Reconciliation of Non-GAAP Measures, cont’d
2004 Pro Forma ("PF")
Assuming
1/1/04 close
Reconciliation of net income outlook, pre-SBC acquisition
to EBITDA outlook, adjusted, post-SBC acquisition
Net income outlook - GAAP
116.0
$
Plus expected tax provision
76.0
Plus expected interest expense, net
164.0
Plus expected depreciation and amortization
59.0
EBITDA outlook, pre-SBC acquisition
415.0
$
Impact of SBC acquisition:
Plus expected revenue from acquired SBC-branded directories that published prior
to the SBC acquisition that would have been recognized during the period absent
purchase accounting adjustments required under GAAP
252.6
Plus expected revenue from acquired SBC-branded directories that will publish after
the SBC acquisition
221.3
Less estimated pre-press revenue that would not be recognized as a result of
the SBC acquisition
(19.0)
Less estimated expenses from SBC-branded directories that published prior
to the SBC acquisition that would have been recognized during the period absent
purchase accounting adjustments required under GAAP
(32.9)
Less estimated operating expenses that would be recognized as a result of
the SBC acquisition
(139.0)
Less expected partnership income that would have been recognized
absent the SBC acquisition
(112.0)
EBITDA outlook, adjusted
586.0
$
(3)
(3)
(2)
Amounts in millions
Reconciliation of Non-GAAP Measures, cont’d
2004G
Assuming
9/1/04 close
Reconciliation of cash flow from operations outlook
to free cash flow outlook
Cash flow from operations outlook - GAAP
343.2
$
Less expected fixed asset and computer software additions
(16.2)
Free cash flow outlook
327.0
$
2004PF
Assuming
1/1/04 close
Reconciliation of net revenue outlook - GAAP to net revenue outlook, adjusted
Net revenue outlook - GAAP
903.3
$
Plus expected revenue from acquired SBC-branded directories that published prior
to the SBC acquisition that would have been recognized during the period absent
purchase accounting adjustments required under GAAP
130.0
Net revenue outlook, adjusted
1,033.3
$
2004G
Reconciliation of expected diluted shares outstanding - GAAP to
expected diluted shares outstanding - as adjusted
Diluted shares outstanding outlook - GAAP
32.7
Additional diluted shares outstanding outlook assuming the preferred stock
is converted to common stock at the beginning of the period
9.5
Diluted shares outstanding outlook - as adjusted
42.2
(3)
Amounts in millions
Reconciliation of Non-GAAP Measures, cont’d
Amounts in millions
2004PF
Assuming
1/1/04 close
Reconciliation of expected pro forma revenue from acquired SBC directories to
acquired pro forma EBITDA
Expected pro forma revenue from acquired SBC-branded directories
473.9
$
Less estimated pro forma expenses from acquired SBC-branded directories
(171.9)
Less estimated pre-press revenue that would not be recognized as a result of the SBC acquisition
(19.0)
Less expected partnership income that would have been recognized absent the SBC acquisition
(112.0)
Expected pro forma EBITDA, adjusted
171.0
$
Net purchase price for SBC acquisition
1,420.0
$
Purchase price / pro forma EBITDA, adjusted
8.3x
Reconciliation of Non-GAAP Measures, cont’d
Notes:
1. Represents the revenue and direct costs from Sprint directories published prior to the SPA acquisition that
would have been recognized during the period had it not been for purchase accounting adjustments required under
GAAP and includes an adjustment for the difference in SPA's historical accounting policy with respect to expense
recognition and RHD's current policy.
2. On September 1, 2004, R.H. Donnelley completed the acquisition of SBC Communications Inc.'s directory
publishing business in Illinois and Northwest Indiana, including SBC's interest in the DonTech partnership. For
illustration purposes, we are presenting a reconciliation of the expected impact on 2004 net income to adjusted
EBITDA, reflecting a September 1, 2004 close. Additionally, we are presenting a reconciliation of pro forma net
income outlook to pro forma adjusted EBITDA outlook to show full year adjusted pro forma EBITDA as if the
transaction closed on January 1, 2004.
3. The 2004 as adjusted results assume that the estimated pro rata portion of the revenue and direct costs of SBC-
branded directories that published prior to the SBC acquisition were recognized during the period pursuant to the
deferral and amortization method. As a result of purchase accounting, these pre-SBC acquisition revenues and
expenses will not be included in our reported GAAP results.
