SPMD PR OUT ..2010 financial results
SuperMedia (NASDAQ:SPMD) today announced its financial results for the year ended December 31, 2010.
Highlights for 2010 include:
* The company reduced total debt obligations by $579 million in 2010, including the utilization of $185 million of cash in the fourth quarter to reduce total debt obligations by $264 million under an amendment to the term loan agreement allowing a below par debt repurchase;
* adjusted pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) was $651 million1; and
* continued aggressive cost management.
SuperMedia’s Chief Executive Officer, Peter McDonald, who joined the company in October 2010 said, “As we move into 2011, our focus will be on improving our revenue trends and continuing to manage expenses.”
Financial Summary
SuperMedia reports financial results on a generally accepted accounting principles (“GAAP”) and non-GAAP basis, referred to as “adjusted pro forma”. The adjusted pro forma basis measures are described and reconciled to the corresponding GAAP measures in the accompanying financial schedules. These results were adjusted for the impacts of fresh start accounting and certain unique costs including reorganization items, restructuring costs and certain other non-recurring costs.
Reported GAAP operating revenue for Q4 2010 was $426 million. Adjusted pro forma operating revenue for Q4 2010 was $468 million, versus $576 million for Q4 2009, a decline of 18.8 percent.
Reported GAAP full year operating revenue for 2010 was $1,176 million. Adjusted pro forma full year operating revenue for 2010 was $2,002 million, versus $2,512 million in 2009, a decline of 20.3 percent.
Reported Q4 2010 earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP measure, was $126 million. On an adjusted pro forma basis, Q4 2010 EBITDA was $151 million with an EBITDA margin of 32.3 percent compared to Q4 2009 EBITDA of $195 million with an EBITDA margin of 33.9 percent.
Reported full year 2010 EBITDA, a non-GAAP measure, was $90 million. On an adjusted pro forma basis, full year 2010 EBITDA was $651 million with an EBITDA margin of 32.5 percent compared to full year 2009 EBITDA of $856 million with an EBITDA margin of 34.1 percent. Results for 2010 include a $40 million general and administrative expense reduction related to the favorable non-recurring, non-cash resolution of state operating tax claims.
Advertising sales in Q4 2010 declined 15.1 percent, compared to a decline of 20.9 percent reported for the same period in 2009. Full year 2010 advertising sales declined 17.2 percent compared to a full year 2009 decline of 18.8 percent.
Free cash flow, a non-GAAP measure, for 2010 was $464 million representing cash from operating activities of $509 million, less capital expenditures (including capitalized software) of $45 million. In the second quarter, the company received a net federal income tax refund of $94 million.
SuperMedia made debt principal payments of $61 million in the fourth quarter, in accordance with the mandatory cash sweep provisions of the company’s loan agreement. Cash on hand at the end of the quarter totaled $174 million, reflecting the net cash benefits of the items noted above.
Also in the fourth quarter, an amendment was approved by the holders of the company’s term loan allowing the company to repurchase $264 million of debt at 70 percent of par, utilizing $185M in cash. For the year ending December 31, 2010, the company utilized cash of $500 million to reduce total debt obligations in the amount of $579 million.
Webcast Information
Individuals within the United States can access the earnings call by dialing 888/603-6873. International participants should dial 973/582-2706. The pass code for the call is: 37480660. In order to ensure a prompt start time, please dial into the call by 9:50am (Eastern). A replay of the teleconference will be available at 800/642-1687. International callers can access the replay by calling 706/645-9291. The replay pass code is: 37480660. The replay will be available through March 9, 2011. In addition, a live Web cast will be available on SuperMedia’s Web site in the Investor Relations section at www.supermedia.com.
Basis of Presentation and Non-GAAP Measures
In connection with SuperMedia's emergence from bankruptcy on December 31, 2009, and the application of fresh start accounting, the post-emergence results of the successor company and the pre-emergence results of the predecessor company are presented separately as successor and predecessor results in the financial statements presented in accordance with GAAP. This presentation is required by GAAP as the successor company is considered to be a new entity and the results of the new entity reflect the application of fresh start accounting. For the readers' convenience, the financial information accompanying this release provides a reconciliation of GAAP to non-GAAP results.
Forward-Looking Statements
Certain statements included in this annual report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. Statements that include the words “may,” “will,” “could,” “should,” “would,” “believe,” “anticipate,” “forecast,” “estimate,” “expect,” “preliminary,” “intend,” “plan,” “project,” “outlook” and similar statements of a future or forward-looking nature identify forward-looking statements. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and industry in general. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the risks related to the following:
* the inability to provide assurance for the long-term continued viability of our business;
* reduced advertising spending and contract cancellations by our clients, which drives reduced revenue;
* declining use of print yellow pages directories by consumers;
* competition from other yellow pages directory publishers and other traditional and new media and our ability to anticipate or respond to changes in technology and user preferences;
* changes in our operating performance;
* our post-restructuring financial condition, financing requirements and cash flow;
* limitations on our operating and strategic flexibility and the ability to operate our business, finance our capital needs or expand business strategies under the terms of our debt agreements;
* failure to comply with the financial covenants and other restrictive covenants in our debt agreements;
* limited access to capital markets and increased borrowing costs resulting from our leveraged capital structure and debt ratings;
* our ability to resolve any remaining bankruptcy claims;
* changes in the availability and cost of paper and other raw materials used to print our directories and our reliance on third-party providers for printing, publishing and distribution services;
* credit risk associated with our reliance on small- and medium-sized businesses as clients;
* our ability to attract and retain qualified key personnel;
* our ability to maintain good relations with our unionized employees;
* changes in labor, business, political and economic conditions;
* changes in governmental regulations and policies and actions of regulatory bodies; and
* the outcome of pending or future litigation and other claims.
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this and other reports we file with the Securities and Exchange Commission, including the information in “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2010. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. All forward-looking statements included in this report are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About SuperMedia Inc.
SuperMedia (NASDAQ:SPMD) is the advertising company for local small- to medium-sized businesses across the United States. SuperMedia specializes in results. Click-here results. Ring-the-phone results. Knock-on-the-door results.
SuperMedia’s advertising products and services include: the SuperGuarantee® and SuperTradeExchange® programs, Verizon® SuperYellowPages, FairPoint® SuperYellowPages and Frontier® SuperYellowPages, Superpages.com®, EveryCarListed.comSM, Switchboard.comSM, LocalSearch.comSM, Superpages MobileSM and SuperpagesDirect® direct mail products. For more information, visit www.supermedia.com.
1 includes a favorable non-recurring non-cash benefit of $40 million associated with the resolution of state operating tax claims
SPMD-G
SuperMedia Inc.
Consolidated Statements of Operations
Reported (GAAP)
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009 (2)
(dollars in millions, except per share amounts)
Successor Company Predecessor Company
Year Ended Year Ended
Unaudited 12/31/10 12/31/09 % Change
Operating Revenue $ 1,176 $ 2,512 (53.2)
Operating Expense
Selling 470 677 (30.6)
Cost of sales (exclusive of depreciation and amortization) 418 581 (28.1)
General and administrative 198 445 (55.5)
Depreciation and amortization 186 68 173.5
Total Operating Expense 1,272 1,771 (28.2)
Operating Income (Loss) (96) 741 NM
Interest expense, net 278 145 91.7
Income (Loss) Before Reorganization Items, Gain on Early Extinguishment of Debt and Provision (Benefit) for Income Taxes
(374)
596 NM
Reorganization items (5) 8,035 NM
Gain on early extinguishment of debt 76 - NM
Income (Loss) Before Provision (Benefit) for Income Taxes
(303) 8,631 NM
Provision (benefit) for income taxes (107) 374 NM
Net Income (Loss) $ (196) $ 8,257 NM
Basic and Diluted Earnings (Loss) per Common Share (1) $ (13.04) $ 56.32 NM
Basic and diluted weighted-average common
shares outstanding
15.0 146.6
These schedules are preliminary and subject to change pending the Company's filing of its Form 10-K. As a result of our adoption of fresh start accounting in December 2009, our Successor Company financial results are not comparable to our Predecessor Company financial results.
Note:
(1) Equity based awards granted had no impact on the calculation of diluted earnings per common share.
(2) Results for the year ended December 31, 2010 include a $40 million general and administrative expense reduction related to the favorable non-recurring, non-cash resolution of state operating tax claims.
SuperMedia Inc.
Consolidated Statements of Operations
Reported (GAAP)
Three Months Ended December 31, 2010 Compared to Three Months Ended December 31, 2009
(dollars in millions, except per share amounts)
Successor Company Predecessor Company
3 Mos. Ended 3 Mos. Ended
Unaudited 12/31/10 12/31/09 % Change
Operating Revenue $ 426 $ 576 (26.0 )
Operating Expense
Selling 126 149 (15.4 )
Cost of sales (exclusive of depreciation and amortization) 118 145 (18.6 )
General and administrative 56 111 (49.5 )
Depreciation and amortization 46 17 170.6
Total Operating Expense 346 422 (18.0 )
Operating Income 80 154 (48.1 )
Interest expense (income), net 66 (3 ) NM
Income Before Reorganization Items, Gain on Early Extinguishment of Debt and Provision for Income Taxes
14 157 (91.1 )
Reorganization items - 8,475 (100.0 )
Gain on early extinguishment of debt 76 - NM
Income Before Provision for Income Taxes
90 8,632 (99.0 )
Provision for income taxes 34 375 (90.9 )
Net Income $ 56 $ 8,257 (99.3 )
Basic and Diluted Earnings per Common Share (1) $ 3.67 $ 56.32 (93.5 )
Basic and diluted weighted-average common
shares outstanding
15.0 146.7
Note:
(1) Equity based awards granted had no impact on the calculation of diluted earnings per common share.
SuperMedia Inc.
Consolidated Statements of Operations
Adjusted Pro Forma and Adjusted (Non-GAAP) (1)
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009 (3)
(dollars in millions, except per share amounts)
Successor Company Predecessor Company
Year Ended Year Ended
Unaudited 12/31/10 12/31/09 % Change
Operating Revenue $ 2,002 $ 2,512 (20.3)
Operating Expense
Selling 578 677 (14.6)
Cost of sales (exclusive of depreciation and amortization) 523 581 (10.0)
General and administrative 250 398 (37.2)
Depreciation and amortization 186 68 173.5
Total Operating Expense 1,537 1,724 (10.8)
Operating Income 465 788 (41.0)
Interest expense, net 278 147 89.1
Income Before Reorganization Items, Gain on Early Extinguishment of Debt and Provision for Income Taxes
187 641 (70.8)
Reorganization items - - NM
Gain on early extinguishment of debt - - NM
Income Before Provision for Income Taxes
187 641 (70.8)
Provision for income taxes 70 202 (65.3)
Net Income $ 117 $ 439 (73.3)
Basic and Diluted Earnings per Common Share (2) $ 7.82 $ 3.00 160.7
Basic and diluted weighted-average common
shares outstanding
15.0 146.6
Notes:
(1) These consolidated statements of operations provide a comparison of the twelve months ended December 31, 2010 adjusted pro forma results to the twelve months ended December 31, 2009 adjusted results. The following schedules provide reconciliations from our reported GAAP results to adjusted pro forma and adjusted non-GAAP results for the periods shown above.
(2) Equity based awards granted had no impact on the calculation of diluted earnings per common share.
(3) Results for the twelve months ended December 31, 2010 include a $40 million general and administrative expense reduction related to the favorable non-recurring, non-cash resolution of state operating tax claims.
SuperMedia Inc.
Consolidated Statements of Operations
Adjusted Pro Forma and Adjusted (Non-GAAP) (1)
Three Months Ended December 31, 2010 Compared to Three Months Ended December 31, 2009
(dollars in millions, except per share amounts)
Successor Company Predecessor Company
3 Mos. Ended 3 Mos. Ended
Unaudited 12/31/10 12/31/09 % Change
Operating Revenue $ 468 $ 576 (18.8)
Operating Expense
Selling 136 149 (8.7)
Cost of sales (exclusive of depreciation and amortization) 123 145 (15.2)
General and administrative 58 87 (33.3)
Depreciation and amortization 46 17 170.6
Total Operating Expense 363 398 (8.8)
Operating Income 105 178 (41.0)
Interest expense (income), net 66 (3) NM
Income Before Reorganization Items, Gain on Early Extinguishment of Debt and Provision for Income Taxes
39 181 (78.5)
Reorganization items - - NM
Gain on early extinguishment of debt - - NM
Income Before Provision for Income Taxes
39 181 (78.5)
Provision for income taxes 16 33 (51.5)
Net Income $ 23 $ 148 (84.5)
Basic and Diluted Earnings per Common Share (2) $ 1.51 $ 1.01 49.5
Basic and diluted weighted-average common
shares outstanding
15.0 146.7
Notes:
(1) These consolidated statements of operations provide a comparison of the three months ended December 31, 2010 adjusted pro forma results to the three months ended December 31, 2009 adjusted results. The following schedules provide reconciliations from our reported GAAP results to adjusted pro forma and adjusted non-GAAP results for the periods shown above.
(2) Equity based awards granted had no impact on the calculation of diluted earnings per common share.
SuperMedia Inc.
Consolidated Statements of Operations
Reported (GAAP)
Three Months Ended December 31, 2010 Compared to Three Months Ended September 30, 2010 (2)
(dollars in millions, except per share amounts)
3 Mos. Ended 3 Mos. Ended
Unaudited 12/31/10 9/30/10 % Change
Operating Revenue $ 426 $ 349 22.1
Operating Expense
Selling 126 122 3.3
Cost of sales (exclusive of depreciation and amortization) 118 108 9.3
General and administrative 56 45 24.4
Depreciation and amortization 46 45 2.2
Total Operating Expense 346 320 8.1
Operating Income 80 29 175.9
Interest expense, net 66 69 (4.3)
Income (Loss) Before Reorganization Items, Gain on Early Extinguishment of Debt and Provision (Benefit) for Income Taxes
14 (40) NM
Reorganization items - (2) (100.0)
Gain on early extinguishment of debt 76 - NM
Income (Loss) Before Provision (Benefit) for Income Taxes
90 (42) NM
Provision (benefit) for income taxes 34 (16) NM
Net Income (Loss) $ 56 $ (26) NM
Basic and Diluted Earnings (Loss) per Common Share (1) $ 3.67 $ (1.73) NM
Basic and diluted weighted-average common
shares outstanding
15.0 15.0
Note:
(1) Equity based awards granted had no impact on the calculation of diluted earnings per common share.
(2) Results for the three months ended September 30, 2010 include a general and administrative expense reduction related to the favorable non-recurring, non-cash resolution of state operating tax claims of $24 million.
SuperMedia Inc.
Consolidated Statements of Operations
Adjusted Pro Forma (Non-GAAP) (1)
Three Months Ended December 31, 2010 Compared to Three Months Ended September 30, 2010 (3)
(dollars in millions, except per share amounts)
3 Mos. Ended 3 Mos. Ended
Unaudited 12/31/10 9/30/10 % Change
Operating Revenue $ 468 $ 489 (4.3)
Operating Expense
Selling 136 144 (5.6)
Cost of sales (exclusive of depreciation and amortization) 123 126 (2.4)
General and administrative 58 47 23.4
Depreciation and amortization 46 45 2.2
Total Operating Expense 363 362 0.3
Operating Income 105 127 (17.3)
Interest expense, net 66 69 (4.3)
Income Before Reorganization Items, Gain on Early
Extinguishment of Debt and Provision for Income Taxes
39 58 (32.8)
Reorganization items - - NM
Gain on early extinguishment of debt - - NM
Income Before Provision for Income Taxes
39 58 (32.8)
Provision for income taxes 16 22 (27.3)
Net Income $ 23 $ 36 (36.1)
Basic and Diluted Earnings per Common Share (2) $ 1.51 $ 2.44 (38.1)
Basic and diluted weighted-average common
shares outstanding
15.0 15.0
Notes:
(1) These consolidated statements of operations provide a comparison of the three months ended December 31, 2010 adjusted pro forma results to the three months ended September 30, 2010 adjusted pro forma results. The following schedules provide reconciliations from our reported GAAP results to adjusted pro forma non-GAAP results for the periods shown above.
(2) Equity based awards granted had no impact on the calculation of diluted earnings per common share.
(3) Results for the three months ended September 30, 2010 include a general and administrative expense reduction related to the favorable non-recurring, non-cash resolution of state operating tax claims of $24 million.
SuperMedia Inc.
Consolidated Statements of Operations
Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP) (8)
Year Ended December 31, 2010
(dollars in millions, except per share amounts)
Successor Company
Adjustments Pro Forma Items
Year Ended 12/31/10 Restructuring and Other Severance Costs (3) Reorganization Items (4) Health Care Reform Act (5) Gain on Early Extinguishment of Debt (6) Year Ended 12/31/10 Fresh Start Accounting Items (7) Year Ended 12/31/10
Unaudited Reported
(GAAP)
Adjusted
(Non-GAAP)
Adjusted
Pro Forma
(Non-GAAP)
Operating Revenue $ 1,176 $ - $ - $ - $ - $ 1,176 $ 826 $ 2,002
Operating Expense
Selling 470 - - - - 470 108 578
Cost of sales (exclusive of depreciation and amortization) 418 - - - - 418 105 523
General and administrative 198 (9 ) - - - 189 61 250
Depreciation and amortization 186 - - - - 186 - 186
Total Operating Expense 1,272 (9 ) - - - 1,263 274 1,537
Operating Income (Loss) (96 ) 9 - - - (87 ) 552 465
Interest expense, net 278 - - - - 278 - 278
Income (Loss) Before Reorganization Items, Gain on Early Extinguishment of Debt and Provision (Benefit) for Income Taxes
(374 ) 9 - - - (365 ) 552 187
Reorganization items (5 ) - 5 - - - - -
Gain on early extinguishment of debt 76 - - - (76 ) - - -
Income (Loss) Before Provision (Benefit) for Income Taxes
(303 ) 9 5 - (76 ) (365 ) 552 187
Provision (benefit) for income taxes (107 ) 4 2 (7 ) (28 ) (136 ) 206 70
Net Income (Loss) $ (196 ) $ 5 $ 3 $ 7 $ (48 ) $ (229 ) $ 346 $ 117
Basic and Diluted Earnings (Loss) per Common Share $ (13.04 ) $ 0.35 $ 0.20 $ 0.48 $ (3.18 ) $ (15.20 ) $ 23.03 $ 7.82
Operating Income (Loss) $ (96 ) $ 9 $ - $ - $ - $ (87 ) $ 552 $ 465
Depreciation and Amortization 186 - - - - 186 - 186
EBITDA (non-GAAP) (1) $ 90 $ 9 $ - $ - $ - $ 99 $ 552 $ 651
Operating income (loss) margin (2) -8.1 % -7.4 % 23.2 %
Impact of depreciation and amortization 15.8 % 15.8 % 9.3 %
EBITDA margin (non-GAAP) (1) 7.7 % 8.4 % 32.5 %
Notes:
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation, and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by operating revenue.
(2) Operating income (loss) margin is calculated by dividing operating income (loss) by operating revenue.
(3) Restructuring and other severance costs include costs associated with strategic organizational cost savings initiatives of $5 million and costs related to the termination of our former chief executive officer's employment of $4 million.
(4) Reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the United States Bankruptcy Code.
(5) As a result of the passage of the Health Care Reform Act in March of 2010, the future benefit of certain deferred tax assets was eliminated, resulting in a charge in the current period.
(6) Gain on the early extinguishment of debt represents the gain associated with the purchase of the Company's debt below par value.
(7) Fresh start accounting items include adjustments for revenue and expense items that would have been otherwise amortized into the Company's
statement of operations but were written off at December 31, 2009 as prescribed by United States Generally Accepted Accounting Principles.
(8) Results include a $40 million general and administrative expense reduction related to the favorable non-recurring, non-cash resolution of state operating tax claims.
SuperMedia Inc.
Consolidated Statements of Operations
Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)
Three Months Ended December 31, 2010
(dollars in millions, except per share amounts)
Successor Company
Adjustments Pro Forma Items
3 Mos. Ended 12/31/10 Gain on Early Extinguishment of Debt and Other (3) 3 Mos. Ended 12/31/10 Fresh Start Accounting Items (4) 3 Mos. Ended 12/31/10
Unaudited Reported
(GAAP)
Adjusted
(Non-GAAP)
Adjusted
Pro Forma
(Non-GAAP)
Operating Revenue $ 426 $ - $ 426 $ 42 $ 468
Operating Expense
Selling 126 - 126 10 136
Cost of sales (exclusive of depreciation and amortization) 118 - 118 5 123
General and administrative 56 - 56 2 58
Depreciation and amortization 46 - 46 - 46
Total Operating Expense 346 - 346 17 363
Operating Income 80 - 80 25 105
Interest expense, net 66 - 66 - 66
Income Before Reorganization Items, Gain on Early Extinguishment of Debt and Provision for Income Taxes
14 - 14 25 39
Reorganization items - - - - -
Gain on early extinguishment of debt 76 (76) - - -
Income Before Provision for Income Taxes
90 (76) 14 25 39
Provision for income taxes 34 (28) 6 10 16
Net Income $ 56 $ (48) $ 8 $ 15 $ 23
Basic and Diluted Earnings per Common Share $ 3.67 $ (3.12) $ 0.55 $ 0.96 $ 1.51
Operating Income $ 80 $ - $ 80 $ 25 $ 105
Depreciation and Amortization 46 - 46 - 46
EBITDA (non-GAAP) (1) $ 126 $ - $ 126 $ 25 $ 151
Operating income margin (2) 18.8% 18.8% 22.5%
Impact of depreciation and amortization 10.8% 10.8% 9.8%
EBITDA margin (non-GAAP) (1) 29.6% 29.6% 32.3%
Notes:
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation, and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by operating revenue.
(2) Operating income margin is calculated by dividing operating income by operating revenue.
(3) Gain on the early extinguishment of debt and other represents the gain associated with the purchase of the Company's debt below par value and other adjustments of less than $1 million.
(4) Fresh start accounting items include adjustments for revenue and expense items that would have been otherwise amortized into the Company's statement of operations but were written off at December 31, 2009 according to the rules of fresh start accounting.
SuperMedia Inc.
Consolidated Statements of Operations
Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP) (6)
Three Months Ended September 30, 2010
(dollars in millions, except per share amounts)
Successor Company
Adjustments Pro Forma Items
3 Mos. Ended 9/30/10 Restructuring and Other Severance Costs (3) Reorganization Items (4) 3 Mos. Ended 9/30/10 Fresh Start Accounting Items (5) 3 Mos. Ended 9/30/10
Unaudited Reported
(GAAP)
Adjusted
(Non-GAAP)
Adjusted
Pro Forma
(Non-GAAP)
Operating Revenue $ 349 $ - $ - $ 349 $ 140 $ 489
Operating Expense
Selling 122 - - 122 22 144
Cost of sales (exclusive of depreciation and amortization) 108 - - 108 18 126
General and administrative 45 (5) - 40 7 47
Depreciation and amortization 45 - - 45 - 45
Total Operating Expense 320 (5) - 315 47 362
Operating Income 29 5 - 34 93 127
Interest expense, net 69 - - 69 - 69
Income (Loss) Before Reorganization Items and Provision (Benefit) for Income Taxes
(40) 5 - (35) 93 58
Reorganization items (2) - 2 - - -
Income (Loss) Before Provision (Benefit) for Income Taxes
(42) 5 2 (35) 93 58
Provision (benefit) for income taxes (16) 3 1 (12) 34 22
Net Income (Loss) $ (26) $ 2 $ 1 $ (23) $ 59 $ 36
Basic and Diluted Earnings (Loss) per Common Share $ (1.73) $ 0.22 $ 0.07 $ (1.44) $ 3.88 $ 2.44
Operating Income $ 29 $ 5 $ - $ 34 $ 93 $ 127
Depreciation and Amortization 45 - - 45 - 45
EBITDA (non-GAAP) (1) $ 74 $ 5 $ - $ 79 $ 93 $ 172
Operating income margin (2) 8.3% 9.7% 26.0%
Impact of depreciation and amortization 12.9% 12.9% 9.2%
EBITDA margin (non-GAAP) (1) 21.2% 22.6% 35.2%
Notes:
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation, and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by operating revenue.
(2) Operating income margin is calculated by dividing operating income by operating revenue.
(3) Restructuring and other severance costs include costs associated with strategic organizational cost savings initiatives of $1 million and costs related to the termination of our former chief executive officer's employment of $4 million.
(4) Reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the United States Bankruptcy Code.
(5) Fresh start accounting items include adjustments for revenue and expense items that would have been otherwise amortized into the Company's statement of operations but were written off at December 31, 2009 according to the rules of fresh start accounting.
(6) Results include a $24 million general and administrative expense reduction related to the favorable non-recurring, non-cash resolution of state operating tax claims.
SuperMedia Inc.
Consolidated Statements of Operations
Reconciliation from Reported (GAAP) to Adjusted (Non-GAAP)
Year Ended December 31, 2009
(dollars in millions, except per share amounts)
Predecessor Company
Adjustments
Year Ended 12/31/09 Stock-Based Compensation and Swap Adjustments(3) Restructuring
Costs (4)
Benefit Charges (5) Reorganization Items (6) Year Ended 12/31/09
Unaudited Reported
(GAAP)
Adjusted
(Non-GAAP)
Operating Revenue $ 2,512 $ - $ - $ - $ - $ 2,512
Operating Expense
Selling 677 - - - - 677
Cost of sales (exclusive of depreciation and amortization) 581 - - - - 581
General and administrative 445 (4) (25) (18) - 398
Depreciation and amortization 68 - - - - 68
Total Operating Expense 1,771 (4) (25) (18) - 1,724
Operating Income 741 4 25 18 - 788
Interest expense, net 145 2 - - - 147
Income Before Reorganization Items and Provision for Income Taxes
596 2 25 18 - 641
Reorganization items 8,035 - - - (8,035) -
Income Before Provision for Income Taxes
8,631 2 25 18 (8,035) 641
Provision for income taxes 374 1 8 6 (187) 202
Net Income $ 8,257 $ 1 $ 17 $ 12 $ (7,848) $ 439
Basic and Diluted Earnings per Common Share $ 56.32 $ 0.01 $ 0.12 $ 0.08 $ (53.53) $ 3.00
Operating Income $ 741 $ 4 $ 25 $ 18 $ - $ 788
Depreciation and Amortization 68 - - - - 68
EBITDA (non-GAAP) (1) $ 809 $ 4 $ 25 $ 18 $ - $ 856
Operating income margin (2) 29.5% 31.4%
Impact of depreciation and amortization 2.7% 2.7%
EBITDA margin (non-GAAP) (1) 32.2% 34.1%
Notes:
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, reorganization items, depreciation and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by operating revenue.
(2) Operating income margin is calculated by dividing operating income by operating revenue.
(3) The stock-based compensation reflects costs associated with a one-time incentive compensation award granted to most of the Company's employees in January 2007. The swap adjustments reflect the changes associated with the discontinuation of hedge accounting.
(4) Restructuring costs are associated with strategic organizational cost savings initiatives.
(5) Non-recurring true-up of long-term benefit plans.
(5) Reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the United States Bankruptcy Code. As required by U.S. GAAP, the Company adopted fresh start accounting effective December 31, 2009. This represents non-recurring reorganization items of $469 million, a pre-emergence gain of $6,035 million resulting from the discharge of liabilities and a gain of $2,469 million associated with fresh start accounting adjustments.
SuperMedia Inc.
Consolidated Statements of Operations
Reconciliation from Reported (GAAP) to Adjusted (Non-GAAP)
Three Months Ended December 31, 2009
(dollars in millions, except per share amounts)
Predecessor Company
Adjustments
3 Mos. Ended 12/31/09 Restructuring Costs (3) Benefit Charges (4) Reorganization Items (5) 3 Mos. Ended 12/31/09
Unaudited Reported
(GAAP)
Adjusted
(Non-GAAP)
Operating Revenue $ 576 $ - $ - $ - $ 576
Operating Expense
Selling 149 - - - 149
Cost of sales (exclusive of depreciation and amortization) 145 - - - 145
General and administrative 111 (6) (18) - 87
Depreciation and amortization 17 - - - 17
Total Operating Expense 422 (6) (18) - 398
Operating Income 154 6 18 - 178
Interest expense (income), net (3) - - - (3)
Income Before Reorganization Items and Provision for Income Taxes
157 6 18 - 181
Reorganization items 8,475 - - (8,475) -
Income Before Provision for Income Taxes
8,632 6 18 (8,475) 181
Provision for income taxes 375 2 6 (350) 33
Net Income $ 8,257 $ 4 $ 12 $ (8,125) $ 148
Basic and Diluted Earnings per Common Share $ 56.32 $ 0.03 $ 0.08 $ (55.42) $ 1.01
Operating Income $ 154 $ 6 $ 18 $ - $ 178
Depreciation and Amortization 17 - - - 17
EBITDA (non-GAAP) (1) $ 171 $ 6 $ 18 $ - $ 195
Operating Income margin (2) 26.7% 30.9%
Impact of depreciation and amortization 3.0% 3.0%
EBITDA margin (non-GAAP) (1) 29.7% 33.9%
Notes:
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, reorganization items, depreciation and
amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by operating revenue.
(2) Operating income margin is calculated by dividing operating income by operating revenue.
(3) Restructuring costs are associated with strategic organizational cost savings initiatives.
(4) Non-recurring true-up of long-term benefit plans.
(5) Reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the United States Bankruptcy Code. As required by U.S. GAAP, the Company adopted fresh start accounting effective December 31, 2009. This represents a charge for non-recurring reorganization items of $29 million, a pre-emergence gain of $6,035 million resulting from the discharge of liabilities and a gain of $2,469 million associated with fresh start accounting adjustments.
SuperMedia Inc.
Consolidated Balance Sheets
Reported (GAAP)
As of December 31, 2010 and December 31, 2009
(dollars in millions)
Unaudited 12/31/2010 12/31/2009 $ Change
Assets
Current assets:
Cash and cash equivalents $ 174 $ 212 $ (38)
Accounts receivable, net of allowances of $89 and $0 210 319 (109)
Unbilled accounts receivable - 627 (627)
Accrued taxes receivable - 132 (132)
Deferred directory costs 199 24 175
Prepaid expenses and other 13 17 (4)
Total current assets 596 1,331 (735)
Property, plant and equipment 122 107 15
Less: accumulated depreciation 28 - 28
94 107 (13)
Goodwill 1,707 1,707 -
Intangible assets, net 481 614 (133)
Pension assets 42 65 (23)
Other non-current assets 6 10 (4)
Total Assets $ 2,926 $ 3,834 $ (908)
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities $ 236 $ 232 $ 4
Deferred revenue 114 - 114
Deferred tax liabilities 2 218 (216)
Other 17 19 (2)
Total current liabilities 369 469 (100)
Long-term debt 2,171 2,750 (579)
Employee benefit obligations 355 325 30
Non-current deferred tax liabilities 22 55 (33)
Unrecognized tax benefits 37 33 4
Other liabilities 2 2 -
Stockholders' equity (deficit):
Common stock ($.01 par value; 60 million shares authorized, 15,489,936 and 14,996,952 shares issued and outstanding in 2010 and 2009, respectively)
- - -
Additional paid-in capital 206 200 6
Retained earnings (deficit) (196) - (196)
Accumulated other comprehensive (loss) (40) - (40)
Total stockholders' equity (deficit) (30) 200 (230)
Total Liabilities and Stockholders' Equity (Deficit) $ 2,926 $ 3,834 $ (908)
SuperMedia Inc.
Consolidated Statements of Cash Flows
Reported (GAAP) and Non-GAAP Financial Reconciliation - Free Cash Flow
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Successor Company Predecessor Company
Unaudited Year Ended 12/31/10 Year Ended 12/31/09 $ Change
Cash Flows from Operating Activities
Net Income (Loss) $ (196) $ 8,257 $ (8,453)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Non-cash reorganization items - (8,072) 8,072
Gain on early extinguishment of debt (76) - (76)
Depreciation and amortization expense 186 68 118
Employee retirement benefits 11 23 (12)
Deferred income taxes (225) 323 (548)
Provision for uncollectible accounts 61 228 (167)
Stock-based compensation expense 6 12 (6)
Changes in current assets and liabilities
Accounts receivable and unbilled accounts receivable 675 (152) 827
Deferred directory costs (175) 43 (218)
Other current assets 4 (132) 136
Accounts payable and accrued liabilities 244 (82) 326
Other, net (6) (80) 74
Net cash provided by operating activities 509 436 73
Cash Flows from Investing Activities
Capital expenditures (including capitalized software) (45) (52) 7
Acquisitions - (3) 3
Proceeds from sale of assets 1 - 1
Net cash used in investing activities (44) (55) 11
Cash Flows from Financing Activities
Repayment of long-term debt (500) (679) 179
Other, net (3) - (3)
Net cash used in financing activities (503) (679) 176
Increase in cash and cash equivalents (38) (298) 260
Cash and cash equivalents, beginning of year 212 510 (298)
Cash and cash equivalents, end of year $ 174 $ 212 $ (38)
Successor Company Predecessor Company
Non-GAAP Financial Reconciliation - Free Cash Flow Year Ended 12/31/10 Year Ended 12/31/09 $ Change
Unaudited
Net cash provided by operating activities $ 509 $ 436 $ 73
Less: Capital expenditures (including capitalized software) (45) (52) 7
Free Cash Flow $ 464 $ 384 $ 80
SuperMedia Inc.
Advertising Sales
(dollars in millions)
Successor Company Successor Company
Predecessor Company Predecessor Company
3 Mos. Ended 3 Mos. Ended 3 Mos. Ended Year Ended Year Ended Year Ended
Unaudited 12/31/10 12/31/09 12/31/08 12/31/10 12/31/09 12/31/08
Net Advertising Sales(1) $ 483 $ 569 $ 722 $ 1,842 $ 2,224 $ 2,739
% Change year-over-year (15.1%) (21.2%) (17.2%) (18.8%)
Notes:
(1) Net advertising sales is an operating measure used by the Company to compare advertising sales for current advertising periods to corresponding sales for previous periods. It is important to distinguish net advertising sales from operating revenue, which on our financial statements is recognized under the deferral and amortization method.
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