mary.delagarza@idearc.com
972-453-7016
Mr. Samuel D. (Dee) Jones
dee.jones@idearc.com
972-453-7364
AND SECOND QUARTER 2008 RESULTS
Scott W. Klein, the Company’s chief executive officer, said, “As I complete my first sixty days with Idearc, I see opportunities everywhere. The future is in our hands and we aren’t going to accept the economy as an excuse. It is clear that we have not made the leap from operating as a division of Verizon to being a stand alone public company. You will see us catch up quickly.”
“Our priorities are accelerating revenue growth; right-sizing expenses; and, creating a high-performance culture. These priorities can best be achieved by leveraging our key assets — our customers, our sales force and employee base and our products. We have already made significant changes that will improve performance.”
Klein continued: “The need for small and medium sized businesses to connect with buyers is critical to our success. We have relationships with about 800,000 businesses and while that might sound impressive we have just scratched the surface. There are more than 12.5 million of these businesses in the United States and thousands are launched weekly. We are streamlining cumbersome internal processes and equipping our sales professionals with new technology to drive sales.”
“We are also changing Idearc’s management structure and focus. By centralizing and restructuring, we can eliminate complexity, maximize efficiency, and become easier to do business with. While the changes we have made and will continue to make will take some time to be fully realized, I am confident we will succeed.”
2
3
Consolidated Statements of Income
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
6 Mos. Ended | 6 Mos. Ended | |||||||||||
Unaudited | 6/30/08 | 6/30/07 | % Change | |||||||||
Operating Revenue | ||||||||||||
Print products | $ | 1,379 | $ | 1,468 | (6.1 | ) | ||||||
Internet | 148 | 141 | 5.0 | |||||||||
Other | 2 | 2 | — | |||||||||
Total Operating Revenue | 1,529 | 1,611 | (5.1 | ) | ||||||||
Operating Expense | ||||||||||||
Selling | 370 | 376 | (1.6 | ) | ||||||||
Cost of sales (exclusive of depreciation and amortization) | 304 | 314 | (3.2 | ) | ||||||||
General and administrative | 197 | 203 | (3.0 | ) | ||||||||
Depreciation and amortization | 40 | 44 | (9.1 | ) | ||||||||
Total Operating Expense | 911 | 937 | (2.8 | ) | ||||||||
Operating Income | 618 | 674 | (8.3 | ) | ||||||||
Interest expense, net | 329 | 337 | (2.4 | ) | ||||||||
Income Before Provision for Income Taxes | 289 | 337 | (14.2 | ) | ||||||||
Provision for income taxes | 102 | 125 | (18.4 | ) | ||||||||
Net Income | $ | 187 | $ | 212 | (11.8 | ) | ||||||
Basic and Diluted Earnings per Common Share(1) | $ | 1.28 | $ | 1.45 | (11.7 | ) | ||||||
Basic and diluted weighted-average common shares outstanding (in millions) | 146 | 146 | ||||||||||
Dividends Declared per Common Share | $ | .3425 | $ | .6850 |
Note: | ||
(1) | Equity based awards granted in 2007 and 2008 had no material impact on the calculation of diluted earnings per common share. |
4
Consolidated Statements of Income
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
3 Mos. Ended | 3 Mos. Ended | |||||||||||
Unaudited | 6/30/08 | 6/30/07 | % Change | |||||||||
Operating Revenue | ||||||||||||
Print products | $ | 683 | $ | 731 | (6.6 | ) | ||||||
Internet | 75 | 73 | 2.7 | |||||||||
Other | 1 | 1 | — | |||||||||
Total Operating Revenue | 759 | 805 | (5.7 | ) | ||||||||
Operating Expense | ||||||||||||
Selling | 185 | 188 | (1.6 | ) | ||||||||
Cost of sales (exclusive of depreciation and amortization) | 157 | 156 | 0.6 | |||||||||
General and administrative | 118 | 97 | 21.6 | |||||||||
Depreciation and amortization | 20 | 22 | (9.1 | ) | ||||||||
Total Operating Expense | 480 | 463 | 3.7 | |||||||||
Operating Income | 279 | 342 | (18.4 | ) | ||||||||
Interest expense, net | 163 | 167 | (2.4 | ) | ||||||||
Income Before Provision for Income Taxes | 116 | 175 | (33.7 | ) | ||||||||
Provision for income taxes | 40 | 66 | (39.4 | ) | ||||||||
Net Income | $ | 76 | $ | 109 | (30.3 | ) | ||||||
Basic and Diluted Earnings per Common Share(1) | $ | .52 | $ | .75 | (30.7 | ) | ||||||
Basic and diluted weighted-average common shares outstanding (in millions) | 146 | 146 | ||||||||||
Dividends Declared per Common Share | $ | — | $ | .3425 |
Note: | ||
(1) | Equity based awards granted in 2007 and 2008 had no material impact on the calculation of diluted earnings per common share. |
5
Consolidated Statements of Income
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
6 Mos. Ended | 6 Mos. Ended | |||||||||||
Unaudited | 6/30/08 | 6/30/07 | % Change | |||||||||
Operating Revenue | ||||||||||||
Print products | $ | 1,379 | $ | 1,468 | (6.1 | ) | ||||||
Internet | 148 | 141 | 5.0 | |||||||||
Other | 2 | 2 | — | |||||||||
Total Operating Revenue | 1,529 | 1,611 | (5.1 | ) | ||||||||
Operating Expense | ||||||||||||
Selling | 370 | 376 | (1.6 | ) | ||||||||
Cost of sales (exclusive of depreciation and amortization) | 304 | 314 | (3.2 | ) | ||||||||
General and administrative | 172 | 151 | 13.9 | |||||||||
Depreciation and amortization | 40 | 44 | (9.1 | ) | ||||||||
Total Operating Expense | 886 | 885 | 0.1 | |||||||||
Operating Income | 643 | 726 | (11.4 | ) | ||||||||
Interest expense, net | 329 | 337 | (2.4 | ) | ||||||||
Income Before Provision for Income Taxes | 314 | 389 | (19.3 | ) | ||||||||
Provision for income taxes | 111 | 143 | (22.4 | ) | ||||||||
Net Income | $ | 203 | $ | 246 | (17.5 | ) | ||||||
Basic and Diluted Earnings per Common Share(2) | $ | 1.39 | $ | 1.69 | (17.8 | ) | ||||||
Basic and diluted weighted-average common shares outstanding (in millions) | 146 | 146 |
Notes: | ||
(1) | These consolidated statements of income provide a comparison of the six months ended June 30, 2008 adjusted pro forma results to the six months ended June 30, 2007 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 in 2007 and 2008 had no material impact on the calculation of diluted earnings per common share. |
6
Consolidated Statements of Income
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
3 Mos. Ended | 3 Mos. Ended | |||||||||||
Unaudited | 6/30/08 | 6/30/07 | % Change | |||||||||
Operating Revenue | ||||||||||||
Print products | $ | 683 | $ | 731 | (6.6 | ) | ||||||
Internet | 75 | 73 | 2.7 | |||||||||
Other | 1 | 1 | — | |||||||||
Total Operating Revenue | 759 | 805 | (5.7 | ) | ||||||||
Operating Expense | ||||||||||||
Selling | 185 | 188 | (1.6 | ) | ||||||||
Cost of sales (exclusive of depreciation and amortization) | 157 | 156 | 0.6 | |||||||||
General and administrative | 101 | 70 | 44.3 | |||||||||
Depreciation and amortization | 20 | 22 | (9.1 | ) | ||||||||
Total Operating Expense | 463 | 436 | 6.2 | |||||||||
Operating Income | 296 | 369 | (19.8 | ) | ||||||||
Interest expense, net | 163 | 167 | (2.4 | ) | ||||||||
Income Before Provision for Income Taxes | 133 | 202 | (34.2 | ) | ||||||||
Provision for income taxes | 46 | 75 | (38.7 | ) | ||||||||
Net Income | $ | 87 | $ | 127 | (31.5 | ) | ||||||
Basic and Diluted Earnings per Common Share(2) | $ | .60 | $ | .87 | (31.0 | ) | ||||||
Basic and diluted weighted-average common shares outstanding (in millions) | 146 | 146 |
Notes: | ||
(1) | These consolidated statements of income provide a comparison of the three months ended June 30, 2008 adjusted pro forma results to the three months ended June 30, 2007 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 in 2007 and 2008 had no material impact on the calculation of diluted earnings per common share. |
7
Consolidated Statements of Income
Six Months Ended June 30, 2008
Non-Recurring Items | ||||||||||||||||||||
6 Mos. Ended | 6 Mos. Ended | |||||||||||||||||||
6/30/08 | 6/30/08 | |||||||||||||||||||
Adjusted | ||||||||||||||||||||
Reported | Stock-Based | Separation | Restructuring | Pro Forma | ||||||||||||||||
Unaudited | (GAAP) | Compensation(3) | Costs(4) | Costs(5) | (Non-GAAP) | |||||||||||||||
Operating Revenue | ||||||||||||||||||||
Print products | $ | 1,379 | $ | — | $ | — | $ | — | $ | 1,379 | ||||||||||
Internet | 148 | — | — | — | 148 | |||||||||||||||
Other | 2 | — | — | — | 2 | |||||||||||||||
Total Operating Revenue | 1,529 | — | — | — | 1,529 | |||||||||||||||
Operating Expense | ||||||||||||||||||||
Selling | 370 | — | — | — | 370 | |||||||||||||||
Cost of sales (exclusive of depreciation and amortization) | 304 | — | — | — | 304 | |||||||||||||||
General and administrative | 197 | (4 | ) | (14 | ) | (7 | ) | 172 | ||||||||||||
Depreciation and amortization | 40 | — | — | — | 40 | |||||||||||||||
Total Operating Expense | 911 | (4 | ) | (14 | ) | (7 | ) | 886 | ||||||||||||
Operating Income | 618 | 4 | 14 | 7 | 643 | |||||||||||||||
Interest expense, net | 329 | — | — | — | 329 | |||||||||||||||
Income Before Provision for Income Taxes | 289 | 4 | 14 | 7 | 314 | |||||||||||||||
Provision for income taxes | 102 | 1 | 5 | 3 | 111 | |||||||||||||||
Net Income | $ | 187 | $ | 3 | $ | 9 | $ | 4 | $ | 203 | ||||||||||
Basic and Diluted Earnings per Common Share | $ | 1.28 | $ | .02 | $ | .06 | $ | .03 | $ | 1.39 | ||||||||||
Operating Income | $ | 618 | $ | 4 | $ | 14 | $ | 7 | $ | 643 | ||||||||||
Depreciation and Amortization | 40 | — | — | — | 40 | |||||||||||||||
EBITDA (non-GAAP)(1) | $ | 658 | $ | 4 | $ | 14 | $ | 7 | $ | 683 | ||||||||||
Operating Income margin(2) | 40.4 | % | 42.1 | % | ||||||||||||||||
Impact of depreciation and amortization | 2.6 | % | 2.6 | % | ||||||||||||||||
EBITDA margin (non-GAAP)(1) | 43.0 | % | 44.7 | % | ||||||||||||||||
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 total operating revenue. | |
(2) | Operating income margin is calculated by dividing operating income by total 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. | |
(4) | Separation costs reflects costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon. | |
(5) | Restructuring costs are associated with strategic organizational realignment and market exit activities. |
8
Consolidated Statements of Income
Three Months Ended June 30, 2008
Non-Recurring Items | ||||||||||||||||||||
3 Mos. Ended | 3 Mos. Ended | |||||||||||||||||||
6/30/08 | 6/30/08 | |||||||||||||||||||
Adjusted | ||||||||||||||||||||
Reported | Stock Based | Separation | Restructuring | Pro Forma | ||||||||||||||||
Unaudited | (GAAP) | Compensation(3) | Costs(4) | Costs(5) | (Non-GAAP) | |||||||||||||||
Operating Revenue | ||||||||||||||||||||
Print products | $ | 683 | $ | — | $ | — | $ | — | $ | 683 | ||||||||||
Internet | 75 | — | — | — | 75 | |||||||||||||||
Other | 1 | — | — | — | 1 | |||||||||||||||
Total Operating Revenue | 759 | — | — | — | 759 | |||||||||||||||
Operating Expense | ||||||||||||||||||||
Selling | 185 | — | — | — | 185 | |||||||||||||||
Cost of sales (exclusive of depreciation and amortization) | 157 | — | — | — | 157 | |||||||||||||||
General and administrative | 118 | (3 | ) | (7 | ) | (7 | ) | 101 | ||||||||||||
Depreciation and amortization | 20 | — | — | — | 20 | |||||||||||||||
Total Operating Expense | 480 | (3 | ) | (7 | ) | (7 | ) | 463 | ||||||||||||
Operating Income | 279 | 3 | 7 | 7 | 296 | |||||||||||||||
Interest expense, net | 163 | — | — | — | 163 | |||||||||||||||
Income Before Provision for Income Taxes | 116 | 3 | 7 | 7 | 133 | |||||||||||||||
Provision for income taxes | 40 | 1 | 2 | 3 | 46 | |||||||||||||||
Net Income | $ | 76 | $ | 2 | $ | 5 | $ | 4 | $ | 87 | ||||||||||
Basic and Diluted Earnings per Common Share | $ | .52 | $ | .01 | $ | .04 | $ | .03 | $ | .60 | ||||||||||
Operating Income | $ | 279 | $ | 3 | $ | 7 | $ | 7 | $ | 296 | ||||||||||
Depreciation and Amortization | 20 | — | — | — | 20 | |||||||||||||||
EBITDA (non-GAAP)(1) | $ | 299 | $ | 3 | $ | 7 | $ | 7 | $ | 316 | ||||||||||
Operating Income margin(2) | 36.8 | % | 39.0 | % | ||||||||||||||||
Impact of depreciation and amortization | 2.6 | % | 2.6 | % | ||||||||||||||||
EBITDA margin (non-GAAP)(1) | 39.4 | % | 41.6 | % | ||||||||||||||||
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 total operating revenue. | |
(2) | Operating income margin is calculated by dividing operating income by total 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. | |
(4) | Separation costs reflects costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon. | |
(5) | Restructuring costs are associated with strategic organizational realignment and market exit activities. |
9
Consolidated Statements of Income
Six Months Ended June 30, 2007
Non-Recurring Items | ||||||||||||||||
6 Mos. Ended | 6 Mos. Ended | |||||||||||||||
6/30/07 | 6/30/07 | |||||||||||||||
Adjusted | ||||||||||||||||
Reported | Stock-Based | Separation | Pro Forma | |||||||||||||
Unaudited | (GAAP) | Compensation(3) | Costs(4) | (Non-GAAP) | ||||||||||||
Operating Revenue | ||||||||||||||||
Print products | $ | 1,468 | $ | — | $ | — | $ | 1,468 | ||||||||
Internet | 141 | — | — | 141 | ||||||||||||
Other | 2 | — | — | 2 | ||||||||||||
Total Operating Revenue | 1,611 | — | — | 1,611 | ||||||||||||
Operating Expense | ||||||||||||||||
Selling | 376 | — | — | 376 | ||||||||||||
Cost of sales (exclusive of depreciation and amortization) | 314 | — | — | 314 | ||||||||||||
General and administrative | 203 | (17 | ) | (35 | ) | 151 | ||||||||||
Depreciation and amortization | 44 | — | — | 44 | ||||||||||||
Total Operating Expense | 937 | (17 | ) | (35 | ) | 885 | ||||||||||
Operating Income | 674 | 17 | 35 | 726 | ||||||||||||
Interest expense, net | 337 | — | — | 337 | ||||||||||||
Income Before Provision for Income Taxes | 337 | 17 | 35 | 389 | ||||||||||||
Provision for income taxes | 125 | 6 | 12 | 143 | ||||||||||||
Net Income | $ | 212 | $ | 11 | $ | 23 | $ | 246 | ||||||||
Basic and Diluted Earnings per Common Share | $ | 1.45 | $ | .08 | $ | .16 | $ | 1.69 | ||||||||
Operating Income | $ | 674 | $ | 17 | $ | 35 | $ | 726 | ||||||||
Depreciation and Amortization | 44 | — | — | 44 | ||||||||||||
EBITDA (non-GAAP)(1) | $ | 718 | $ | 17 | $ | 35 | $ | 770 | ||||||||
Operating Income margin(2) | 41.9 | % | 45.1 | % | ||||||||||||
Impact of depreciation and amortization | 2.7 | % | 2.7 | % | ||||||||||||
EBITDA margin (non-GAAP)(1) | 44.6 | % | 47.8 | % | ||||||||||||
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 total operating revenue. | |
(2) | Operating income margin is calculated by dividing operating income by total 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. | |
(4) | Separation costs reflects costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon. |
10
Consolidated Statements of Income
Reconciliation from Reported (GAAP) to Adjusted Pro Forma (Non-GAAP)
Three Months Ended June 30, 2007
Non-Recurring Items | ||||||||||||||||
3 Mos. Ended | 3 Mos. Ended | |||||||||||||||
6/30/07 | 6/30/07 | |||||||||||||||
Adjusted | ||||||||||||||||
Reported | Stock Based | Separation | Pro Forma | |||||||||||||
Unaudited | (GAAP) | Compensation(3) | Costs(4) | (Non-GAAP) | ||||||||||||
Operating Revenue | ||||||||||||||||
Print products | $ | 731 | $ | — | $ | — | $ | 731 | ||||||||
Internet | 73 | — | — | 73 | ||||||||||||
Other | 1 | — | — | 1 | ||||||||||||
Total Operating Revenue | 805 | — | — | 805 | ||||||||||||
Operating Expense | ||||||||||||||||
Selling | 188 | — | — | 188 | ||||||||||||
Cost of sales (exclusive of depreciation and amortization) | 156 | — | — | 156 | ||||||||||||
General and administrative | 97 | (8 | ) | (19 | ) | 70 | ||||||||||
Depreciation and amortization | 22 | — | — | 22 | ||||||||||||
Total Operating Expense | 463 | (8 | ) | (19 | ) | 436 | ||||||||||
Operating Income | 342 | 8 | 19 | 369 | ||||||||||||
Interest expense, net | 167 | — | — | 167 | ||||||||||||
Income Before Provision for Income Taxes | 175 | 8 | 19 | 202 | ||||||||||||
Provision for income taxes | 66 | 3 | 6 | 75 | ||||||||||||
Net Income | $ | 109 | $ | 5 | $ | 13 | $ | 127 | ||||||||
Basic and Diluted Earnings per Common Share | $ | .75 | $ | .03 | $ | .09 | $ | .87 | ||||||||
Operating Income | $ | 342 | $ | 8 | $ | 19 | $ | 369 | ||||||||
Depreciation and Amortization | 22 | — | — | 22 | ||||||||||||
EBITDA (non-GAAP)(1) | $ | 364 | $ | 8 | $ | 19 | $ | 391 | ||||||||
Operating Income margin(2) | 42.5 | % | 45.9 | % | ||||||||||||
Impact of depreciation and amortization | 2.7 | % | 2.7 | % | ||||||||||||
EBITDA margin (non-GAAP)(1) | 45.2 | % | 48.6 | % | ||||||||||||
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 total operating revenue. | |
(2) | Operating income margin is calculated by dividing operating income by total 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. | |
(4) | Separation costs reflects costs associated with becoming a stand-alone entity as a result of the spin-off from Verizon. |
11
Consolidated Balance Sheets
As of June 30, 2008 and December 31, 2007
Unaudited | 6/30/2008 | 12/31/2007 | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 127 | $ | 48 | ||||
Accounts receivable, net of allowances of $83 and $77 | 408 | 423 | ||||||
Deferred directory costs | 312 | 312 | ||||||
Prepaid expenses and other | 5 | 10 | ||||||
Total current assets | 852 | 793 | ||||||
Property, plant and equipment | 476 | 471 | ||||||
Less: accumulated depreciation | 368 | 356 | ||||||
108 | 115 | |||||||
Goodwill | 73 | 73 | ||||||
Intangible assets, net | 295 | 303 | ||||||
Pension assets | 182 | 171 | ||||||
Non-current deferred tax assets | 84 | 124 | ||||||
Debt issuance costs | 81 | 86 | ||||||
Other non-current assets | 3 | 2 | ||||||
Total Assets | $ | 1,678 | $ | 1,667 | ||||
Liabilities and Stockholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 233 | $ | 272 | ||||
Deferred revenue | 197 | 209 | ||||||
Current maturities of long-term debt | 85 | 48 | ||||||
Current deferred taxes | 23 | 28 | ||||||
Other | 25 | 31 | ||||||
Total current liabilities | 563 | 588 | ||||||
Long-term debt | 8,959 | 9,020 | ||||||
Employee benefit obligations | 316 | 327 | ||||||
Unrecognized tax benefits | 87 | 109 | ||||||
Other liabilities | 185 | 223 | ||||||
Stockholders’ equity (deficit): | ||||||||
Common stock ($.01 par value; 225 million shares authorized, 147,776,287 and 146,795,971 shares issued and outstanding in 2008 and 2007, respectively) | 1 | 1 | ||||||
Additional paid-in capital (deficit) | (8,769 | ) | (8,776 | ) | ||||
Retained earnings | 498 | 361 | ||||||
Accumulated other comprehensive loss | (162 | ) | (186 | ) | ||||
Total stockholders’ equity (deficit) | (8,432 | ) | (8,600 | ) | ||||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 1,678 | $ | 1,667 | ||||
12
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
6 Months Ended | 6 Months Ended | |||||||
Unaudited | 6/30/08 | 6/30/07 | ||||||
Cash Flows from Operating Activities | ||||||||
Net Income | $ | 187 | $ | 212 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 40 | 44 | ||||||
Employee retirement benefits | (1 | ) | 10 | |||||
Deferred income taxes | 7 | 1 | ||||||
Provision for uncollectible accounts | 87 | 64 | ||||||
Stock-based compensation | 1 | 28 | ||||||
Changes in current assets and liabilities | ||||||||
Accounts receivable | (72 | ) | (152 | ) | ||||
Deferred directory costs | — | (31 | ) | |||||
Other current assets | 5 | 1 | ||||||
Accounts payable and accrued liabilities | (66 | ) | (25 | ) | ||||
Other, net | (12 | ) | (14 | ) | ||||
Net cash provided by operating activities | 176 | 138 | ||||||
Cash Flows from Investing Activities | ||||||||
Capital expenditures (including capitalized software) | (25 | ) | (22 | ) | ||||
Proceeds from sale of assets | 2 | 1 | ||||||
Other, net | — | 4 | ||||||
Net cash used in investing activities | (23 | ) | (17 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Repayment of long-term debt | (24 | ) | (24 | ) | ||||
Dividends paid to Idearc stockholders | (50 | ) | (100 | ) | ||||
Net cash used in financing activities | (74 | ) | (124 | ) | ||||
Increase (decrease) in cash and cash equivalents | 79 | (3 | ) | |||||
Cash and cash equivalents, beginning of year | 48 | 172 | ||||||
Cash and cash equivalents, end of period | $ | 127 | $ | 169 | ||||
13
Mutli-Product Advertising Sales
3 Mos. Ended | 3 Mos. Ended | 3 Mos. Ended | 6 Mos. Ended | 6 Mos. Ended | 6 Mos. Ended | |||||||||||||||||||
Unaudited | 6/30/08 | 6/30/07 | 6/30/06 | 6/30/08 | 6/30/07 | 6/30/06 | ||||||||||||||||||
Net Print Products Revenue(1) | $ | 606 | $ | 678 | $ | 697 | $ | 1,257 | $ | 1,383 | $ | 1,419 | ||||||||||||
% Change year-over-year | (10.6 | %) | (2.7 | %) | (9.1 | %) | (2.5 | %) | ||||||||||||||||
Net Internet Revenue(2) | 75 | 73 | 55 | 148 | 141 | 107 | ||||||||||||||||||
% Change year-over-year | 2.7 | % | 32.7 | % | 5.0 | % | 31.8 | % | ||||||||||||||||
Net Multi-Product Advertising Sales(3) | 681 | 751 | 752 | 1,405 | 1,524 | 1,526 | ||||||||||||||||||
% Change year-over-year | (9.3 | %) | (0.1 | %) | (7.8 | %) | (0.1 | %) | ||||||||||||||||
Notes: | ||
(1) | Net print products revenue represents the total revenue value (less a provision for sales allowances) of directories published that will be amortized over the life of the directories, which is typically 12 months. Directories from preceding periods have been aligned to match the publication schedule of 2008 publications, allowing for a meaningful comparison of current publications to previous publications. Previously reported amounts have been changed to reflect subsequent adjustments. | |
(2) | Net Internet revenue represents total revenue for our fixed-fee and performance-based advertising products less a provision for sales allowances. Fixed-fee advertising includes advertisement placement on our Superpages.com website, and website development and hosting for our advertisers. Revenue from fixed-fee advertisers is recognized monthly over the life of the advertising service. Performance-based advertising revenue is earned when consumers connect with our Superpages.com advertisers by a “click” on their Internet advertising or a phone call to their business. Revenue from performance-based advertising is recognized when there is evidence that qualifying transactions have occurred. | |
(3) | Net multi-product advertising sales is a statistical measure. It is important to distinguish net mult-product advertising sales from total operating revenue, which on our financial statements is recognized under the deferral and amortization method. |
14
15