Exhibit 99.1
R.H. Donnelley and Dex Media Cash
Flow and Deleveraging Exceed Expectations in 2005; Both Companies
Report 2005 Results; R.H. Donnelley Provides 2006 Guidance for Newly
Combined Entity
CARY, N.C.--(BUSINESS WIRE)--Feb. 22, 2006--R.H. Donnelley
Corporation (NYSE: RHD):
Key Highlights:
-- Dex and Sprint markets continue record of solid sales growth
-- RHD and Dex Media collectively repay $832 million of debt in
2005
-- R.H. Donnelley completes acquisition of Dex Media on January
31, 2006; Merger integration on track
R.H. Donnelley Corporation (NYSE: RHD), one of the nation's
leading Yellow Pages and online local commercial search companies,
today reported full year 2005 cash flow from operations of $392.1
million compared to $335.0 million in the prior year (which excluded
tax refunds of $71.3 million). Dex Media, Inc. ("Dex" or "Dex Media")
generated full year 2005 cash flow from operations of $570.4 million
compared to $491.4 million in the prior year.
"Both companies entered 2005 with a tremendous amount of
opportunity and we certainly capitalized in a number of areas, most
notably, finalizing our plans to acquire Dex Media," said David C.
Swanson, R.H. Donnelley Chief Executive Officer. "We look forward to
making significant progress with respect to integration activities
related to Dex Media in 2006. We will also continue initiatives to
drive operational improvement in our core business, increase
leadership in online search and generate superior value for our
shareowners, advertisers and consumers."
George Burnett, R.H. Donnelley Chairman and former Chief Executive
Officer of Dex Media, said, "Dex Media consistently delivered on its
commitments in 2005. It was a year of operational momentum for us, in
which we successfully innovated both in print and online. We are
pleased to move into a new era with R.H. Donnelley from a position of
strength and increased momentum."
Full Year 2005 - Reported GAAP Results
R.H. Donnelley
RHD's full year 2005 net revenue was $956.6 million compared to
$603.1 million in the prior year. Operating expenses, including
depreciation and amortization, were $581.4 million compared to $389.4
million in the prior year. Operating income for the full year was
$375.2 million versus $291.7 million in the prior year. Net interest
expense in full year 2005 was $264.5 million compared to $175.5
million in 2004. Loss available to common shareholders for the full
year was $288.9 million or $9.10 per diluted share reflecting $11.7
million in preferred stock dividends, a $133.7 million loss on
repurchase of preferred stock and $211.0 million in preferred stock
fair value adjustments. This compares to income available to common
shareholders of $48.5 million or $1.15 per diluted share in the prior
year.
Dex Media
Dex Media's full year 2005 revenue was $1,658.4 million compared
to $1,602.9 million in the prior year. Operating expenses, including
depreciation and amortization, were $1,134.4 million compared to
$1,180.3 million in the prior year. Operating income for the full year
was $524.0 million versus $422.6 million in the prior year. Net
interest expense in full year 2005 was $445.7 million compared to
$504.8 million in 2004. Net income for the full year was $46.8 million
or $0.31 per diluted share compared to net loss of $50.8 million or
$0.39 per diluted share in the prior year.
Cash Flow and Debt
R.H. Donnelley
For the full year, RHD generated cash flow from operations of
$392.1 million. Free cash flow (cash flow from operations less $31.6
million of capital expenditures and software investment) for the year
was $360.5 million. In aggregate, RHD repaid $348.5 million of debt
during the full year. As of December 31, 2005, net debt outstanding
was $3,071.0 million.
Dex Media
For the full year, Dex Media generated cash flow from operations
of $570.4 million. Free cash flow (cash flow from operations less
$37.2 million of capital expenditures and software investment) for the
year was $533.2 million. In aggregate, Dex Media repaid $483.1 million
of debt during 2005 and paid $54.1 million of cash dividends to common
shareholders during the year. As of December 31, 2005, net debt
outstanding was $5,290.0 million.
Full Year 2005 Results - Including Adjustments and Non-GAAP
Measures
R.H. Donnelley
Combined publication sales for RHD for full year 2005 were
$1,026.9 million, up 1.3 percent from $1,013.7 million in the prior
year. Performance was primarily driven by strong results in the Sprint
markets. This was partially offset by lower publication sales in the
AT&T markets (acquired in 2004) driven by the reconstruction efforts
in that business. RHD's publication sales represent the total billable
value of advertising in directories that were published in the period.
RHD's adjusted net revenue during the full year was $1,041.6
million compared to adjusted pro forma net revenue of $1,033.9 million
in 2004. Adjusted operating expenses, including depreciation and
amortization, were $531.5 million for full year 2005 compared to
adjusted pro forma operating expenses of $502.6 million for the prior
year. Adjusted operating income for full year 2005 was $510.1 million
compared to adjusted pro forma operating income for full year 2004 of
$531.3 million. Adjusted EBITDA during the full year was $595.2
million compared to adjusted pro forma EBITDA of $616.8 million in the
prior year. Full year 2005 adjusted net income, excluding preferred
dividends and adjusted to remove the effect of purchase accounting,
was $149.8 million compared to adjusted pro forma net income of $193.3
million in the prior year. Adjusted net income per diluted share in
the full year was $3.87 compared to adjusted pro forma net income per
diluted share of $4.59 in full year 2004.
See the attached schedules for a reconciliation of non-GAAP
financial measures presented in this release to the most comparable
GAAP measures.
Dex Media
Publication sales for Dex Media during full year 2005 were
$1,728.0 million, up 2.2 percent from the prior year. Dex publication
sales represent the total billable value of advertising in directories
that were published during the period, together with all other
revenue, including Internet and direct marketing products, sold during
the period. Dex Media's revenue in the full year was $1,658.4 million
compared to adjusted revenue of $1,649.7 million in full year 2004.
Operating expenses, including depreciation and amortization, were
$1,134.4 million in the full year compared to adjusted operating
expenses of $1,190.8 million for full year 2004. Operating income for
full year 2005 was $524.0 million compared to adjusted operating
income for the prior year of $458.9 million. EBITDA adjusted to
exclude the effects of purchase accounting and certain non-recurring
items for the full year was $936.5 million compared to $930.9 million
in the prior year. Full year 2005 net income was $46.8 million
compared to net loss of $50.8 million for the prior year. Net income
per diluted share in the full year was $0.31 compared to net loss per
diluted share of $0.39 in full year 2004.
See the attached schedules for a reconciliation of non-GAAP
financial measures presented in this release to the most comparable
GAAP measures.
Fourth Quarter 2005 - Both GAAP and Including Adjustments and
Non-GAAP Measures
R.H. Donnelley
RHD's combined publication sales for the fourth quarter 2005 were
$293.5 million, up 0.3 percent from $292.8 million the prior period.
RHD's publication sales represent the total billable value of
advertising in directories that were published in the period. Net
revenue in the fourth quarter of 2005 was $261.1 million. Adjusted
EBITDA in the fourth quarter of 2005 was $142.7 million, while cash
flow from operations in the quarter was $77.7 million. GAAP net income
for the fourth quarter 2005 was $12.6 million.
Dex Media
Dex Media's publication sales in the fourth quarter of 2005 were
$411.0 million, up 2.0 percent in the quarter compared to $403.0
million in the fourth quarter of 2004. Dex publication sales represent
the total billable value of advertising in directories that were
published during the period, together with all other revenue,
including Internet and direct marketing products, sold during the
period. Dex's fourth quarter 2005 revenue was $414.0 million. Adjusted
EBITDA in the fourth quarter of 2005 was $230.4 million, while cash
flow from operations in the quarter was $154.7 million. Net loss for
the fourth quarter of 2005 was $2.7 million.
See the attached schedules for a reconciliation of non-GAAP
financial measures presented in this release to the most comparable
GAAP measures for both companies.
Outlook
R.H. Donnelley is providing guidance on a consolidated basis for
2006 adjusted to exclude the effects of purchase accounting and
assuming the Dex transaction closed on January 1. Pro forma
advertising sales are expected to be approximately $2.7 billion in
full year 2006. Advertising sales represent the total billable value
of print and online products in the period in which the billing
commences. Adjusted pro forma EBITDA margin excluding FAS 123 expense
is expected to be approximately 53 to 54 percent for the full year,
reflecting the first year of combined operations following the
acquisition of Dex Media and the costs necessary to achieve synergies.
RHD expects to generate more than $700 million of free cash flow after
$75 million of capital expenditures during 2006. Weighted average
fully diluted shares outstanding during 2006 are expected to be
approximately 73 million. Details and related reconciliations of
non-GAAP financial measures to the most comparable GAAP measures
appear in Schedule 9d in this press release.
Comparative Financial Results
As a result of the AT&T and Sprint transactions by R.H. Donnelley
as well as the Dex West acquisition by Dex Media and the related
financing and associated accounting, management believes that R.H.
Donnelley's and Dex Media's 2005 and 2004 results reported in
accordance with GAAP are not comparable, nor do they reflect the
underlying operational or financial performance of R.H. Donnelley or
Dex Media, respectively. Accordingly, management is presenting certain
non-GAAP financial measures in addition to results reported in
accordance with GAAP in order to better communicate underlying
operational and financial performance for each of R.H. Donnelley and
Dex Media, and to facilitate comparison of adjusted 2005 and adjusted
pro forma 2004 results for each of R.H. Donnelley and Dex Media.
Adjusted pro forma results for Donnelley discussed in this press
release and the attached schedules reflect the combination of RHD with
the AT&T directory business in Illinois and Northwest Indiana as if
the transaction had been consummated at the beginning of 2004 and
certain other adjustments described below, including adjustments to
exclude the effects of purchase accounting related to the AT&T
transaction. Adjusted 2004 results for Dex Media discussed in this
press release and the attached schedules exclude the effects of
purchase accounting related to the Dex West acquisition by Dex Media.
Adjusted 2004 and 2005 results for Dex Media exclude certain
non-recurring items. While management believes that the adjusted and
adjusted pro forma results reasonably resemble operational performance
as if the AT&T transaction had been consummated at the beginning of
the respective years and as if purchase accounting had not impacted
reported results for either Donnelley or Dex Media, because of
differences between RHD, Dex Media and their respective predecessor
accounting policies, management does not believe these adjusted and
adjusted pro forma results are strictly comparable.
The primary adjustments related to the AT&T transaction and the
Dex West transaction are 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.
Adjusted results for Donnelley also exclude deferred directory costs
related to sales contracts executed prior to the acquisition for
directories that were scheduled to publish subsequent to the
acquisition, determined based on the estimated billable value of the
published directories less the expected costs to complete the
directories plus a normal margin. Similar adjustments related to the
Sprint transaction were made in 2004 with respect to Donnelley's
adjusted results. R.H. Donnelley's adjusted earnings per share assumes
conversion at the beginning of the period of the preferred stock that
was outstanding at December 31 of the applicable year. The attached
Schedules include a reconciliation of all non-GAAP financial measures
to the most comparable GAAP measures and a further description of the
related adjustments for both Donnelley and Dex Media results.
While purchase accounting related to the Dex Media merger will
impact R.H. Donnelley's 2006 reported results, it did not affect 2005
results for either company.
Fourth Quarter and Full Year Conference Call
R.H. Donnelley will host a conference call to discuss the fourth
quarter and full year 2005 results of RHD and Dex Media on February
23, 2006 at 10:00 a.m. (Eastern Time). The call can be accessed by
dialing 888-387-9606 (domestic) or 517-645-6055 (international). The
passcode for the call is "RHD". Please dial in to the call by 9:50
a.m. (Eastern Time) to ensure a prompt start time. 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 800-813-5526
(domestic) or 402-280-1632 (international). The recording will be
available through March 10, 2006. There is no passcode for the replay.
About R.H. Donnelley
R.H. Donnelley ("RHD") is one of the nation's leading Yellow Pages
and online local commercial search companies. The company has more
than 4,000 employees operating in 28 states across the United States.
Every day, consumers rely on the company's more than 600 directories,
online city guides, and search websites to find businesses that
provide the services they need. RHD's directories, which have a
circulation of approximately 73 million, are marketed under three of
the industry's most recognized brands: AT&T(R) (formerly SBC) Yellow
Pages in Illinois and Northwest Indiana; Dex(R) Yellow Pages and
Sprint Yellow Pages(R). R.H. Donnelley's expanding presence on the
Internet now includes the Best Red Yellow Pages(R) brand at
www.bestredyp.com, in our AT&T Yellow Pages markets at
www.chicagolandyp.com and local search services through DexOnline(R)
at www.dexonline.com. Visit www.rhd.com for more information.
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," "planned," "estimated," "potential," "goal," "outlook," and
similar expressions, as they relate to R.H. Donnelley, 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 and 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 include, but are not limited to, statements about the
benefits of the merger between R.H. Donnelley and Dex Media, including
future financial and operating results, R.H. Donnelley's plans,
objectives, expectations and intentions and other statements that are
not historical facts.
The following factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements: (1) the
risk that the businesses will not be integrated successfully; (2) the
risk that the expected strategic advantages and cost savings from the
merger may not be fully realized or may take longer to realize than
expected; (3) disruption from the merger making it more difficult to
maintain relationships with customers, employees or suppliers; and (4)
general economic conditions and consumer sentiment in our markets.
Additional factors that could cause R.H. Donnelley's results to differ
materially from those described in the forward-looking statements are
described in detail in the registration statement on Form S-4 that
R.H. Donnelley filed with the Securities and Exchange Commission (the
"SEC") (Registration No. 333-129539), which contains the joint proxy
statement/prospectus relating to the transaction, R.H. Donnelley's
Annual Report on Form 10-K, as amended, for the fiscal year ended
December 31, 2004 in Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations," Dex Media's Annual
Report on Form 10-K for the fiscal year ended December 31, 2004 in
Item 1 "Business" and Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Standalone Company
and elsewhere in Dex Media's Report," as well as R.H. Donnelley's and
Dex Media's other periodic filings with the SEC that are available on
the SEC's website at www.sec.gov.
(See attached tables)
R.H. DONNELLEY CORPORATION Schedule 1
INDEX OF SCHEDULES
- ------------------
Schedule 1: Index of Schedules
Schedule 2: Unaudited Consolidated Statements of Operations
for the year ended December 31, 2005 and 2004 and
three months ended December 31, 2005 and 2004
Schedule 3: Unaudited Adjusted and Adjusted Pro Forma
Consolidated Statements of Operations for the
three months ended December 31, 2005 and 2004
Schedule 4: Unaudited Adjusted and Adjusted Pro Forma
Consolidated Statements of Operations for the
year ended December 31, 2005 and 2004
Schedule 5: Unaudited Consolidated Balance Sheets at December
31, 2005 and December 31, 2004
Schedule 6: Unaudited Consolidated Statements of Cash Flows
for the year ended December 31, 2005 and 2004 and
three months ended December 31, 2005 and 2004
Schedule 7: Reconciliation of Reported to Adjusted and
Adjusted Pro Forma Unaudited Consolidated
Statements of Operations for the three months
ended December 31, 2005 and 2004
Schedule 8: Reconciliation of Reported to Adjusted and
Adjusted Pro Forma Unaudited Consolidated
Statements of Operations for the year ended
December 31, 2005 and 2004
Schedule 9: Reconciliation of Non-GAAP Measures
Note: These schedules are preliminary and subject to change pending
each of R.H. Donnelley's and Dex Media, Inc.'s filing its Form
10-K.
DEX MEDIA, INC. Schedule 1 (cont'd)
INDEX OF SCHEDULES
- ------------------
Schedule 10: Unaudited Combining Statement of Operations Data
for the three months ended December 31, 2005 and
2004
Schedule 11: Unaudited Combining Statement of Operations Data
for the year ended December 31, 2005 and 2004
Schedule 12: Unaudited Balance Sheet Data as of December 31,
2005 and December 31, 2004
Schedule 13: Unaudited Combining Cash Flow Data for the three
months ended December 31, 2005 and 2004
Schedule 14: Unaudited Combining Cash Flow Data for the year
ended December 31, 2005 and 2004
Schedule 15: Reconciliation of Certain GAAP to Non-GAAP
Measures for the three months ended December 31,
2005 and 2004 and the year ended December 31,
2005 and 2004 (A)
Schedule 16: EBITDA Reconciliation for the three months ended
December 31, 2005 and 2004
Schedule 17: EBITDA Reconciliation for the year ended
December 31, 2005 and 2004
Schedule 18: Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures
Note: These schedules are preliminary and subject to change pending
each of R.H. Donnelley's and Dex Media, Inc.'s filing its Form
10-K.
R.H. DONNELLEY CORPORATION Schedule 2
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------
(unaudited)
Amounts in millions, except earnings per share
Three months ended Year ended December
December 31, 31,
-------------------- -------------------
2005 2004 2005 2004
Reported Reported Reported Reported
-------- -------- --------- --------
Net revenue (1) $ 261.1 $170.3 $ 956.6 $ 603.1
Expenses 128.4 110.8 496.3 322.8
Depreciation and
amortization 21.4 20.3 85.1 66.6
Partnership income - - - 78.0
-------- -------- --------- --------
Operating income 111.3 39.2 375.2 291.7
Interest expense, net (90.6) (54.6) (264.5) (175.5)
-------- -------- --------- --------
Pre-tax income (loss) 20.7 (15.4) 110.7 116.2
Tax (provision) benefit (8.1) 6.1 (43.2) (45.9)
-------- -------- --------- --------
Net income (loss) 12.6 (9.3) 67.5 70.3
Loss on repurchase of
Preferred Stock - - 133.7 -
Accretion of Preferred Stock
to fair value 211.0 - 211.0 -
Preferred dividend 2.5 5.6 11.7 21.8
-------- -------- --------- --------
(Loss) income available to
common shareholders $(200.9) $(14.9) $(288.9) $ 48.5
======== ======== ========= ========
Earnings per share (EPS): (5)
Basic $ (6.30) $(0.47) $ (9.10) $ 1.19
Diluted $ (6.30) $(0.47) $ (9.10) $ 1.15
Shares used in computing
EPS: (5)
Basic 31.9 31.4 31.7 31.3
Diluted 31.9 31.4 31.7 32.6
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 3
ADJUSTED AND ADJUSTED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------
(unaudited)
Amounts in millions, except earnings per share
Three months ended
December 31,
------------------
2004 Variance
2005 Adjusted
Adjusted(2) Pro Forma(2)(3) $ %
------------ --------------- ------- ---------
Net revenue (1) $261.1 $259.3 $ 1.8 0.7%
Expenses 118.4 113.5 (4.9) (4.3%)
Depreciation and
amortization 21.4 20.3 (1.1) (5.4%)
------ ------ ----- ------
Operating income 121.3 125.5 (4.2) (3.3%)
Interest expense, net (90.6) (54.6) (36.0) (65.9%)
------ ------ ----- ------
Pre-tax income 30.7 70.9 (40.2) (56.7%)
Tax provision (12.0) (28.0) 16.0 57.1%
------ ------ ----- ------
Net income $ 18.7 $ 42.9 (24.2) (56.4%)
====== ====== ===== ======
Earnings per share
(EPS): (6)
Basic $ 0.50 $ 1.04 $(0.54) (51.9%)
Diluted $ 0.48 $ 1.00 $(0.52) (52.0%)
Shares used in
computing EPS: (6)
Basic 37.2 41.2
Diluted 39.0 42.9
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
See Schedule 7 for a reconciliation of reported to adjusted and
adjusted pro forma amounts.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 4
ADJUSTED AND ADJUSTED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------
(unaudited)
Amounts in millions, except earnings per share
Year ended December 31,
----------------------------
2004 Variance
2005 Adjusted
Adjusted (2) Pro Forma (2)(3) $ %
----------- --------------- ------ -----
Net revenue (1) $1,041.6 $1,033.9 $ 7.7 0.7%
Expenses 446.4 417.2 (29.2) (7.0%)
Depreciation and
amortization 85.1 85.4 0.3 0.4%
-------- -------- ------ -------
Operating income 510.1 531.3 (21.2) (4.0%)
Interest expense,
net (264.5) (211.9) (52.6) (24.8%)
Other income - 0.1 (0.1) (100.0%)
-------- -------- ------ -------
Pre-tax income 245.6 319.5 (73.9) (23.1%)
Tax provision (95.8) (126.2) 30.4 24.1%
-------- -------- ------ -------
Net income $ 149.8 $ 193.3 (43.5) (22.5%)
======== ======== ====== =======
Earnings per share
(EPS): (6)
Basic $ 4.06 $ 4.74 $(0.68) (14.3%)
Diluted $ 3.87 $ 4.59 $(0.72) (15.7%)
Shares used in
computing EPS: (6)
Basic 36.9 40.8
Diluted 38.7 42.1
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
See Schedule 8 for a reconciliation of reported to adjusted and
adjusted pro forma amounts.
Note: These schedules are preliminary and subject to change
pending the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 5
CONSOLIDATED BALANCE SHEETS
- ---------------------------
(unaudited)
Amounts in millions
December 31, December 31,
2005 2004
Reported Reported
------------- ------------
Assets
Cash and cash equivalents $ 7.8 $ 10.8
Accounts receivable, net 457.3 455.4
Deferred directory costs 67.7 116.5
Other current assets 42.3 40.6
-------- --------
Total current assets 575.1 623.3
Fixed assets and computer software, net 55.7 37.7
Intangible assets, net 2,833.2 2,905.3
Other non-current assets 94.1 102.6
Goodwill 319.0 310.0
-------- --------
Total Assets $3,877.1 $3,978.9
======== ========
Liabilities, Redeemable Convertible Preferred
Stock and Shareholders' (Deficit) Equity
Accounts payable and accrued liabilities $ 90.3 $ 80.4
Deferred directory revenue 463.4 381.4
Current portion of long-term debt 100.2 162.0
-------- --------
Total current liabilities 653.9 623.8
Long-term debt 2,978.6 2,965.3
Deferred income taxes, net 148.2 118.8
Other non-current liabilities 54.4 36.9
-------- --------
Total liabilities 3,835.1 3,744.8
Redeemable Convertible Preferred Stock 334.1 216.1
Shareholders' (deficit) equity (292.1) 18.0
-------- --------
Total Liabilities, Redeemable Convertible
Preferred Stock and Shareholders'
(Deficit) Equity $3,877.1 $3,978.9
======== ========
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
For the three months and year ended December 31, 2005 and 2004
(unaudited)
Amounts in millions
Reported Reported
Three Months Three Months
ended ended
Operating activities: December 31, December 31,
2005 2004
------------- --------------
Net income (loss) $ 12.6 $ (9.3)
Depreciation and amortization 21.4 20.3
Deferred income tax 59.3 19.5
Cash in excess of partnership income - -
Changes in working capital (52.1) 30.2
Loss on extinguishment of debt 25.3 -
Other 11.2 21.9
------- ---------
Net cash provided by operating
activities 77.7 82.6
Investment activities:
Additions to fixed assets and computer
software (11.1) (5.9)
Dex Media Inc merger costs (6.5) -
------- ---------
Net cash used in investing activities (17.6) (5.9)
Financing activities:
Increase (decrease) in checks not yet
presented for payment 1.9 (4.6)
Proceeds from issuance of debt, net of
costs 318.5 -
Repurchase of Preferred shares - -
Repayment of debt (360.2) (76.4)
Revolver repayments (23.0) (98.0)
Borrowings under the Revolver 5.0 108.9
Proceeds from option exercises - 1.3
------- ---------
Net cash (used in) provided by financing
activities (57.8) (68.8)
Increase (decrease) in cash and cash
equivalents 2.3 7.9
Cash and cash equivalents, beginning of
period 5.5 2.9
------- ---------
Cash and cash equivalents, end of period $ 7.8 $ 10.8
======= =========
Reported Reported
Year ended Year ended
Operating activities: December 31, December 31,
2005 2004
------- ---------
Net income (loss) $ 67.5 $ 70.3
Depreciation and amortization 85.1 66.6
Deferred income tax 102.6 71.5
Cash in excess of partnership income - 1.4
Changes in working capital 83.4 179.6
Loss on extinguishment of debt 25.3 -
Other 28.2 16.9
------- ---------
Net cash provided by operating activities 392.1 406.3
Investment activities:
Additions to fixed assets and computer
software (31.6) (18.0)
Dex Media Inc merger costs (6.5) (1,413.6)
------- ---------
Net cash used in investing activities (38.1) (1,431.6)
Financing activities:
Increase (decrease) in checks
not yet presented for payment 1.7 (0.9)
Proceeds from issuance of debt, net of
costs 609.6 1,318.9
Repurchase of Preferred shares (277.2) -
Repayment of debt (662.3) (338.3)
Revolver repayments (304.2) (104.3)
Borrowings under the Revolver 268.0 145.5
Proceeds from option exercises 7.4 7.5
------- ---------
Net cash (used in) provided by financing
activities (357.0) 1,028.4
Increase (decrease) in cash and cash
equivalents (3.0) 3.1
Cash and cash equivalents, beginning of
period 10.8 7.7
------- ---------
Cash and cash equivalents, end of period $ 7.8 $ 10.8
======= =========
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 7
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------
Reconciliation of Reported to Adjusted and Adjusted Pro
Forma Amounts
(unaudited)
Amounts in millions, except earnings per share
Three Months Ended December 31,
2005
------------------------------
Sprint
Reported Adjustments (3)
---------------- -----------
Net revenue (1) $ 261.1 $ -
Expenses 128.4 -
Depreciation and amortization 21.4 -
---------------- -----------
Total expenses 149.8 -
---------------- -----------
Operating income 111.3 -
Interest expense, net (90.6) -
---------------- -----------
Pre-tax income (loss) 20.7 -
Tax (provision) benefit (8.1) -
---------------- -----------
Net income (loss) 12.6 -
Accretion of Preferred Stock to
fair value 211.0 (211.0)(4)
Preferred dividend 2.5 (2.5)(4)
---------------- -----------
(Loss) income available to
common shareholders $ (200.9) $ 213.5
================ ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ (6.30)
Diluted $ (6.30)
Shares used in computing EPS:
(4), (5), (6)
Basic 31.9 5.3
Diluted 31.9 7.1
Three Months Ended December 31,
2005
------------------------------
AT&T
Adjustments (2) Adjusted
---------------- -----------
Net revenue (1) $ - $ 261.1
Expenses (10.0)(7) 118.4
Depreciation and amortization - 21.4
---------------- -----------
Total expenses (10.0) 139.8
---------------- -----------
Operating income 10.0 121.3
Interest expense, net - (90.6)
---------------- -----------
Pre-tax income (loss) 10.0 30.7
Tax (provision) benefit (3.9)(11) (12.0)
---------------- -----------
Net income (loss) 6.1 18.7
Accretion of Preferred Stock to
fair value - -
Preferred dividend - -
---------------- -----------
(Loss) income available to
common shareholders $ 6.1 $ 18.7
================ ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ 0.50
Diluted $ 0.48
Shares used in computing EPS:
(4), (5), (6)
Basic 37.2
Diluted 39.0
Three Months Ended December 31,
2004
------------------------------
Sprint
Reported Adjustments (3)
---------------- -----------
Net revenue (1) $ 170.3 -
Expenses 110.8 -
Depreciation and amortization 20.3 -
---------------- -----------
Total expenses 131.1 -
---------------- -----------
Operating income 39.2 -
Interest expense, net (54.6)
---------------- -----------
Pre-tax income (loss) (15.4) -
Tax (provision) benefit 6.1
---------------- -----------
Net income (loss) (9.3) -
Accretion of Preferred Stock to
fair value - -
Preferred dividend 5.6 (5.6)(4)
---------------- -----------
(Loss) income available to
common shareholders $ (14.9) $ 5.6
================ ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ (0.47)
Diluted $ (0.47)
Shares used in computing EPS:
(4), (5), (6)
Basic 31.4 9.8
Diluted 31.4 11.5
Three Months Ended December 31,
2004
------------------------------
AT&T Adjusted
Adjustments (2) Pro Forma
---------------- -----------
Net revenue (1) $ 89.0 (7) $ 259.3
Expenses 2.7 (7) 113.5
Depreciation and amortization - 20.3
---------------- -----------
Total expenses 2.7 133.8
---------------- -----------
Operating income 86.3 125.5
Interest expense, net - (54.6)
---------------- -----------
Pre-tax income (loss) 86.3 70.9
Tax (provision) benefit (34.1)(11) (28.0)
---------------- -----------
Net income (loss) 52.2 42.9
Accretion of Preferred Stock to
fair value - -
Preferred dividend - -
---------------- -----------
(Loss) income available to
common shareholders $ 52.2 $ 42.9
================ ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ 1.04
Diluted $ 1.00
Shares used in computing EPS:
(4), (5), (6)
Basic 41.2
Diluted 42.9
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 8
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------
Reconciliation of Reported to Adjusted and Adjusted Pro
Forma Amounts
(unaudited)
Amounts in millions, except earnings per share
Year Ended December 31, 2005
----------------------------
Sprint
Reported Adjustments (3)
--------------- -----------
Net revenue (1) $ 956.6 $ -
Expenses 496.3 -
Depreciation and amortization 85.1 -
--------------- -----------
Total expenses 581.4 -
Partnership income - -
--------------- -----------
Operating income 375.2 -
Interest expense, net (264.5) -
Other income - -
--------------- -----------
Pre-tax income 110.7 -
Tax provision (43.2) -
--------------- -----------
Net income 67.5 -
Loss on repurchase of Preferred
Stock 133.7 (133.7)(4)
Accretion of Preferred Stock to
fair value 211.0 (211.0)(4)
Preferred dividend 11.7 (11.7)(4)
--------------- -----------
(Loss) income available to
common shareholders $ (288.9) $ 356.4
=============== ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ (9.10)
Diluted $ (9.10)
Shares used in computing EPS:
(4), (5), (6)
Basic 31.7 5.2
Diluted 31.7 7.0
Year Ended December 31, 2005
----------------------------
AT&T
Adjustments (2) Adjusted
--------------- -----------
Net revenue (1) $ 85.0 (7) $ 1,041.6
Expenses (49.9)(7) 446.4
Depreciation and amortization - 85.1
--------------- -----------
Total expenses (49.9) 531.5
Partnership income - -
--------------- -----------
Operating income 134.9 510.1
Interest expense, net - (264.5)
Other income - -
--------------- -----------
Pre-tax income 134.9 245.6
Tax provision (52.6)(11) (95.8)
--------------- -----------
Net income 82.3 149.8
Loss on repurchase of Preferred
Stock - -
Accretion of Preferred Stock to
fair value - -
Preferred dividend - -
--------------- -----------
(Loss) income available to
common shareholders $ 82.3 $ 149.8
=============== ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ 4.06
Diluted $ 3.87
Shares used in computing EPS:
(4), (5), (6)
Basic 36.9
Diluted 38.7
Year Ended December 31, 2004
----------------------------
Sprint
Reported Adjustments (3)
--------------- -----------
Net revenue (1) $ 603.1 $ 1.1 (7)
Expenses 322.8 (3.6)(7)
Depreciation and amortization 66.6 -
--------------- -----------
Total expenses 389.4 (3.6)
Partnership income 78.0 -
--------------- -----------
Operating income 291.7 4.7
Interest expense, net (175.5) -
Other income - -
--------------- -----------
Pre-tax income 116.2 4.7
Tax provision (45.9) (1.9)(11)
--------------- -----------
Net income 70.3 2.8
Loss on repurchase of Preferred
Stock - -
Accretion of Preferred Stock to
fair value - -
Preferred dividend 21.8 (21.8)(4)
--------------- -----------
(Loss) income available to
common shareholders $ 48.5 $ 24.6
=============== ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ 1.19
Diluted $ 1.15
Shares used in computing EPS:
(4), (5), (6)
Basic 31.3 9.5
Diluted 32.6 9.5
Year Ended December 31, 2004
----------------------------
AT&T Adjusted
Adjustments (2) Pro Forma
--------------- -----------
Net revenue (1) $ 429.7 (7) $ 1,033.9
Expenses 98.0 (7) 417.2
Depreciation and amortization 18.8 (8) 85.4
--------------- -----------
Total expenses 116.8 502.6
Partnership income (78.0)(9) -
--------------- -----------
Operating income 234.9 531.3
Interest expense, net (36.4)(10) (211.9)
Other income 0.1 0.1
--------------- -----------
Pre-tax income 198.6 319.5
Tax provision (78.4)(11) (126.2)
--------------- -----------
Net income 120.2 193.3
Loss on repurchase of Preferred
Stock - -
Accretion of Preferred Stock to
fair value - -
Preferred dividend - -
--------------- -----------
(Loss) income available to
common shareholders $ 120.2 $ 193.3
=============== ===========
Earnings per share (EPS):
(4), (5), (6)
Basic $ 4.74
Diluted $ 4.59
Shares used in computing EPS:
(4), (5), (6)
Basic 40.8
Diluted 42.1
See accompanying Notes to Consolidated Statements of Operations and
Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 9a
RECONCILIATION OF NON-GAAP MEASURES
- -----------------------------------
(unaudited)
Amounts in millions, except per share amounts
Three Months Ended
December 31,
------------------
2005 2004
-------- --------
Reconciliation of publication sales for Sprint-
branded and AT&T-branded directories to net
revenue -GAAP and net revenue -adjusted and net
revenue -adjusted pro forma
Publication sales - Sprint-branded directories
(12) $ 128.9 $ 124.5
Publication sales - Sprint-branded directories -
percentage change over prior year 3.6%
Adjustments for changes in directory publication
date(s) (12) -
---------
Publication sales disclosed in December 31, 2004
Form 10K 124.5
Publication sales - AT&T-branded directories (12) 164.6 168.3
Publication sales - AT&T-branded directories -
percentage change over prior year -2.2%
Adjustments for changes in directory publication
date(s) (12) 17.3
---------
Publication sales disclosed in December 31, 2004
Form 10K 185.6
Less pre-acquisition publication sales for AT&T-
branded directories not recognized as revenue
in current period due to purchase accounting - -
Less current period publication sales for Sprint-
branded directories not recognized as
revenue in current period due to the deferral
method of accounting (108.1) (104.3)
Less current period publication sales for AT&T-
branded directories not recognized as
revenue in current period due to the deferral
method of accounting (140.9) (159.1)
Plus net revenue reported in the period for
publication sales from prior periods
for Sprint-branded directories 126.1 122.2
Plus net revenue reported in the period for
publication sales from prior periods
for AT&T-branded directories 87.5 -
-------- --------
Net directory advertising revenue 258.1 168.9
Pre-press publishing revenue - -
Other revenue 3.0 1.4
-------- --------
Net revenue - GAAP 261.1 170.3
Plus net revenue from Sprint-branded directories
that published prior to the acquisition that
would have been recognized during the
period absent purchase accounting
adjustments required under GAAP - -
Plus net revenue from AT&T-branded directories
that published prior to the acquisition
that would have been recognized during the
period absent purchase accounting
adjustments required under GAAP had the
transaction occurred on January 1, 2004 - 89.0
Less pre-press publishing revenue that would not
have been recorded had the AT&T
transaction occurred on January 1, 2004 - -
Net revenue - Adjusted $ 261.1
========
Net revenue - Adjusted pro forma $ 259.3
========
Year Ended
December 31,
------------------
2005 2004
-------- --------
Reconciliation of publication sales for Sprint-
branded and AT&T-branded directories to net
revenue -GAAP and net revenue -adjusted and net
revenue -adjusted pro forma
Publication sales - Sprint-branded directories
(12) $ 593.5 $ 567.8
Publication sales - Sprint-branded directories -
percentage change over prior year 4.5%
Adjustments for changes in directory publication
date(s) (12) (0.6)
--------
Publication sales disclosed in December 31, 2004
Form 10K 567.2
Publication sales - AT&T-branded directories (12) 433.4 445.9
Publication sales - AT&T-branded directories -
percentage change over prior year -2.8%
Adjustments for changes in directory publication
date(s) (12) 17.3
--------
Publication sales disclosed in December 31, 2004
Form 10K 463.2
Less pre-acquisition publication sales for AT&T-
branded directories not recognized as revenue
in current period due to purchase accounting - (277.3)
Less current period publication sales for Sprint-
branded directories not recognized as
revenue in current period due to the deferral
method of accounting (230.3) (221.0)
Less current period publication sales for AT&T-
branded directories not recognized as
revenue in current period due to the deferral
method of accounting (225.6) (158.4)
Plus net revenue reported in the period for
publication sales from prior periods
for Sprint-branded directories 216.3 209.3
Plus net revenue reported in the period for
publication sales from prior periods
for AT&T-branded directories 158.3 -
-------- --------
Net directory advertising revenue 945.6 583.0
Pre-press publishing revenue - 13.0
Other revenue 11.0 7.1
-------- --------
Net revenue - GAAP 956.6 603.1
Plus net revenue from Sprint-branded directories
that published prior to the acquisition
that would have been recognized during the
period absent purchase accounting
adjustments required under GAAP - 1.1
Plus net revenue from AT&T-branded directories
that published prior to the acquisition
that would have been recognized during the
period absent purchase accounting
adjustments required under GAAP had the
transaction occurred on January 1, 2004 85.0 441.5
Less pre-press publishing revenue that would not
have been recorded had the AT&T
transaction occurred on January 1, 2004 - (11.8)
Net revenue - Adjusted $1,041.6
========
Net revenue - Adjusted pro forma $1,033.9
========
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 9b
RECONCILIATION OF NON-GAAP MEASURES (cont'd)
- --------------------------------------------
(unaudited)
Amounts in millions, except per share amounts
Three Months Year Ended
Ended December December 31,
31,
--------------- ---------------
2005 2004 2005 2004
------- ------- ------- -------
Reconciliation of net income - GAAP to
EBITDA, adjusted EBITDA and adjusted
pro forma EBITDA
Net income (loss) - GAAP $ 12.6 $ (9.3) $ 67.5 $ 70.3
Plus tax provision (benefit) 8.1 (6.1) 43.2 45.9
Plus interest expense, net 90.6 54.6 264.5 175.5
Plus depreciation and amortization 21.4 20.3 85.1 66.6
------- ------- ------- -------
EBITDA (13) 132.7 59.5 460.3 358.3
Less Other income - - - 0.1
Plus net revenue from Sprint-branded
directories that published prior to
the acquisition that would have been
recognized during the period absent
purchase accounting adjustments
required under GAAP - - - 1.1
Less pre-press publishing revenue that
would not have been recorded had the
AT&T transaction occurred on January
1, 2004 - - (11.8)
Plus net revenue from AT&T-branded
directories that published prior to
the acquisition that would have been
recognized during the period absent
purchase accounting adjustments
required under GAAP had the
transaction occurred on January 1,
2004 - 89.0 85.0 441.5
Plus amortized deferred cost uplift on
Sprint sales contracts as of the date
of the acquisition, net of expenses on
Sprint-branded directories that
published prior to the acquisition
that would not have been recognized
during the period absent purchase
accounting adjustments required under
GAAP - - - 3.6
Plus amortized deferred cost uplift on
AT&T sales contracts as of the date of
the acquisition, net of expenses on
AT&T-branded directories that
published prior to the acquisition
that would not have been recognized
during the period absent purchase
accounting adjustments required under
GAAP 10.0 (2.7) 49.9 (98.0)
Less partnership income that would not
have been recognized during the period
assuming the AT&T transaction occurred
on January 1, 2004 - - - (78.0)
------- ------- ------- ------
Net effect of adjustments to GAAP
results $ 10.0 $ 86.3 $134.9 $258.5
------- -------
Adjusted EBITDA (13) $142.7 $595.2
======= ------- ======= ------
Adjusted pro forma EBITDA (13) $145.8 $616.8
======= ======= ======= =======
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 9c
RECONCILIATION OF NON-GAAP MEASURES (cont'd)
- --------------------------------------------
(unaudited)
Amounts in millions, except per share amounts
Three Months Ended Year Ended
December 31, December 31,
------------------ ---------------
2005 2004 2005 2004
------ ------ ------ ------
Reconciliation of cash flow
from operations to Free Cash
Flow
Cash flow from operations -
GAAP $ 77.7 $ 82.6 $392.1 $406.3
Less: additions to fixed assets
and computer software (11.1) (5.9) (31.6) (18.0)
------ ------ ------ ------
Free cash flow $ 66.6 $ 76.7 $360.5 $388.3
====== ====== ====== ======
Three Months Ended Year Ended
December 31, December 31,
------------------ ---------------
2005 2004 2005 2004
------ ------ ------ ------
Reconciliation of diluted
shares outstanding - GAAP to
diluted shares outstanding
- adjusted
Diluted shares outstanding -
GAAP 31.9 31.4 31.7 32.6
Additional diluted shares
outstanding assuming the
Preferred Stock is converted
to common stock at the
beginning of the period
plus common stock equivalents 7.1 11.5 7.0 9.5
------ ------ ------ ------
Diluted shares outstanding -
adjusted 39.0 42.9 38.7 42.1
====== ====== ====== ======
Three Months Ended Year Ended
December 31, December 31,
------------------ ---------------
2005 2004 2005 2004
------ ------ ------ ------
Reconciliation of diluted
earnings per share - GAAP to
diluted earnings per share -
adjusted and diluted earnings
per share - adjusted pro forma
Diluted earnings per share -
GAAP $(6.30) $(0.47) $(9.10) $ 1.15
Effect of converting Preferred
Stock to common stock at the
beginning of the period 6.62 - 10.84 -
Impact of Sprint transaction,
including adjustments to
eliminate purchase accounting - 0.25 - 0.58
Pro forma impact of AT&T
transaction, including
adjustments to eliminate
purchase accounting - - - 1.64
Impact of AT&T transaction,
including adjustments to
eliminate purchase accounting 0.16 1.22 2.13 1.22
------ ------
Diluted earnings per share -
adjusted $ 0.48 $ 3.87
====== ------ ====== ------
Diluted earnings per share -
adjusted pro forma $ 1.00 $ 4.59
====== ======
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 9d
RECONCILIATION OF NON-GAAP MEASURES (cont'd)
- --------------------------------------------
(unaudited)
$ in billions
Full Year 2006
Outlook
--------------
Reconciliation of advertising sales (14) outlook to net
revenue -GAAP outlook and
net revenue -adjusted pro forma outlook
Advertising sales outlook $ 2.70
Less pre-acquisition advertising sales for
Dex-branded directories not recognized as revenue
in current period due to purchase accounting (0.15)
Less current period advertising sales for
directories not recognized as revenue in current
period due to the deferral method of accounting (1.17)
Plus net revenue reported in the period for
advertising sales from prior periods 0.48
Other revenue 0.01
--------------
Net revenue -GAAP outlook $ 1.87
Plus pro forma net revenue that would have been
recognized during the period absent purchase
accounting adjustments required under GAAP
assuming the Dex Media transaction had occurred
on January 1, 2006 0.86
--------------
Net revenue - Adjusted pro forma outlook $2.73
==============
Full Year 2006
Outlook
--------------
Reconciliation of adjusted pro forma EBITDA outlook to
operating income - GAAP outlook
Adjusted pro forma EBITDA outlook $ 1.46
Less pro forma depreciation and amortization (0.37)
--------------
Adjusted pro forma operating income outlook $ 1.09
Less revenue from Dex-branded directories that
published prior to the acquisition that would
have been recognized during the period absent
purchase accounting adjustments required
under GAAP, excluding January 2006 (0.72)
Plus expenses from Dex-branded directories that
published prior to the acquisition that would
have been recognized during the period absent
purchase accounting adjustments required under
GAAP, net of amortized deferred cost uplift,
on Dex and AT&T sales contracts as of their
respective acquisition dates, excluding January
2006 0.01
Less Dex Media net operating income impact for the
month of January 2006 (0.05)
--------------
Operating income - GAAP outlook $0.33
==============
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
See Schedule16 for reconciliation of reported to adjusted and adjusted
pro forma amounts.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 9d
RECONCILIATION OF NON-GAAP MEASURES (cont'd) (continued)
- --------------------------------------------
(unaudited)
$ in billions
Full Year 2006
Outlook
--------------
Calculation of adjusted pro forma EBITDA margin outlook
Adjusted pro forma net revenue outlook $ 2.73
Adjusted pro forma EBITDA outlook 1.46
--------------
Adjusted pro forma EBITDA margin outlook 53.5%
==============
Full Year 2006
Outlook
--------------
Reconciliation of cash flow from operations - GAAP
outlook to free cash flow outlook expected adjusted
diluted shares outstanding
Cash flow from operations - GAAP outlook $ 0.78
Less: Additions to fixed assets and computer software (0.08)
--------------
Free cash flow outlook $ 0.70
==============
Full Year 2006
Outlook
(millions)
--------------
Reconciliation of expected diluted shares outstanding -
GAAP to expected adjusted diluted shares outstanding
Expected diluted shares outstanding - GAAP 71
Additional expected shares from common stock
equivalents 2
-------------
Expected adjusted diluted shares outstanding 73
=============
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
The following schedules have been provided for ease of reviewing
consolidated selected financial data for Dex Media, Inc. and its
wholly-owned subsidiaries, Dex Media East, LLC and Dex Media West,
LLC. Non-GAAP measures presented in these tables have been reconciled
in Schedules 15 through 17 to the most directly comparable GAAP
measure.
Schedule 10
Dex Media, Inc. and Subsidiaries
Unaudited Combining Statement of Operations
Three Months Ended
(Dollars in Millions) December 31, 2005
--------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
-------- -------- ------------- ------------
Total Revenue $ 176.6 $ 237.3 $ 0.1 $ 414.0
Cost of Revenue 56.3 74.9 - 131.2
General &
Administrative -
(including bad debt
expense) 33.4 42.1 0.7 76.2
Depreciation &
Amortization 3.6 4.8 - 8.4
Amortization of
Intangibles 38.4 48.0 - 86.4
Operating Income 44.9 67.5 (0.6) 111.8
Interest Expense - Net 36.0 54.6 23.0 113.6
Pre-tax Income 8.9 12.9 (23.7) (1.9)
Tax Provision 5.2 6.6 (11.0) 0.8
Net Income (Loss) 3.7 6.3 (12.7) (2.7)
Earnings Per Share
(EPS):
Basic (0.02)
Diluted (0.02)
(Dollars in Millions) December 31, 2004
---------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
-------- -------- ------------- -------------
Total Revenue $ 179.2 $ 233.5 $ - $ 412.7
Cost of Revenue 54.4 67.2 - 121.6
General &
Administrative -
(including bad debt
expense) 27.0 35.9 0.5 63.4
Depreciation &
Amortization 3.0 5.4 0.1 8.5
Amortization of
Intangibles 45.3 57.8 - 103.1
Operating Income 49.5 67.2 (0.6) 116.1
Interest Expense - Net 36.5 59.6 22.0 118.1
Pre-tax Income 13.0 7.6 (22.6) (1.9)
Tax Provision 6.2 3.2 (8.8) 0.6
Net Income (Loss) 6.8 4.5 (13.8) (2.5)
Earnings Per Share
(EPS):
Basic (0.02)
Diluted (0.02)
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 11
Dex Media, Inc. and Subsidiaries
Unaudited Combining Statement of Operations
Year Ended
(Dollars in Millions) December 31, 2005
--------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
-------- -------- ------------- ------------
Total Revenue $ 716.5 $ 941.9 - $ 1,658.4
Cost of Revenue 218.7 285.7 0.1 504.5
General &
Administrative -
(including bad debt
expense) 113.3 136.3 3.1 252.7
Depreciation &
Amortization 13.1 18.4 - 31.5
Amortization of
Intangibles 153.7 192.0 - 345.7
Operating Income 217.7 309.5 (3.2) 524.0
Interest Expense - Net 146.0 209.7 90.0 445.7
Pre-tax Income 72.0 100.8 (93.2) 79.6
Tax Provision 29.8 41.0 (38.0) 32.8
Net Income (Loss) 42.2 59.9 (55.3) 46.8
Earnings Per Share
(EPS):
Basic 0.31
Diluted 0.31
(Dollars in Millions) December 31, 2004
---------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
-------- -------- ------------- -------------
Total Revenue $ 723.0 $ 879.9 $ - $ 1,602.9
Total Revenue -
excluding the effects
of Purchase Accounting 723.0 926.7 - 1,649.7
Cost of Revenue 220.1 265.4 - 485.5
Cost of Revenue -
excluding the effects
of Purchase Accounting 220.1 275.9 - 496.0
General &
Administrative -
(including bad debt
expense) 112.4 138.2 - 251.6
Depreciation &
Amortization 12.2 18.6 - 30.8
Amortization of
Intangibles 181.1 231.3 - 412.4
Operating Income 197.2 226.4 (1.0) 422.6
Interest Expense - Net 199.3 221.8 83.8 504.8
Pre-tax Income (2.1) 4.6 (84.7) (82.2)
Tax Provision (0.5) 2.0 (32.9) (31.5)
Net Income (Loss) (1.6) 2.6 (51.8) (50.8)
Earnings Per Share
(EPS):
Basic (0.39)
Diluted (0.39)
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 12
Dex Media, Inc. and Subsidiaries
Unaudited Balance Sheets
As of
(Dollars in Millions) December 31, 2005
-----------------------------------
Dex Media,
Dex Media Dex Media Inc.
East West Consolidated
---------- ---------- -------------
Assets
Cash and Cash Equivalents $ 0.2 $ 1.7 $ 2.8
Accounts Receivable, Net 69.5 63.5 133.0
Deferred Directory Costs 139.4 154.2 293.6
Other Current Assets 11.7 27.0 35.3
--------- --------- ---------
Total Current Assets 220.8 246.4 464.7
Property, Plant &
Equipment, net 53.9 53.0 106.9
Intangible Assets, net 1,210.0 1,478.0 2,688.0
Other Non-current Assets 54.0 59.5 155.2
Goodwill 890.7 2,190.7 3,081.4
--------- --------- ---------
Total Assets 2,429.4 4,027.6 6,496.2
========= ========= =========
Accounts Payable and
Accrued Liabilities 75.4 121.8 195.2
Deferred Directory Revenue 107.8 113.7 221.4
Current Portion of Long-
term Debt 129.3 110.4 239.7
--------- --------- ---------
Total Current Liabilities 312.5 345.9 656.3
Long-term Debt (excluding
current portion) 1,434.5 2,524.1 5,053.1
Deferred Income Taxes, net - 42.9 -
Other Non-current Liabilities 45.4 50.3 95.9
--------- --------- ---------
Total Liabilities 1,792.4 2,963.2 5,805.3
Total Equity 637.0 1,064.4 690.9
--------- --------- ---------
Total Liabilities & Equity $ 2,429.4 $ 4,027.6 $ 6,496.2
========= ========= =========
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 12
Dex Media, Inc. and Subsidiaries
Unaudited Balance Sheets
As of
(Dollars in Millions) December 31, 2004
-----------------------------------
Dex Media,
Dex Media Dex Media Inc.
East West Consolidated
---------- ---------- -------------
Assets
Cash and Cash Equivalents $ - $ 8.9 $ 9.2
Accounts Receivable, Net 56.1 48.1 104.2
Deferred Directory Costs 135.4 155.8 291.2
Other Current Assets 13.4 12.6 26.6
--------- --------- ---------
Total Current Assets 204.9 225.4 431.2
Property, Plant &
Equipment, net 50.8 50.7 101.5
Intangible Assets, net 1,363.7 1,670.0 3,033.7
Other Non-current Assets 90.4 88.0 230.2
Goodwill 890.7 2,190.7 3,081.4
--------- --------- ---------
Total Assets 2,600.5 4,224.8 6,878.0
========= ========= =========
Accounts Payable and
Accrued Liabilities 69.9 91.4 180.1
Deferred Directory Revenue 96.6 111.1 207.7
Current Portion of Long-
term Debt 105.2 84.3 189.5
--------- --------- ---------
Total Current Liabilities 271.7 286.8 577.3
Long-term Debt (excluding
current portion) 1,655.3 2,836.5 5,537.8
Deferred Income Taxes, net - - -
Other Non-current
Liabilities 39.9 42.4 82.4
--------- --------- ---------
Total Liabilities 1,966.9 3,165.7 6,197.5
Total Equity 633.6 1,059.1 680.5
--------- --------- ---------
Total Liabilities & Equity $ 2,600.5 $ 4,224.8 $ 6,878.0
========= ========= =========
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 13
Dex Media, Inc. and Subsidiaries
Unaudited Combining Statement of Cash Flows
Three Months Ended
(Dollars in Millions) December 31, 2005
----------------------------------------------
Dex Media,
Dex Inc., Dex Media,
Media Dex Media Eliminations Inc.
East West & Other Consolidated
-------- --------- ------------- -------------
Operating Activities:
Net Income (Loss) $ 3.7 $ 6.3 $ (12.7) $ (2.7)
Provision for
Bad Debts 5.8 7.7 0.1 13.6
Depreciation
and Amortization 42.0 52.8 - 94.8
Amortization of
Deferred Financing
Costs 3.0 5.2 0.5 8.7
Accretion of Notes - - 12.6 12.6
Deferred Income Tax 5.1 6.6 (10.9) 0.8
Changes in Operating
Assets & Liabilities (26.3) 50.8 (9.8) 14.7
Other 5.3 6.8 0.1 12.2
Cash Provided by
(Used for)
Operating Activities 38.6 136.2 (20.1) 154.7
Investment Activities:
Capital Expenditures (5.2) (6.0) - (11.2)
Cash Provided by
(Used for)
Investing Activities (5.2) (6.0) - (11.2)
Financing Activities:
Net Borrowings
on Revolver 3.0 (13.0) - (10.0)
Debt Repayments (22.2) (96.0) - (118.2)
Dividends - - (13.5) (13.5)
Other (14.1) (19.5) 34.4 0.8
Cash Provided by
(Used for)
Financing Activities (33.3) (128.5) 20.9 (140.9)
Beginning Cash Balance 0.1 - 0.1 0.2
Ending Cash Balance 0.2 1.7 0.9 2.8
Cash Interest Paid 51.1 23.4 20.0 94.5
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 13
Dex Media, Inc. and Subsidiaries
Unaudited Combining Statement of Cash Flows
Three Months Ended
(Dollars in Millions) December 31, 2004
----------------------------------------------
Dex Media,
Dex Inc., Dex Media,
Media Dex Media Eliminations Inc.
East West & Other Consolidated
-------- --------- ------------- -------------
Operating Activities:
Net Income (Loss) $ 6.8 $ 4.5 $ (13.8) $ (2.5)
Provision for
Bad Debts 4.9 5.2 - 10.1
Depreciation
and Amortization 48.3 63.3 - 111.6
Amortization of
Deferred Financing
Costs 3.6 13.2 0.3 17.1
Accretion of Notes - - 11.6 11.6
Deferred Income Tax 6.2 3.2 (8.8) 0.6
Changes in Operating
Assets & Liabilities (31.2) 29.8 (10.4) (11.8)
Other 0.2 0.3 - 0.5
Cash Provided by
(Used for)Operating
Activities 38.8 119.5 (21.1) 137.2
Investment Activities:
Capital Expenditures (0.9) (5.7) - (6.6)
Other Investing
Activities - 2.7 - 2.7
Cash Provided by
(Used for)Investing
Activities (0.9) (3.0) - (3.9)
Financing Activities:
Net Borrowings
on Revolver - - - -
Debt Repayments (29.1) (94.0) - (123.1)
Other (8.8) (16.5) 20.5 (4.8)
Cash Provided by
(Used for)Financing
Activities (37.9) (110.5) 20.5 (127.9)
Beginning Cash Balance - 2.9 0.9 3.8
Ending Cash Balance - 8.9 0.3 9.2
Cash Interest Paid 55.2 22.6 19.9 97.7
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 14
Dex Media, Inc. and Subsidiaries
Unaudited Combining Statement of Cash Flow
Year Ended
(Dollars in Millions) December 31, 2005
-----------------------------------------------
Dex Media,
Inc., Dex Media,
Dex Media Dex Media Eliminations Inc.
East West & Other Consolidated
--------- --------- ------------- -------------
Operating Activities:
Net Income (Loss) $ 42.2 $ 59.9 $ (55.3) $ 46.8
Provision for
Bad Debts 25.8 26.7 (0.1) 52.4
Depreciation
and Amortization 166.8 210.5 (0.1) 377.2
Amortization
of Deferred
Financing Costs 15.5 19.8 1.7 37.0
Accretion of Notes - - 48.5 48.5
Deferred Income Tax 29.8 40.9 (37.9) 32.8
Changes in Operating
Assets & Liabilities (30.8) (7.8) 0.4 (38.2)
Other 5.9 7.6 0.4 13.9
Cash Provided by
(Used for)Operating
Activities 255.2 357.6 (42.4) 570.4
Investment Activities:
Capital Expenditures (16.3) (20.8) (0.1) (37.2)
Cash Provided by
(Used for)Investing
Activities (16.3) (20.8) (0.1) (37.2)
Financing Activities:
Net Borrowings
on Revolver 17.0 5.0 - 22.0
Debt Repayments (213.8) (291.3) - (505.1)
Dividends - - (54.1) (54.1)
Other (41.9) (57.7) 97.2 (2.4)
Cash Provided by
(Used for)Financing
Activities (238.7) (344.0) 43.1 (539.6)
Beginning Cash
Balance - 8.9 0.3 9.2
Ending Cash Balance 0.2 1.7 0.9 2.8
Cash Interest Paid 127.6 187.9 40.0 355.5
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 14
Dex Media, Inc. and Subsidiaries
Unaudited Combining Statement of Cash Flow
Year Ended
(Dollars in Millions) December 31, 2004
Dex Media,
Inc., Dex Media,
Dex Media Dex Media Eliminations Inc.
East West & Other Consolidated
--------- --------- ------------- -------------
Operating Activities:
Net Income (Loss) $ (1.6) $ 2.6 $ (51.8) $ (50.8)
Provision for
Bad Debts 21.2 22.5 - 43.7
Depreciation
and Amortization 193.3 249.9 - 443.2
Amortization of
Deferred Financing
Costs 28.9 33.0 1.6 63.5
Accretion of Notes - - 42.3 42.3
Deferred Income Tax (0.5) 2.0 (33.0) (31.5)
Changes in Operating
Assets & Liabilities (35.4) 14.9 0.2 (20.3)
Other 0.5 0.8 - 1.3
Cash Provided by
(Used for)Operating
Activities 206.4 325.7 (40.7) 491.4
Investment Activities:
Capital Expenditures (23.2) (31.4) - (54.6)
Other Investing
Activities - 7.9 - 7.9
Cash Provided by
(Used for)
Investing Activities (23.2) (23.5) - (46.7)
Financing Activities:
Net Borrowings
on Revolver - - - -
Debt Repayments (380.3) (282.2) 250.4 (412.1)
Other 194.4 (15.7) (209.5) (30.8)
Cash Provided by
(Used for)
Financing Activities (185.9) (297.9) 40.9 (442.9)
Beginning Cash Balance 2.7 4.6 0.1 7.4
Ending Cash Balance - 8.9 0.3 9.2
Cash Interest Paid 176.2 194.5 40.5 411.2
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 15A
Dex Media, Inc. and Subsidiaries
EBITDA, EBITDA, as adjusted (B)
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
----------------- -------------------
2005 2004 2005 2004
------- ------- -------- --------
Net income (loss) $ (2.7) $ (2.5) $ 46.8 $ (50.8)
Income tax provision
(benefit) 0.8 0.6 32.8 (31.4)
Interest expense - net 113.6 118.0 445.7 504.8
Depreciation & amortization 8.4 8.5 31.5 30.8
Amortization of intangibles 86.4 103.1 345.7 412.4
------- ------- -------- --------
EBITDA (a) 206.5 227.7 902.5 865.8
Effects of purchase accounting:
Revenue - - - 46.8
Cost of revenue - - - (10.5)
------- ------- -------- --------
EBITDA (a), as adjusted to
exclude the effects of
purchase accounting 206.5 227.7 902.5 902.1
------- ------- -------- --------
Other adjustments:
Advisory fees to Sponsors - - - 2.0
Advisory fee termination - - - 20.0
Accrued severance costs 2.6 (2.0) 11.0 6.8
Merger costs 10.0 - 11.7 -
Stock compensation 11.3 - 11.3 -
------- -------- -------- --------
EBITDA, as adjusted to exclude
the effects of purchase
accounting and certain non-
recurring items (a) $ 230.4 $ 225.7 $ 936.5 $ 930.9
======= ======= ======== ========
Revenue $ 414.0 $ 412.7 $1,658.4 $1,602.9
Effects of purchase
accounting - - - 46.8
------- ------- -------- --------
Revenue, adjusted to exclude
the effects of purchase
accounting $ 414.0 $ 412.7 $1,658.4 $1,649.7
======= ======= ======== ========
Cost of Revenue $ 131.2 $121.6 $ 504.5 $ 485.5
Effects of purchase
accounting - - - 10.5
------- ------- -------- --------
Cost of Revenue, adjusted to
exclude the effects of
purchase accounting $ 131.2 $121.6 $ 504.5 $ 496.0
======= ======= ======== ========
(a) Denotes a non-GAAP financial measure.
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 15B
Dex Media, Inc. and Subsidiaries
Free Cash Flow (C)
Three Months Twelve Months
Ended Dec 31, Ended Dec 31,
------------------------------------
2005 2004 2005 2004
------ ------- ------- -------
Cash provided by operating
activities $154.7 $ 137.2 $ 570.4 $ 491.4
Capital expenditures (11.2) (6.6) (37.2) (54.6)
------ ------- ------- -------
Free cash flow (a) 143.5 130.6 533.2 436.8
(a) Denotes a non-GAAP financial measure.
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 15C
Dex Media, Inc. and Subsidiaries
Diluted Earnings Per Share (D)
Three Months Twelve Months
Ended Dec 31, Ended Dec 31,
--------------------------------
2005 2004 2005 2004
------ ------ ----- ------
Diluted earnings per share - GAAP $(0.02) $(0.02) $0.31 $(0.39)
Adjustments:
Effects of purchase accounting - - - 0.16
Advisory fees to Sponsors - - - 0.01
Advisory fee termination - - - 0.09
Accrued severance costs 0.01 (0.01) 0.04 0.03
Merger costs 0.04 - 0.05 -
Stock compensation expense 0.04 - 0.04 -
------- ------- ----- -------
Diluted earnings per share -
Adjusted (a) $ 0.07 $(0.03) $0.44 $(0.10)
======= ======= ===== =======
(a) Denotes a non-GAAP financial measure.
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 15D
Dex Media, Inc. and Subsidiaries
Publication Sales (a) (E)
Three Months Twelve Months Ended
Ended December 31,
December 31,
2005 2004 2005 2004
------- ------- --------- ---------
Publication sales, excluding
adjustments for changes in
directory publication $ 411.0 $ 389.5 $ 1,742.9 $ 1,669.4
dates (a)
Adjustments for changes in
directory publication dates - 13.5 (14.9) 20.2
------- ------- --------- ---------
Publication sales (a) 411.0 403.0 1,728.0 1,689.6
Less: Current period
publication sales (a) not
recognized as revenue in
current period due to the
deferral method of accounting (382.3) (371.5) (1,503.6) (1,015.4)
Plus: Revenue recognized in
the current period for
publication sales (a) from
prior periods 385.3 381.2 1,403.2 928.7
Plus: Revenue recognized in
the current period related to
extension billings for
changes in directory
publication dates - - 30.8 -
Revenue $ 414.0 $ 412.7 $ 1,658.4 $ 1,602.9
(a) Denotes a non-GAAP financial measure.
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 16
Dex Media, Inc. and Subsidiaries
EBITDA (a) Reconciliation
Three Months Ended
(Dollars in Millions) December 31, 2005
------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
------ ------- ------------- -------------
Net income (loss) $ 3.7 $ 6.3 $(12.7) $ (2.7)
Income tax provision
(benefit) 5.2 6.6 (11.0) 0.8
Interest expense - net 36.0 54.6 23.0 113.6
Depreciation &
amortization 3.6 4.8 - 8.4
Amortization of
intangibles 38.4 48.0 - 86.4
----- ------ ------ ------
EBITDA (a) 86.9 120.3 (0.7) 206.5
Other adjustments:
Accrued severance
costs 1.1 1.4 0.1 2.6
Merger costs 4.3 5.7 - 10.0
Stock compensation 5.0 6.4 (0.1) 11.3
----- ------ ------ ------
EBITDA, as adjusted to
exclude the effects of
certain non-recurring
items (a) 97.3 133.8 (0.7) 230.4
===== ====== ====== ======
(Dollars in Millions) December 31, 2004
-------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
------- ------- ------------- -------------
Net income (loss) $ 6.8 $ 4.5 $(13.8) $ (2.5)
Income tax provision
(benefit) 6.2 3.2 (8.8) 0.6
Interest expense - net 36.5 59.6 21.9 118.0
Depreciation &
amortization 3.0 5.4 0.1 8.5
Amortization of
intangibles 45.3 57.8 - 103.1
----- ------ ------ ------
EBITDA (a) 97.8 130.5 (0.6) 227.7
----- ------ ------ ------
Other adjustments:
Advisory fees to
Sponsors - - - -
Advisory fees
termination - - - -
Accrued severance
costs (1.1) (0.9) - (2.0)
----- ------ ------ ------
EBITDA, as adjusted to
exclude the effects of
certain non-recurring
items (a) $96.7 $129.6 $ (0.6) $225.7
===== ====== ====== ======
(a) Denotes a non-GAAP financial measure.
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 17
Dex Media, Inc. and Subsidiaries
EBITDA (a) Reconciliation
Year Ended
(Dollars in Millions) December 31, 2005
-------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
------- ------- ------------- -------------
Net income (loss) $ 42.2 $ 59.9 $(55.3) $ 46.8
Income tax provision
(benefit) 29.8 41.0 (38.0) 32.8
Interest expense - net 146.0 209.7 90.0 445.7
Depreciation &
amortization 13.1 18.4 - 31.5
Amortization of
intangibles 153.7 192.0 - 345.7
------ ------ ------ ------
EBITDA (a) 384.8 521.0 (3.3) 902.5
Other adjustments:
Accrued severance
costs 4.8 6.2 - 11.0
Merger costs 5.0 6.6 0.1 11.7
Stock compensation 5.0 6.4 (0.1) 11.3
------ ------ ------ ------
EBITDA, as adjusted to
exclude the effects of
certain non-recurring
items (a) 399.6 540.2 (3.3) 936.5
====== ====== ====== ======
(a) Denotes a non-GAAP financial measure.
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 17
Dex Media, Inc. and Subsidiaries
EBITDA (a) Reconciliation
Year Ended
(Dollars in Millions) December 31, 2004
-------------------------------------------
Dex Media,
Dex Dex Inc., Dex Media,
Media Media Eliminations Inc.
East West & Other Consolidated
------- ------- ------------- -------------
Net income (loss) $ (1.6) 2.6 $(51.8) $ (50.8)
Income tax provision
(benefit) (0.5) 2.0 (32.9) (31.4)
Interest expense - net 199.3 221.8 83.7 504.8
Depreciation &
amortization 12.2 18.6 - 30.8
Amortization of
intangibles 181.1 231.3 - 412.4
------ ------ ------ --------
EBITDA (a) 390.5 476.3 (1.0) 865.8
Effects of purchase
accounting:
Revenue - 46.8 - 46.8
Cost of revenue - (10.5) - (10.5)
------ ------ ------ --------
EBITDA (a), as adjusted
to exclude the effects
of purchase accounting 390.5 512.6 (1.0) 902.1
Other adjustments:
Advisory fees to
Sponsors 1.0 1.0 - 2.0
Advisory fee
termination 10.0 10.0 - 20.0
Accrued severance
costs 2.9 3.9 - 6.8
------ ------ ------ --------
EBITDA, as adjusted to
exclude the effects of
purchase accounting and
certain non-recurring
items (a) $404.4 $527.5 $ (1.0) $ 930.9
====== ====== ====== ========
Revenue $723.0 $879.9 - $1,602.9
Effects of purchase
accounting - 46.8 - 46.8
------ ------ ------ --------
Revenue, adjusted to
exclude the effects of
purchase accounting $723.0 $926.7 $ - $1,649.7
====== ====== ====== ========
Cost of Revenue $220.1 $265.4 - $ 485.5
Effects of purchase
accounting - 10.5 - 10.5
------ ------ ------ --------
Cost of Revenue, adjusted
to exclude the effects
of purchase accounting $220.1 $275.9 $ - $ 496.0
====== ====== ====== ========
(a) Denotes a non-GAAP financial measure.
See accompanying Notes to Unaudited Consolidated Statements of
Operations and Non-GAAP Measures - Schedule 18.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 18
NOTES TO UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------
AND NON-GAAP MEASURES
---------------------
(1) Publishing 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) As a result of the AT&T transaction (formerly known as SBC) and
the related financing and associated accounting, management
believes that the 2005 and 2004 results reported in accordance
with GAAP are not comparable, nor do they reflect the Company's
underlying operational or financial performance. Accordingly,
management is presenting certain non-GAAP financial measures in
addition to results reported in accordance with GAAP in order to
better communicate underlying operational and financial
performance and to facilitate comparison of adjusted 2005
performance with adjusted pro forma 2004 results. Adjusted
results for 2005 exclude the impact of purchase accounting as
well as certain other adjustments. Adjusted pro forma results
for 2004 also reflect the combination of RHD with the AT&T
directory business in Illinois and Northwest Indiana as if the
transaction had been consummated at the beginning of the year
presented and certain other adjustments. While management
believes that the adjusted pro forma results reasonably resemble
operational performances as if the AT&T transaction had been
consummated at the beginning of the period presented, because of
differences between RHD and predecessor accounting policies,
management does not believe these pro forma results are strictly
comparable. The adjusted and adjusted pro forma results assume
that the appropriate pro rata portion of the revenues and direct
costs of directories acquired from AT&T that published prior to
the acquisition plus, in the case of 2004 adjusted pro forma
results, all September 2004 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. For the
periods prior to the actual acquisition date of September 1,
2004, adjusted pro forma interest expense assumes the transaction
occurred at the beginning of the periods presented and is based
on the incremental debt actually incurred at the time of the
acquisition and the interest rate in effect at the time of the
acquisition with no assumption for additional debt repayments.
For periods after the acquisition date, interest expense is
determined in accordance with GAAP results. See Schedules 7 and 8
for details of all adjustments to the reported GAAP results.
Additionally, the cost uplift reported under GAAP to eliminate
profit on sales contracts completed before the acquisition date
for AT&T directories not yet published at the acquisition date
has also been excluded from adjusted and adjusted pro forma
results.
(3) As a result of the Sprint transaction and the related financing
and associated accounting, management believes that the 2005 and
2004 results reported in accordance with GAAP are not comparable,
nor do they reflect the Company's underlying operational or
financial performance in 2004. Accordingly, management is
presenting certain non-GAAP financial measures in addition to
results reported in accordance with GAAP in order to better
communicate underlying operational and financial performance and
to facilitate comparison of adjusted 2005 performance with
adjusted pro forma 2004 results. Adjusted results reflect the
elimination of purchase accounting and certain other adjustments.
The 2004 adjusted pro forma results assume that the appropriate
pro rata portion of the revenue and direct costs of directories
acquired from Sprint that published prior to the acquisition plus
all January 2003 Sprint 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
Schedules 7 and 8 for details of all adjustments to the reported
GAAP results. Additionally, the cost uplift reported under GAAP
to eliminate profit on sales contracts completed before the
acquisition date for Sprint directories not yet published at the
acquisition date has also been removed.
(4) The preferred dividend, accretion of Preferred Stock to fair
value, and the loss on repurchase of Preferred Stock is excluded
because the adjusted results for the three months and year ended
December 31, 2005 and the adjusted pro forma results for the
three months and year ended December 31, 2004 assume the
remaining Preferred Stock was completely converted to Common
Stock at the beginning of the period and therefore no dividends
would have been payable and no accretion of Preferred Stock to
fair value or loss on the repurchase would have been recorded.
(5) On a reported basis, basic EPS are calculated under the
"two-class" method that requires earnings available to common
shareholders, after deducting preferred dividends, the accretion
of Preferred Stock to fair value and the loss on repurchase of
Preferred Stock, to be allocated between the common and preferred
shareholders based on the respective rights to receive dividends.
Basic EPS are 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 potentially dilutive common stock
equivalents. In periods that result in a net loss, the net loss
is not allocated between common and preferred shareholders since
the preferred shareholders do not have a contractual obligation
to share in any loss.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
R.H. DONNELLEY CORPORATION Schedule 18(cont'd)
NOTES TO UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------
AND NON-GAAP MEASURES (cont'd)
-------------------------------
(6) On an adjusted and adjusted pro forma 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.
(7) Adjustments for the three months and year ended December 31, 2005
include revenue and expenses for directories acquired from AT&T
that published prior to such acquisition that would have been
recognized during the period absent purchase accounting
adjustments required under GAAP. Pro forma adjustments for the
three months and year ended December 31, 2004 include (a) the
revenue and expenses for directories acquired from AT&T that
published prior to the acquisition that would have been
recognized during the period absent purchase accounting
adjustments required under GAAP, (b) DonTech's selling and
operational expenses prior to the acquisition, (c) certain
differences between historical and current accounting policies
of RHD and the acquired entities, and (d) the revenue and
expenses for directories acquired from Sprint in 2003 that
published prior to the acquisition, plus all January 2003
directories that would have been recognized during the period
absent purchase accounting adjustments required under GAAP.
Additionally, the cost uplift reported under GAAP to eliminate
profit on sales contracts completed before the acquisition date
for directories not yet published at the acquisition date has
also been removed from both periods presented.
(8) Represents the additional depreciation and amortization expense
related to the tangible and identifiable intangible assets
acquired from AT&T over their estimated useful lives.
(9) Represents the elimination of equity accounting used
to account for RHD's 50% ownership interest in
DonTech prior to the AT&T transaction.
(10) Represents the additional interest expense from the incremental
borrowings used to finance the AT&T transaction. For the
periods prior to the actual acquisition date of September 1,
2004, pro forma interest expense is based on the incremental
debt actually incurred at the time of the acquisition and the
interest rate in effect at the time of the acquisition with no
assumption for additional debt repayments. For periods after
the acquisition date, interest expense is determined in
accordance with GAAP results.
(11) Represents the tax effect of adjustments.
(12) RHD publication sales represent the total billable value of
advertising sold in directories that published during the
period. Beginning in 2006, RHD will begin using the term
"advertising sales," which is substantially the same as
publication sales. If events occur during the current period
that affect the comparability of publication sales to the prior
year period, such as changes in directory publication dates,
then prior year publication sales are adjusted to conform to the
current period presentation and to maintain comparability.
(13) EBITDA represents earnings before interest, taxes, depreciation
and amortization. Adjusted EBITDA and adjusted pro forma EBITDA
represent adjusted earnings and adjusted pro forma earnings
before interest, taxes, depreciation and amortization. EBITDA,
adjusted EBTIDA and adjusted pro forma EBITDA are not
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.
(14) Advertising sales represent the total billable value of
print and online products in the period in which the billing
commences. 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
to maintain comparability.
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
Schedule 18 (cont'd)
Dex Media, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Of Operations and Non-GAAP Measures
A) In addition to disclosing financial results that are determined
in accordance with GAAP, Dex Media also discloses certain
non-GAAP measures. Dex Media discloses EBITDA, EBITDA as
adjusted, free cash flow, and publication sales, all of which
are non-GAAP measures. Dex Media also makes certain
adjustments to revenue and cost of revenue to exclude the
effects of purchase accounting relating to Dex Media's
acquisition of its wholly-owned subsidiary, Dex Media West LLC
in September 2003. Management believes that presenting
adjusted GAAP results and non-GAAP measures is important for
investors to better understand Dex Media's underlying
operational and financial performance, to facilitate
comparison of results between periods, to enable investors to
better assess and understand Dex Media's ability to meet debt
service, make capital expenditures and meet its working
capital requirements. An analysis of Dex Media's results of
operations as adjusted and the other non-GAAP measures
presented in this press release should only be made in
conjunction with data presented in accordance with GAAP.
B) The most directly comparable GAAP measure to EBITDA and EBITDA,
as adjusted, is net income (loss). This schedule presents a
reconciliation of net income (loss) to EBITDA and EBITDA, as
adjusted, for the three months and twelve months ended
December 31, 2005, compared to the same periods in 2004 (in
millions). This schedule also reflects adjustments to revenue
and cost of revenue to exclude the effects of purchase
accounting. Using R.H. Donnelley's accounting policies and
assumptions, Dex Media's full year 2005 adjusted EBITDA and
fourth quarter 2005 adjusted EBITDA would have been different.
C) The most directly comparable GAAP measure to free cash flow is
cash provided by operating activities. This schedule presents
a reconciliation of cash provided by operating activities to
free cash flow and for the three months and twelve months
ended December 31, 2005, compared to the same periods in 2004
(in millions).
Note: These schedules are preliminary and subject to change
pending the Company's filing of its Form 10-K.
Schedule 18 (cont'd)
Dex Media, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Of Operations and Non-GAAP Measures
D) The most directly comparable GAAP measure to diluted earnings
per share - adjusted is diluted earnings per share - GAAP.
This schedule presents a reconciliation of diluted earnings
per share - GAAP to diluted earnings per share - adjusted for
the three months and twelve months ended December 31, 2005,
compared to the same periods in 2004 (in millions).
E) Dex Media utilizes the deferral and amortization method of
accounting, under which revenue and expenses are recognized
over the lives of the directories published by the company.
Dex publication sales, which is a non-GAAP financial measure
for the company, represents the total billable value of
advertising in directories that were published during the
period, together with all other revenue, including Internet
and direct marketing products, sold during the period. If
events occur during the current period that affect the
comparability of publication sales to the prior year period,
such as changes in directory publication dates, then prior
year publication sales are adjusted to conform to the current
period presentation and to maintain comparability. The most
comparable GAAP financial measure to publication sales is
revenue. Management believes that a comparison of publication
sales from one period to another provides a meaningful
indication of recent sales trends, taking into consideration
the diversity of directories published and other products sold
in each quarter that are not fully reflected by deferral and
amortization accounting. Although publication sales is
subsequently recognized as revenue over the lives of the
respective directories, publication sales may not be directly
indicative of the amount ultimately recognized as revenue
under deferral and amortization, due to adjustments that may
occur in subsequent reporting periods. Therefore, publication
sales is not necessarily indicative of Dex Media's future
quarterly or annual recognized revenue. Dex Media utilizes
publication sales to set bonus targets and to monitor, assess
and reward sales performance. This schedule presents a
reconciliation of publication sales to total recognized
revenue for the three months and twelve months ended December
31, 2005, compared to the same periods in 2004 (in millions).
Note: These schedules are preliminary and subject to change
pending the Company's filing of its Form 10-K.
CONTACT: R.H. Donnelley Corporation
Investor Relations:
James M. Gruskin, 800-497-6329
or
Media Relations:
Tyler D. Gronbach, 919-297-1541