UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    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.
  Delaware
    
    52-2141938(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 46000 Center Oak Plaza
Sterling, Virginia 20166
 (571) 434-5400
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



NeuStar, Inc.
Index
 PART I FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of December 31, 2007 and March 31, 2008 (unaudited)Unaudited Consolidated Statements of Operations for the three months ended March 31, 2007 and 2008Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2008Notes to Unaudited Consolidated Financial StatementsItem 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RiskItem 4.
    
    Controls and ProceduresPART II OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk FactorsItem 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
    
    Defaults upon Senior SecuritiesItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    ExhibitsSignatures
  2




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##### 



PART I FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 NEUSTAR, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share data)
 December 31,
    
    
    March 31,2007
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    98,630
    
    
    $
    54,396Restricted cash
    
    
    488
    
    
    
    532Short-term investments
    
    
    100,048
    
    
    
    32,059Accounts receivable, net of allowance for
doubtful accounts of $1,654 and $2,299,
respectively
    
    
    76,632
    
    
    
    62,745Unbilled receivables
    
    
    383
    
    
    
    744Notes receivable
    
    
    2,159
    
    
    
    2,202Prepaid expenses and other current assets
    
    
    9,608
    
    
    
    10,547Deferred costs
    
    
    8,281
    
    
    
    9,216Deferred tax assets
    
    
    13,907
    
    
    
    13,192Total current assets
    
    
    310,136
    
    
    
    185,633Investments, long-term
    
    
    
    
    
    
    39,371Property and equipment, net
    
    
    56,191
    
    
    
    57,813Goodwill
    
    
    204,093
    
    
    
    181,451Intangible assets, net
    
    
    36,851
    
    
    
    39,524Notes receivable, long-term
    
    
    759
    
    
    
    192Deferred costs, long-term
    
    
    3,575
    
    
    
    3,272Other assets
    
    
    5,056
    
    
    
    4,804Total assets
    
    $
    616,661
    
    
    $
    512,060
 See accompanying notes.
 3




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##### 



NEUSTAR, INC.
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share data)
 December 31,
    
    
    March 31,2007
    
    
    2008(unaudited)LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    9,742
    
    
    $
    7,443Accrued expenses
    
    
    47,501
    
    
    
    49,822Deferred revenue
    
    
    32,236
    
    
    
    33,660Notes payable
    
    
    2,501
    
    
    
    2,495Capital lease obligations
    
    
    3,511
    
    
    
    3,803Accrued restructuring reserve
    
    
    413
    
    
    
    426Income tax payable
    
    
    3,254
    
    
    
    1,999Other liabilities
    
    
    108
    
    
    
    Total current liabilities
    
    
    99,266
    
    
    
    99,648Deferred revenue, long-term
    
    
    18,063
    
    
    
    16,232Notes payable, long-term
    
    
    5,206
    
    
    
    4,364Capital lease obligations, long-term
    
    
    5,717
    
    
    
    5,033Accrued restructuring reserve, long-term
    
    
    1,793
    
    
    
    1,679Other liabilities, long-term
    
    
    3,866
    
    
    
    4,470Deferred tax liability
    
    
    2,215
    
    
    
    4,022Total liabilities
    
    
    136,126
    
    
    
    135,448Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Preferred stock, $0.001 par value;
100,000,000 shares authorized; No shares
issued or outstanding as of December 31,
2007 and March 31, 2008
    
    
    
    
    
    
    Class A common stock, par value $0.001;
200,000,000 shares authorized; 77,082,161
and 77,528,281 shares issued and
outstanding at December 31, 2007 and
March 31, 2008, respectively
    
    
    77
    
    
    
    77Class B common stock, par value $0.001;
100,000,000 shares authorized; 4,538 and
4,538 shares issued and outstanding at
December 31, 2007 and March 31, 2008,
respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    293,785
    
    
    
    299,822Treasury stock, 99,286 and 4,136,458
shares at cost at December 31, 2007 and
March 31, 2008, respectively
    
    
    (3,221
    )
    
    
    (107,108
    )Accumulated other comprehensive loss
    
    
    (140
    )
    
    
    (1,753
    )Retained earnings
    
    
    190,034
    
    
    
    185,574Total stockholders equity
    
    
    480,535
    
    
    
    376,612Total liabilities and stockholders equity
    
    $
    616,661
    
    
    $
    512,060
 See accompanying notes.
 4




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##### 



NEUSTAR, INC.
 
 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
 Three Months EndedMarch 31,2007
    
    
    2008Revenue:Addressing
    
    $
    27,003
    
    
    $
    30,161Interoperability
    
    
    14,932
    
    
    
    16,440Infrastructure and other
    
    
    55,513
    
    
    
    70,812Total revenue
    
    
    97,448
    
    
    
    117,413Operating expense:Cost of revenue (excluding depreciation
and amortization shown separately
below)
    
    
    23,078
    
    
    
    24,489Sales and marketing
    
    
    18,636
    
    
    
    18,724Research and development
    
    
    6,569
    
    
    
    7,548General and administrative
    
    
    10,769
    
    
    
    16,482Depreciation and amortization
    
    
    9,064
    
    
    
    10,120Impairment of goodwill
    
    
    
    
    
    
    29,02168,116
    
    
    
    106,384Income from operations
    
    
    29,332
    
    
    
    11,029Other (expense) income:Interest expense
    
    
    (350
    )
    
    
    (442
    )Interest and other income
    
    
    649
    
    
    
    1,592Income before income taxes
    
    
    29,631
    
    
    
    12,179Provision for income taxes
    
    
    11,663
    
    
    
    16,639Net income (loss)
    
    $
    17,968
    
    
    $
    (4,460
    )Net income (loss) per common share:Basic
    
    $
    0.24
    
    
    $
    (0.06
    )Diluted
    
    $
    0.23
    
    
    $
    (0.06
    )Weighted average common shares outstanding:Basic
    
    
    74,688
    
    
    
    76,247Diluted
    
    
    79,031
    
    
    
    76,247
 See accompanying notes.
 5




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##### 



NEUSTAR, INC.
 
 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Three Months EndedMarch 31,2007
    
    
    2008Operating activities:Net income (loss)
    
    $
    17,968
    
    
    $
    (4,460
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    9,064
    
    
    
    10,120Stock-based compensation
    
    
    3,563
    
    
    
    4,429Amortization of deferred financing costs
    
    
    29
    
    
    
    44Excess tax benefits from stock-based compensation
    
    
    (10,326
    )
    
    
    (91
    )Deferred income taxes
    
    
    3,849
    
    
    
    3,481Provision for doubtful accounts
    
    
    484
    
    
    
    1,024Impairment of goodwill
    
    
    
    
    
    
    29,021Changes in operating assets and liabilities, net of acquisitions:Accounts receivable
    
    
    (9,164
    )
    
    
    13,727Unbilled receivables
    
    
    89
    
    
    
    (361
    )Notes receivable
    
    
    484
    
    
    
    524Prepaid expenses and other current assets
    
    
    (540
    )
    
    
    (742
    )Deferred costs
    
    
    (300
    )
    
    
    (632
    )Income tax receivable
    
    
    2,126
    
    
    
    Other assets
    
    
    (914
    )
    
    
    216Other liabilities
    
    
    39
    
    
    
    271Accounts payable and accrued expenses
    
    
    (10,994
    )
    
    
    87Income tax payable
    
    
    
    
    
    
    (1,164
    )Accrued restructuring reserve
    
    
    (92
    )
    
    
    (101
    )Deferred revenue
    
    
    4,298
    
    
    
    (1,313
    )Net cash provided by operating activities
    
    
    9,663
    
    
    
    54,080Investing activities:Purchases of property and equipment
    
    
    (4,623
    )
    
    
    (6,702
    )Sales of investments, net
    
    
    1,802
    
    
    
    25,904Businesses acquired, net of cash
    
    
    (1,569
    )
    
    
    (12,915
    )Net cash (used in) provided by investing activities
    
    
    (4,390
    )
    
    
    6,287Financing activities:Disbursement of restricted cash
    
    
    (100
    )
    
    
    (44
    )Principal repayments on notes payable
    
    
    (316
    )
    
    
    (848
    )Principal repayments on capital lease obligations
    
    
    (1,495
    )
    
    
    (1,573
    )Proceeds from exercise of common stock options
    
    
    5,081
    
    
    
    1,518Excess tax benefits from stock-based compensation
    
    
    10,326
    
    
    
    91Repurchase of common stock
    
    
    (3,128
    )
    
    
    (103,887
    )Net cash provided by (used in) financing activities
    
    
    10,368
    
    
    
    (104,743
    )Effect of foreign exchange rates on cash and cash equivalents
    
    
    
    
    
    
    142Net increase (decrease) in cash and cash equivalents
    
    
    15,641
    
    
    
    (44,234
    )Cash and cash equivalents at beginning of period
    
    
    39,242
    
    
    
    98,630Cash and cash equivalents at end of period
    
    $
    54,883
    
    
    $
    54,396
 See accompanying notes.
 6




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##### 



NEUSTAR, INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2008
 1. DESCRIPTION OF BUSINESS AND ORGANIZATION
   
    
    Addressing.The Company enables CSPs to use critical, shared
addressing resources, such as telephone numbers, Internet top-level
domain names, and U.S. Common Short Codes.
    
    Interoperability.The Company enables CSPs to exchange and share
critical operating data so that communications originating on one
providers network can be delivered and received on the network of
another CSP. The Company also facilitates order management and work
flow processing among CSPs.
    
    Infrastructure and Other.The Company enables CSPs to manage their
networks more efficiently by centrally managing certain critical data
they use to route communications over their own networks.
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Unaudited Interim Financial Information
   7




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Use of Estimates
   Investments
   Goodwill
 Goodwill and Other Intangible Assets
 8




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Identifiable Intangible Assets
 Accounting for Impairment or Disposal of Long-Lived Assets
  Years
    
    MethodAcquired technologies
    
    
    3 to 5
    
    
    Straight-lineCustomer lists and relationships
    
    
    3 to 7
    
    
    VariousTrade name
    
    
    3
    
    
    Straight-line
  Impairment of Long-Lived Assets
  Revenue Recognition
 Revenue Recognition
 9




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Addressing
    Interoperability
  Infrastructure and Other
  10




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Significant Contracts
   Service Level Standards
  Cost of Revenue and Deferred Costs
   Stock-Based Compensation
 Share-Based Payment
 11




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Basic and Diluted Net Income (Loss) per Common Share
  Income Taxes
 Accounting for Income
Taxes .
  Accounting for Uncertainty
in Income Taxesan interpretation of FASB Statement No. 109 i.e.
 Foreign Currency
   Comprehensive Income (Loss)
  12




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Recent Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements,
 Effective Date of FASB
Statement No. 157,
 3. INVESTMENTS
  March 31, 2008Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCash reserve fund
    
    $
    33,047
    
    
    $
    3⁄4
    
    
    $
    (988
    )
    
    $
    32,059High grade auction rate securities
    
    
    41,725
    
    
    
    3⁄4
    
    
    
    (2,354
    )
    
    
    39,371$
    74,772
    
    
    $
    3⁄4
    
    
    $
    (3,342
    )
    
    $
    71,430
 December 31, 2007Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCash reserve fund
    
    $
    49,851
    
    
    $
    3⁄4
    
    
    $
    (628
    )
    
    $
    49,223High grade auction rate securities
    
    
    50,825
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    50,825$
    100,676
    
    
    $
    3⁄4
    
    
    $
    (628
    )
    
    $
    100,048
 13




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    4. FAIR VALUE MEASUREMENTS
 Fair Value Measurements
 
    
    Level 1. Observable inputs such as quoted prices in active markets
    
    Level 2. Inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly; and
    
    Level 3. Unobservable inputs in which there is little or no market data, which require
the reporting entity to develop its own assumptions.
  14




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Level 1
    
    Level 2
    
    Level 3
    
    TotalShort-term investments
    
    
    
    
    
    
    
    
    
    $
    32,059
    
    
    $
    32,059Long-term investments
    
    
    
    
    
    
    
    
    
    $
    39,371
    
    
    $
    39,371
  Short-term
    
    
    Long-termInvestments
    
    
    InvestmentsBalance on January 1, 2008
    
    $
    
    
    
    $
    Transfers in and/or (out) of Level 3
    
    
    49,223
    
    
    
    50,825Total losses realized/unrealized included in earnings
    
    
    (240
    )
    
    
    Total losses included in other comprehensive income
    
    
    (360
    )
    
    
    (2,354
    )Purchases, sales, issuances and settlements, net
    
    
    (16,564
    )
    
    
    (9,100
    )Balance on March 31, 2008
    
    $
    32,059
    
    
    $
    39,371
  5. ACQUISITION
 Webmetrics, Inc.
   15




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 6. GOODWILL AND INTANGIBLE ASSETS
  Clearinghouse
    
    
    NGMServices
    
    
    Services
    
    
    TotalBalance at December 31, 2007
    
    $
    88,148
    
    
    $
    115,945
    
    
    $
    204,093Acquisitions
    
    
    6,379
    
    
    
    
    
    
    
    6,379Impairment charge
    
    
    
    
    
    
    (29,021
    )
    
    
    (29,021
    )Balance at March 31, 2008
    
    $
    94,527
    
    
    $
    86,924
    
    
    $
    181,451
   Weighted-AverageAmortizationMarch 31,
    
    
    PeriodDecember 31,
    
    
    2008
    
    
    (In Years)2007
    
    
    (unaudited)
    
    
    (unaudited)Intangible assets:Customer lists and relationships
    
    $
    43,740
    
    
    $
    47,504
    
    
    
    5.5Accumulated amortization
    
    
    (15,463
    )
    
    
    (17,853
    )Customer lists and relationships, net
    
    
    28,277
    
    
    
    29,651Acquired technology
    
    
    17,068
    
    
    
    19,757
    
    
    
    3.3Accumulated amortization
    
    
    (8,581
    )
    
    
    (9,954
    )Acquired technology, net
    
    
    8,487
    
    
    
    9,803Trade name
    
    
    200
    
    
    
    200
    
    
    
    3.0Accumulated amortization
    
    
    (113
    )
    
    
    (130
    )Trade name, net
    
    
    87
    
    
    
    70Intangible assets, net
    
    $
    36,851
    
    
    $
    39,524
  16




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 7. NOTES PAYABLE
    8. STOCKHOLDERS EQUITY
 Stock-Based Compensation
   Stock Options
  17




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Three Months EndedMarch 31,2007
    
    2008Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    33.37
    %
    
    
    35.82
    %Risk-free interest rate
    
    
    4.46
    %
    
    
    2.56
    %Expected life of options (in years)
    
    
    4.61
    
    
    
    4.37
    Share-Based Payment
  Weighted-AverageShares
    
    Exercise PriceOutstanding at December 31, 2007
    
    
    5,668,501
    
    
    $
    15.42Options granted
    
    
    1,119,015
    
    
    
    26.38Options exercised
    
    
    (325,713
    )
    
    
    4.66Options canceled
    
    
    (106,594
    )
    
    
    28.82Outstanding March 31, 2008
    
    
    6,355,209
    
    
    
    17.68Exercisable at March 31, 2008
    
    
    3,572,701
    
    
    
    10.31
  18




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Restricted Stock
  Weighted-AverageGrant DateShares
    
    Fair ValueNon-vested December 31, 2007
    
    
    75,660
    
    
    $
    31.55Granted
    
    
    124,800
    
    
    
    26.83Vested
    
    
    (9,960
    )
    
    
    30.37Forfeited
    
    
    (4,393
    )
    
    
    30.08Non-vested March 31, 2008
    
    
    186,107
    
    
    
    28.48
  Performance Vested Stock Units
  Weighted-AverageGrant DateShares
    
    Fair ValueNon-vested December 31, 2007
    
    
    303,080
    
    
    $
    32.59Granted
    
    
    286,660
    
    
    
    26.29Vested
    
    
    
    
    
    
    Forfeited
    
    
    (68,460
    )
    
    
    32.19Non-vested March 31, 2008
    
    
    521,280
    
    
    
    29.18
   Restricted Stock Units
  19




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   Phantom Stock Units
  Treasury Stock
   9. BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE
  Three Months EndedMarch 31,2007
    
    
    2008Computation of basic net income (loss) per common share:Net income (loss)
    
    $
    17,968
    
    
    $
    (4,460
    )Weighted average common shares outstanding  basic
    
    
    74,688
    
    
    
    76,247Basic net income (loss) per common share
    
    $
    0.24
    
    
    $
    (0.06
    )Computation of diluted net income (loss) per common share:Net income (loss)
    
    $
    17,968
    
    
    $
    (4,460
    )Weighted average common shares outstanding  basic
    
    
    74,688
    
    
    
    76,247Effect of dilutive securities:Stock-based awards
    
    
    4,343
    
    
    
    Weighted average common shares outstanding  diluted
    
    
    79,031
    
    
    
    76,247Diluted net income (loss) per common share
    
    $
    0.23
    
    
    $
    (0.06
    )
 20




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  10. SEGMENT INFORMATION
   Three Months Ended March 31,2007
    
    
    2008Revenue:Clearinghouse services
    
    $
    96,906
    
    
    $
    113,552NGM services
    
    
    542
    
    
    
    3,861Total revenue
    
    $
    97,448
    
    
    $
    117,413Depreciation and amortization:Clearinghouse services
    
    $
    6,818
    
    
    $
    7,404NGM services
    
    
    2,246
    
    
    
    2,716Total depreciation and amortization
    
    $
    9,064
    
    
    $
    10,120Income (loss) from operations:Clearinghouse services
    
    $
    37,828
    
    
    $
    50,401NGM services
    
    
    (8,496
    )
    
    
    (39,372
    )Income (loss) from operations
    
    $
    29,332
    
    
    $
    11,029
  December 31,
    
    
    March 31,2007
    
    
    2008Total assets:Clearinghouse services
    
    $
    449,523
    
    
    $
    377,486NGM services
    
    
    167,138
    
    
    
    134,574Total assets
    
    $
    616,661
    
    
    $
    512,060Goodwill:Clearinghouse services
    
    $
    88,148
    
    
    $
    94,527NGM services
    
    
    115,945
    
    
    
    86,924Goodwill
    
    $
    204,093
    
    
    $
    181,451Intangible assets:Clearinghouse services
    
    $
    14,973
    
    
    $
    19,462NGM services
    
    
    21,878
    
    
    
    20,062Intangible assets
    
    $
    36,851
    
    
    $
    39,524
 21




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##### 



NEUSTAR, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 11. INCOME TAXES
     22




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##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
  Overview
  Recent Development
  Critical Accounting Policies and Estimates
  23




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##### 



Investments
 Accounting for Certain Investments in Debt and Equity Securities
 Goodwill
 Goodwill and Other
Intangible Assets
   24




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##### 



Acquisitions
 I-View.com, Inc. (d/b/a MetaInfo)
  Webmetrics, Inc.
  25




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##### 



Consolidated Results of Operations
 Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2008
  Three Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2008
    
    
    2007 vs. 2008$
    
    
    $
    
    
    $ Change
    
    
    % Change(unaudited)(in thousands, except per share data)Revenue:Addressing
    
    
    27,003
    
    
    
    30,161
    
    
    
    3,158
    
    
    
    11.7Interoperability
    
    
    14,932
    
    
    
    16,440
    
    
    
    1,508
    
    
    
    10.1Infrastructure and other
    
    
    55,513
    
    
    
    70,812
    
    
    
    15,299
    
    
    
    27.6Total revenue
    
    
    97,448
    
    
    
    117,413
    
    
    
    19,965
    
    
    
    20.5Operating expense:Cost of revenue (excluding depreciation
and amortization shown separately
below)
    
    
    23,078
    
    
    
    24,489
    
    
    
    1,411
    
    
    
    6.1Sales and marketing
    
    
    18,636
    
    
    
    18,724
    
    
    
    88
    
    
    
    0.5Research and development
    
    
    6,569
    
    
    
    7,548
    
    
    
    979
    
    
    
    14.9General and administrative
    
    
    10,769
    
    
    
    16,482
    
    
    
    5,713
    
    
    
    53.1Depreciation and amortization
    
    
    9,064
    
    
    
    10,120
    
    
    
    1,056
    
    
    
    11.7Impairment of goodwill
    
    
    
    
    
    
    29,021
    
    
    
    29,021
    
    
    
    68,116
    
    
    
    106,384
    
    
    
    38,268
    
    
    
    56.2Income from operations
    
    
    29,332
    
    
    
    11,029
    
    
    
    (18,303
    )
    
    
    (62.4
    )Other (expense) income:Interest expense
    
    
    (350
    )
    
    
    (442
    )
    
    
    (92
    )
    
    
    26.3Interest and other income
    
    
    649
    
    
    
    1,592
    
    
    
    943
    
    
    
    145.3Income before income taxes
    
    
    29,631
    
    
    
    12,179
    
    
    
    (17,452
    )
    
    
    (58.9
    )Provision for income taxes
    
    
    11,663
    
    
    
    16,639
    
    
    
    4,976
    
    
    
    42.7Net income (loss)
    
    
    17,968
    
    
    
    (4,460
    )
    
    
    (22,428
    )
    
    
    (124.8
    )Net income (loss) attributable to common
stockholders
per common share:Basic
    
    $
    0.24
    
    
    $
    (0.06
    )Diluted
    
    $
    0.23
    
    
    $
    (0.06
    )Weighted average common shares outstanding:Basic
    
    
    74,688
    
    
    
    76,247Diluted
    
    
    79,031
    
    
    
    76,247
 26




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##### 



Revenue
 Total revenue.
 Addressing.
 Interoperability.
 Infrastructure and other.
 Expense
 Cost of revenue.
 Sales and marketing.
 Research and development.
 General and administrative.
 27




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##### 



Depreciation and amortization.
 Impairment of goodwill.
 Interest expense
 Interest and other income
 Provision for income taxes
 Liquidity and Capital Resources
     Discussion of Cash Flows
 Cash flows from operations
  28




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##### 



Cash flows from investing
  Cash flows from financing
  Recent Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements,
 Effective Date of FASB
Statement No. 157,
 Off-Balance Sheet Arrangements
  29




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##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
    30




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##### 



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Maximum Number(or ApproximateTotal Number of
    
    
    Dollar Value) ofShares Purchased
    
    
    Shares that MayTotal Number
    
    
    Average
    
    
    as Part of Publicly
    
    
    Yet Be Purchasedof Shares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Under the Plans orMonth
    
    Purchased (1)
    
    
    per Share
    
    
    or Programs (2)
    
    
    Programs (3)January 1 through 31, 2008
    
    
    744
    
    
    $
    29.01
    
    
    
    
    
    
    
    February 1 through 29, 2008
    
    
    284,749
    
    
    
    25.96
    
    
    
    283,000
    
    
    $
    242,653,235March 1 through 31, 2008
    
    
    3,751,678
    
    
    
    25.71
    
    
    
    3,751,678
    
    
    $
    146,208,186Total
    
    
    4,037,171
    
    
    
    25.73
    
    
    
    4,034,678
    
    
    $
    146,208,186
 
 (1)
    
    Includes shares of common stock tendered by employees to satisfy the employees
tax withholding obligations arising as a result of vesting of restricted stock grants
under our stock incentive plan, which shares were purchased by us based on 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 2,493
shares, all of which relate to shares surrendered to us to satisfy the employees tax
withholding obligations arising as a result of vesting of restricted stock grants under
our stock incentive plan. 
 Item 3. Defaults upon Senior Securities
  31




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##### 



Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit No.
    
    Description3.1
    
    Restated Certificate of Incorporation, incorporated herein by reference to
Exhibit 3.1 to Amendment No. 7 to NeuStars Registration Statement on Form S-1,
filed June 28, 2005 (File No. 333-123635).3.2
    
    Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.1 to
NeuStars Current Report on Form 8-K, filed July 13, 2007.10.3.2
    
    Amendment to the National Thousands-Block Pooling Administration agreement
awarded to NeuStar, Inc. by the Federal Communications Commission.10.5.1
    
    Amendments to .us Top-Level Domain Registry Management and Coordination
agreement awarded to NeuStar, Inc. by the National Institute of Standards and
Technology on behalf of the Department of Commerce on October 18, 2007.10.7.1
    
    Amendment to Common Short Code License Agreement between the Cellular
Telecommunications and Internet Association and NeuStar, Inc.10.41
    
    Form of Agreement Respecting Noncompetition, Nonsolicitation and Confidentiality.10.42
    
    Incentive Stock Option Agreement
under the 1999 Plan, made as of December 13, 2003, by and
between NeuStar, Inc. and Martin Lowen, as amended as of
June 22, 2004 and May 20, 2005. 10.43
    
    Nonqualified Stock Option Agreement
under the 1999 Plan, made as of December 13, 2003, by and
between NeuStar, Inc. and Martin Lowen, as amended as of
June 22, 2004 and May 20, 2005. 10.99.1
    
    Amendments to .us Top-Level Domain Registry Management and Coordination
agreement awarded to NeuStar, Inc. by the National Institute of Standards and
Technology on behalf of the Department of Commerce on October 26, 2001.31.1
    
    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.
 
 
    
    Compensation arrangement. 32




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##### 



NeuStar, Inc.Date: May 12, 2008
    By:
    /s/ Jeffrey A. BabkaJeffrey A. BabkaChief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer) 33




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##### 



EXHIBIT INDEX
 Exhibit No.
    
    Description3.1
    
    Restated Certificate of Incorporation, incorporated herein by reference to
Exhibit 3.1 to Amendment No. 7 to NeuStars Registration Statement on Form S-1,
filed June 28, 2005 (File No. 333-123635).3.2
    
    Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.1 to
NeuStars Current Report on Form 8-K, filed July 13, 2007.10.3.2
    
    Amendment to the National Thousands-Block Pooling Administration agreement
awarded to NeuStar, Inc. by the Federal Communications Commission.10.5.1
    
    Amendments to .us Top-Level Domain Registry Management and Coordination
agreement awarded to NeuStar, Inc. by the National Institute of Standards and
Technology on behalf of the Department of Commerce on October 18, 2007.10.7.1
    
    Amendment to Common Short Code License Agreement between the Cellular
Telecommunications and Internet Association and NeuStar, Inc.10.41
    
    Form of Agreement Respecting Noncompetition, Nonsolicitation and Confidentiality.10.42
    
    Incentive Stock Option Agreement
under the 1999 Plan, made as of December 13, 2003, by and
between NeuStar, Inc. and Martin Lowen, as amended as of
June 22, 2004 and May 20, 2005. 10.43
    
    Nonqualified Stock Option Agreement
under the 1999 Plan, made as of December 13, 2003, by and
between NeuStar, Inc. and Martin Lowen, as amended as of
June 22, 2004 and May 20, 2005. 10.99.1
    
    Amendments to .us Top-Level Domain Registry Management and Coordination
agreement awarded to NeuStar, Inc. by the National Institute of Standards and
Technology on behalf of the Department of Commerce on October 26, 2001.31.1
    
    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.
 
 
    
    Compensation arrangement. 34