Dex One Corporation (NYSE: DEXO) today announced fourth quarter and full
year 2012 results in line with previously provided guidance.
The quarter and year were highlighted by digital bookings growth of 29
percent and 34 percent, respectively.
Ad sales for the quarter and year declined 14 percent, in line with
guidance. Quarterly bookings and revenue declined 13 percent and 14
percent, while annual bookings and revenue declined 13 percent and 12
percent.
“Dex One continued to deliver in 2012, as we met all stated guidance
objectives,” said Dex One CEO Alfred Mockett. “Our team found a way to
achieve our business goals despite the continuing pressure on our print
business. We have stemmed the rate of ad sales decline, thanks in large
part to our bundled sales strategy, and are aggressively selling bundles
across our business.”
“Since early 2010, Dex One has retired $1.9 billion in debt and we have
consistently met our financial obligations,” said Dex One CFO Greg
Freiberg. “Concurrently, we have built a digital business with growth
exceeding industry averages.”
|
2012 PERFORMANCE
|
|
(dollars in millions)
|
|
Metric
|
|
|
4Q 2012
|
|
|
FY 2012
|
|
|
|
|
Results
|
|
Year over year change in bookings
|
|
|
|
|
|
|
|
Total
|
|
|
(13%)
|
|
|
(13%)
|
|
Digital
|
|
|
29%
|
|
|
34%
|
|
Print
|
|
|
(23%)
|
|
|
(23%)
|
|
|
|
|
|
|
|
|
|
Year over year change in advertising sales
|
|
|
(14%)
|
|
|
(14%)
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
$301
|
|
|
$1,300
|
|
Adjusted EBITDA(1) |
|
|
$133
|
|
|
$561
|
|
Adjusted EBITDA margin(1) |
|
|
44%
|
|
|
43%
|
|
Adjusted free cash flow(1) |
|
|
$88
|
|
|
$335
|
|
Adjusted net debt(1) |
|
|
$1,874
|
|
|
$1,874
|
|
|
|
|
|
|
|
|
|
2012 GUIDANCE
|
|
(dollars in millions)
|
|
2012 Metric
|
|
|
Guidance(2)
|
|
FY 2012 Results
|
|
Fourth quarter year over year change in net advertising sales
|
|
|
(13%) to (14%)
|
|
(14%)
|
|
|
|
|
|
|
|
|
Full year net revenue
|
|
|
$1,275 - $1,300
|
|
$1,300
|
|
Full year adjusted EBITDA(1,2) |
|
|
$535 - $565
|
|
$561
|
|
Full year adjusted free cash flow(1,2) |
|
|
$320 - $350
|
|
$335
|
|
|
|
|
|
|
|
Net loss and cash flow from operations in the fourth quarter were $35
million and $87 million, respectively. Net income, cash flow from
operations and total debt (including fair value discount) for full year
2012 were $62 million, $348 million and $2,010 million, respectively.
Dex One-SuperMedia Merger Update
On March 13, 2013, stockholders of both Dex One and SuperMedia approved
the merger. Earlier today, Dex One and SuperMedia each filed
pre-packaged plans of reorganization for Chapter 11 Bankruptcy as a
means to complete the merger. This process will allow both companies to
finalize the proposed credit agreement amendments previously agreed to
by a significant percentage of lenders. The companies expect to complete
the merger in the first half of 2013.
2013 Guidance
The company will not be providing first quarter or full year 2013
guidance due to its pending merger with SuperMedia, Inc.
Additional Information
Important information regarding operating results and related
reconciliations of non-GAAP financial measures to the most comparable
GAAP measures can be found in the schedules and related footnotes to
this press release, which should be thoroughly reviewed. All figures are
preliminary and subject to change pending the filing of our Annual
Report on Form 10-K.
Advertising sales is a non-GAAP statistical measure and consist of sales
of advertising in print directories distributed during the period and
Internet-based products and services with respect to which such
advertising first appeared publicly during the period.
The year over year change in ad sales is calculated by dividing the
difference between ad sales in the current period and adjusted ad sales
in the prior year divided by adjusted ad sales in the prior year. The
adjustments made to the prior year’s ad sales are made to align
publication dates.
Bookings is another non-GAAP statistical measure that represents sales
activity associated with our print directories and Internet-based
marketing solutions during the period. Bookings associated with our
local customers represent signed contracts during the period. Bookings
associated with our national customers represent what has been published
or fulfilled during the period.
The year over year change in bookings is calculated by dividing the
difference between bookings in the current period and bookings generated
in the prior year divided by bookings generated in the prior year.
It is important to distinguish advertising sales and bookings from net
revenue, which is recognized under the deferral and amortization method.
FOURTH QUARTER AND FULL YEAR CONFERENCE CALL
Dex One Corporation will be hosting a conference call to discuss its
fourth quarter and full year 2012 results today at 11:30 a.m. (EDT).
Individuals within the United States can access the call by dialing
888-456-0318 – others should dial 212-547-0460. The pass code for the
call is “Dex One.” In order to ensure a prompt start time, please dial
into the call by 11:20 a.m. (EDT).
In addition, a live webcast will be available at www.DexOne.com
and an archived version will be accessible for up to one year. A replay
of the conference call can also be accessed from within the United
States by dialing 866-424-4002 and internationally by dialing
203-369-0852. There is no pass code for the telephonic replay, which
will be available through March 31, 2013.
Endnotes
1) These are non-GAAP financial measures. Please see the discussion of
non-GAAP financial measures in the schedules and related footnotes at
the end of this press release.
2) Full year guidance for net revenue, adjusted EBITDA, adjusted free
cash flow and adjusted net debt originally provided on July 28, 2011.
Fourth quarter ad sales guidance was provided on November 3, 2011.
ABOUT DEX ONE CORPORATION
Dex One Corporation (NYSE: DEXO) is a leading marketing solutions
provider helping local businesses and their customers connect wherever
and whenever they choose to search. Building on its heritage of
delivering print-based solutions, the company provides integrated
products and services to help its clients establish their digital
presence and generate leads. Dex One’s locally based marketing experts
offer a broad network of local marketing solutions including online,
mobile and print search solutions, such as DexKnows.com. For more
information, visit www.DexOne.com.
Safe Harbor Provision
Certain statements contained in this press release regarding Dex
One’s future operating results, performance, business plans, prospects,
guidance, statements about the benefits of the proposed merger with
SuperMedia Inc. (“SuperMedia”) and the combined company, and other
statements not constituting historical fact are "forward-looking
statements" subject to the safe harbor created by the Private Securities
Litigation Reform Act of 1995. Where possible, the words "believe,"
"expect," "anticipate," "intend," "should," "will," "would," "planned,"
"estimated," "potential," "goal," "outlook," "may," "predicts," "could,"
or the negative of such terms, or other comparable expressions, as they
relate to Dex One or its management, have been used to identify such
forward-looking statements. All forward-looking statements reflect only
Dex One’s current beliefs and assumptions with respect to future
business plans, prospects, decisions and results, and are based on
information currently available to Dex One. Accordingly, the statements
are subject to significant risks, uncertainties and contingencies, which
could cause Dex One’s or the combined company’s actual operating
results, performance or business plans or prospects to differ materially
from those expressed in, or implied by, these statements.
Factors that could cause actual results to differ materially from
current expectations include risks and other factors described in Dex
One’s publicly available reports filed with the SEC, which contain
discussions of various factors that may affect the business or financial
results of Dex One or the combined company. Such risks and other
factors, which in some instances are beyond the company’s control,
include: the continuing decline in the use of print directories;
increased competition, particularly from existing and emerging digital
technologies; ongoing weak economic conditions and continued decline in
advertising sales; our ability to collect trade receivables from
customers to whom we extend credit; our ability to generate sufficient
cash to service our debt; our ability to comply with the financial
covenants contained in our debt agreements and the potential impact to
operations and liquidity as a result of restrictive covenants in such
debt agreements; our ability to refinance or restructure our debt on
reasonable terms and conditions as might be necessary from time to time;
increasing interest rates; changes in the company’s and the company’s
subsidiaries credit ratings; changes in accounting standards; regulatory
changes and judicial rulings impacting our business; adverse results
from litigation, governmental investigations or tax related proceedings
or audits; the effect of labor strikes, lock-outs and negotiations;
successful realization of the expected benefits of acquisitions,
divestitures and joint ventures; our ability to maintain agreements with
CenturyLink, AT&T and other major Internet search and local media
companies; our reliance on third-party vendors for various services; and
other events beyond our control that may result in unexpected adverse
operating results. Neither Dex One nor the combined company is
responsible for updating the information contained in this press release
beyond the published date, or for changes made to this document by wire
services or Internet service providers. This press release is
being furnished to the SEC through a Form 8-K. The company’s
Annual Report on Form 10-K for the year ended December 31, 2012 to be
filed with the SEC may contain updates to the information included in
this release.
With respect to the proposed merger with SuperMedia, important
factors could cause actual results to differ materially from those
indicated by forward-looking statements included herein, including, but
not limited to, the ability of Dex One and SuperMedia to consummate the
transaction on the terms set forth in the merger agreement; risks
related to the impact that either Dex One’s or SuperMedia’s voluntary
case under Chapter 11 of title 11 of the United States Code, filed to
consummate the transaction, could have on our business operations,
financial condition, liquidity or cash flow; the risk that anticipated
cost savings, growth opportunities and other financial and operating
benefits as a result of the transaction may not be realized or may take
longer to realize than expected; the risk that benefits from the
transaction may be significantly offset by costs incurred in integrating
the companies; potential adverse impacts or delay in completing the
transaction as a result of the bankruptcy cases; and difficulties in
connection with the process of integrating Dex One and SuperMedia,
including: coordinating geographically separate organizations;
integrating business cultures, which could prove to be incompatible;
difficulties and costs of integrating information technology systems;
and the potential difficulty in retaining key officers and personnel.
(See attached schedules and related footnotes)
|
DEX ONE CORPORATION
|
|
|
|
|
|
|
|
|
Schedule 1
|
|
INDEX OF SCHEDULES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 1:
|
|
|
Index of Schedules
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 2:
|
|
|
Unaudited Condensed Consolidated Statements of Operations for the
three months and years ended December 31, 2012 and 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 3:
|
|
|
Unaudited Condensed Consolidated Balance Sheets at December 31, 2012
and 2011
|
|
`
|
|
|
|
|
|
|
Schedule 4:
|
|
|
Unaudited Condensed Consolidated Statements of Cash Flows for the
three months and years ended December 31, 2012 and 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 5:
|
|
|
Reconciliation of Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 6:
|
|
|
Statistical Measures - Advertising Sales and Bookings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 7:
|
|
|
Notes to Unaudited Condensed Consolidated Financial Statements and
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
|
|
|
|
DEX ONE CORPORATION
|
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
Schedule 2
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in millions, except earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Net revenue (1) |
|
$
|
301.3
|
|
|
$
|
352.0
|
|
|
$
|
1,300.0
|
|
|
$
|
1,480.6
|
|
|
Expenses
|
|
|
176.9
|
|
|
|
203.0
|
|
|
|
755.6
|
|
|
|
858.0
|
|
|
Depreciation and amortization (2) |
|
|
105.5
|
|
|
|
69.8
|
|
|
|
418.7
|
|
|
|
251.8
|
|
|
Impairment charges (3) |
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
801.1
|
|
|
Operating income (loss)
|
|
|
18.9
|
|
|
|
79.2
|
|
|
|
125.7
|
|
|
|
(430.3
|
)
|
|
Gain on Debt Repurchases, net (4) |
|
|
-
|
|
|
|
-
|
|
|
|
139.6
|
|
|
|
-
|
|
|
Gain on sale of assets, net (5) |
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13.4
|
|
|
Interest expense, net
|
|
|
(44.3
|
)
|
|
|
(55.7
|
)
|
|
|
(196.0
|
)
|
|
|
(226.8
|
)
|
|
Income (loss) before income taxes
|
|
|
(25.4
|
)
|
|
|
23.5
|
|
|
|
69.3
|
|
|
|
(643.7
|
)
|
|
(Provision) benefit for income taxes
|
|
|
(10.0
|
)
|
|
|
(18.0
|
)
|
|
|
(6.9
|
)
|
|
|
124.7
|
|
|
Net income (loss)
|
|
$
|
(35.4
|
)
|
|
$
|
5.5
|
|
|
$
|
62.4
|
|
|
$
|
(519.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share (EPS):
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.70
|
)
|
|
$
|
0.11
|
|
|
$
|
1.23
|
|
|
$
|
(10.35
|
)
|
|
Diluted
|
|
$
|
(0.70
|
)
|
|
$
|
0.11
|
|
|
$
|
1.23
|
|
|
$
|
(10.35
|
)
|
|
Shares used in computing EPS:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
50.9
|
|
|
|
50.2
|
|
|
|
50.6
|
|
|
|
50.1
|
|
|
Diluted
|
|
|
50.9
|
|
|
|
50.3
|
|
|
|
50.7
|
|
|
|
50.1
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
|
|
|
|
|
|
|
|
|
|
DEX ONE CORPORATION
|
|
|
|
Schedule 3
|
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in millions
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
172.0
|
|
$
|
257.9
|
|
|
Accounts receivable, net
|
|
|
528.8
|
|
|
605.7
|
|
|
Deferred directory costs
|
|
|
100.3
|
|
|
130.8
|
|
|
Short term deferred income taxes, net
|
|
|
39.4
|
|
|
67.8
|
|
|
Other current assets
|
|
|
37.4
|
|
|
51.4
|
|
|
Total current assets
|
|
|
877.9
|
|
|
1,113.6
|
|
|
|
|
|
|
|
|
Fixed assets and computer software, net
|
|
|
105.1
|
|
|
151.5
|
|
|
Intangible assets, net (2) |
|
|
1,832.7
|
|
|
2,182.1
|
|
|
Other non-current assets
|
|
|
19.7
|
|
|
13.0
|
|
|
Total Assets
|
|
$
|
2,835.4
|
|
$
|
3,460.2
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity (Deficit)
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
95.5
|
|
$
|
126.2
|
|
|
Accrued interest
|
|
|
18.9
|
|
|
29.2
|
|
|
Deferred revenue
|
|
|
529.9
|
|
|
644.1
|
|
|
Current portion of long-term debt (7) (8) |
|
|
2,009.6
|
|
|
326.3
|
|
|
Total current liabilities
|
|
|
2,653.9
|
|
|
1,125.8
|
|
|
|
|
|
|
|
|
Long-term debt (7) (8) |
|
|
-
|
|
|
2,184.1
|
|
|
Deferred income taxes, net
|
|
|
54.2
|
|
|
75.5
|
|
|
Other non-current liabilities
|
|
|
86.7
|
|
|
84.7
|
|
|
Total liabilities
|
|
|
2,794.8
|
|
|
3,470.1
|
|
|
|
|
|
|
|
|
Shareholders’ equity (deficit)
|
|
|
40.6
|
|
|
(9.9
|
)
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity (Deficit)
|
|
$
|
2,835.4
|
|
$
|
3,460.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
|
|
|
|
|
|
|
|
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
|
|
|
|
DEX ONE CORPORATION
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
Schedule 4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Net cash provided by operating activities
|
|
|
$
|
87.1
|
|
|
$
|
118.4
|
|
|
$
|
348.5
|
|
|
$
|
413.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment activities:
|
|
|
|
|
|
|
|
|
|
|
Additions to fixed assets and computer software
|
|
|
|
(5.5
|
)
|
|
|
(8.9
|
)
|
|
|
(22.6
|
)
|
|
|
(28.1
|
)
|
|
Proceeds from sale of assets
|
|
|
|
0.1
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
15.5
|
|
|
Net cash used in investing activities
|
|
|
|
(5.4
|
)
|
|
|
(8.7
|
)
|
|
|
(22.5
|
)
|
|
|
(12.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
Long-term debt repurchases and repayments
|
|
|
|
-
|
|
|
|
(47.5
|
)
|
|
|
(400.9
|
)
|
|
|
(254.6
|
)
|
|
Debt issuance costs and other financing items, net
|
|
|
|
(5.5
|
)
|
|
|
-
|
|
|
|
(10.8
|
)
|
|
|
0.5
|
|
|
Increase (decrease) in checks not yet presented for payment
|
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
(0.2
|
)
|
|
|
(16.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
(5.3
|
)
|
|
|
(47.2
|
)
|
|
|
(411.9
|
)
|
|
|
(270.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
76.4
|
|
|
|
62.5
|
|
|
|
(85.9
|
)
|
|
|
130.0
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
95.6
|
|
|
|
195.4
|
|
|
|
257.9
|
|
|
|
127.9
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
172.0
|
|
|
$
|
257.9
|
|
|
$
|
172.0
|
|
|
$
|
257.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
Issuance of Dex One Senior Subordinated Notes in lieu of cash
interest payments (6) |
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
17.9
|
|
|
$
|
-
|
|
|
Reduction of debt from Debt Repurchases (4) |
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(144.3
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
|
|
|
|
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
DEX ONE CORPORATION
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
|
|
|
|
|
|
|
|
|
Schedule 5a
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA are not measurements of operating
performance computed in accordance with GAAP and should not be
considered as a substitute for net income (loss) prepared in
conformity with GAAP. In addition, EBITDA and Adjusted EBITDA may
not be comparable to similarly titled measures of other companies.
Management believes that these non-GAAP financial measures are
important indicators of our operations because they exclude items
that may not be indicative of, or related to, our core operating
results, and provide a better baseline for analyzing our
underlying business. Adjusted EBITDA for the three months ended
December 31, 2012 is determined by adjusting EBITDA for (i)
stock-based compensation expense and long-term incentive program
and (ii) merger transaction and integration expenses associated
with the proposed merger between Dex One and SuperMedia, Inc.
Adjusted EBITDA for the three months ended December 31, 2011 is
determined by adjusting EBITDA for stock-based compensation
expense and long-term incentive program. Adjusted EBITDA for the
year ended December 31, 2012 is determined by adjusting EBITDA for
(i) gain on Debt Repurchases, net, (ii) stock-based compensation
expense and long-term incentive program and (iii) merger
transaction and integration expenses associated with the proposed
merger between Dex One and SuperMedia, Inc. Adjusted EBITDA for
the year ended December 31, 2011 is determined by adjusting EBITDA
for (i) impairment charges, (ii) gain on sale of assets, net and
(iii) stock-based compensation expense and long-term incentive
program.
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
Reconciliation of net income (loss) -
GAAP to EBITDA and Adjusted EBITDA
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) - GAAP
|
|
|
$
|
(35.4
|
)
|
|
$
|
5.5
|
|
$
|
62.4
|
|
|
$
|
(519.0
|
)
|
|
Plus (less): tax provision (benefit)
|
|
|
|
10.0
|
|
|
|
18.0
|
|
|
6.9
|
|
|
|
(124.7
|
)
|
|
Plus: interest expense, net
|
|
|
|
44.3
|
|
|
|
55.7
|
|
|
196.0
|
|
|
|
226.8
|
|
|
Plus: depreciation and amortization
|
|
|
|
105.5
|
|
|
|
69.8
|
|
|
418.7
|
|
|
|
251.8
|
|
|
EBITDA
|
|
|
$
|
124.4
|
|
|
$
|
149.0
|
|
$
|
684.0
|
|
|
$
|
(165.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Impairment charges (3) |
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
801.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain on Debt Repurchases, net (4) |
|
|
|
-
|
|
|
|
-
|
|
|
(139.6
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain on sale of assets, net (5) |
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(13.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Stock-based compensation expense and long-term incentive
program
|
|
|
|
1.0
|
|
|
|
1.4
|
|
|
4.9
|
|
|
|
6.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Merger transaction and integration expenses
|
|
|
|
7.4
|
|
|
|
-
|
|
|
11.8
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
132.8
|
|
|
$
|
150.4
|
|
$
|
561.1
|
|
|
$
|
628.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Unaudited Condensed Consolidated
Financial Statements and Non-GAAP Measures - Schedule 7.
|
|
|
|
Note: These schedules are preliminary and subject to change
pending the Company's filing of its Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
DEX ONE CORPORATION
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
(cont'd)
|
|
|
|
|
|
|
|
|
Schedule 5b
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow and Adjusted free cash flow are not measurements of
operating performance computed in accordance with GAAP and should
not be considered as a substitute for cash flow from operations
prepared in conformity with GAAP. In addition, Free cash flow and
Adjusted free cash flow may not be comparable to similarly titled
measures of other companies. Management believes that these cash
flow measures provide investors and stockholders with a relevant
measure of liquidity and a useful basis for assessing the Company's
ability to fund its activities and obligations. Adjusted free cash
flow for the three months and year ended December 31, 2012 is
determined by adjusting Free cash flow for merger transaction and
integration cash payments associated with the proposed merger
between Dex One and SuperMedia, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
Reconciliation of cash flow from operations - GAAP to free
cash flow and adjusted free cash flow
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations - GAAP
|
|
|
$
|
87.1
|
|
|
$
|
118.4
|
|
|
$
|
348.5
|
|
|
$
|
413.3
|
|
|
Less: Additions to fixed assets and computer software - GAAP
|
|
|
|
(5.5
|
)
|
|
|
(8.9
|
)
|
|
|
(22.6
|
)
|
|
|
(28.1
|
)
|
|
Free cash flow
|
|
|
|
81.6
|
|
|
$
|
109.5
|
|
|
|
325.9
|
|
|
$
|
385.2
|
|
|
Add: Merger transaction and integration cash payments
|
|
|
|
6.8
|
|
|
|
|
|
9.4
|
|
|
|
|
Adjusted free cash flow
|
|
|
$
|
88.4
|
|
|
|
|
$
|
335.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of debt - GAAP to net debt and net debt -
eliminating fair value discount (8) (9) |
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
|
|
|
Debt - GAAP
|
|
|
$
|
2,009.6
|
|
|
$
|
2,510.4
|
|
|
|
|
|
|
Less: Cash and cash equivalents
|
|
|
|
(172.0
|
)
|
|
|
(257.9
|
)
|
|
|
|
|
|
Net debt
|
|
|
|
1,837.6
|
|
|
|
2,252.5
|
|
|
|
|
|
|
Fair value discount
|
|
|
|
36.7
|
|
|
|
63.2
|
|
|
|
|
|
|
Net debt - eliminating fair value discount
|
|
|
$
|
1,874.3
|
|
|
$
|
2,315.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
|
|
|
|
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
|
|
|
|
DEX ONE CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
CALCULATION OF ADVERTISING SALES AND
BOOKINGS PERCENTAGE CHANGE OVER PRIOR YEAR PERIODS
|
|
Schedule 6
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in millions, except percentages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Advertising Sales (10) |
|
|
December 31, 2012
|
|
December 31, 2012
|
|
September 30, 2012
|
|
June 30, 2012
|
|
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising Sales
|
|
|
$
|
1,194
|
|
|
$
|
332
|
|
|
$
|
232
|
|
|
$
|
334
|
|
|
$
|
296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising sales percentage change over prior year periods
|
|
|
|
(14
|
%)
|
|
|
(14
|
%)
|
|
|
(14
|
%)
|
|
|
(12
|
%)
|
|
|
(16
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Bookings (10) |
|
|
December 31, 2012
|
|
December 31, 2012
|
|
September 30, 2012
|
|
June 30, 2012
|
|
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bookings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Print bookings
|
|
|
$
|
837
|
|
|
$
|
194
|
|
|
$
|
200
|
|
|
$
|
206
|
|
|
$
|
237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital bookings
|
|
|
|
285
|
|
|
|
77
|
|
|
|
72
|
|
|
|
69
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Bookings
|
|
|
$
|
1,122
|
|
|
$
|
271
|
|
|
$
|
272
|
|
|
$
|
275
|
|
|
$
|
304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bookings percentage change over prior year periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Print bookings percentage change
|
|
|
|
(23
|
%)
|
|
|
(23
|
%)
|
|
|
(22
|
%)
|
|
|
(24
|
%)
|
|
|
(21
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital bookings percentage change
|
|
|
|
34
|
%
|
|
|
29
|
%
|
|
|
26
|
%
|
|
|
53
|
%
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total bookings percentage change over prior year periods
|
|
|
|
(13
|
%)
|
|
|
(13
|
%)
|
|
|
(13
|
%)
|
|
|
(13
|
%)
|
|
|
(13
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements and Non-GAAP Measures - Schedule 7.
|
|
|
|
Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
|
|
|
|
|
DEX ONE CORPORATION
|
Schedule 7
|
|
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS AND NON-GAAP MEASURES
|
|
|
|
|
(1)
|
Our advertising revenues are earned primarily from the sale of
advertising in yellow pages directories we publish. Advertising
revenues also include revenues from our Internet-based marketing
solutions including online directories, such as DexKnows.com and
Dex Net. Advertising revenues are affected by several factors,
including changes in the quantity and size of advertisements,
acquisition of new clients, renewal rates of existing clients,
premium advertisements sold, changes in advertisement pricing, the
introduction of new marketing solutions, an increase in
competition and more fragmentation in the local business search
market and general economic factors. Revenues with respect to
print advertising and Internet-based marketing solutions that are
sold with print advertising are recognized under the deferral and
amortization method whereby revenues are initially deferred when a
directory is published, net of sales claims and allowances, and
recognized ratably over the directory’s life, which is typically
12 months. Revenues with respect to Internet-based marketing
solutions that are sold standalone, such as Dex Net, are
recognized ratably over the life of the contract commencing when
they are first delivered or fulfilled. Revenues with respect to
our marketing solutions that are performance-based are recognized
as the service is delivered or fulfilled.
|
|
|
|
|
(2)
|
The company evaluated the remaining useful lives of definite-lived
intangible assets and other long-lived assets during the first
quarter of 2012. Based on our evaluation, we reduced the estimated
useful lives of our directory services agreements, local and
national customer relationships and tradenames and trademarks. As a
result of reducing the estimated useful lives of these intangible
assets, the company recognized an increase in amortization expense
of $161.6 million in 2012.
|
|
|
|
|
(3)
|
The company concluded there were indicators of impairment as of May
31, 2011. As a result, we performed impairment tests of our
goodwill, definite-lived intangible assets and other long-lived
assets as of May 31, 2011. The impairment testing results for
recoverability of our definite-lived intangible assets and other
long-lived assets indicated they were recoverable and thus no
impairment test was required as of May 31, 2011. Based upon the
testing results of our goodwill, we determined that the remaining
goodwill assigned to each of our reporting units was fully impaired
and thus recognized an aggregate goodwill impairment charge of
$801.1 million during the second quarter of 2011, which was recorded
at each of our reporting units.
|
|
|
|
|
(4)
|
On April 19, 2012, the company utilized cash on hand of $26.5
million to repurchase $98.2 million aggregate principal amount of
Dex One senior subordinated notes. On March 23, 2012, the Company
utilized cash on hand of $69.5 million to repurchase loans under our
credit facilities of $142.1 million. These debt transactions are
hereby referred to as the "Debt Repurchases." The Debt Repurchases
have been accounted for as an extinguishment of debt resulting in a
non-cash, pre-tax gain of $139.6 million during the year ended
December 31, 2012.
|
|
|
|
|
(5)
|
On February 14, 2011, we completed the sale of substantially all
net assets of Business.com. As a result, we recognized a gain on
sale of these assets of $13.4 million during the first quarter of
2011.
|
|
|
|
|
(6)
|
For the semi-annual interest periods ending September 30, 2012 and
March 31, 2012, the company made interest payments 50% in cash and
50% in paid-in-kind interest, as permitted by the indenture
governing the Dex One senior subordinated notes, resulting in the
issuance of an additional $17.9 million of Dex One senior
subordinated notes.
|
|
|
|
|
(7)
|
The company's voluntary filing for Chapter 11 on March 18, 2013
triggered the acceleration of financial obligations under our Dex
One senior subordinated notes and credit facilities. Although we
believe that any efforts to enforce the acceleration of these
financial obligations are stayed as a result of filing Chapter 11 in
the bankruptcy court, we have classified our Dex One senior
subordinated notes and credit facilities as current obligations on
our consolidated balance sheet as of December 31, 2012.
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(8)
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In conjunction with our adoption of fresh start accounting, an
adjustment was established to record our outstanding debt at fair
value on the Fresh Start Reporting Date. The Company was required to
record our credit facilities at a discount as a result of their fair
value on the Fresh Start Reporting Date. Therefore, the carrying
amount of these debt obligations is lower than the principal amount
due at maturity. This fair value adjustment is amortized as an
increase to interest expense over the remaining term of the
respective debt agreements and does not impact future scheduled
interest or principal payments. The unamortized fair value
adjustment resulting from fresh start accounting was $36.7 million
at December 31, 2012.
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(9)
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Net debt represents total debt less cash and cash equivalents on the
respective date. Net debt – eliminating fair value discount
eliminates the fair value discount as a result of fresh start
accounting described in Note 8 and represents principal amounts due
at maturity.
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(10)
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Advertising sales is a non-GAAP statistical measure and consists
of sales of advertising in print directories distributed during
the period and Internet-based marketing solutions with respect to
which such advertising first appeared publicly during the period.
In order to calculate a percentage change over prior periods,
adjustments have been made to the prior year’s advertising sales
in an attempt to create a same store sales metric.
Bookings
is also a non-GAAP statistical measure and represents sales
activity associated with our print directories and Internet-based
marketing solutions during the period. Bookings associated with
our local customers represent signed contracts during the period.
Bookings associated with our national customers represent what has
been published or fulfilled during the period. It is important to
distinguish advertising sales and bookings from net revenue, which
is recognized under the deferral and amortization method.
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Note: These schedules are preliminary and subject to change pending
the Company's filing of its Form 10-K.
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