Exhibit 99.1
R.H. Donnelley Reports First Quarter 2004 Results; Company Generates
$88 Million of Operating Cash Flow; Publication Sales up 2.6 Percent
CARY, N.C.--(BUSINESS WIRE)--April 27, 2004--R.H. Donnelley
Corporation (NYSE: RHD), a leading yellow pages publisher and
directional media company, today reported first quarter 2004 income
available to common shareholders of $22.8 million, or $0.54 per
diluted share. RHD's first quarter 2004 net income before preferred
dividends was $28.1 million, resulting in adjusted diluted earnings
per share of $0.68. Cash flow from operations in the quarter was $87.9
million, and free cash flow for the quarter was $85.1 million,
allowing the Company to repay $88.6 million of debt. See the attached
schedules for a reconciliation of non-GAAP measures presented in this
release to the most comparable GAAP measures.
David C. Swanson, Chairman and Chief Executive Officer, said, "I
am very pleased with our first quarter results. We continued our
record of strong cash flow generation and debt repayment, while we
began to realize tangible benefits from our integration efforts,
process changes and systems conversion. We also saw real economic
improvement in places like Las Vegas, which contributed to better top
line growth in our Sprint business. The results lead us to be
optimistic that we will achieve our guidance for the year."
First Quarter Results - Including Adjustments and Non-GAAP
Measures
Publication sales for RHD's Sprint-branded directories during the
first quarter of 2004 were $151.3 million, up 2.6% from
publication sales of $147.5 million in the prior year. Publication
sales represent the total billable value of advertising in directories
that were published in the period. Substantially all of the Company's
markets with publications during the first quarter performed better as
compared to last year, driven by improving advertiser renewal rates
and an uptick in new advertisers.
Net revenue in the quarter was $143.8 million, up slightly from
adjusted net revenue of $143.5 million in the first quarter of 2003.
Operating expenses excluding depreciation and amortization were $66.6
million as compared to $68.5 million on an as adjusted basis for the
same period in 2003. The decline in operating expenses reflects
process improvements related to print, paper, distribution and billing
and collection activity as well as the synergies related to the SPA
integration. Included in 2004 operating expenses is a favorable
adjustment to bad debt expense in 2004 of $3.0 million, partially
offset by $2.6 million of costs associated with the corporate
relocation. Operating income for the first quarter 2004 was $86.7
million, compared to adjusted operating income for the first quarter
of 2003 of $82.6 million. EBITDA for the quarter was $101.1 million,
compared to adjusted EBITDA of $98.6 million in the prior year.
Partnership income from DonTech was $23.9 million, up 1.3% from
$23.6 million in the prior year. (DonTech operating results are
described below.)
Net interest expense for the first quarter of 2004 was $40.3
million, compared to adjusted interest expense for the first quarter
of 2003 of $46.3 million, reflecting lower interest rates and lower
average debt outstanding. Net interest expense for 2004 also includes
the $1.2 million call premium and the write-off of deferred financing
costs related to redeeming the remaining 9 1/8% senior subordinated
notes. See the attached schedules for additional description and
reconciliation of these and other non-GAAP measures to the most
comparable GAAP measures.
First Quarter - Reported GAAP Results
First quarter net revenue was $143.8 million compared to $12.4
million in the prior year. Operating expenses including depreciation
and amortization were $81.0 million compared to $57.9 million in the
prior year. Partnership income was $23.9 million for the quarter
versus $23.6 million reported in the prior year. Operating income in
the quarter was $86.7 million versus an operating loss of $21.9
million in the prior year. Net interest expense in the quarter was
$40.3 million compared to $48.7 million in the first quarter 2003. Net
income after preferred dividends for the quarter was $22.8 million or
$0.54 per diluted share compared to a loss of $83.4 million or $2.76
per share in the first quarter 2003. Reported GAAP results for the
first quarter of 2004 reflect certain purchase accounting adjustments
related to the SPA acquisition, which resulted in a net reduction to
operating income of $3.4 million in the quarter.
DonTech Operating Results
Publication sales at DonTech were $84.1 million for the quarter,
down 5.1% compared to $88.7 million in the first quarter of 2003. The
decrease in publication sales is primarily related to the decline in
calendar sales previously disclosed in the third and fourth quarters
of 2003.
First quarter calendar sales for DonTech, which represent the
value of actual sales contracts signed in the period, were $86.4
million, up 1.3% compared to $85.3 million last year. The increase in
calendar sales is largely driven by timing and reflects an increase in
the amount of advertising serviced in the quarter. Partnership income
from DonTech was $23.9 million, up 1.3% from $23.6 million last year,
primarily reflecting the increase in calendar sales in the first
quarter of 2004.
DonTech is accounted for under the equity method. As such, the
Company does not consolidate DonTech's revenue and expenses in its
consolidated results, rather it reports the Company's share of
DonTech's net income and revenue participation income from SBC
Communications Inc. (NYSE: SBC), which are both based on DonTech's
calendar sales and reported collectively as partnership income.
DonTech is a perpetual partnership between RHD and SBC Communications
to sell yellow pages advertising in Illinois and northwest Indiana.
Cash Flow
The Company generated cash flow from operations of $87.9 million
in the quarter, which included an $11.9 million Federal tax refund.
Free cash flow (cash flow from operations less capital expenditures
and software investment) for the quarter was $85.1 million. Cash flow
used in the quarter for capital expenditures and software investment
totaled $2.8 million, debt repayment totaled $88.6 million and
proceeds from stock option exercises totaled $2.6 million.
As of March 31, 2004, total debt outstanding totaled $2,003.5
million. As of March 31, 2004, the ratio of total debt to 2004
forecasted EBITDA is approximately 4.8 to 1.0.
Outlook
The Company re-affirms the 2004 guidance given in its fourth
quarter and full year earnings press release issued on February 26,
2004, with the exception of its guidance for cash flow from operations
and free cash flow. As a result of the approximately $12 million tax
refund, the Company is increasing its guidance for cash flow from
operations to $272 million from $260 million and for free cash flow to
$257 million from $245 million.
Adjustments to Results
In 2004, adjusted earnings per share assumes conversion of the
preferred stock at the beginning of the period in order to be
consistent with the 2003 presentation.
As a result of the SPA acquisition, the related financing and
associated accounting, certain adjustments were made to the 2003 GAAP
results. The primary 2003 adjustments were recognition of
pre-acquisition deferred revenue and deferred expenses that are not
reportable under GAAP due to purchase accounting requirements, but
that absent purchase accounting would have been recognized during the
periods presented.
See the Company's Current Report on Form 8-K filed with the SEC on
May 2, 2003 for further details regarding the adjustments and non-GAAP
financial measures. All non-GAAP financial measures for the first
quarter 2004 and first quarter 2003 are reconciled to the most
comparable GAAP reported results within the attached schedules.
First Quarter Conference Call
R.H. Donnelley's first quarter conference call will be held on
April 28, 2004 at 10:00 a.m. EST and can be accessed by dialing
888-387-9606 (domestic) or 484-630-7198. The passcode for the call is
"RHD". Please dial in to the call by 9:50 a.m. The call will also be
available through a Webcast, which can be accessed by visiting our Web
site at www.rhd.com, clicking on "Investor Information" and following
the instructions provided. Those unable to participate at the
scheduled time may access a recording by dialing 800-945-2760
(domestic) or 402-220-3538 (international). The recording will be
available through May 12, 2004. There is no passcode for the replay.
About R.H. Donnelley
R.H. Donnelley is a leading yellow pages publisher and directional
media company. Directional media is where consumers go to find who
sells the goods and services they are ready to purchase. R.H.
Donnelley publishes approximately 260 directories under the Sprint
Yellow Pages(R) brand in 18 states, with major markets including Las
Vegas, Orlando, and Lee County, Florida. The Company also offers
online city guides and search web sites in these major markets under
the Best Red Yellow Pages brand at www.bestredyp.com. In addition,
R.H. Donnelley serves as the exclusive sales agent for 129 SBC
directories under the SBC Yellow Pages(R) brand in Illinois and
northwest Indiana through DonTech, its perpetual partnership with SBC.
Including DonTech, R.H. Donnelley serves more than 250,000 local and
national advertisers. For more information, please visit R.H.
Donnelley at www.rhd.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," "should," "planned,"
"estimated," "potential," "goal," "outlook," and similar expressions,
as they relate to R.H. Donnelley or its management, have been used to
identify such forward-looking statements. Without limiting the
generality of the foregoing, the statements under the caption
"Outlook" are forward-looking statements. Regardless of any
identifying phrases, these statements and all other 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. Such risks, uncertainties and
contingencies are described in detail in Management's Discussion and
Analysis of Financial Condition and Results of Operations in the
Company's Annual Report on Form 10-K for the year ended December 31,
2003, as well as the Company's other periodic filings with the
Securities and Exchange Commission, and in summary and without
limitation include the following: (1) our ability to meet our
substantial debt service obligations; (2) restrictive covenants under
the terms our debt and convertible preferred stock agreements; (3)
usage of print yellow pages directories and changes in technology; (4)
competition in the yellow pages industry and other competitive media;
(5) SBC's or DonTech's actions could adversely impact our results of
operations and financial condition; (6) reliance on and extension of
credit to small- and medium-sized businesses; (7) dependence on third
party providers of printing, distribution and delivery services and
the sale of advertising to national accounts; (8) general economic
conditions and consumer sentiment in our markets; and (9) fluctuations
in the price and availability of paper.
(See attached tables)
R.H. DONNELLEY CORPORATION Schedule 1
INDEX OF SCHEDULES
- ------------------
Schedule 1: Index of Schedules
Schedule 2: Unaudited Consolidated Statements of Income
For the three months ended March 31, 2004 and 2003
Schedule 3: Unaudited As Adjusted Consolidated Statements
of Income for the three months ended March 31, 2004 and
2003
Schedule 4: Unaudited Consolidated Balance Sheets at March 31, 2004
and December 31, 2003
Schedule 5: Unaudited Consolidated Statement of Cash Flows
For the three months ended March 31, 2004
Schedule 6: Reconciliation of Reported to As Adjusted
Unaudited Consolidated Statements of Income
For the three months ended March 31, 2004 and 2003,
respectively
Schedule 7: Reconciliation of Non-GAAP Measures
Schedule 8: Notes to Unaudited Consolidated Statements of Income and
Non-GAAP Measures
R.H. DONNELLEY CORPORATION Schedule 2
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------
(unaudited)
Amounts in millions, except earnings per share
Three months ended
March 31,
-------------------------
2004 2003
Reported Reported
-------------------------
Net revenue (1) $ 143.8 $ 12.4
Expenses 66.6 41.9
Depreciation and amortization 14.4 16.0
Partnership income 23.9 23.6
-------------------------
Operating income (loss) 86.7 (21.9)
Interest expense, net (40.3) (48.7)
Other income, net - 0.8
-------------------------
Pre-tax income (loss) 46.4 (69.8)
Tax (provision) benefit (18.3) 28.6
-------------------------
Net income (loss) 28.1 (41.2)
Preferred dividend 5.3 42.2
-------------------------
Income (loss) available to common $ 22.8 $ (83.4)
=========================
Earnings per share (EPS): (4)
Basic $ 0.57 $ (2.76)
Diluted $ 0.54 $ (2.76)
Shares used in computing EPS:
Basic 31.1 30.2
Diluted 32.3 30.2
See accompanying Notes to Unaudited Consolidated Statements of Income
and Non-GAAP Measures - Schedule 8.
R.H. DONNELLEY CORPORATION Schedule 3
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------
(unaudited)
Amounts in millions, except earnings per share
Three months ended
March 31,
--------------------------
2004 2003 Variance
As Adjusted As Adjusted
(2) (2) $ %
---------------------------------------------------
Net revenue (1) $ 143.8 $ 143.5 $ 0.3 0.2%
Expenses 66.6 68.5 1.9 2.8%
Depreciation and
amortization 14.4 16.0 1.6 10.0%
Partnership income 23.9 23.6 0.3 1.3%
---------------------------------------------------
Operating income 86.7 82.6 4.1 5.0%
Interest expense,
net (40.3) (46.3) 6.0 13.0%
---------------------------------------------------
Pre-tax income 46.4 36.3 10.1 27.8%
Tax provision (18.3) (14.0) (4.3) (30.7%)
---------------------------------------------------
Net income 28.1 22.3 5.8 26.0%
Preferred dividend
(3) - - -
---------------------------------------------------
Income available
to common $ 28.1 $ 22.3 5.8 26.0%
===================================================
Earnings per share
(EPS): (5)
Basic $ 0.70 $ 0.58 $ 0.12 20.7%
Diluted $ 0.68 $ 0.57 $ 0.11 19.3%
Shares used in
computing EPS:
(5)
Basic 40.3 38.7
Diluted 41.5 39.5
See accompanying Notes to Unaudited Consolidated Statements of Income
and Non-GAAP Measures - Schedule 8.
See Schedule 6 for a reconciliation of reported to as adjusted
amounts.
R.H. DONNELLEY CORPORATION Schedule 4
CONSOLIDATED BALANCE SHEETS
- ---------------------------
(unaudited)
Amounts in millions
December
March 31, 31,
2004 2003
------------ ------------
Assets
Cash and cash equivalents $ 9.3 $ 7.7
Accounts receivable, net 221.9 211.0
Deferred directory costs 41.7 37.9
Prepaid expenses and other 19.1 28.0
------------ ------------
Total current assets 292.0 284.6
Partnership investment 167.6 175.7
Fixed assets and computer software, net 21.6 20.6
Intangible assets, net 1,852.7 1,865.2
Other non-current assets 91.5 95.6
Goodwill 97.0 97.0
------------ ------------
Total Assets $ 2,522.4 $ 2,538.7
============ ============
Liabilities, Redeemable Convertible
Preferred Stock and
Shareholders' Deficit
Accounts payable and accrued liabilities $ 58.5 $ 33.5
Deferred directory revenue 230.0 216.5
Current portion of long-term debt 39.1 49.6
------------ ------------
Total current liabilities 327.6 299.6
Long-term debt 1,964.4 2,042.5
Deferred income taxes, net 32.7 33.6
Other non-current liabilities 26.1 21.0
------------ ------------
Total liabilities 2,350.8 2,396.7
Redeemable convertible preferred stock 202.6 198.2
Shareholders' deficit (31.0) (56.2)
------------ ------------
Total Liabilities, Redeemable Convertible
Preferred
Stock and Shareholders' Deficit $ 2,522.4 $ 2,538.7
============ ============
R.H. DONNELLEY CORPORATION Schedule 5
CONSOLIDATED STATEMENT OF CASH FLOWS
- -----------------------
For the three months ended March 31, 2004
(unaudited)
Amounts in millions
Operating activities:
Net income $ 28.1
Depreciation and amortization 14.4
Deferred income tax 18.3
Cash in excess of partnership income 8.1
Changes in working capital 13.4
Other 5.6
----------
Net cash provided by operating activities 87.9
Investment activities:
Additions to fixed assets and computer software (2.8)
----------
Net cash used in investing activities (2.8)
Financing activities:
Increase in checks not yet presented for payment 2.5
Repayment of debt (88.6)
Proceeds from option exercises 2.6
----------
Net cash used in financing activities (83.5)
Increase in cash and cash equivalents 1.6
Cash and cash equivalents, beginning of period 7.7
----------
Cash and cash equivalents, end of period $ 9.3
==========
R.H. DONNELLEY CORPORATION Schedule 6
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------
Reconciliation of Reported to As Adjusted
(unaudited)
Amounts in millions, except earnings per share
Three Months Ended March 31, 2004
----------------------------------------
Reported Adjustments As Adjusted
----------------------------------------
Net revenue (1) $ 143.8 $ 143.8
Expenses 66.6 66.6
Depreciation and amortization 14.4 14.4
----------------------------------------
Total expenses 81.0 81.0
Partnership income 23.9 23.9
----------------------------------------
Operating income (loss) 86.7 86.7
Interest expense, net (40.3) (40.3)
Other income, net
----------------------------------------
Pre-tax income (loss) 46.4 46.4
Tax (provision) benefit (18.3) (18.3)
----------------------------------------
Net income (loss) 28.1 28.1
Preferred dividend 5.3 (5.3)(3) -
----------------------------------------
Income (loss) available to
common $ 22.8 $ 5.3 $ 28.1
========================================
Earnings per share (EPS):
(4), (5)
Basic $ 0.57 $ 0.13 $ 0.70
Diluted $ 0.54 $ 0.13 $ 0.68
Shares used in computing EPS:
(5)
Basic 31.1 9.2 40.3
Diluted 32.3 9.2 41.5
Three Months Ended March 31, 2003
----------------------------------------
Reported Adjustments As Adjusted
----------------------------------------
Net revenue (1) $ 12.4 $ 131.1 (6) $ 143.5
Expenses 41.9 26.6 (6) 68.5
Depreciation and amortization 16.0 - 16.0
----------------------------------------
Total expenses 57.9 26.6 84.5
Partnership income 23.6 - 23.6
----------------------------------------
Operating income (loss) (21.9) 104.5 82.6
Interest expense, net (48.7) 2.4 (11) (46.3)
Other income, net 0.8 (0.8)(12) -
----------------------------------------
Pre-tax income (loss) (69.8) 106.1 36.3
Tax (provision) benefit 28.6 (42.6)(7) (14.0)
----------------------------------------
Net income (loss) (41.2) 63.5 22.3
Preferred dividend 42.2 (42.2)(3) -
----------------------------------------
Income (loss) available to
common $ (83.4) $ 105.7 $ 22.3
========================================
Earnings per share (EPS):
(4), (5)
Basic $ (2.76) $ 3.34 $ 0.58
Diluted $ (2.76) $ 3.33 $ 0.57
Shares used in computing EPS:
(5)
Basic 30.2 8.5 38.7
Diluted 30.2 9.2 39.5
See accompanying Notes to Unaudited Consolidated Statements of Income
and Non-GAAP Measures - Schedule 8.
R.H. DONNELLEY CORPORATION Schedule 7
RECONCILIATION TO NON-GAAP MEASURES
- -----------------------------------
(unaudited)
Amounts in millions, except per share amounts
Three Months ended
March 31,
------------------------
2004 2003
------------------------
Reconciliation of publication sales for
Sprint-branded directories to net revenue
and adjusted net revenue
Publication sales - Sprint-branded
directories $ 151.3 $ 147.5
Less: adjustment for changes in directory
publication date(s) (8) (2.4)
------------
Publication sales disclosed in first quarter,
2003 earnings release 145.1
Less publication sales for January 2003
directories that will not be recognized as
revenue due to purchase accounting (102.4)
Less current period publication sales not
recognized as revenue in current period (109.8) (37.4)
Plus: net revenue reported in the period for
2003 publication sales, excluding
publication sales for January 2003 95.9
------------------------
Net directory advertising revenue on above
publication sales 137.4 5.3
Pre-press publishing revenue 4.8 6.1
Other revenue 1.6 1.0
------------------------
Net revenue - GAAP 143.8 12.4
Plus: Net revenue that would have been
reported for publication sales made prior to
acquisition absent purchase accounting
plus all January 2003 published directories 131.1
------------------------
Net revenue - Adjusted $ 143.8 $ 143.5
========================
R.H. DONNELLEY CORPORATION Schedule 7
RECONCILIATION TO NON-GAAP MEASURES (con't)
- -------------------------------------------
(unaudited)
Amounts in millions, except per share amounts
Three Months ended
March 31,
------------------------
2004 2003
------------------------
Reconciliation of publication sales for SBC
directories for which DonTech sells
advertising to partnership income - GAAP
Publication sales (8) $ 84.1 $ 88.7
Less the value of contracts executed and
reported as calendar sales in prior periods (81.8) (86.3)
Plus the value of contracts executed during
the period to be reported as publication
sales in future periods 84.1 82.9
------------------------
Calendar sales (9) $ 86.4 $ 85.3
========================
Commission revenue from above calendar sales $ 21.8 $ 21.6
Partnership net expenses (15.6) (15.2)
------------------------
Partnership profit $ 6.2 $ 6.4
========================
Company's 50% share of partnership profits $ 3.1 $ 3.2
Revenue participation income from above
calendar sales 20.8 20.4
------------------------
Partnership income - GAAP $ 23.9 $ 23.6
========================
Three Months ended
March 31,
------------------------
2004 2003
------------------------
Reconciliation of net income (loss) - GAAP
to EBITDA and Adjusted EBITDA
Net income (loss) - GAAP $ 28.1 $ (41.2)
Plus tax provision (benefit) 18.3 (28.6)
Plus interest expense, net 40.3 48.7
Plus depreciation and amortization 14.4 16.0
------------------------
EBITDA - GAAP 101.1 (5.1)
Less other income (net) from gain on hedging
activity recognized in the first quarter
of 2003. This gain is considered non-
operational and is excluded from the as
adjusted results. (0.8)
Plus revenue from directories that published
prior to the acquisition plus all January 2003
published directories that would have
been recognized during the period absent
purchase accounting adjustments required
under GAAP 131.1
Less expenses from directories that published
prior to the acquisition plus all January 2003
published directories that would have
been recognized during the period absent
purchase accounting adjustments required
under GAAP (26.6)
------------------------
Adjusted EBITDA (10) $ 101.1 $ 98.6
========================
R.H. DONNELLEY CORPORATION Schedule 7
RECONCILIATION TO NON-GAAP MEASURES (con't)
- -------------------------------------------
(unaudited)
Amounts in millions, except per share amounts
Three months ended
March 31,
------------------------
2004 2003
------------------------
Reconciliation of cash flow from operations
to Free Cash Flow
Cash flow from operations - GAAP $ 87.9 $ 88.8
Less: additions to fixed assets and computer
software (2.8) (2.5)
------------------------
Free cash flow $ 85.1 $ 86.3
========================
Three Months ended
March 31,
------------------------
2004 2003
------------------------
Reconciliation of diluted shares outstanding
- GAAP to diluted shares outstanding - as
adjusted
Diluted shares outstanding - GAAP 32.3 30.2
Additional diluted shares outstanding
assuming the preferred stock is converted to
common stock at the beginning of the period 9.2 9.2
------------------------
Diluted shares outstanding - as adjusted 41.5 39.5
========================
Three Months ended
March 31,
------------------------
2004 2003
------------------------
Reconciliation of diluted earnings per share
- GAAP to diluted earnings per share - as
adjusted
Diluted earnings per share - GAAP $ 0.54 $ (2.76)
Anti-dilutive effect of converting preferred
stock to common stock at the beginning of
the period 0.13 3.33
------------------------
Diluted earnings per share - as adjusted $ 0.68 $ 0.57
========================
R.H. DONNELLEY CORPORATION Schedule 8
NOTES TO UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND NON-GAAP
MEASURES
- ----------------------------------------------------------------------
(1) Revenue is recognized using the deferral and amortization method
of accounting. Under this method, when a directory is published,
the publication sales value is deferred and amortized into the
income statement ratably over the life of the directory, which is
typically 12 months.
(2) The 2004 as adjusted results assume the conversion of the
preferred shares to common shares. The 2003 as adjusted results
assume that the appropriate pro rata portion of the revenue and
direct costs of directories that published prior to the
acquisition plus all January 2003 published directories were
recognized during the period pursuant to the deferral and
amortization method. As a result of purchase accounting, these
pre-acquisition revenues and expenses are not included in reported
GAAP results. See Schedule 6 for a detail of all adjustments to
the reported GAAP results.
(3) As adjusted results for both 2003 and 2004 exclude the entire
preferred dividend because the as adjusted results assume the
preferred shares were completely converted to common shares at the
beginning of the period and that therefore no dividends would have
been payable.
(4) On a reported basis, basic EPS are calculated using the two-class
method which requires earnings available to common stockholders,
after deducting preferred stock dividends, to be allocated between
the common and preferred shareholders based on the respective
rights to receive dividends. Basic EPS is then calculated by
dividing income allocable to common shareholders by the weighted
average number of shares outstanding. Diluted EPS are calculated
by dividing income allocable to common shareholders by the
weighted average common shares outstanding plus dilutive potential
common stock.
(5) On an adjusted basis, basic and diluted EPS are calculated as net
income (loss) divided by the weighted average basic and diluted
shares outstanding for the period assuming the preferred stock was
converted to common stock at the beginning of the period. Assuming
the preferred stock was converted at the beginning of the period,
basic and diluted shares would have been 9.2 million shares higher
for 2004 and 8.5 million shares higher for 2003.
(6) Represents the revenue and direct costs for directories that
published prior to the acquisition plus all January 2003 published
directories that would have been recognized during the period had
it not been for purchase accounting adjustments required under
GAAP and includes the effect of differences between SPA and RHD
historical and current accounting policies.
(7) Represents the tax effect of adjustments.
(8) Publication sales represent the billable value of advertising
sales in directories that published during the period. If
events occur during the current period that affect the
comparability of sales to the prior year period, such as changes
in directory publication dates, then prior year sales are
adjusted to conform to the current period presentation and
maintain comparability.
(9) Calendar sales represent the value of actual sales contracts
executed during the period. Calendar sales are a relevant
metric for DonTech as our share of DonTech profits and revenue
participation income are based on DonTech calendar sales.
(10) Adjusted EBITDA represents adjusted earnings before interest,
taxes, depreciation and amortization. EBITDA and Adjusted EBITDA
are measurements of operating performance computed in accordance
with GAAP and should not be considered as a substitute for
operating income or net income prepared in conformity with GAAP.
In addition, EBITDA may not be comparable to similarly titled
measures of other companies. This schedule reconciles Net Income
(Loss) -GAAP to EBITDA and Adjusted EBITDA.
(11) Represents the write-off of deferred financing costs on pre-
acquisition debt that was refinanced at the closing of the
acquisition. This write-off is considered non-operational and is
excluded from the as adjusted results.
(12) Represents the gain on hedging activity recognized in the first
quarter of 2003. This gain is considered non-operational and is
excluded from the as adjusted results.
CONTACT: R.H. Donnelley Corporation
Jenny L. Apker, 919/804-6137
or
James M. Gruskin, 919/804-6137