SuperMedia Announces Second Quarter 2012 Results

About SuperMedia

SuperMedia Inc. (NASDAQ: SPMD) helps small and medium-sized businesses grow through effective local marketing solutions across print, online, mobile and social media. SuperMedia provides a full range of solutions including: the award-winning SuperGuarantee® program, Superpages® directories, published for Verizon®, FairPoint® and Frontier®, Superpages.com®, EveryCarListed.com®, Superpages for your mobile and Superpages direct mail products. For more information, visit  www.supermedia.com.

SuperMedia Inc.
Consolidated Statements of Comprehensive Income
Reported (GAAP)
Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011
		(dollars in millions, except per share amounts)
		6 Mos. Ended				6 Mos. Ended
Unaudited		6/30/12				6/30/11					% Change
Operating Revenue		$	712			$	859				(17.1	)
Operating Expense
Selling			178				228				(21.9	)
Cost of sales (exclusive of depreciation and amortization)			170				216				(21.3	)
General and administrative			74				118				(37.3	)
Depreciation and amortization			80				88				(9.1	)
Total Operating Expense			502				650				(22.8	)
Operating Income			210				209				0.5
Interest expense, net			89				114				(21.9	)
Income Before Reorganization Items, Gains on Early
Extinguishment of Debt and Provision for Income Taxes			121				95				27.4
Reorganization items			-				(1	)			(100.0	)
Gains on early extinguishment of debt			51				-				NM
Income Before Provision for Income Taxes			172				94				83.0
Provision for income taxes			46				35				31.4
Net Income		$	126			$	59				113.6
Basic and Diluted Earnings per Common Share (1) (2) (3)		$	8.08			$	3.79				113.2
Basic and diluted weighted-average common shares outstanding			15.3				15.1
Comprehensive Income
Net Income		$	126			$	59				113.6
Adjustments for pension and post-employment benefits, net of tax (4)			173				3				NM
Total Comprehensive Income		$	299			$	62				NM

Notes:
(1)		Equity based awards granted had no impact on the calculation of diluted earnings per common share.
(2)		Net income allocated to participating securities (unvested restricted stock awards) which are eligible to receive dividend equivalents is excluded from the calculation of EPS. The amount excluded from earnings per common share was $3 million and $2 million for the six months ended June 30, 2012 and 2011, respectively.
(3)		Basic and diluted earnings per common share for the six months ended June 30, 2012 includes a correction of a calculation error that was previously reported for the three months ended March 31, 2012. The corrected basic and diluted earnings per common share for the three months ended March 31, 2012 was $3.97 as opposed to $3.92 previously reported.
(4)		Adjustments for pension and post-employment benefits, net of tax of $173 million includes a gain of $164 million associated with certain amendments to the Company's post-employment health care and life insurance benefit plans.
Schedule A

SuperMedia Inc.
Consolidated Statements of Comprehensive Income
Reported (GAAP)
Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011
		(dollars in millions, except per share amounts)
		3 Mos. Ended				3 Mos. Ended
Unaudited		6/30/12				6/30/11					% Change
Operating Revenue		$	349			$	421				(17.1	)
Operating Expense
Selling			88				112				(21.4	)
Cost of sales (exclusive of depreciation and amortization)			84				106				(20.8	)
General and administrative			33				53				(37.7	)
Depreciation and amortization			40				44				(9.1	)
Total Operating Expense			245				315				(22.2	)
Operating Income			104				106				(1.9	)
Interest expense, net			43				57				(24.6	)
Income Before Reorganization Items, Gains on Early
Extinguishment of Debt and Provision for Income Taxes			61				49				24.5
Reorganization items			-				(1	)			(100.0	)
Gains on early extinguishment of debt			23				-				NM
Income Before Provision for Income Taxes			84				48				75.0
Provision for income taxes			20				19				5.3
Net Income		$	64			$	29				120.7
Basic and Diluted Earnings per Common Share (1) (2)		$	4.11			$	1.89				117.5
Basic and diluted weighted-average common shares outstanding			15.3				15.1
Comprehensive Income
Net Income		$	64			$	29				120.7
Adjustments for pension and post-employment benefits, net of tax (3)			173				5				NM
Total Comprehensive Income		$	237			$	34				NM

Notes:
(1)		Equity based awards granted had no impact on the calculation of diluted earnings per common share.
(2)		Net income allocated to participating securities (unvested restricted stock awards) which are eligible to receive dividend equivalents is excluded from the calculation of EPS. The amount excluded from earnings per common share for the three months ended June 30, 2012 and June 30, 2011 was $1 million for both periods.
(3)		Adjustments for pension and post-employment benefits, net of tax of $173 million includes a gain of $164 million associated with certain amendments to the Company's post-employment health care and life insurance benefit plans.
Schedule B

SuperMedia Inc.
Reconciliation of Non-GAAP Measures
Six Months Ended June 30, 2012 and 2011
		(dollars in millions)
Unaudited		6 Mos. Ended6/30/12					6 Mos. Ended6/30/11
Net Income - GAAP		$	126				$	59
Add/subtract non-operating items:
Provision for income taxes			46					35
Interest expense, net			89					114
Reorganization items (7)			-					1
Gains on early extinguishment of debt (6)			(51	)				-
Operating Income			210					209
Depreciation and amortization			80					88
EBITDA (non-GAAP) (1)			290					297
Adjustments:
Severance costs (5)			2					9
Adjusted EBITDA (non-GAAP) (2)		$	292				$	306
Operating Revenue		$	712				$	859
Operating Income margin (3)			29.5	%				24.3	%
Impact of depreciation and amortization			11.2	%				10.3	%
EBITDA margin (non-GAAP) (4)			40.7	%				34.6	%
Impact of adjustments			0.3	%				1.0	%
Adjusted EBITDA margin (non-GAAP) (4)			41.0	%				35.6	%

Notes:
(1)		EBITDA is a non-GAAP measure that represents earnings before interest, taxes, gains on early extinguishment of debt, depreciation and amortization.
(2)		Adjusted EBITDA is a non-GAAP measure that adjusts EBITDA for certain unique costs including severance costs.
(3)		Operating Income margin is calculated by dividing Operating Income by Operating Revenue.
(4)		EBITDA and Adjusted EBITDA margin is calculated by dividing EBITDA and Adjusted EBITDA by Operating Revenue.
(5)		Severance costs are associated with headcount reductions.
(6)		Gains on early extinguishment of debt represents the gains associated with the purchase of a portion of the Company's debt below par value.
(7)		Reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the United States Bankruptcy Code.
Schedule C

SuperMedia Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended June 30, 2012 and 2011
		(dollars in millions)
Unaudited		3 Mos. Ended6/30/12					3 Mos. Ended6/30/11
Net Income - GAAP		$	64				$	29
Add/subtract non-operating items:
Provision for income taxes			20					19
Interest expense, net			43					57
Reorganization items (7)			-					1
Gains on early extinguishment of debt (6)			(23	)				-
Operating Income			104					106
Depreciation and amortization			40					44
EBITDA (non-GAAP) (1)			144					150
Adjustments:
Severance costs (5)			-					2
Adjusted EBITDA (non-GAAP) (2)		$	144				$	152
Operating Revenue		$	349				$	421
Operating Income margin (3)			29.8	%				25.2	%
Impact of depreciation and amortization			11.5	%				10.4	%
EBITDA margin (non-GAAP) (4)			41.3	%				35.6	%
Impact of adjustments			0.0	%				0.5	%
Adjusted EBITDA margin (non-GAAP) (4)			41.3	%				36.1	%

Notes:
(1)		EBITDA is a non-GAAP measure that represents earnings before interest, taxes, gains on early extinguishment of debt, depreciation and amortization.
(2)		Adjusted EBITDA is a non-GAAP measure that adjusts EBITDA for certain unique costs including severance costs.
(3)		Operating Income margin is calculated by dividing Operating Income by Operating Revenue.
(4)		EBITDA and Adjusted EBITDA margin is calculated by dividing EBITDA and Adjusted EBITDA by Operating Revenue.
(5)		Severance costs are associated with headcount reductions.
(6)		Gains on early extinguishment of debt represents the gains associated with the purchase of a portion of the Company's debt below par value.
(7)		Reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the United States Bankruptcy Code.
Schedule D

SuperMedia Inc.
Consolidated Balance Sheets
Reported (GAAP)
As of June 30, 2012 and December 31, 2011
		(dollars in millions)
Unaudited		6/30/2012					12/31/2011					$ Change
Assets
Current assets:
Cash and cash equivalents		$	77				$	90				$	(13	)
Accounts receivable, net of allowances of $47 and $59			132					147					(15	)
Accrued taxes receivable			-					27					(27	)
Deferred directory costs			138					155					(17	)
Prepaid expenses and other			12					12					-
Total current assets			359					431					(72	)
Property, plant and equipment			126					127					(1	)
Less: accumulated depreciation			63					53					10
			63					74					(11	)
Goodwill			704					704					-
Intangible assets, net			281					345					(64	)
Pension assets			83					75					8
Other non-current assets			4					4					-
Total Assets		$	1,494				$	1,633				$	(139	)
Liabilities and Stockholders' (Deficit)
Current liabilities:
Current maturities of long-term debt		$	1				$	4				$	(3	)
Accounts payable and accrued liabilities			106					126					(20	)
Deferred revenue			82					82					-
Deferred tax liabilities			8					4					4
Other			13					18					(5	)
Total current liabilities			210					234					(24	)
Long-term debt			1,510					1,741					(231	)
Employee benefit obligations			97					364					(267	)
Non-current deferred tax liabilities			122					43					79
Unrecognized tax benefits			42					39					3
Stockholders' (deficit):
Common stock ($.01 par value; 60 million shares authorized,
15,668,058 and 15,468,740 shares issued and outstanding
in 2012 and 2011, respectively)			-					-					-
Additional paid-in capital			212					210					2
Retained (deficit)			(841	)				(967	)				126
Accumulated other comprehensive income (loss)			142					(31	)				173
Total stockholders' (deficit)			(487	)				(788	)				301
Total Liabilities and Stockholders' (Deficit)		$	1,494				$	1,633				$	(139	)
Schedule E

SuperMedia Inc.
Consolidated Statements of Cash Flows
Reported (GAAP) and Non-GAAP Financial Reconciliation - Free Cash Flow
Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011
		(dollars in millions)
Unaudited		6 Mos. Ended6/30/12					6 Mos. Ended6/30/11					$ Change
Cash Flows from Operating Activities
Net Income		$	126				$	59				$	67
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense			80					88					(8	)
Gains on early extinguishment of debt			(51	)				-					(51	)
Employee retirement benefits			1					9					(8	)
Deferred income taxes			(20	)				(12	)				(8	)
Provision for uncollectible accounts			13					35					(22	)
Stock-based compensation expense			2					2					-
Changes in current assets and liabilities
Accounts receivable and unbilled accounts receivable			2					-					2
Deferred directory costs			17					16					1
Other current assets			2					(5	)				7
Accounts payable and accrued liabilities			9					(132	)				141
Other, net			(5	)				(11	)				6
Net cash provided by operating activities			176					49					127
Cash Flows from Investing Activities
Capital expenditures (including capitalized software)			(6	)				(7	)				1
Net cash used in investing activities			(6	)				(7	)				1
Cash Flows from Financing Activities
Repayment of long-term debt			(182	)				(36	)				(146	)
Other, net			(1	)				-					(1	)
Net cash used in financing activities			(183	)				(36	)				(147	)
Increase (decrease) in cash and cash equivalents			(13	)				6					(19	)
Cash and cash equivalents, beginning of year			90					174					(84	)
Cash and cash equivalents, end of period		$	77				$	180				$	(103	)
Non-GAAP Financial Reconciliation - Free Cash Flow		6 Mos. Ended6/30/12					6 Mos. Ended6/30/11					$ Change
Unaudited
Net cash provided by operating activities		$	176				$	49				$	127
Less: Capital expenditures (including capitalized software)			(6	)				(7	)				1
Free Cash Flow		$	170				$	42				$	128
Schedule F

SuperMedia Inc.
Advertising Sales
		(dollars in millions)
		3 Mos. Ended					3 Mos. Ended					3 Mos. Ended					6 Mos. Ended					6 Mos. Ended					6 Mos. Ended
Unaudited		6/30/12					6/30/11					6/30/10					6/30/12					6/30/11					6/30/10
Net Advertising Sales (1) (2)		$	314				$	389				$	465				$	641				$	785				$	944
% Change year-over-year			(19.3	%)				(16.3	%)									(18.3	%)				(16.8	%)

Notes:
(1)		Net advertising sales is an operating measure used by the Company to compare advertising sales for current advertising periods to corresponding sales for previous periods. It is important to distinguish net advertising sales from operating revenue, which on our financial statements is recognized under the deferral and amortization method.
(2)		Advertising sales for the three and six months ended June 30, 2011 include negative adjustments of $2 million and $11 million, respectively, related to the financial distress and operational wind down of a single certified marketing representative in our third-party national sales channel. Excluding this impact, advertising sales for the three and six months ended June 30, 2012 would have reflected a decline of 19.7% and 19.5%, respectively, compared to a decline of 15.9% and 15.7% for the three and six months ended June 30, 2011, respectively. As of June 2011, these accounts were transitioned to other certified marketing representative firms.
Schedule G

(SPMD-G)

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