This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Dex One Reports Third Quarter Performance

(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 and nine months ended September 30, 2012 and 2011
 
Schedule 3: Unaudited Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011
`
Schedule 4: Unaudited Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 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-Q.
 

       
DEX ONE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Schedule 2
 
Amounts in millions, except earnings (loss) per share
               
Three Months Ended Nine Months Ended
September 30,   September 30,
  2012   2011   2012   2011
Net revenue (1) $ 319.7 $ 360.1 $ 998.7 $ 1,128.6
Expenses 188.0 215.9 578.7 655.1
Depreciation and amortization (2) 104.4 66.0 313.2 182.0
Impairment charges (3)   -       -       -       801.1  
Operating income (loss) 27.3 78.2 106.8 (509.6 )
Gain on Debt Repurchases, net (4) - - 139.6 -
Gain on sale of assets, net (5) - - - 13.4
Interest expense, net   (46.6 )     (55.3 )     (151.6 )     (171.1 )
Income (loss) before income taxes (19.3 ) 22.9 94.8 (667.3 )
Tax (provision) benefit   6.6       (0.7 )     3.1       142.8  
Net income (loss) $ (12.7 )   $ 22.2     $ 97.9     $ (524.5 )
 
Earnings (loss) per share (EPS):
Basic $ (0.25 ) $ 0.44 $ 1.94 $ (10.47 )
Diluted $ (0.25 ) $ 0.44 $ 1.93 $ (10.47 )
Shares used in computing EPS:
Basic 50.8 50.2 50.6 50.1
Diluted   50.8       50.2       50.6       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-Q.

 
DEX ONE CORPORATION Schedule 3

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 
Amounts in millions    
September 30, 2012 December 31, 2011
Assets
Cash and cash equivalents $ 95.6 $ 257.9
Accounts receivable, net 499.2 605.7
Deferred directory costs 98.6 130.8
Short term deferred income taxes, net 71.5 67.8
Other current assets   42.7   51.4  
Total current assets 807.6 1,113.6
 
Fixed assets and computer software, net 117.6 151.5
Intangible assets, net (2) 1,920.0 2,182.1
Other non-current assets   17.7   13.0  
Total Assets $ 2,862.9 $ 3,460.2  
 
Liabilities and Shareholders' Equity (Deficit)
Accounts payable and accrued liabilities $ 91.7 $ 126.2
Accrued interest 22.4 29.2
Deferred revenue 505.9 644.1
Current portion of long-term debt (6)   226.1   326.3  
Total current liabilities 846.1 1,125.8
 
Long-term debt (6) 1,778.6 2,184.1
Deferred income taxes, net 78.2 75.5
Other non-current liabilities   68.0   84.7  
Total liabilities 2,770.9 3,470.1
 
Shareholders’ equity (deficit)   92.0   (9.9 )
 
Total Liabilities and Shareholders' Equity (Deficit) $ 2,862.9 $ 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-Q.

   
DEX ONE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Schedule 4
 
 
Amounts in millions          
Three Months Ended Nine Months Ended
September 30, September 30,
    2012 2011 2012 2011
Net cash provided by operating activities $ 97.6 $ 82.4 $ 261.4 $ 295.0
 
Investment activities:
Additions to fixed assets and computer software (5.1 ) (4.4 ) (17.1 ) (19.2 )
Proceeds from sale of assets   -     -     0.1     15.4  
Net cash used in investing activities (5.1 ) (4.4 ) (17.0 ) (3.8 )
 
Financing activities:
Long-term debt repurchases and repayments (77.4 ) (52.2 ) (400.9 ) (207.2 )
Debt issuance costs and other financing items, net (2.4 ) - (5.3 ) 0.5
Decrease in checks not yet presented for payment - - (0.5 ) (17.0 )
       
Net cash used in financing activities (79.8 ) (52.2 ) (406.7 ) (223.7 )
 
Increase (decrease) in cash and cash equivalents 12.7 25.8 (162.3 ) 67.5
Cash and cash equivalents, beginning of period   82.9     169.6     257.9     127.9  
Cash and cash equivalents, end of period $ 95.6   $ 195.4   $ 95.6   $ 195.4  
 
Non-cash financing activities:
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-Q.

 
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 September 30, 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 September 30, 2011 is determined by adjusting EBITDA for stock-based compensation expense and long-term incentive program. Adjusted EBITDA for the nine months ended September 30, 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 nine months ended September 30, 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 Nine Months Ended
September 30, September 30,
Reconciliation of net income (loss) - GAAP to EBITDA and Adjusted EBITDA 2012 2011 2012 2011
 
Net income (loss) - GAAP $ (12.7 ) $ 22.2 $ 97.9 $ (524.5 )
Plus (less): tax provision (benefit) (6.6 ) 0.7 (3.1 ) (142.8 )
Plus: interest expense, net 46.6 55.3 151.6 171.1
Plus: depreciation and amortization   104.4     66.0   313.2     182.0  
EBITDA $ 131.7   $ 144.2 $ 559.6   $ (314.2 )
 
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 1.5 3.9 4.7
 
Plus: Merger transaction and integration expenses 4.4 - 4.4 -
       
Adjusted EBITDA $ 137.1   $ 145.7 $ 428.3   $ 478.2  
 

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-Q.

 

 
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 and nine months ended September 30, 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 Nine Months Ended
September 30, September 30,
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 $ 97.6 $ 82.4 $ 261.4 $ 295.0
Less: Additions to fixed assets and computer software - GAAP   (5.1 )   (4.4 )   (17.1 )   (19.2 )
Free cash flow 92.5 $ 78.0   244.3 $ 275.8  
Add: Merger transaction and integration cash payments   2.6     2.6  
Adjusted free cash flow $ 95.1   $ 246.9  
 
       
Reconciliation of debt - GAAP to net debt and net debt - eliminating fair value discount (6) (7) September 30, 2012 December 31, 2011
Debt - GAAP $ 2,004.7 $ 2,510.4
Less: Cash and cash equivalents   (95.6 )   (257.9 )
Net debt 1,909.1 2,252.5
Fair value discount   41.6     63.2  
Net debt - eliminating fair value discount $ 1,950.7   $ 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-Q.

 
DEX ONE CORPORATION

RECONCILIATION OF NON-GAAP MEASURES (cont'd)

Schedule 5c
(unaudited)
 
Amounts in millions
       
Full Year 2012
Reconciliation of adjusted EBITDA outlook - Midpoint to operating income - GAAP outlook   Outlook
 
Adjusted EBITDA outlook - Midpoint $ 550
Less: depreciation and amortization   (415 )
Adjusted operating income outlook 135
Less: Stock-based compensation expense and long-term incentive program   (10 )
Operating income - GAAP outlook     $ 125  
 
       
Full Year 2012
Reconciliation of adjusted free cash flow outlook - Midpoint to cash flow from operations outlook - GAAP   Outlook
 
Adjusted free cash flow outlook - Midpoint $ 335
Plus: Additions to fixed assets and computer software   30  
Cash flow from operations outlook - GAAP     $ 365  

       
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                  
Nine Months Ended   Three Months Ended   Three Months Ended   Three Months Ended   Three Months Ended
Advertising Sales (8) September 30, 2012   September 30, 2012   June 30, 2012   March 31, 2012   December 31, 2011
 
Advertising Sales $ 862 $ 232 $ 334 $ 296 $ 387
                 
Advertising sales percentage change over prior year periods   (14 %)     (14 %)     (12 %)     (16 %)     (13 %)
                     
Nine Months Ended   Three Months Ended   Three Months Ended   Three Months Ended   Three Months Ended
Bookings (8) September 30, 2012   September 30, 2012   June 30, 2012   March 31, 2012   December 31, 2011
 
Bookings:
 
Print bookings $ 644 $ 200 $ 206 $ 237 $ 253
 
Digital bookings   208       72       69       67       60  
 
Total Bookings $ 852 $ 272 $ 275 $ 304 $ 313
 
Bookings percentage change over prior year periods:
 
Print bookings percentage change (22 %) (22 %) (24 %) (21 %) (18 %)
Digital bookings percentage change   36 %     26 %     53 %     32 %     34 %
 
Total bookings percentage change over prior year periods   (13 %)     (13 %)     (13 %)     (13 %)     (11 %)
 
 
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-Q.

 
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 DexNet. 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 DexNet, 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 to a combined weighted average useful life of 9 years. As a result of reducing the estimated useful lives of these intangible assets, the Company expects an increase in amortization expense of $161.6 million and total amortization expense of $349.4 million for 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 nine months ended September 30, 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)

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 $41.6 million at September 30, 2012.
 

(7)

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 6 and represents principal amounts due at maturity.
 

(8)

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.

 

       
Note: These schedules are preliminary and subject to change pending the Company's filing of its Form 10-Q.




Stock quotes in this article: DEXO 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs