Thursday, May 07, 2009 7:48:26 AM
R.H. Donnelley Reports First Quarter 2009 Results
May 7, 2009 7:30:00 AM
Email Story Discuss on ZenoBank
View Additional Profiles- Net Revenue of $602 Million
- Adjusted EBITDA of $320 Million
CARY, N.C., May 7 /PRNewswire-FirstCall/ -- R.H. Donnelley Corporation, one of the nation's leading consumer and business-to-business local commercial search companies, today reported first quarter 2009 net revenue of $602 million, representing an 11 percent decline from first quarter 2008. Adjusted EBITDA(1) in the quarter was $320 million, down $37 million or 10 percent from first quarter 2008. Adjusted free cash flow in the quarter was $66 million - based on cash flow from operations of $56 million, capital expenditures of $4 million and $14 million of other adjustments that primarily relate to restructuring - down from $92 million in first quarter 2008. First quarter advertising sales were $598 million, down 17 percent from advertising sales in the first quarter 2008. Net loss was $401 million in the quarter, compared to a net loss of $1,623 million in first quarter 2008. Net debt during the quarter decreased by $61 million, resulting in quarter-end net debt outstanding of $9,344 million, excluding the purchase accounting fair value adjustment. As of March 31, 2009, the cash balance was $533 million.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060731/NYM044LOGO)
"Results continue to be impacted by the recession and its effect on small- and medium-sized businesses and consumer spending," said David C. Swanson, chairman and CEO of R.H. Donnelley. "Our efforts to improve efficiency and eliminate non-mission critical costs helped to protect EBITDA and generated over $30 million of year-over-year cost savings."
Swanson continued, "As we previously announced, we are working to better position R.H. Donnelley for the future by establishing a more sustainable capital structure. We continue to discuss options for amending, refinancing or restructuring our debt obligations with our creditors."
During the first quarter, the Company underwent an ownership change as defined in Section 382 of the Internal Revenue Code. As a result, the Company believes it will be restricted in its ability to use some of its net operating losses and other corporate tax attributes in the future. The financials in the attached schedules contain the Company's best estimate of the impact related to the ownership change based on analysis performed to date; however, the analysis is not yet complete and there could be material changes in subsequent periods. As a result, deferred tax liability at quarter-end and deferred tax expense in the first quarter were each $375 million higher than they otherwise would have been. Such ownership change does not constitute a change in control under any of the Company's debt agreements.
Further important information regarding operating results and related reconciliations of non-GAAP financial measures to the most comparable GAAP measures can be found in the schedules and related footnotes of this press release, which should be thoroughly reviewed. Advertising sales is a statistical measure and consists of sales of advertising in print directories distributed during the period and Internet-based products and services with respect to which such advertising first appeared publicly during the period. It is important to distinguish advertising sales from net revenues, which is recognized under the deferral and amortization method.
Helping Local Small- and Medium-Sized Businesses Reach More Customers
R.H. Donnelley's integrated Dex(R) product solutions extend the marketing reach of local businesses. Through its unique Dex(R) Advantage, customers' business information is leveraged and marketed through a single profile, and efficiently distributed via a variety of local search products. Dex ensures advertisers' business content and messages are found wherever, whenever and however consumers choose to search. The Dex Advantage spans multiple media platforms for local advertisers including print with the Dex(R) directories; online and mobile devices with DexKnows.com; voice-activated directory search at 1-800-Call-Dex; and leading search engines and other online sites via Dex Net.
About R.H. Donnelley
R.H. Donnelley Corporation (OTC: RHDC) is one of the nation's leading consumer and business-to-business local commercial search companies. The company delivers relevant search results for consumers and leads to small- and medium-sized businesses through its Dex-branded print yellow and white pages directories, Internet yellow pages site, mobile and voice search platforms as well as one of the largest pay-per-click ad networks in the U.S. It also operates the nation's leading business search engine and online directory through its Business.com subsidiary. For more information, visit www.rhd.com and www.dexknows.com.
Safe Harbor Provision
Certain statements contained in this press release regarding R.H. Donnelley's future operating results or performance or business plans or prospects and any other statements not constituting historical fact are "forward-looking statements" subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, the words "believe," "expect," "anticipate," "intend," "should," "will," "would," "planned," "estimated," "potential," "goal," "outlook," "may," "predicts," "could," or the negative of such terms, or other comparable expressions, as they relate to R.H. Donnelley or its management, have been used to identify such forward-looking statements. All forward-looking statements reflect only R.H. Donnelley's current beliefs and assumptions with respect to future business plans, prospects, decisions and results, and are based on information currently available to R.H. Donnelley. Accordingly, the statements are subject to significant risks, uncertainties and contingencies, which could cause R.H. Donnelley's actual operating results, performance or business plans or prospects to differ materially from those expressed in, or implied by, these statements.
Factors that could cause actual results to differ materially from current expectations include risks and other factors described in R.H. Donnelley's publicly available reports filed with the SEC, which contain a discussion of various factors that may affect R.H. Donnelley's business or financial results. Such risks and other factors, which in some instances are beyond R.H. Donnelley's control, include: our ability to generate sufficient cash to service our significant debt levels; our ability to comply with or obtain modifications or waivers of the financial covenants contained in our debt agreements, and the potential impact to operations and liquidity as a result of restrictive covenants in such debt agreements; our ability to refinance or restructure our debt on reasonable terms and conditions as might be necessary from time to time, particularly in light of the continuing instability in the global credit markets; increasing LIBOR rates; changes in directory advertising spend and consumer usage; regulatory and judicial rulings; competition and other economic conditions; changes in the Company's and the Company's subsidiaries credit ratings; changes in accounting standards; adverse results from litigation, governmental investigations or tax related proceedings or audits; the effect of labor strikes, lock-outs and negotiations; successful integration and realization of the expected benefits of acquisitions; the continued enforceability of the commercial agreements with Qwest, Embarq and AT&T; our reliance on third-party vendors for various services; and other events beyond our control that may result in unexpected adverse operating results. R.H. Donnelley is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet service providers. This press release is being furnished to the SEC through a Form 8-K. The Company's 2009 quarterly report on Form 10-Q for the period ended March 31, 2009 to be filed with the SEC may contain updates to the information included in this release.
(1) Before the following expenses: (a) restructuring, (b) FAS 123 R and
(c) restricted stock units related to the Business.com acquisition.
(See attached tables)
R.H. DONNELLEY CORPORATION Schedule 1
INDEX OF SCHEDULES
------------------
Schedule 1: Index of Schedules
Schedule 2: Unaudited Condensed Consolidated Statements of
Operations for the three months ended March 31,
2009 and 2008
Schedule 3: Unaudited Condensed Consolidated Balance
Sheets at March 31, 2009 and December 31, 2008
Schedule 4: Unaudited Condensed Consolidated Statements of
Cash Flows for the three months ended March 31,
2009 and 2008
Schedule 5: Reconciliation of Non-GAAP Measures
Schedule 6: Statistical Measure - Advertising Sales
Schedule 7: Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------
Schedule 2
Amounts in millions, except loss per share
------------------
Three Months Ended
March 31,
------------------
2009 2008
-------------- ---- ----
Net revenue (1) $602.0 $674.7
Expenses 295.6 330.4
Depreciation and amortization 142.8 118.3
Impairment charges (2) - 2,463.6
----- -------
Operating income (loss) 163.6 (2,237.6)
Interest expense, net (198.8) (195.9)
------ ------
Pre-tax loss (35.2) (2,433.5)
Tax (provision) benefit (366.0) 810.4
------ -----
Net loss $(401.2) $(1,623.1)
======= =========
Loss per share (EPS):
Basic and Diluted $(5.83) $(23.60)
Shares used in computing EPS:
Basic and Diluted 68.8 68.8
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------
Note: These schedules are preliminary and subject to change
pending the Company's filing of its Form 10-Q.
------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 3
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------
Amounts in millions
------------------- --------- ------------
March 31, December 31,
2009 2008
---- ----
Assets
Cash and cash equivalents $533.3 $131.2
Accounts receivable, net 998.6 1,027.0
Deferred directory costs 163.2 164.3
Other current assets 166.8 193.0
----- -----
Total current assets 1,861.9 1,515.5
Fixed assets and computer software, net 178.4 188.7
Intangible assets, net 9,880.9 10,009.3
Other non-current assets 154.4 167.2
----- -----
Total Assets $12,075.6 $11,880.7
========= =========
Liabilities and Shareholders' Deficit
Accounts payable and accrued liabilities $180.7 $216.1
Accrued interest 175.6 181.1
Deferred directory revenue 1,034.0 1,076.3
Current portion of long-term debt 408.6 113.6
----- -----
Total current liabilities 1,798.9 1,587.1
Long-term debt 9,550.0 9,508.7
Deferred income taxes, net 1,366.1 998.1
Other non-current liabilities 250.9 280.2
----- -----
Total liabilities 12,965.9 12,374.1
Shareholders' deficit (890.3) (493.4)
------ ------
Total Liabilities and Shareholders' Deficit $12,075.6 $11,880.7
========= =========
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
--------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-Q.
--------------------------------------------------------------------
R.H. DONNELLEY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Schedule 4
---------------------------------------------------------
Amounts in millions
-------------------
Three Months Ended
March 31,
-------------------
Operating activities: 2009 2008
---- ----
Net loss $(401.2) $(1,623.1)
Impairment charges (2) - 2,463.6
Depreciation and amortization 142.8 118.3
Deferred income taxes 366.7 (812.1)
Changes in working capital (55.6) (49.1)
Other 3.4 2.3
--- ---
Net cash provided by operating activities 56.1 99.9
Investment activities:
Additions to fixed assets and computer software (3.9) (10.1)
Equity investment disposition - 4.3
--- ---
Net cash used in investing activities (3.9) (5.8)
Financing activities:
Credit facilities repayments (22.0) (91.4)
Revolver repayments - (232.4)
Borrowings under the Revolver 361.0 215.3
Repurchase of common stock - (6.1)
Increase in checks not yet presented for payment 10.9 4.2
Proceeds from employee stock option exercises - 0.1
----- ------
Net cash provided by (used in) financing activities 349.9 (110.3)
Increase (decrease) in cash and cash equivalents 402.1 (16.2)
Cash and cash equivalents, beginning of period 131.2 46.1
------ -----
Cash and cash equivalents, end of period $533.3 $29.9
====== =====
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION
RECONCILIATION OF NON-GAAP MEASURES Schedule 5a
------------------------------------
(unaudited)
Amounts in millions
------------------
Three Months Ended
March 31,
------------------
2009 2008
---- ----
Reconciliation of net loss - GAAP to EBITDA and
Adjusted EBITDA (3)
Net loss - GAAP $(401.2) $(1,623.1)
Plus (less) tax provision (benefit) 366.0 (810.4)
Plus interest expense, net 198.8 195.9
Plus depreciation and amortization 142.8 118.3
----- -----
EBITDA $306.4 $(2,119.3)
------ ---------
Impairment charges (2) - 2,463.6
SFAS No. 123 R non-cash compensation expense 4.0 10.8
Restricted stock unit expense related to the
Business.com acquisition 0.2 2.0
Restructuring costs 9.1 -
------ ------
Adjusted EBITDA $319.7 $357.1
====== ======
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 5b
RECONCILIATION OF NON-GAAP MEASURES (cont'd)
--------------------------------------------
(unaudited)
Amounts in millions
----------------------------
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Reconciliation of cash flow
from operations - GAAP to
adjusted free cash flow
Cash flow from operations - GAAP $56.1 $99.9
Add: Cash restructuring payments 13.9 -
Add: Cash restricted stock unit
payments related to the
Business.com acquisition 0.2 2.4
--- ---
Adjusted cash flow from operations 70.2 102.3
Less: Additions to fixed assets and
computer software - GAAP 3.9 10.1
--- ----
Adjusted free cash flow $66.3 $92.2
===== =====
----------------------------
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Reconciliation of interest
expense - GAAP to adjusted
interest expense (4)
Interest expense - GAAP $198.8 $195.9
Plus: Amortization of fair
value adjustment due to
purchase accounting 4.7 4.3
--- ---
Adjusted interest expense $203.5 $200.2
====== ======
----- -----
As of As of
----- -----
March 31, 2009 December 31, 2008
-------------- -----------------
Reconciliation of debt - GAAP to net
debt and net debt -excluding fair
value adjustment (4) (5)
Debt - GAAP $9,958.6 $9,622.3
Less: Cash and cash equivalents (533.3) (131.2)
------ ------
Net debt 9,425.3 9,491.1
Less: Fair value adjustment due to
purchase accounting (81.5) (86.2)
----- -----
Net debt - excluding fair value
adjustment $9,343.8 $9,404.9
======== ========
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 6
STATISTICAL MEASURE
CALCULATION OF ADVERTISING SALES PERCENTAGE CHANGE OVER PRIOR YEAR PERIODS
--------------------------------------------------------------------------
(unaudited)
Amounts in millions, except percentages
--------------------------------------- ------------------
Three Months Ended
------------------
March 31 December 31 September 30 June 30
-------- ----------- ------------ -------
2009 Advertising sales (6) $598.1
2008 Advertising sales
disclosed in 2008 Form
10-K and Forms 10-Q 717.6 $618.4 $503.6 $678.4
2007 Advertising sales
disclosed in 2007 Form
10-K and Forms 10-Q - 700.3 541.6 729.0
Pro forma adjustments
related to Business.com
Acquisition - - - 14.2
Adjustments primarily
related to changes in
publication dates 1.0 0.1 7.7 (1.2)
--- --- --- ----
2008 Pro forma advertising
sales $718.6
2007 Pro forma advertising
sales $700.4 $549.3 $742.0
----- ----- ---- ----
Pro forma advertising
sales percentage change
over prior year periods (16.8%) (11.7%) (8.3%) (8.6%)
===== ===== ==== ====
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 7
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------
AND NON-GAAP MEASURES
---------------------
(1) Our advertising revenues are earned primarily from the sale of
advertising in yellow pages directories that we publish. Revenue from
the sale of such advertising is deferred when a directory is
published, net of estimated sales claims, and recognized ratably over
the life of a directory, which is typically 12 months. Advertising
revenues also include revenues for Internet-based advertising
products, including our proprietary local search site, dexknows.com,
and Dex Net. Revenues with respect to our Internet-based advertising
products that are sold with print advertising are initially deferred
until the service is delivered or fulfilled and recognized ratably
over the life of the contract. Revenues with respect to Internet-
based services that are not sold with print advertising are
recognized as delivered or fulfilled.
(2) As a result of the decline in the trading value of our debt and
equity securities in the first quarter of 2008 and continuing
negative industry and economic trends that directly affected our
business, we performed impairment tests of our goodwill, definite
lived intangible assets and other long-lived assets as of March 31,
2008 in accordance with SFAS No. 142, Goodwill and Other Intangible
Assets ("SFAS No. 142") and SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"),
respectively. Based upon our testing results, we recognized a non-
cash goodwill impairment charge of $2.5 billion during the three
months ended March 31, 2008. Given the ongoing global credit and
liquidity crisis and the significant negative impact on financial
markets and the overall economy, the continued decline in our
advertising sales and other operating results, downward revisions to
our forecasted results, the recent downgrade of certain of our credit
ratings and the continued decline in the trading value of our debt
securities, we performed impairment tests of our definite-lived
intangible assets and other long-lived assets in accordance with
SFAS No. 144 as of March 31, 2009. Our testing results of our
definite-lived intangible assets and other long-lived assets indicated
no impairment as of March 31, 2009.
(3) EBITDA and Adjusted EBITDA are not measurements of operating
performance computed in accordance with GAAP and should not be
considered as a substitute for net loss prepared in conformity with
GAAP. In addition, EBITDA may not be comparable to similarly titled
measures of other companies. Adjusted EBITDA is determined by
adjusting EBITDA for items such as (i) impairment charges, (ii)
stock-based compensation in accordance with SFAS No. 123 (R), Share-
Based Payment, (iii) restricted stock unit expense related to the
Business.com Acquisition and (iv) restructuring costs.
(4) As a result of purchase accounting, RHD was required to adjust the
carrying value of Dex Media's debt at January 31, 2006 to its fair
value. Adjusted interest expense eliminates the interest benefit
resulting from the amortization of the fair value adjustment to Dex
Media's debt.
(5) Net debt represents total debt less cash and cash equivalents on the
respective date. Net debt - excluding fair value adjustments
represents net debt adjusted to remove the remaining fair value
purchase accounting adjustment of Dex Media's debt noted in footnote
4 above.
(6) Advertising sales is a statistical measure and consists of sales of
advertising in print directories distributed during the period and
Internet-based products and services with respect to which such
advertising first appeared publicly during the period. It is
important to distinguish advertising sales from net revenue, which
is recognized under the deferral and amortization method. 2007 pro
forma advertising sales assumes the Business.com Acquisition occurred
on January 1, 2007.
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
SOURCE R.H. Donnelley Corporation
----------------------------------------------
Investors
James M. Gruskin
1-800-497-6329
or Media
Tyler D. Gronbach
+1-919-297-1541
both for R.H. Donnelley Corporation
May 7, 2009 7:30:00 AM
Email Story Discuss on ZenoBank
View Additional Profiles- Net Revenue of $602 Million
- Adjusted EBITDA of $320 Million
CARY, N.C., May 7 /PRNewswire-FirstCall/ -- R.H. Donnelley Corporation, one of the nation's leading consumer and business-to-business local commercial search companies, today reported first quarter 2009 net revenue of $602 million, representing an 11 percent decline from first quarter 2008. Adjusted EBITDA(1) in the quarter was $320 million, down $37 million or 10 percent from first quarter 2008. Adjusted free cash flow in the quarter was $66 million - based on cash flow from operations of $56 million, capital expenditures of $4 million and $14 million of other adjustments that primarily relate to restructuring - down from $92 million in first quarter 2008. First quarter advertising sales were $598 million, down 17 percent from advertising sales in the first quarter 2008. Net loss was $401 million in the quarter, compared to a net loss of $1,623 million in first quarter 2008. Net debt during the quarter decreased by $61 million, resulting in quarter-end net debt outstanding of $9,344 million, excluding the purchase accounting fair value adjustment. As of March 31, 2009, the cash balance was $533 million.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060731/NYM044LOGO)
"Results continue to be impacted by the recession and its effect on small- and medium-sized businesses and consumer spending," said David C. Swanson, chairman and CEO of R.H. Donnelley. "Our efforts to improve efficiency and eliminate non-mission critical costs helped to protect EBITDA and generated over $30 million of year-over-year cost savings."
Swanson continued, "As we previously announced, we are working to better position R.H. Donnelley for the future by establishing a more sustainable capital structure. We continue to discuss options for amending, refinancing or restructuring our debt obligations with our creditors."
During the first quarter, the Company underwent an ownership change as defined in Section 382 of the Internal Revenue Code. As a result, the Company believes it will be restricted in its ability to use some of its net operating losses and other corporate tax attributes in the future. The financials in the attached schedules contain the Company's best estimate of the impact related to the ownership change based on analysis performed to date; however, the analysis is not yet complete and there could be material changes in subsequent periods. As a result, deferred tax liability at quarter-end and deferred tax expense in the first quarter were each $375 million higher than they otherwise would have been. Such ownership change does not constitute a change in control under any of the Company's debt agreements.
Further important information regarding operating results and related reconciliations of non-GAAP financial measures to the most comparable GAAP measures can be found in the schedules and related footnotes of this press release, which should be thoroughly reviewed. Advertising sales is a statistical measure and consists of sales of advertising in print directories distributed during the period and Internet-based products and services with respect to which such advertising first appeared publicly during the period. It is important to distinguish advertising sales from net revenues, which is recognized under the deferral and amortization method.
Helping Local Small- and Medium-Sized Businesses Reach More Customers
R.H. Donnelley's integrated Dex(R) product solutions extend the marketing reach of local businesses. Through its unique Dex(R) Advantage, customers' business information is leveraged and marketed through a single profile, and efficiently distributed via a variety of local search products. Dex ensures advertisers' business content and messages are found wherever, whenever and however consumers choose to search. The Dex Advantage spans multiple media platforms for local advertisers including print with the Dex(R) directories; online and mobile devices with DexKnows.com; voice-activated directory search at 1-800-Call-Dex; and leading search engines and other online sites via Dex Net.
About R.H. Donnelley
R.H. Donnelley Corporation (OTC: RHDC) is one of the nation's leading consumer and business-to-business local commercial search companies. The company delivers relevant search results for consumers and leads to small- and medium-sized businesses through its Dex-branded print yellow and white pages directories, Internet yellow pages site, mobile and voice search platforms as well as one of the largest pay-per-click ad networks in the U.S. It also operates the nation's leading business search engine and online directory through its Business.com subsidiary. For more information, visit www.rhd.com and www.dexknows.com.
Safe Harbor Provision
Certain statements contained in this press release regarding R.H. Donnelley's future operating results or performance or business plans or prospects and any other statements not constituting historical fact are "forward-looking statements" subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, the words "believe," "expect," "anticipate," "intend," "should," "will," "would," "planned," "estimated," "potential," "goal," "outlook," "may," "predicts," "could," or the negative of such terms, or other comparable expressions, as they relate to R.H. Donnelley or its management, have been used to identify such forward-looking statements. All forward-looking statements reflect only R.H. Donnelley's current beliefs and assumptions with respect to future business plans, prospects, decisions and results, and are based on information currently available to R.H. Donnelley. Accordingly, the statements are subject to significant risks, uncertainties and contingencies, which could cause R.H. Donnelley's actual operating results, performance or business plans or prospects to differ materially from those expressed in, or implied by, these statements.
Factors that could cause actual results to differ materially from current expectations include risks and other factors described in R.H. Donnelley's publicly available reports filed with the SEC, which contain a discussion of various factors that may affect R.H. Donnelley's business or financial results. Such risks and other factors, which in some instances are beyond R.H. Donnelley's control, include: our ability to generate sufficient cash to service our significant debt levels; our ability to comply with or obtain modifications or waivers of the financial covenants contained in our debt agreements, and the potential impact to operations and liquidity as a result of restrictive covenants in such debt agreements; our ability to refinance or restructure our debt on reasonable terms and conditions as might be necessary from time to time, particularly in light of the continuing instability in the global credit markets; increasing LIBOR rates; changes in directory advertising spend and consumer usage; regulatory and judicial rulings; competition and other economic conditions; changes in the Company's and the Company's subsidiaries credit ratings; changes in accounting standards; adverse results from litigation, governmental investigations or tax related proceedings or audits; the effect of labor strikes, lock-outs and negotiations; successful integration and realization of the expected benefits of acquisitions; the continued enforceability of the commercial agreements with Qwest, Embarq and AT&T; our reliance on third-party vendors for various services; and other events beyond our control that may result in unexpected adverse operating results. R.H. Donnelley is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet service providers. This press release is being furnished to the SEC through a Form 8-K. The Company's 2009 quarterly report on Form 10-Q for the period ended March 31, 2009 to be filed with the SEC may contain updates to the information included in this release.
(1) Before the following expenses: (a) restructuring, (b) FAS 123 R and
(c) restricted stock units related to the Business.com acquisition.
(See attached tables)
R.H. DONNELLEY CORPORATION Schedule 1
INDEX OF SCHEDULES
------------------
Schedule 1: Index of Schedules
Schedule 2: Unaudited Condensed Consolidated Statements of
Operations for the three months ended March 31,
2009 and 2008
Schedule 3: Unaudited Condensed Consolidated Balance
Sheets at March 31, 2009 and December 31, 2008
Schedule 4: Unaudited Condensed Consolidated Statements of
Cash Flows for the three months ended March 31,
2009 and 2008
Schedule 5: Reconciliation of Non-GAAP Measures
Schedule 6: Statistical Measure - Advertising Sales
Schedule 7: Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------
Schedule 2
Amounts in millions, except loss per share
------------------
Three Months Ended
March 31,
------------------
2009 2008
-------------- ---- ----
Net revenue (1) $602.0 $674.7
Expenses 295.6 330.4
Depreciation and amortization 142.8 118.3
Impairment charges (2) - 2,463.6
----- -------
Operating income (loss) 163.6 (2,237.6)
Interest expense, net (198.8) (195.9)
------ ------
Pre-tax loss (35.2) (2,433.5)
Tax (provision) benefit (366.0) 810.4
------ -----
Net loss $(401.2) $(1,623.1)
======= =========
Loss per share (EPS):
Basic and Diluted $(5.83) $(23.60)
Shares used in computing EPS:
Basic and Diluted 68.8 68.8
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------
Note: These schedules are preliminary and subject to change
pending the Company's filing of its Form 10-Q.
------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 3
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------
Amounts in millions
------------------- --------- ------------
March 31, December 31,
2009 2008
---- ----
Assets
Cash and cash equivalents $533.3 $131.2
Accounts receivable, net 998.6 1,027.0
Deferred directory costs 163.2 164.3
Other current assets 166.8 193.0
----- -----
Total current assets 1,861.9 1,515.5
Fixed assets and computer software, net 178.4 188.7
Intangible assets, net 9,880.9 10,009.3
Other non-current assets 154.4 167.2
----- -----
Total Assets $12,075.6 $11,880.7
========= =========
Liabilities and Shareholders' Deficit
Accounts payable and accrued liabilities $180.7 $216.1
Accrued interest 175.6 181.1
Deferred directory revenue 1,034.0 1,076.3
Current portion of long-term debt 408.6 113.6
----- -----
Total current liabilities 1,798.9 1,587.1
Long-term debt 9,550.0 9,508.7
Deferred income taxes, net 1,366.1 998.1
Other non-current liabilities 250.9 280.2
----- -----
Total liabilities 12,965.9 12,374.1
Shareholders' deficit (890.3) (493.4)
------ ------
Total Liabilities and Shareholders' Deficit $12,075.6 $11,880.7
========= =========
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
--------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-Q.
--------------------------------------------------------------------
R.H. DONNELLEY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Schedule 4
---------------------------------------------------------
Amounts in millions
-------------------
Three Months Ended
March 31,
-------------------
Operating activities: 2009 2008
---- ----
Net loss $(401.2) $(1,623.1)
Impairment charges (2) - 2,463.6
Depreciation and amortization 142.8 118.3
Deferred income taxes 366.7 (812.1)
Changes in working capital (55.6) (49.1)
Other 3.4 2.3
--- ---
Net cash provided by operating activities 56.1 99.9
Investment activities:
Additions to fixed assets and computer software (3.9) (10.1)
Equity investment disposition - 4.3
--- ---
Net cash used in investing activities (3.9) (5.8)
Financing activities:
Credit facilities repayments (22.0) (91.4)
Revolver repayments - (232.4)
Borrowings under the Revolver 361.0 215.3
Repurchase of common stock - (6.1)
Increase in checks not yet presented for payment 10.9 4.2
Proceeds from employee stock option exercises - 0.1
----- ------
Net cash provided by (used in) financing activities 349.9 (110.3)
Increase (decrease) in cash and cash equivalents 402.1 (16.2)
Cash and cash equivalents, beginning of period 131.2 46.1
------ -----
Cash and cash equivalents, end of period $533.3 $29.9
====== =====
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION
RECONCILIATION OF NON-GAAP MEASURES Schedule 5a
------------------------------------
(unaudited)
Amounts in millions
------------------
Three Months Ended
March 31,
------------------
2009 2008
---- ----
Reconciliation of net loss - GAAP to EBITDA and
Adjusted EBITDA (3)
Net loss - GAAP $(401.2) $(1,623.1)
Plus (less) tax provision (benefit) 366.0 (810.4)
Plus interest expense, net 198.8 195.9
Plus depreciation and amortization 142.8 118.3
----- -----
EBITDA $306.4 $(2,119.3)
------ ---------
Impairment charges (2) - 2,463.6
SFAS No. 123 R non-cash compensation expense 4.0 10.8
Restricted stock unit expense related to the
Business.com acquisition 0.2 2.0
Restructuring costs 9.1 -
------ ------
Adjusted EBITDA $319.7 $357.1
====== ======
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 5b
RECONCILIATION OF NON-GAAP MEASURES (cont'd)
--------------------------------------------
(unaudited)
Amounts in millions
----------------------------
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Reconciliation of cash flow
from operations - GAAP to
adjusted free cash flow
Cash flow from operations - GAAP $56.1 $99.9
Add: Cash restructuring payments 13.9 -
Add: Cash restricted stock unit
payments related to the
Business.com acquisition 0.2 2.4
--- ---
Adjusted cash flow from operations 70.2 102.3
Less: Additions to fixed assets and
computer software - GAAP 3.9 10.1
--- ----
Adjusted free cash flow $66.3 $92.2
===== =====
----------------------------
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Reconciliation of interest
expense - GAAP to adjusted
interest expense (4)
Interest expense - GAAP $198.8 $195.9
Plus: Amortization of fair
value adjustment due to
purchase accounting 4.7 4.3
--- ---
Adjusted interest expense $203.5 $200.2
====== ======
----- -----
As of As of
----- -----
March 31, 2009 December 31, 2008
-------------- -----------------
Reconciliation of debt - GAAP to net
debt and net debt -excluding fair
value adjustment (4) (5)
Debt - GAAP $9,958.6 $9,622.3
Less: Cash and cash equivalents (533.3) (131.2)
------ ------
Net debt 9,425.3 9,491.1
Less: Fair value adjustment due to
purchase accounting (81.5) (86.2)
----- -----
Net debt - excluding fair value
adjustment $9,343.8 $9,404.9
======== ========
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 6
STATISTICAL MEASURE
CALCULATION OF ADVERTISING SALES PERCENTAGE CHANGE OVER PRIOR YEAR PERIODS
--------------------------------------------------------------------------
(unaudited)
Amounts in millions, except percentages
--------------------------------------- ------------------
Three Months Ended
------------------
March 31 December 31 September 30 June 30
-------- ----------- ------------ -------
2009 Advertising sales (6) $598.1
2008 Advertising sales
disclosed in 2008 Form
10-K and Forms 10-Q 717.6 $618.4 $503.6 $678.4
2007 Advertising sales
disclosed in 2007 Form
10-K and Forms 10-Q - 700.3 541.6 729.0
Pro forma adjustments
related to Business.com
Acquisition - - - 14.2
Adjustments primarily
related to changes in
publication dates 1.0 0.1 7.7 (1.2)
--- --- --- ----
2008 Pro forma advertising
sales $718.6
2007 Pro forma advertising
sales $700.4 $549.3 $742.0
----- ----- ---- ----
Pro forma advertising
sales percentage change
over prior year periods (16.8%) (11.7%) (8.3%) (8.6%)
===== ===== ==== ====
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
------------------------------------------------------------------------
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
------------------------------------------------------------------------
R.H. DONNELLEY CORPORATION Schedule 7
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------
AND NON-GAAP MEASURES
---------------------
(1) Our advertising revenues are earned primarily from the sale of
advertising in yellow pages directories that we publish. Revenue from
the sale of such advertising is deferred when a directory is
published, net of estimated sales claims, and recognized ratably over
the life of a directory, which is typically 12 months. Advertising
revenues also include revenues for Internet-based advertising
products, including our proprietary local search site, dexknows.com,
and Dex Net. Revenues with respect to our Internet-based advertising
products that are sold with print advertising are initially deferred
until the service is delivered or fulfilled and recognized ratably
over the life of the contract. Revenues with respect to Internet-
based services that are not sold with print advertising are
recognized as delivered or fulfilled.
(2) As a result of the decline in the trading value of our debt and
equity securities in the first quarter of 2008 and continuing
negative industry and economic trends that directly affected our
business, we performed impairment tests of our goodwill, definite
lived intangible assets and other long-lived assets as of March 31,
2008 in accordance with SFAS No. 142, Goodwill and Other Intangible
Assets ("SFAS No. 142") and SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"),
respectively. Based upon our testing results, we recognized a non-
cash goodwill impairment charge of $2.5 billion during the three
months ended March 31, 2008. Given the ongoing global credit and
liquidity crisis and the significant negative impact on financial
markets and the overall economy, the continued decline in our
advertising sales and other operating results, downward revisions to
our forecasted results, the recent downgrade of certain of our credit
ratings and the continued decline in the trading value of our debt
securities, we performed impairment tests of our definite-lived
intangible assets and other long-lived assets in accordance with
SFAS No. 144 as of March 31, 2009. Our testing results of our
definite-lived intangible assets and other long-lived assets indicated
no impairment as of March 31, 2009.
(3) EBITDA and Adjusted EBITDA are not measurements of operating
performance computed in accordance with GAAP and should not be
considered as a substitute for net loss prepared in conformity with
GAAP. In addition, EBITDA may not be comparable to similarly titled
measures of other companies. Adjusted EBITDA is determined by
adjusting EBITDA for items such as (i) impairment charges, (ii)
stock-based compensation in accordance with SFAS No. 123 (R), Share-
Based Payment, (iii) restricted stock unit expense related to the
Business.com Acquisition and (iv) restructuring costs.
(4) As a result of purchase accounting, RHD was required to adjust the
carrying value of Dex Media's debt at January 31, 2006 to its fair
value. Adjusted interest expense eliminates the interest benefit
resulting from the amortization of the fair value adjustment to Dex
Media's debt.
(5) Net debt represents total debt less cash and cash equivalents on the
respective date. Net debt - excluding fair value adjustments
represents net debt adjusted to remove the remaining fair value
purchase accounting adjustment of Dex Media's debt noted in footnote
4 above.
(6) Advertising sales is a statistical measure and consists of sales of
advertising in print directories distributed during the period and
Internet-based products and services with respect to which such
advertising first appeared publicly during the period. It is
important to distinguish advertising sales from net revenue, which
is recognized under the deferral and amortization method. 2007 pro
forma advertising sales assumes the Business.com Acquisition occurred
on January 1, 2007.
Note: These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
SOURCE R.H. Donnelley Corporation
----------------------------------------------
Investors
James M. Gruskin
1-800-497-6329
or Media
Tyler D. Gronbach
+1-919-297-1541
both for R.H. Donnelley Corporation
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