Idearc (NYSE:IAR)
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Idearc Inc. (NYSE: IAR) today announced financial results for
year-to-date and third quarter ended September 30, 2008.
“Idearc’s financial
results in the third quarter reflect the significant challenges our
clients are facing as they contend with difficult economic conditions
across the nation,” said Scott W. Klein, chief
executive officer of Idearc Inc. “We remain
focused on accelerating revenue, reducing expenses and improving
margins, as well as creating a high-performance culture. We are acting
aggressively and quickly to adjust our organization and market approach
to meet the challenges ahead of us.”
Financial Summary
Idearc reports financial results on a GAAP basis and on an adjusted pro
forma basis to eliminate the impact of transition and restructuring
costs. The adjusted pro forma basis measures are described and are
reconciled to the corresponding GAAP measures in the accompanying
financial schedules.
On a year-to-date basis, Idearc reported multi-product revenues of
$2,264 million, a 5.7 percent decrease compared to the same period in
2007. Year-to-date Internet revenue was $223 million, a 6.2 percent
increase compared to the same period in 2007.
The Company reported third quarter 2008 multi-product revenues of $735
million, a 7.1 percent decrease compared to the same period in 2007. The
Company reported Internet revenue of $75 million in the third quarter,
an 8.7 percent increase compared to the same period in 2007.
The Company reported year-to-date earnings before interest, taxes,
depreciation and amortization (EBITDA) of $ 956 million, a 12.9 percent
decrease compared to the same period in 2007. Reported year-to-date
EBITDA margins were 42.2 percent, compared to 45.7 percent in the same
period in 2007. On an adjusted pro forma basis, year-to-date EBITDA was
$985 million, a 15.7 percent decrease compared to the same period in
2007. Adjusted pro forma EBITDA margins were 43.5 percent, compared to
48.6 percent in the same period in 2007.
The Company reported third quarter EBITDA of $ 298 million, a 21.6
percent decrease compared to the same period in 2007. The Company
reported EBITDA margins of 40.5 percent in the third quarter, compared
to 48.0 percent in the same period in 2007. On an adjusted pro forma
basis, third quarter EBITDA was $302 million, a 24.1 percent decrease
compared to the same period in 2007. Adjusted pro forma EBITDA margins
were 41.1 percent in the third quarter 2008, compared to 50.3 percent in
the same period in 2007.
The Company reported year-to-date net income of $ 260 million, a 21.0
percent decrease compared to the same period in 2007. On an adjusted pro
forma basis, year-to-date net income was $279 million, a 25.4 percent
decrease versus the same period in 2007.
The Company reported third quarter net income of $73 million, a decrease
of 37.6 percent versus the same period in 2007. On an adjusted pro forma
basis, third quarter net income was $76 million, a decrease of 40.6
percent versus the same period in 2007.
Free cash flow for the nine months ended September 30, 2008 was $340
million based on cash from operating activities of $377 million, less
capital expenditures of $37 million.
Multi-product advertising sales for the third quarter declined 10.8
percent compared to 2007.
Update on Liquidity and Capital Structure
As of September 30, 2008, Idearc had cash and cash equivalents of $304
million. On October 24, 2008, the Company initiated borrowings of $247
million under its existing $250 million revolving credit facility.
Idearc intends to use the funds from the revolving credit facility for
general corporate purposes.
The Company has retained Merrill Lynch & Co. and Moelis & Company as
financial advisors in connection with the review of alternatives related
to the Company’s capital structure. There can
be no assurance that the Company will pursue transactions related to any
such alternatives.
“Our objective is to maximize opportunities to
help ensure that Idearc has an appropriate capital structure to support
our strategic business objectives,” Klein
said. “We intend to look closely at all
available opportunities to strengthen our balance sheet and improve our
risk profile. At the same time, we will continue to manage our financial
resources prudently, with a focus on maintaining sufficient liquidity
and flexibility as we work our way through the current challenging
economic environment. Fortunately, Idearc continues to generate
significant cash flow.”
New York Stock Exchange Listing
On October 24, 2008, the Company received notice from the New York Stock
Exchange (“NYSE”)
that it is not in compliance with NYSE continued listing standards
because the 30 trading-day average closing price of the Company’s
common stock was less than $1.00 per share. Under applicable NYSE rules,
the Company generally has six months to return to compliance with this
requirement.
The Company expects that its common stock will remain listed on the NYSE
during this six-month period. If the average trading price of the Company’s
common stock does not sufficiently improve, the Company’s
Board of Directors and management intend to consider a reverse stock
split and other possible alternatives. If the Board decides to seek
stockholder approval for a reverse stock split, the Company must do so
no later than its 2009 annual meeting of stockholders, which is
scheduled for May 2009.
Operational Update
During the third quarter, Klein announced his new leadership team and
implemented several programs focused on:
Driving sales productivity;
Simplifying the organization and making it easier to do business with;
Accelerating Internet revenue; and
Creating a better place to work.
“I am pleased with the progress we are
making, although it will take some time before the changes we are
implementing have a significant impact on our financial results,”
Klein said. “We are re-energizing the company
and we are on the road to redefining who we are. Our objective is to
address our challenges and introduce new ideas –
in some cases, radical ideas -- to help position the company as an
industry leader in providing outstanding solutions and support to our
clients.”
Webcast Information
Idearc welcomes investors, media and other interested parties to join
Klein, and Samuel D. (Dee) Jones, chief financial officer, in a
discussion via a webcast and teleconference beginning today at 10:00
a.m. (Eastern) by visiting Idearc's Web site at http://ir.idearc.com/presentations.cfm
and following the instructions provided. In addition, individuals within
the United States can access the earnings call by dialing (888)
603-6873. International participants should dial (973) 582-2706. The
pass code for the call is: 67869257. In order to ensure a prompt start
time, please dial into the call by 9:50 a.m. (Eastern). A replay of the
teleconference for individuals within the United States will be
available at (800) 642-1687, and international callers can access the
replay by calling (706) 645-9291. The replay pass code is 67869257 and
will be available through November 13.
Certain statements included in this press release and the hyperlinked
materials constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect Idearc management’s
current views with respect to Idearc’s
financial performance and future events with respect to its business and
industry in general. Statements regarding Idearc’s
exploration of alternatives related to its capital structure and efforts
to regain compliance with the NYSE continued listing standards are
forward-looking statements. Statements that include the words “believe,”
“will,” “anticipate,”
“foresee,” and
similar expressions identify forward-looking statements. Idearc cautions
you not to place undue reliance on these forward-looking statements. The
following important factors could affect future results and could cause
those results to differ materially from those expressed in the
forward-looking statements: (i) risks related to Idearc’s
substantial indebtedness, including covenant compliance; (ii) risks
related to Idearc’s declining print revenue,
including a reduction in customer spending resulting from the current
economic downturn; (iii) limitations on Idearc’s
operating and strategic flexibility under the terms of its debt
agreements; (iv) risks associated with a sustained stock price below
$1.00 per share and a market capitalization below $75 million, including
delisting from the NYSE; (v) changes in Idearc’s
competitive position due to competition from other yellow pages
directories publishers and other traditional and new media and its
ability to anticipate or respond to changes in technology and user
preferences; (vi) declining use of print yellow pages directories;
(vii) Idearc’s ability to successfully
identify and implement cost initiatives; (viii) access to capital
markets and changes in credit ratings; (ix) changes in the availability
and cost of paper and other raw materials used to print directories and
reliance on third-party printers and distributors; (x) increased credit
risk associated with reliance on small- and medium-sized businesses, in
particular in the current economic environment; (xi) changes in
operating performance; (xii) Idearc’s ability
to attract and retain qualified executives; (xiii) Idearc’s
ability to maintain good relations with its unionized employees;
(xiv) changes in U.S. labor, business, political and/or economic
conditions; (xv) changes in governmental regulations and policies and
actions of regulatory bodies; and (xvi) risks associated with Idearc’s
obligations under agreements entered into with Verizon in connection
with the spin-off. For a discussion of these and other risks and
uncertainties, see Idearc Inc.’s periodic
filings with the Securities and Exchange Commission, which you may view
at www.sec.gov,
and in particular, Idearc Inc.’s Annual
Report on Form 10-K for the year ended December 31, 2007.
IDEARC INC.
Consolidated Statements of Income
Reported (GAAP)
Nine Months Ended September 30, 2008 Compared to Nine Months
Ended September 30, 2007
(dollars in millions, except per share amounts)
9 Mos. Ended
9 Mos. Ended
Unaudited
9/30/08
9/30/07
% Change
Operating Revenue
Print products
$
2,038
$
2,189
(6.9
)
Internet
223
210
6.2
Other
3
3
-
Total Operating Revenue
2,264
2,402
(5.7
)
Operating Expense
Selling
541
544
(0.6
)
Cost of sales (exclusive of depreciation and amortization)
461
469
(1.7
)
General and administrative
306
291
5.2
Depreciation and amortization
59
66
(10.6
)
Total Operating Expense
1,367
1,370
(0.2
)
Operating Income
897
1,032
(13.1
)
Interest expense, net
491
505
(2.8
)
Income Before Provision for Income Taxes
406
527
(23.0
)
Provision for income taxes
146
198
(26.3
)
Net Income
$
260
$
329
(21.0
)
Basic and Diluted Earnings per Common Share (1)
$
1.78
$
2.25
(20.9
)
Basic and diluted weighted-average common
shares outstanding (in millions)
146
146
Dividends Declared per Common Share
$
.3425
$
1.0275
Prior period amounts presented above and in the following schedules have
been reclassified to conform to current period presentation.
These schedules are preliminary and subject to change pending the
Company's filing of its Form 10-Q.
Note:
(1) Equity based awards granted in 2007 and
2008 had no material impact on the calculation of diluted earnings per
common share.
IDEARC INC.
Consolidated Statements of Income
Reported (GAAP)
Three Months Ended September 30, 2008 Compared to Three Months
Ended September 30, 2007
(dollars in millions, except per share amounts)
3 Mos. Ended
3 Mos. Ended
Unaudited
9/30/08
9/30/07
% Change
Operating Revenue
Print products
$
659
$
721
(8.6
)
Internet
75
69
8.7
Other
1
1
-
Total Operating Revenue
735
791
(7.1
)
Operating Expense
Selling
176
171
2.9
Cost of sales (exclusive of depreciation and amortization)
151
149
1.3
General and administrative
110
91
20.9
Depreciation and amortization
19
22
(13.6
)
Total Operating Expense
456
433
5.3
Operating Income
279
358
(22.1
)
Interest expense, net
162
168
(3.6
)
Income Before Provision for Income Taxes
117
190
(38.4
)
Provision for income taxes
44
73
(39.7
)
Net Income
$
73
$
117
(37.6
)
Basic and Diluted Earnings per Common Share (1)
$
.50
$
.80
(37.5
)
Basic and diluted weighted-average common shares outstanding (in
millions)
146
146
Dividends Declared per Common Share
$
-
$
.3425
Note:
(1) Equity based awards granted in 2007 and
2008 had no material impact on the calculation of diluted earnings per
common share.
IDEARC INC.
Consolidated Statements of Income
Adjusted Pro Forma (Non-GAAP)(1)
Nine Months Ended September 30, 2008 Compared to Nine Months
Ended September 30, 2007
(dollars in millions, except per share amounts)
9 Mos. Ended
9 Mos. Ended
Unaudited
9/30/08
9/30/07
% Change
Operating Revenue
Print products
$
2,038
$
2,189
(6.9
)
Internet
223
210
6.2
Other
3
3
-
Total Operating Revenue
2,264
2,402
(5.7
)
Operating Expense
Selling
541
544
(0.6
)
Cost of sales (exclusive of depreciation and amortization)
461
469
(1.7
)
General and administrative
277
221
25.3
Depreciation and amortization
59
66
(10.6
)
Total Operating Expense
1,338
1,300
2.9
Operating Income
926
1,102
(16.0
)
Interest expense, net
491
505
(2.8
)
Income Before Provision for Income Taxes
435
597
(27.1
)
Provision for income taxes
156
223
(30.0
)
Net Income
$
279
$
374
(25.4
)
Basic and Diluted Earnings per Common Share (2)
$
1.91
$
2.56
(25.4
)
Basic and diluted weighted-average common shares outstanding (in
millions)
146
146
Notes:
(1) These consolidated statements of income
provide a comparison of the nine months ended September 30, 2008
adjusted pro forma results to the nine months ended September 30, 2007
adjusted pro forma results. The following schedules provide
reconciliations from our reported GAAP results to adjusted pro forma
non-GAAP results for the periods shown above.
(2) Equity based awards granted in 2007 and
2008 had no material impact on the calculation of diluted earnings per
common share.
IDEARC INC.
Consolidated Statements of Income
Adjusted Pro Forma (Non-GAAP)(1)
Three Months Ended September 30, 2008 Compared to Three Months
Ended September 30, 2007
(dollars in millions, except per share amounts)
3 Mos. Ended
3 Mos. Ended
Unaudited
9/30/08
9/30/07
% Change
Operating Revenue
Print products
$
659
$
721
(8.6
)
Internet
75
69
8.7
Other
1
1
-
Total Operating Revenue
735
791
(7.1
)
Operating Expense
Selling
176
171
2.9
Cost of sales (exclusive of depreciation and amortization)
151
149
1.3
General and administrative
106
73
45.2
Depreciation and amortization
19
22
(13.6
)
Total Operating Expense
452
415
8.9
Operating Income
283
376
(24.7
)
Interest expense, net
162
168
(3.6
)
Income Before Provision for Income Taxes
121
208
(41.8
)
Provision for income taxes
45
80
(43.8
)
Net Income
$
76
$
128
(40.6
)
Basic and Diluted Earnings per Common Share (2)
$
.52
$
.88
(40.9
)
Basic and diluted weighted-average common shares outstanding (in
millions)
146
146
Notes:
(1) These consolidated statements of income
provide a comparison of the three months ended September 30, 2008
adjusted pro forma results to the three months ended September 30, 2007
adjusted pro forma results. The following schedules provide
reconciliations from our reported GAAP results to adjusted pro forma
non-GAAP results for the periods shown above.
(2) Equity based awards granted in 2007 and
2008 had no material impact on the calculation of diluted earnings per
common share.
IDEARC INC.
Consolidated Statements of Income
Reconciliation from Reported (GAAP) to Adjusted Pro Forma
(Non-GAAP)
Nine Months Ended September 30, 2008
(dollars in millions, except per share amounts)
Adjustments
9 Mos. Ended 9/30/08
9 Mos. Ended 9/30/08
Unaudited
Reported
(GAAP)
Stock-Based Compensation(3)
Separation
Costs (4)
Restructuring Costs (5)
Adjusted
Pro Forma
(Non-GAAP)
Operating Revenue
Print products
$
2,038
$
-
$
-
$
-
$
2,038
Internet
223
-
-
-
223
Other
3
-
-
-
3
Total Operating Revenue
2,264
-
-
-
2,264
Operating Expense
Selling
541
-
-
-
541
Cost of sales (exclusive of depreciation and amortization)
461
-
-
-
461
General and administrative
306
(4
)
(14
)
(11
)
277
Depreciation and amortization
59
-
-
-
59
Total Operating Expense
1,367
(4
)
(14
)
(11
)
1,338
Operating Income
897
4
14
11
926
Interest expense, net
491
-
-
-
491
Income Before Provision for Income Taxes
406
4
14
11
435
Provision for income taxes
146
1
5
4
156
Net Income
$
260
$
3
$
9
$
7
$
279
Basic and Diluted Earnings per Common Share
$
1.78
$
.02
$
.06
$
.05
$
1.91
Operating Income
$
897
$
4
$
14
$
11
$
926
Depreciation and Amortization
59
-
-
-
59
EBITDA (non-GAAP)(1)
$
956
$
4
$
14
$
11
$
985
Operating Income margin (2)
39.6
%
40.9
%
Impact of depreciation and amortization
2.6
%
2.6
%
EBITDA margin (non-GAAP)(1)
42.2
%
43.5
%
Notes:
(1) EBITDA is a non-GAAP measure that
represents earnings before interest, taxes, depreciation, and
amortization. EBITDA margin is a non-GAAP measure calculated by dividing
EBITDA by total operating revenue.
(2) Operating income margin is calculated by
dividing operating income by total operating revenue.
(3) Stock-based compensation reflects costs
associated with a one-time incentive compensation award granted to most
of the Company's employees in January 2007.
(4) Separation costs reflects costs associated
with becoming a stand-alone entity as a result of the spin-off from
Verizon.
(5) Restructuring costs are associated with
strategic organizational realignment and market exit activities.
IDEARC INC.
Consolidated Statements of Income
Reconciliation from Reported (GAAP) to Adjusted Pro Forma
(Non-GAAP)
Three Months Ended September 30, 2008
(dollars in millions, except per share amounts)
Adjustments
3 Mos. Ended
9/30/08
3 Mos. Ended
9/30/08
Unaudited
Reported
(GAAP)
Restructuring Costs (3)
Adjusted
Pro Forma
(Non-GAAP)
Operating Revenue
Print products
$
659
$
-
$
659
Internet
75
-
75
Other
1
-
1
Total Operating Revenue
735
-
735
Operating Expense
Selling
176
-
176
Cost of sales (exclusive of depreciation and amortization)
151
-
151
General and administrative
110
(4
)
106
Depreciation and amortization
19
-
19
Total Operating Expense
456
(4
)
452
Operating Income
279
4
283
Interest expense, net
162
-
162
Income Before Provision for Income Taxes
117
4
121
Provision for income taxes
44
1
45
Net Income
$
73
$
3
$
76
Basic and Diluted Earnings per Common Share
$
.50
$
.02
$
.52
Operating Income
$
279
$
4
$
283
Depreciation and Amortization
19
-
19
EBITDA (non-GAAP) (1)
$
298
$
4
$
302
Operating Income margin (2)
37.9
%
38.5
%
Impact of depreciation and amortization
2.6
%
2.6
%
EBITDA margin (non-GAAP) (1)
40.5
%
41.1
%
Notes:
(1) EBITDA is a non-GAAP measure that
represents earnings before interest, taxes, depreciation, and
amortization. EBITDA margin is a non-GAAP measure calculated by dividing
EBITDA by total operating revenue.
(2) Operating income margin is calculated by
dividing operating income by total operating revenue.
(3) Restructuring costs are associated with
strategic organizational realignment and market exit activities.
IDEARC INC.
Consolidated Statements of Income
Reconciliation from Reported (GAAP) to Adjusted Pro Forma
(Non-GAAP)
Nine Months Ended September 30, 2007
(dollars in millions, except per share amounts)
Adjustments
9 Mos. Ended
9/30/07
9 Mos. Ended
9/30/07
Unaudited
Reported
(GAAP)
Stock-Based Compensation(3)
Separation
Costs (4)
Adjusted
Pro Forma
(Non-GAAP)
Operating Revenue
Print products
$
2,189
$
-
$
-
$
2,189
Internet
210
-
-
210
Other
3
-
-
3
Total Operating Revenue
2,402
-
-
2,402
Operating Expense
Selling
544
-
-
544
Cost of sales (exclusive of depreciation and amortization)
469
-
-
469
General and administrative
291
(21
)
(49
)
221
Depreciation and amortization
66
-
-
66
Total Operating Expense
1,370
(21
)
(49
)
1,300
Operating Income
1,032
21
49
1,102
Interest expense, net
505
-
-
505
Income Before Provision for Income Taxes
527
21
49
597
Provision for income taxes
198
8
17
223
Net Income
$
329
$
13
$
32
$
374
Basic and Diluted Earnings per Common Share
$
2.25
$
.09
$
.22
$
2.56
Operating Income
$
1,032
$
21
$
49
$
1,102
Depreciation and Amortization
66
-
-
66
EBITDA (non-GAAP) (1)
$
1,098
$
21
$
49
$
1,168
Operating Income margin (2)
43.0
%
45.9
%
Impact of depreciation and amortization
2.7
%
2.7
%
EBITDA margin (non-GAAP) (1)
45.7
%
48.6
%
Notes:
(1) EBITDA is a non-GAAP measure that
represents earnings before interest, taxes, depreciation, and
amortization. EBITDA margin is a non-GAAP measure calculated by dividing
EBITDA by total operating revenue.
(2) Operating income margin is calculated by
dividing operating income by total operating revenue.
(3) Stock-based compensation reflects costs
associated with a one-time incentive compensation award granted to most
of the Company's employees in January 2007.
(4) Separation costs reflects costs associated
with becoming a stand-alone entity as a result of the spin-off from
Verizon.
IDEARC INC.
Consolidated Statements of Income
Reconciliation from Reported (GAAP) to Adjusted Pro Forma
(Non-GAAP)
Three Months Ended September 30, 2007
(dollars in millions, except per share amounts)
Adjustments
3 Mos. Ended
9/30/07
3 Mos. Ended
9/30/07
Unaudited
Reported
(GAAP)
Stock Based Compensation(3)
Separation
Costs (4)
Adjusted
Pro Forma
(Non-GAAP)
Operating Revenue
Print products
$
721
$
-
$
-
$
721
Internet
69
-
-
69
Other
1
-
-
1
Total Operating Revenue
791
-
-
791
Operating Expense
Selling
171
-
-
171
Cost of sales (exclusive of depreciation and amortization)
149
-
-
149
General and administrative
91
(4
)
(14
)
73
Depreciation and amortization
22
-
-
22
Total Operating Expense
433
(4
)
(14
)
415
Operating Income
358
4
14
376
Interest expense, net
168
-
-
168
Income Before Provision for Income Taxes
190
4
14
208
Provision for income taxes
73
2
5
80
Net Income
$
117
$
2
$
9
$
128
Basic and Diluted Earnings per Common Share
$
.80
$
.01
$
.06
$
.88
Operating Income
$
358
$
4
$
14
$
376
Depreciation and Amortization
22
-
-
22
EBITDA (non-GAAP) (1)
$
380
$
4
$
14
$
398
Operating Income margin (2)
45.2
%
47.5
%
Impact of depreciation and amortization
2.8
%
2.8
%
EBITDA margin (non-GAAP) (1)
48.0
%
50.3
%
Notes:
(1) EBITDA is a non-GAAP measure that
represents earnings before interest, taxes, depreciation, and
amortization. EBITDA margin is a non-GAAP measure calculated by dividing
EBITDA by total operating revenue.
(2) Operating income margin is calculated by
dividing operating income by total operating revenue.
(3) Stock-based compensation reflects costs
associated with a one-time incentive compensation award granted to most
of the Company's employees in January 2007.
(4) Separation costs reflects costs associated
with becoming a stand-alone entity as a result of the spin-off from
Verizon.
IDEARC INC.
Consolidated Balance Sheets
Reported (GAAP)
As of September 30, 2008 and December 31, 2007
(dollars in millions)
Unaudited
9/30/2008
12/31/2007
Assets
Current assets:
Cash and cash equivalents
$
304
$
48
Accounts receivable, net of allowances of $99 and $77
377
423
Deferred directory costs
283
312
Prepaid expenses and other
4
10
Total current assets
968
793
Property, plant and equipment
480
471
Less: accumulated depreciation
376
356
104
115
Goodwill
73
73
Intangible assets, net
291
303
Pension assets
183
171
Non-current deferred tax assets
76
124
Debt issuance costs
78
86
Other non-current assets
5
2
Total Assets
$
1,778
$
1,667
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities
$
304
$
272
Deferred revenue
166
209
Current maturities of long-term debt
104
48
Current deferred taxes
30
28
Other
26
31
Total current liabilities
630
588
Long-term debt
8,928
9,020
Employee benefit obligations
312
327
Unrecognized tax benefits
87
109
Other liabilities
170
223
Stockholders' equity (deficit):
Common stock ($.01 par value; 225 million shares authorized,
147,760,445 and 146,795,971 shares issued and outstanding in 2008
and 2007, respectively)
1
1
Additional paid-in capital (deficit)
(8,766
)
(8,776
)
Retained earnings
571
361
Accumulated other comprehensive loss
(155
)
(186
)
Total stockholders' equity (deficit)
(8,349
)
(8,600
)
Total Liabilities and Stockholders' Equity (Deficit)
$
1,778
$
1,667
IDEARC INC.
Consolidated Statements of Cash Flows
Reported (GAAP)
Nine Months Ended September 30, 2008 Compared to Nine Months
Ended September 30, 2007
(dollars in millions)
Unaudited
9 Months Ended
9/30/08
9 Months Ended
9/30/07
Cash Flows from Operating Activities
Net Income
$
260
$
329
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
59
66
Employee retirement benefits
1
(4
)
Deferred income taxes
17
(5
)
Provision for uncollectible accounts
147
111
Stock-based compensation
3
34
Changes in current assets and liabilities
Accounts receivable
(101
)
(193
)
Deferred directory costs
29
(5
)
Other current assets
6
1
Accounts payable and accrued liabilities
(21
)
18
Other, net
(23
)
(18
)
Net cash provided by operating activities
377
334
Cash Flows from Investing Activities
Capital expenditures (including capitalized software)
(37
)
(31
)
Acquisitions
-
(3
)
Proceeds from sale of assets
2
26
Other, net
-
4
Net cash used in investing activities
(35
)
(4
)
Cash Flows from Financing Activities
Repayment of long-term debt
(36
)
(36
)
Dividends paid to Idearc stockholders
(50
)
(150
)
Net cash used in financing activities
(86
)
(186
)
Increase in cash and cash equivalents
256
144
Cash and cash equivalents, beginning of year
48
172
Cash and cash equivalents, end of period
$
304
$
316
IDEARC INC.
Mutli-Product Advertising Sales
(dollars in millions)
3 Mos. Ended
3 Mos. Ended
3 Mos. Ended
9 Mos. Ended
9 Mos. Ended
9 Mos. Ended
Unaudited
9/30/08
9/30/07
9/30/06
9/30/08
9/30/07
9/30/06
Net Print Products Sales(1)
$ 545
$ 626
$ 654
$ 1,802
$ 2,009
$ 2,073
% Change year-over-year
(12.9%)
(4.3%)
(10.3%)
(3.1%)
Net Internet Sales(2)
75
69
60
223
210
167
% Change year-over-year
8.7%
15.0%
6.2%
25.7%
Net Multi-Product Advertising Sales(3)
620
695
714
2,025
2,219
2,240
% Change year-over-year
(10.8%)
(2.7%)
(8.7%)
(0.9%)
Notes:
(1) Net print products sales represents the
total sales value (less a provision for sales allowances) of directories
published that will be amortized over the life of the directories, which
is typically 12 months. Directories from preceding periods have been
aligned to match the publication schedule of 2008 publications, allowing
for a meaningful comparison of current publications to previous
publications. Previously reported amounts have been changed to reflect
subsequent adjustments.
(2) Net Internet sales represents total
revenue for our fixed-fee and performance-based advertising products
less a provision for sales allowances. Fixed-fee advertising includes
advertisement placement on our Superpages.com website, and website
development and hosting for our advertisers. Revenue from fixed-fee
advertisers is recognized monthly over the life of the advertising
service. Performance-based advertising revenue is earned when consumers
connect with our Superpages.com advertisers by a "click" on their
Internet advertising or a phone call to their business. Revenue from
performance-based advertising is recognized when there is evidence that
qualifying transactions have occurred.
(3) Net multi-product advertising sales is an
operating measure used by the Company to compare advertising sales for
current advertising publications and products to sales for previous
advertising publications and products. It is important to distinguish
net multi-product advertising sales from total operating revenue, which
on our financial statements is recognized under the deferral and
amortization method.
About Idearc Inc.
Idearc Inc. (NYSE: IAR) delivers products on multiple platforms to help
consumers find the information they want, wherever they are. Idearc’s
multi-platform of advertising solutions includes Superpages.com®,
Superpages MobileSM, Superpages Mobile SM
for BlackBerry®,
Switchboard.com, LocalSearch.comSM, Verizon®
Yellow Pages, Verizon®
White Pages, smaller-sized portable Verizon®
Yellow Pages Companion Directories, FairPoint®
Yellow Pages, FairPoint®
White Pages, FairPoint®
Yellow Pages Companion Directories, reFresh reCharge reNew™
magazine, Solutions At Hand™ magazine, and
Solutions on the Move™ and Solutions Direct™
direct mail packages. For more information, visit www.idearc.com.
(IAR-G)