 
—

Other liabilities
6,532

 
2,717

 
57

 
—

 
9,306

Intercompany payable
1,621

 
1,022

 
—

 
(2,643
)
 
—

Total current liabilities
203,063

 
100,961

 
29,449

 
(17,915
)
 
315,558

Deferred revenue, long-term
8,178

 
8,576

 
6,096

 
—

 
22,850

Notes payable, long-term
642,750

 
—

 
—

 
—

 
642,750

Deferred income tax liabilities, long-term
16,771

 
18,039

 
6,321

 
—

 
41,131

Other liabilities, long-term
41,122

 
5,117

 
7,018

 
—

 
53,257

Total liabilities
911,884

 
132,693

 
48,884

 
(17,915
)
 
1,075,546

Total stockholders’ equity
966,636

 
1,309,339

 
133,993

 
(1,440,135
)
 
969,833

Total liabilities and stockholders’ equity
$
1,878,520

 
$
1,442,032

 
$
182,877

 
$
(1,458,050
)
 
$
2,045,379



19
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2016
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
166,939

 
$
118,407

 
$
12,560

 
$
(10,608
)
 
$
287,298

Operating expense:
 
 
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
41,676

 
50,927

 
7,277

 
(8,529
)
 
91,351

Sales and marketing
30,813

 
22,535

 
3,179

 
(1,204
)
 
55,323

Research and development
5,471

 
1,623

 
455

 
—

 
7,549

General and administrative
22,334

 
5,872

 
187

 
(875
)
 
27,518

Depreciation and amortization
13,324

 
22,796

 
2,362

 
—

 
38,482

Restructuring charges
2,664

 
—

 
—

 
—

 
2,664

 
116,282

 
103,753

 
13,460

 
(10,608
)
 
222,887

Income from operations
50,657

 
14,654

 
(900
)
 
—

 
64,411

Other (expense) income:
 
 
 
 
 
 
 
 
 
Interest and other expense
(16,280
)
 
(154
)
 
(677
)
 
—

 
(17,111
)
Interest income
113

 
70

 
(9
)
 
—

 
174

Income (loss) before income taxes and equity income in consolidated subsidiaries
34,490

 
14,570

 
(1,586
)
 
—

 
47,474

Provision (benefit) for income taxes
11,611

 
5,212

 
(724
)
 
—

 
16,099

Income (loss) before equity income in consolidated subsidiaries
22,879

 
9,358

 
(862
)
 
—

 
31,375

Equity income in consolidated subsidiaries
8,496

 
147

 
—

 
(8,643
)
 
—

Net income (loss)
$
31,375

 
$
9,505

 
$
(862
)
 
$
(8,643
)
 
$
31,375

Comprehensive income
$
29,517

 
$
9,495

 
$
3,747

 
$
(8,643
)
 
$
34,116




20
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2017
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
170,623

 
$
121,686

 
$
14,146

 
$
(13,269
)
 
$
293,186

Operating expense:
 
 
 
 
 
 
 
 
 
Cost of revenue (excluding depreciation and amortization shown separately below)
42,911

 
50,783

 
5,414

 
(11,192
)
 
87,916

Sales and marketing
35,396

 
21,717

 
1,433

 
(1,989
)
 
56,557

Research and development
4,433

 
2,280

 
(41
)
 
—

 
6,672

General and administrative
26,282

 
2,507

 
(341
)
 
(88
)
 
28,360

Depreciation and amortization
13,516

 
19,146

 
2,265

 
—

 
34,927

Restructuring charges (recoveries)
36

 
(9
)
 
—

 
—

 
27

Separation costs
1,789

 
—

 
—

 
—

 
1,789

 
124,363

 
96,424

 
8,730

 
(13,269
)

216,248

Income from operations
46,260

 
25,262

 
5,416

 
—

 
76,938

Other (expense) income:
 
 
 
 
 
 
 
 
 
Interest and other expense
(11,902
)
 
(238
)
 
(131
)
 
—

 
(12,271
)
Interest income
58

 
127

 
(113
)
 
—

 
72

Income before income taxes and equity income in consolidated subsidiaries
34,416

 
25,151

 
5,172

 
—


64,739

Provision for income taxes
9,683

 
9,370

 
243

 
—

 
19,296

Income before equity income in consolidated subsidiaries
24,733

 
15,781

 
4,929

 
—


45,443

Equity income in consolidated subsidiaries
20,710

 
591

 
—

 
(21,301
)
 
—

Net income
$
45,443


$
16,372


$
4,929


$
(21,301
)

$
45,443

Comprehensive income (loss)
$
43,592

 
$
(8,307
)
 
$
19,987

 
$
(6,920
)
 
$
48,352







21
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2016
(in thousands)

 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by (used in) operating activities
$
29,576

 
$
49,676

 
$
(5,616
)
 
$
(42,414
)
 
$
31,222

Investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
(8,037
)
 
(1,833
)
 
—

 
—

 
(9,870
)
Net cash used in investing activities
(8,037
)
 
(1,833
)
 
—


—

 
(9,870
)
Financing activities:
 
 
 
 
 
 
 
 
 
Increase of restricted cash
—

 
(256
)
 
—

 
—

 
(256
)
Payments under notes payable obligations
(26,881
)
 
—

 
—

 
—

 
(26,881
)
Principal repayments on capital lease obligations
(1,459
)
 
—

 
—

 
—

 
(1,459
)
Proceeds from issuance of stock
150

 
—

 
—

 
—

 
150

Tax benefit from equity awards
323

 
—

 
—

 
—

 
323

Repurchase of restricted stock awards and common stock

(12,469
)
 
—

 
—

 
—

 
(12,469
)
(Distribution to) investment by parent
—

 
(42,962
)
 
548

 
42,414

 
—

Net cash (used in) provided by financing activities
(40,336
)
 
(43,218
)
 
548

 
42,414

 
(40,592
)
Effect of foreign exchange rates on cash and cash equivalents
1,099

 
(11
)
 
(1,101
)
 
—

 
(13
)
Net (decrease) increase in cash and cash equivalents
(17,698
)
 
4,614

 
(6,169
)
 
—

 
(19,253
)
Cash and cash equivalents at beginning of period
48,061

 
27,092

 
13,944

 
—

 
89,097

Cash and cash equivalents at end of period
$
30,363

 
$
31,706

 
$
7,775

 
$
—

 
$
69,844



22
NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2017
(in thousands)
 
NeuStar, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by (used in) operating activities
$
110,361

 
$
63,083

 
$
(438
)
 
$
(68,589
)
 
$
104,417

Investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
(13,528
)
 
(1,833
)
 
—

 
—

 
(15,361
)
Net cash used in investing activities
(13,528
)
 
(1,833
)
 
—

 
—

 
(15,361
)
Financing activities:
 
 
 
 
 
 
 
 
 
Decrease of restricted cash
—

 
142

 
—

 
—

 
142

Payments under notes payable obligations
(77,439
)
 
—

 
—

 
—

 
(77,439
)
Principal repayments on capital lease obligations
(987
)
 
—

 
—

 
—

 
(987
)
Proceeds from issuance of stock
4,315

 
—

 
—

 
—

 
4,315

Repurchase of restricted stock awards and common stock
(13,604
)
 
—

 
—

 
—

 
(13,604
)
(Distribution to) investment by parent
—

 
(69,087
)
 
498

 
68,589

 
—

Net cash (used in) provided by financing activities
(87,715
)
 
(68,945
)
 
498

 
68,589

 
(87,573
)
Effect of foreign exchange rates on cash and cash equivalents
1,023

 
(9
)
 
(1,222
)
 
—

 
(208
)
Net increase (decrease) in cash and cash equivalents
10,141

 
(7,704
)
 
(1,162
)
 
—

 
1,275

Cash and cash equivalents at beginning of period
21,871

 
15,037

 
8,865

 
—

 
45,773

Cash and cash equivalents at end of period
$
32,012

 
$
7,333

 
$
7,703

 
$
—

 
$
47,048



23

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 industries, 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
We announced on December 14, 2016 that we entered into a definitive merger agreement to be acquired by a private investment group led by Golden Gate Capital. Under the terms of the merger agreement, our stockholders will be entitled to receive $33.50 per share following the closing of the proposed merger. On March 14, 2017, our stockholders voted in favor of the adoption of the merger agreement. The merger, which is expected to close no later than the end of the third quarter of 2017, is subject to the receipt of required regulatory approvals from the Committee on Foreign Investment in the United States and the Federal Communications Commission, or the FCC, as well as the satisfaction or waiver of other customary closing conditions.
Prior to entering into the merger agreement, we announced on June 21, 2016 our intention to separate into two independent and publicly traded companies through a tax-free spin-off. One company would have consisted of the majority of our information services, including Marketing Services, Security Services and related Data Services. The other company would have focused on providing Order Management and Numbering Services, including Local Number Portability Administration, number administration and ancillary numbering services as well as order and inventory management solutions.
On March 26, 2015, the FCC approved a competitor to serve as the next Local Number Portability Administrator, or LNPA, and authorized the North American Portability Management LLC, or NAPM, to begin contract negotiations with that competitor.  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 concluded on December 17, 2015, and oral argument before the Court of Appeals took place on September 13, 2016.
On April 7, 2015, we amended our seven regional contracts with the NAPM.  Under this amendment, we will provide LNPA services for an annual fixed fee of $496.1 million until the termination of these contracts.  In addition to LNPA services, we are providing certain transition services under this amendment on a cost-plus basis.  On July 1, 2016, we received a notice of non-renewal from the NAPM informing us of its election not to renew the master agreements that were due to expire on September 30, 2016. On July 25, 2016 the FCC issued an Order approving the proposed contract between the NAPM and a competitor to serve as the next LNPA. On September 29, 2016, the NAPM provided notice to extend the term of our master contracts with the NAPM and opted not to license the source code that we use to provide services to the NAPM. We will continue to provide services and transition services at the pricing terms under the current contracts until the NAPM provides at least one termination notice to us, which must establish a termination date that is 180 days after the date of notice. We cannot be certain how long we will provide LNPA services; however, we will continue to provide services under the current terms of the NAPM contracts for as long as required by NAPM.  On April 20, 2016, the NAPM Transition Oversight Manager, or the TOM, published a transition timeline which extends the transition through the third quarter of 2017. The TOM subsequently issued a revised timeline that extends the transition through May 25, 2018.
Prior to the April 2015 amendment, we provided LNPA services under our contracts with NAPM for a fixed fee with a 6.5% annual price escalator.  These contracts were 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,

24

resulting in a 2015 LNPA service fixed fee of $496.1 million.  Under the April 7, 2015 amendment, the annual LNPA service fixed fee remains the same at $496.1 million for the duration of the amended term of the contracts. 
Loss of the NPAC contracts will have a material adverse 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.  As a result of the uncertain contract end date and due to our cost structure, which is organized by function, we are currently analyzing the impact of the termination of the contracts on our income from operations in an effort to quantify such impacts.  Our disclosure will expand as we evaluate the cost structure that will be in place to support our ongoing business or as we learn more about the timing of the contract termination.
Given the facts and circumstances described above, we determined that the structure of our organization is appropriate at this time.
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 I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2016, for certain matters that may bear on our results of operations.
For a discussion of selected critical accounting policies refer 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, 2016.

25

Consolidated Results of Operations
Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2017
The following table presents an overview of our results of operations for the three months ended March 31, 2016 and 2017:
 
Three Months Ended March 31,
 
2016
 
2017
 
2016 vs. 2017
 
$
 
$
 
$ Change
 
% Change
 
(unaudited)
(dollars in thousands, except per share data)
Revenue
$
287,298

 
$
293,186

 
$
5,888

 
2.0
 %
Operating expense:
 
 
 
 
 
 
 
Cost of revenue (excludes depreciation and amortization shown separately below)
91,351

 
87,916

 
(3,435
)
 
(3.8
)%
Sales and marketing
55,323

 
56,557

 
1,234

 
2.2
 %
Research and development
7,549

 
6,672

 
(877
)
 
(11.6
)%
General and administrative
27,518

 
28,360

 
842

 
3.1
 %
Depreciation and amortization
38,482

 
34,927

 
(3,555
)
 
(9.2
)%
Restructuring charges
2,664

 
27

 
(2,637
)
 
(99.0
)%
Separation costs
—

 
1,789

 
1,789

 
100.0
 %
 
222,887

 
216,248

 
(6,639
)
 
(3.0
)%
Income from operations
64,411

 
76,938

 
12,527

 
19.4
 %
Other (expense) income:
 
 
 
 
 
 
 
Interest and other expense
(17,111
)
 
(12,271
)
 
4,840

 
(28.3
)%
Interest income
174

 
72

 
(102
)
 
(58.6
)%
Income before income taxes
47,474

 
64,739

 
17,265

 
36.4
 %
Provision for income taxes
16,099

 
19,296

 
3,197

 
19.9
 %
Net income
$
31,375

 
$
45,443

 
$
14,068

 
44.8
 %
Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.58

 
$
0.82

 
 
 
 
Diluted
$
0.57

 
$
0.80

 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
53,953

 
55,311

 
 
 
 
Diluted
54,940

 
57,022

 
 
 
 
Revenue
Revenue. Revenue increased $5.9 million. Marketing Services revenue increased $7.4 million driven by increased demand for our services that our clients use to make informed and high impact decisions to promote their products and services.
Security Services revenue decreased $1.8 million due to a decrease in revenue of $3.1 million from our DNS services, partially offset by a $1.3 million increase in revenue from domain name registries. The decrease in revenue from our DNS services resulted from lower channel partner revenue. The increase in domain name registries was driven by growth in the number of domain names under management.
Data Services revenue decreased $0.2 million due to a decrease in revenue of $1.5 million from caller identification services and a decrease in revenue of $1.1 million from user authentication and rights management services, partially offset by an increase in revenue of $2.4 million from carrier provisioning services.
NPAC Services revenue increased $0.4 million driven by revenue from transition services under our contracts to provide LNPA services.
Expense
Cost of revenue. Cost of revenue decreased $3.4 million due to decreases of $1.2 million in costs related to our information technology and systems, $0.8 million in personnel and personnel-related expense, $0.7 million in contractor costs

26

and $0.7 million in royalty costs.
Sales and marketing. Sales and marketing expense increased $1.2 million due to an increase of $2.1 million in personnel and personnel-related expense, partially offset by a $1.0 million decrease in advertising and marketing costs.
Research and development. Research and development expense decreased $0.9 million due to a decrease in personnel and personnel-related expense.
General and administrative. General and administrative expense increased $0.8 million due to an increase of $5.2 million in merger-related costs. This increase was partially offset by decreases of $2.5 million in personnel and personnel-related expense, $2.1 million in professional fees, and $0.2 million in general facilities and other costs.
Depreciation and amortization. Depreciation and amortization expense decreased $3.6 million due to a decrease in amortization of intangible assets.
Restructuring charges. Restructuring charges decreased $2.6 million related to restructuring charges recorded during the three months ended March 31, 2016 which did not recur in the first quarter of 2017.
Separation costs. During the three months ended March 31, 2017, we incurred separation costs of $1.8 million. Separation costs related to activities supporting the planned separation including professional fees for outside advisory services including legal, finance, accounting and related services. As a result of the execution and shareholder approval of the merger agreement, we are focusing on completing the merger.
Interest and other expense. Interest and other expense decreased $4.8 million due to a decrease in interest expense driven by lower borrowings under the Amended 2013 Credit Facilities.
Interest income. Interest income for the three months ended March 31, 2017 was comparable to the interest income for the three months ended March 31, 2016.
Provision for income taxes. Our effective tax rate, including discrete items, for the three months ended March 31, 2017 was 29.8%, a decrease from 33.9% for the three months ended March 31, 2016. This decrease was primarily due to the adoption of Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718). As a result of the adoption of this standard, we recognized excess tax benefits on stock-based compensation as a discrete item within income tax benefits on our consolidated statements of operations for the three months ended March 31, 2017. Prior to the adoption of this standard, excess tax benefits were recognized in additional paid-in capital on our consolidated balance sheet. Excluding all discrete tax items, our effective tax rate was approximately 34.8% and 34.7% for the three months ended March 31, 2017 and 2016, respectively.
Liquidity and Capital Resources
Our principal source of liquidity is cash provided by our operating activities. Our principal uses of cash were for debt service requirements and capital expenditures. We anticipate that our principal uses of cash in the future will be for debt service requirements and capital expenditures. Total cash and cash equivalents were $47.0 million at March 31, 2017, an increase of $1.3 million from $45.8 million at December 31, 2016. This increase in cash and cash equivalents was due to cash provided by operations, partially offset by cash used for principal payments under our credit facilities and capital expenditures.
We believe that our existing cash and cash equivalents and cash from operations will be sufficient to fund our operations for at least the next twelve months.
Credit Facilities and Senior Notes
As of March 31, 2017, the outstanding principal balance due under our Amended 2013 Credit Facilities and Senior Notes was $751.6 million and available borrowings under our Amended 2013 Revolving Facility was $147.0 million.
For further discussion of this debt, refer to Note 7 to our Consolidated Financial Statements in Item 8 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2016 and Note 4 to our Financial Statements in Item 1 of Part I of this report.

27

Discussion of Cash Flows
Cash flows from operations
Net cash provided by operating activities for the three months ended March 31, 2017 was $104.4 million, as compared to $31.2 million for the three months ended March 31, 2016. This $73.2 million increase in net cash provided by operating activities was the result of an increase in net income of $14.1 million, a decrease in non-cash adjustments of $11.2 million and an increase in net changes in operating assets and liabilities of $70.3 million.
Non-cash adjustments decreased $11.2 million driven by a decrease of $6.2 million in deferred income taxes, a decrease of $3.6 million in depreciation and amortization expense, a decrease of $1.4 million in amortization of deferred financing costs and original issue discount on debt, a decrease of $0.4 million in stock-based compensation, and a decrease of $0.3 million in tax benefit from equity awards due to the adoption of ASU 2016-09.
Cash provided by net changes in operating assets and liabilities increased $70.3 million primarily due to an increase of $41.2 million in accounts and unbilled receivables, an increase of $8.5 million in income taxes, an increase of $14.7 million in prepaid expenses and other current assets, an increase of $10.2 million in accounts payable and accrued expenses, an increase of $1.6 million in deferred costs, and an increase of $0.5 million in other assets. These total increases of $76.7 million in net changes in operating assets and liabilities were partially offset by a decrease of $4.0 million in other liabilities and a decrease of $2.4 million in deferred revenue.
Cash flows from investing
Net cash used in investing activities for the three months ended March 31, 2017 was $15.4 million, as compared to $9.9 million for three months ended March 31, 2016. This $5.5 million increase in net cash used in investing activities was due to purchases of property and equipment.
Cash flows from financing
Net cash used in financing activities was $87.6 million for the three months ended March 31, 2017, as compared to $40.6 million for the three months ended March 31, 2016. This $47.0 million increase in net cash used in financing activities was due to an increase of $50.6 million in principal payments under our Amended 2013 Credit Facilities, an increase of $1.1 million in cash used for the net down of employee shares and a decrease of $0.3 million in tax benefits from equity awards due to the adoption of ASU 2016-09. These total net increases of $52.0 million in cash used in financing activities were partially offset by an increase of $4.2 million in cash proceeds from the issuance of stock, a decrease of $0.5 million in cash used in principal repayments on capital lease obligations, and a decrease of $0.4 million due to a net change in restricted cash.
Recent Accounting Pronouncements
See Note 2 to our Financial Statements in Item 1 of Part I 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, 2016. Our exposure to market risk has not changed materially since December 31, 2016.
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

28

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 March 31, 2017, 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 first quarter of 2017 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 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 concluded on December 17, 2015, and oral argument before the Court of Appeals took place on September 13, 2016.
We, along with other parties to the merger agreement and our Board of Directors, were named as defendants in a class action complaint filed on January 20, 2017, in the United States District Court for the District of Delaware, entitled Parshall v. NeuStar, Inc. et al., Case 1:17-cv-00060-LPS. We and our Board also were named as defendants in a class action complaint filed on February 1, 2017, in the United States District Court for the District of Delaware, entitled Rubin v. NeuStar, Inc. et al., Case 1:17-cv-00104. The complaints alleged violations of the federal securities laws by the defendants in connection with the preliminary proxy statement on Schedule 14A filed by us with the SEC with a filing date of January 7, 2017. The complaints sought, among other things, an injunction preventing the consummation of the merger, rescission of the merger if it was consummated or rescissory damages, and attorneys’ fees and costs. On March 28, 2017, the plaintiffs of these complaints voluntarily dismissed their cases without any payment.
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, 2016, filed with the SEC on March 1, 2017 (our “2016 Form 10-K”). The risks discussed in our 2016 Form 10-K could materially affect our business, financial condition and future results. The risks described in our 2016 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.

29

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 March 31, 2017:
Month
Total
Number of
Shares
Purchased
(1)
 
Average
Price Paid
per Share
January 1 through January 31, 2017
106,086

 
$
33.30

February 1 through February 28, 2017
133,021

 
33.57

March 1 through March 31, 2017
299,804

 
33.29

Total
538,911

 
$
33.36

(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.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.
Item 6.
Exhibits
See exhibits listed under the Exhibit Index below.

30

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:
May 10, 2017
 
By:
 
/s/ Paul S. Lalljie
 
 
 
Paul S. Lalljie
 
 
 
Chief Financial Officer
 
 
 
(Principal Financial and Accounting Officer and Duly Authorized Officer)


31

EXHIBIT INDEX
Exhibits identified in parentheses below are on file with the SEC and are incorporated herein by reference. All other exhibits are provided as part of this electronic submission. 
Exhibit No.
 
Description
(3.1)
 
Third Restated Certificate of Incorporation, incorporated herein by reference to Exhibit 3.1.2 to our Quarterly Report on Form 10-Q, filed October 29, 2015.
 
 
 
(3.2)
 
Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.2 to our Quarterly Report on Form 10-Q, filed October 29, 2015 and Amendment to Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed December 14, 2016.
 
 
 
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



32

NEUSTAR INC Reports