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Share Name | Share Symbol | Market | Type |
---|---|---|---|
RH Donnelley New | NYSE:RHD | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.00 | - |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-2740040 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
1001 Winstead Drive, Cary, N.C. | 27513 | |
(Address of principal executive offices) | (Zip Code) |
Title of class | Shares Outstanding at October 15, 2007 | |
Common Stock, par value $1 per share | 71,271,594 |
PAGE | ||||||||
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46 | ||||||||
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47 | ||||||||
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47 | ||||||||
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48 | ||||||||
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49 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 |
2
September 30, | December 31, | |||||||
(in thousands, except share and per share data) | 2007 | 2006 | ||||||
Assets
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 19,042 | $ | 156,249 | ||||
Accounts receivable
|
||||||||
Billed
|
246,112 | 248,334 | ||||||
Unbilled
|
835,067 | 842,869 | ||||||
Allowance for doubtful accounts and sales claims
|
(44,121 | ) | (42,952 | ) | ||||
Net accounts receivable
|
1,037,058 | 1,048,251 | ||||||
Deferred directory costs
|
198,350 | 211,822 | ||||||
Short-term deferred income taxes, net
|
61,766 | | ||||||
Prepaid expenses and other current assets
|
99,764 | 115,903 | ||||||
Total current assets
|
1,415,980 | 1,532,225 | ||||||
|
||||||||
Fixed assets and computer software, net
|
184,273 | 159,362 | ||||||
Other non-current assets
|
125,317 | 141,619 | ||||||
Intangible assets, net
|
11,269,967 | 11,477,996 | ||||||
Goodwill
|
3,110,295 | 2,836,266 | ||||||
|
||||||||
Total Assets
|
$ | 16,105,832 | $ | 16,147,468 | ||||
|
||||||||
Liabilities and Shareholders Equity
|
||||||||
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$ | 180,790 | $ | 169,490 | ||||
Accrued interest
|
145,510 | 179,419 | ||||||
Deferred directory revenue
|
1,167,677 | 1,197,796 | ||||||
Short-term deferred income taxes, net
|
| 79,882 | ||||||
Current portion of long-term debt
|
454,191 | 382,631 | ||||||
Total current liabilities
|
1,948,168 | 2,009,218 | ||||||
|
||||||||
Long-term debt
|
9,746,729 | 10,020,521 | ||||||
Deferred income taxes, net
|
2,295,006 | 2,099,102 | ||||||
Other non-current liabilities
|
188,840 | 197,871 | ||||||
Total liabilities
|
14,178,743 | 14,326,712 | ||||||
|
||||||||
Commitments and contingencies
|
||||||||
|
||||||||
Shareholders Equity
|
||||||||
Common stock, par value $1 per share, 400,000,000 shares authorized, 88,169,275
shares issued
|
88,169 | 88,169 | ||||||
Additional paid-in capital
|
2,391,969 | 2,341,009 | ||||||
Accumulated deficit
|
(373,402 | ) | (437,496 | ) | ||||
Treasury stock, at cost, 16,912,367 shares at September 30, 2007 and 17,704,558
shares at December 31, 2006
|
(160,678 | ) | (161,470 | ) | ||||
Accumulated other comprehensive loss
|
(18,969 | ) | (9,456 | ) | ||||
|
||||||||
Total shareholders equity
|
1,927,089 | 1,820,756 | ||||||
|
||||||||
Total Liabilities and Shareholders Equity
|
$ | 16,105,832 | $ | 16,147,468 | ||||
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Three months ended
Nine months ended
September 30,
September 30,
(in thousands, except per share data)
2007
2006
2007
2006
$
669,939
$
524,191
$
1,999,332
$
1,277,020
286,574
260,047
866,206
673,236
34,326
34,497
104,770
114,511
111,569
85,060
323,748
233,225
432,469
379,604
1,294,724
1,020,972
237,470
144,587
704,608
256,048
(201,103
)
(201,768
)
(601,740
)
(557,657
)
36,367
(57,181
)
102,868
(301,609
)
(18,242
)
21,796
(43,871
)
114,679
18,125
(35,385
)
58,997
(186,930
)
(1,974
)
31,195
$
18,125
$
(35,385
)
$
58,997
$
(157,709
)
$
0.25
$
(0.51
)
$
0.83
$
(2.42
)
$
0.25
$
(0.51
)
$
0.82
$
(2.42
)
71,170
69,961
70,833
65,141
72,177
69,961
71,926
65,141
$
18,125
$
(35,385
)
$
58,997
$
(186,930
)
(10,242
)
(21,597
)
(10,622
)
(9,106
)
371
1,109
$
8,254
$
(56,982
)
$
49,484
$
(196,036
)
Table of Contents
Nine months ended
September 30,
(in thousands)
2007
2006
$
58,997
$
(186,930
)
323,748
233,225
36,648
(114,679
)
61,121
47,884
30,013
35,621
37,930
23,381
(49,647
)
(31,317
)
34,629
(32,291
)
(41,406
)
(198
)
(30,813
)
581,271
9,114
10,451
470,334
566,418
(61,819
)
(41,897
)
(328,937
)
(1,901,426
)
(2,500
)
(393,256
)
(1,943,323
)
323,656
2,514,381
570,650
639,400
(566,050
)
(600,900
)
(336,819
)
(562,286
)
(714,327
)
9,000
(1,996
)
(3,212
)
12,741
23,643
(214,285
)
1,522,166
(137,207
)
145,261
156,249
7,793
$
19,042
$
153,054
$
587,376
$
492,561
$
1,951
$
321
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Three months ended
Nine months ended
September 30,
September 30,
2007
2006
2007
2006
$
18,125
$
(35,385
)
$
58,997
$
(157,709
)
100
%
100
%
100
%
100
%
18,125
(35,385
)
58,997
(157,709
)
71,170
69,961
70,833
65,141
$
0.25
$
(0.51
)
$
0.83
$
(2.42
)
$
18,125
$
(35,385
)
$
58,997
$
(157,709
)
100
%
100
%
100
%
100
%
18,125
(35,385
)
58,997
(157,709
)
71,170
69,961
70,833
65,141
1,007
1,093
72,177
69,961
71,926
65,141
$
0.25
$
(0.51
)
$
0.82
$
(2.42
)
(1)
In computing EPS using the two-class method, we have not allocated the net loss reported for
the nine months ended September 30, 2006 between common and preferred shareholders since
preferred shareholders had no contractual obligation to share in the net loss.
(2)
Due to the loss allocable to common shareholders reported for the three and nine months ended
September 30, 2006, the effect of all stock-based awards, warrants and the assumed conversion
of the Preferred Stock were anti-dilutive and therefore are not included in the calculation of
diluted EPS. For the three months ended September 30, 2007 and 2006, 2.7 million and 2.5
million shares, respectively, of stock-based awards had exercise prices that exceeded the
average market price of the Companys common stock for the respective period. For the nine
months ended September 30, 2007 and 2006, 1.1 million and 2.4 million shares, respectively, of
stock-based awards had exercise prices that exceeded the average market price of the Companys
common stock for the respective period. For the nine months ended September 30, 2006, the
assumed conversion of the Preferred Stock into 0.5 million shares of common stock was
anti-dilutive and therefore not included in the calculation of diluted EPS.
Table of Contents
Table of Contents
Nine months ended
September 30, 2006
$
1,416.9
283.6
(225.2
)
$
(3.17
)
Table of Contents
2003
2005
2006
Restructuring
Restructuring
Restructuring
Three months ended September 30, 2007
Actions
Actions
Actions
Total
$
877
$
1,837
$
5,104
$
7,818
(47
)
(29
)
(727
)
(803
)
(1,808
)
(1,808
)
$
830
$
$
4,377
$
5,207
2003
2005
2006
Restructuring
Restructuring
Restructuring
Nine months ended September 30, 2007
Actions
Actions
Actions
Total
$
971
$
1,943
$
7,615
$
10,529
96
96
(141
)
(135
)
(3,334
)
(3,610
)
(1,808
)
(1,808
)
$
830
$
$
4,377
$
5,207
Table of Contents
Table of Contents
Table of Contents
Pension Benefits
Three Months
Nine Months
Ended September 30,
Ended September 30,
2007
2006
2007
2006
$
3,645
$
3,339
$
10,936
$
9,668
4,429
4,372
13,288
12,258
(4,830
)
(4,908
)
(14,490
)
(14,295
)
41
33
507
117
353
468
674
1,386
$
3,638
$
3,304
$
10,915
$
9,134
Postretirement Benefits
Three Months
Nine Months
Ended September 30,
Ended September 30,
2007
2006
2007
2006
$
492
$
725
$
1,476
$
1,996
1,331
1,239
3,993
3,408
201
203
604
646
65
156
$
2,024
$
2,232
$
6,073
$
6,206
Table of Contents
Table of Contents
Condensed Consolidating Balance Sheet
September 30, 2007
R.H. Donnelley
R.H.
Non-
Consolidated
Corporation
Donnelley Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
4,386
$
612
$
3,531
$
10,513
$
$
19,042
422,488
614,570
1,037,058
77,333
121,017
198,350
82,538
48,749
(69,521
)
61,766
3,854
16,099
25,708
54,103
99,764
8,240
16,711
611,598
848,952
(69,521
)
1,415,980
4,910,100
1,719,665
(6,629,765
)
10,176
87,105
7,973
79,019
184,273
171,326
199,133
724
19,144
(265,010
)
125,317
1,705,556
(1,705,556
)
2,695,819
8,574,148
11,269,967
313,753
2,796,542
3,110,295
$
5,099,842
$
3,728,170
$
1,924,311
$
12,317,805
$
(6,964,296
)
$
16,105,832
$
9,346
$
42,715
$
30,427
$
95,286
$
3,016
$
180,790
41,589
26,725
77,196
145,510
430,799
736,878
1,167,677
9,796
59,725
(69,521
)
77,326
376,865
454,191
60,731
206,491
461,226
1,286,225
(66,505
)
1,948,168
310,042
348,543
(673,799
)
66,046
(50,832
)
2,787,878
2,341,686
4,617,165
9,746,729
2,115
399,093
2,095,735
(201,937
)
2,295,006
11,987
49,163
18,126
124,821
(15,257
)
188,840
1,927,089
782,287
1,719,665
4,127,813
(6,629,765
)
1,927,089
$
5,099,842
$
3,728,170
$
1,924,311
$
12,317,805
$
(6,964,296
)
$
16,105,832
Table of Contents
Condensed Consolidating Balance Sheet
December 31, 2006
R.H. Donnelley
R.H.
Non-
Consolidated
Corporation
Donnelley Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
122,565
$
1,606
$
3,299
$
28,779
$
$
156,249
441,962
606,289
1,048,251
67,204
144,618
211,822
9,485
22,908
27,109
76,159
(19,758
)
115,903
132,050
24,514
539,574
855,845
(19,758
)
1,532,225
4,507,776
1,620,213
(6,127,989
)
7,258
80,949
7,127
64,028
159,362
148,066
74,485
2,212
19,705
(102,849
)
141,619
2,102,997
(2,102,997
)
2,755,624
8,722,372
11,477,996
315,560
2,520,706
2,836,266
$
4,795,150
$
3,903,158
$
1,517,100
$
12,182,656
$
(6,250,596
)
$
16,147,468
$
8,483
$
35,668
$
36,942
$
88,397
$
$
169,490
90,971
11,950
76,498
179,419
439,100
758,696
1,197,796
52,036
48,907
(21,061
)
79,882
112,200
270,431
382,631
99,454
211,854
524,949
1,194,022
(21,061
)
2,009,218
413,098
421,302
(858,320
)
10,986
12,934
2,451,873
2,442,269
5,126,379
10,020,521
113
204,320
1,994,636
(99,967
)
2,099,102
9,969
52,366
25,938
124,111
(14,513
)
197,871
1,820,756
775,254
1,620,213
3,732,522
(6,127,989
)
1,820,756
$
4,795,150
$
3,903,158
$
1,517,100
$
12,182,656
$
(6,250,596
)
$
16,147,468
Table of Contents
Condensed Consolidating Statement of Operations
For the Three months ended September 30, 2007
R.H. Donnelley
R.H. Donnelley
Non-
Consolidated
Corporation
Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
$
$
254,759
$
419,518
$
(4,338
)
$
669,939
4,418
20,556
128,447
283,052
(4,004
)
432,469
50,800
52,706
(103,506
)
46,382
32,150
126,312
136,466
(103,840
)
237,470
(56,676
)
(6,236
)
(41,980
)
(96,211
)
(201,103
)
(289
)
289
(10,294
)
25,914
84,043
40,255
(103,551
)
36,367
28,419
2,757
(31,337
)
(18,126
)
45
(18,242
)
$
18,125
$
28,671
$
52,706
$
22,129
$
(103,506
)
$
18,125
Condensed Consolidating Statement of Operations
For the Three months ended September 30, 2006
R.H. Donnelley
R.H. Donnelley
Non-
Consolidated
Corporation
Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
$
$
258,315
$
265,876
$
$
524,191
738
15,538
123,009
240,662
(343
)
379,604
(1,919
)
55,883
(53,964
)
(2,657
)
40,345
135,306
25,214
(53,621
)
144,587
(51,818
)
(400
)
(48,702
)
(100,848
)
(201,768
)
(285
)
285
(54,475
)
39,945
86,319
(75,634
)
(53,336
)
(57,181
)
19,090
4,294
(30,436
)
29,476
(628
)
21,796
$
(35,385
)
$
44,239
$
55,883
$
(46,158
)
$
(53,964
)
$
(35,385
)
Condensed Consolidating Statement of Operations
For the Nine months ended September 30, 2007
R.H. Donnelley
R.H. Donnelley
Non-
Consolidated
Corporation
Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
$
$
770,735
$
1,235,968
$
(7,371
)
$
1,999,332
11,227
56,869
400,767
832,535
(6,674
)
1,294,724
160,852
152,534
(313,386
)
149,625
95,665
369,968
403,433
(314,083
)
704,608
(163,210
)
(19,593
)
(124,840
)
(294,097
)
(601,740
)
(741
)
741
(13,585
)
76,072
244,387
109,336
(313,342
)
102,868
72,582
21,628
(91,853
)
(46,184
)
(44
)
(43,871
)
$
58,997
$
97,700
$
152,534
$
63,152
$
(313,386
)
$
58,997
Table of Contents
Condensed Consolidating Statement of Operations
For the Nine months ended September 30, 2006
R.H. Donnelley
R.H. Donnelley
Non-
Consolidated
Corporation
Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
$
$
778,155
$
498,865
$
$
1,277,020
3,965
56,894
369,018
593,197
(2,102
)
1,020,972
(93,530
)
186,019
(92,489
)
(97,495
)
129,125
409,137
(94,332
)
(90,387
)
256,048
(142,812
)
(29,860
)
(116,605
)
(268,380
)
(557,657
)
(935
)
935
(240,307
)
99,265
291,597
(362,712
)
(89,452
)
(301,609
)
53,377
28,767
(105,578
)
141,150
(3,037
)
114,679
(186,930
)
128,032
186,019
(221,562
)
(92,489
)
(186,930
)
(1,974
)
(1,974
)
31,195
31,195
$
(157,709
)
$
128,032
$
186,019
$
(221,562
)
$
(92,489
)
$
(157,709
)
Condensed Consolidating Statement of Cash Flows
For the Nine months ended September 30, 2007
R.H. Donnelley
R.H. Donnelley
Non-
Consolidated
Corporation
Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
(217,839
)
$
252,865
$
(2,693
)
$
432,091
$
5,910
$
470,334
(2,919
)
(21,595
)
(2,155
)
(35,150
)
(61,819
)
(334,260
)
5,323
(328,937
)
(2,500
)
(2,500
)
(339,679
)
(21,595
)
(2,155
)
(29,827
)
(393,256
)
323,656
323,656
283,850
286,800
570,650
(309,750
)
(256,300
)
(566,050
)
(109,557
)
(452,729
)
(562,286
)
9,000
9,000
(336
)
(1,663
)
(1,696
)
1,699
(1,996
)
12,741
12,741
5,910
(5,910
)
(56,776
)
56,776
94,278
(44,278
)
(50,000
)
439,339
(232,264
)
5,080
(420,530
)
(5,910
)
(214,285
)
(118,179
)
(994
)
232
(18,266
)
(137,207
)
122,565
1,606
3,299
28,779
156,249
$
4,386
$
612
$
3,531
$
10,513
$
$
19,042
Table of Contents
Condensed Consolidating Statement of Cash Flows
For the Nine months ended September 30, 2006
R.H.
R.H.
Donnelley
Donnelley
Non-
Consolidated
Corporation
Inc.
Guarantor
Guarantor
R.H. Donnelley
(Parent)
(Issuer)
Subsidiaries
Subsidiaries
Eliminations
Corporation
$
8,430
$
161,768
$
66,437
$
301,374
$
28,409
$
566,418
(923
)
(25,808
)
(1,358
)
(13,808
)
(41,897
)
(1,768,587
)
(132,839
)
(1,901,426
)
(1,769,510
)
(25,808
)
(1,358
)
(13,808
)
(132,839
)
(1,943,323
)
2,079,005
(1,397
)
443,181
(6,408
)
2,514,381
185,600
453,800
639,400
(172,200
)
(428,700
)
(600,900
)
(336,819
)
(336,819
)
(215,580
)
(501,663
)
2,916
(714,327
)
219
518
(323
)
(3,626
)
(3,212
)
23,643
23,643
137,745
65,000
(65,000
)
(265,745
)
128,000
1,903,793
(138,059
)
(65,323
)
(302,753
)
124,508
1,522,166
142,713
(2,099
)
(244
)
(15,187
)
20,078
145,261
830
2,703
4,260
20,078
(20,078
)
7,793
$
143,543
$
604
$
4,016
$
4,891
$
$
153,054
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Three and nine months ended September 30, 2007 and 2006
Three months ended September 30,
Nine months ended September 30,
(amounts in millions)
2007
2006
$ Change
2007
2006
$ Change
$
675.9
$
528.2
$
147.7
$
2,015.3
$
1,282.4
$
732.9
(12.8
)
(13.3
)
0.5
(44.3
)
(28.6
)
(15.7
)
663.1
514.9
148.2
1,971.0
1,253.8
717.2
6.8
9.3
(2.5
)
28.3
23.2
5.1
$
669.9
$
524.2
$
145.7
$
1,999.3
$
1,277.0
$
722.3
Table of Contents
Table of Contents
Three months ended
Nine months ended
September 30,
September 30,
(amounts in millions)
2007
2006
$ Change
2007
2006
$ Change
$
286.6
$
260.0
$
26.6
$
866.2
$
673.2
$
193.0
34.3
34.5
(0.2
)
104.8
114.5
(9.7
)
111.5
85.1
26.4
323.7
233.2
90.5
$
432.4
$
379.6
$
52.8
$
1,294.7
$
1,020.9
$
273.8
Table of Contents
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2007
2007
(amounts in millions)
$ Change
$ Change
$
38.3
$
208.6
11.1
24.3
11.1
13.1
4.0
12.2
(4.6
)
8.5
(2.6
)
(7.1
)
(31.1
)
(54.0
)
0.4
(12.6
)
$
26.6
$
193.0
Table of Contents
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2007
2007
(amounts in millions)
$ Change
$ Change
$
$
(4.4
)
(0.2
)
(5.3
)
$
(0.2
)
$
(9.7
)
Table of Contents
Three months ended September 30,
Nine months ended September 30,
(amounts in millions)
2007
2006
$ Change
2007
2006
$ Change
$
237.5
$
144.6
$
92.9
$
704.6
$
256.1
$
448.5
Table of Contents
Table of Contents
Table of Contents
Three months ended
September 30, 2007
Three months ended September 30, 2006
Reported
Reported
(amounts in millions)
GAAP
GAAP
Adjustments
Adjusted
$Change
$
669.9
$
524.2
$
141.6
(1)
$
665.8
$
4.1
286.6
260.0
3.9
(2)
263.9
22.7
34.3
34.5
34.5
(0.2
)
111.5
85.1
85.1
26.4
$
237.5
$
144.6
$
137.7
$
282.3
$
(44.8
)
Table of Contents
Nine months ended
September 30, 2007
Nine months ended September 30, 2006
Reported
Reported
(amounts in millions)
GAAP
GAAP
Adjustments
Adjusted
$Change
$
1,999.3
$
1,277.0
$
741.9
$
2,018.9
$
(19.6
)
866.2
673.2
128.8
(2)
802.0
64.2
104.8
114.5
114.5
(9.7
)
323.7
233.2
20.5
(3)
253.7
70.0
$
704.6
$
256.1
$
592.6
$
848.7
$
(144.1
)
(1)
Represents all deferred revenue for directories that published prior to the Dex Media Merger,
which would have been recognized during the period absent purchase accounting required under
GAAP. Adjustments for the nine months ended September 30, 2006 also include GAAP revenue for
January 2006 as reported by Dex Media.
(2)
Represents (a) certain deferred expenses for directories that published prior to the Dex
Media Merger, which would have been recognized during the period absent purchase accounting
required under GAAP, (b) for the nine months ended September 30, 2006, GAAP expenses for
January 2006 as reported by Dex Media, (c) for the nine months ended September 30, 2006,
exclusion of transaction expenses reported by Dex Media in January 2006 directly related to
the Dex Media Merger and (d) the exclusion of cost uplift recorded under purchase accounting
associated with the Dex Media Merger and the AT&T Directory Acquisition for the three and nine
months ended September 30, 2006.
(3)
Represents the additional amortization expense related to the identifiable intangible assets
acquired in the Dex Media Merger over their estimated useful lives, assuming the Dex Media
Merger was consummated on January 1, 2006.
Three months ended
September 30, 2007
Three months ended September 30, 2006
Reported
Reported
(amounts in millions)
GAAP
GAAP
Adjustments
Adjusted
$Change
$
675.9
$
528.2
$
146.0
(1)
$
674.2
$
1.7
(12.8
)
(13.3
)
(7.0
)
(1)
(20.3
)
7.5
663.1
514.9
139.0
653.9
9.2
6.8
9.3
2.6
(2)
11.9
(5.1
)
$
669.9
$
524.2
$
141.6
$
665.8
$
4.1
Table of Contents
Nine months ended
September 30, 2007
Nine months ended September 30, 2006
Reported
Reported
(amounts in millions)
GAAP
GAAP
Adjustments
Adjusted
$Change
$
2,015.3
$
1,282.4
$
750.3
(1)
$
2,032.7
$
(17.4
)
(44.3
)
(28.6
)
(21.5
)
(1)
(50.1
)
5.8
1,971.0
1,253.8
728.8
1,982.6
(11.6
)
28.3
23.2
13.1
(2)
36.3
(8.0
)
$
1,999.3
$
1,277.0
$
741.9
$
2,018.9
$
(19.6
)
(1)
Represents gross directory advertising revenue and sales claims and allowances for
directories that published prior to the Dex Media Merger, which would have been recognized
during the period absent purchase accounting required under GAAP. Adjustments for the nine
months ended September 30, 2006 also include GAAP results for January 2006 as reported by
Dex Media.
(2)
Other revenue includes barter revenue, late fees paid on outstanding customer balances,
commissions earned on sales contracts with respect to advertising placed into other
publishers directories, sales of directories and certain other print and internet
products.
Table of Contents
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2007
2007
(amounts in millions)
$ Change
$ Change
$
3.3
$
27.9
11.1
20.9
11.1
13.1
4.0
12.2
(4.6
)
3.7
(2.6
)
(7.1
)
(8.8
)
0.2
(7.4
)
$
22.5
$
54.5
Table of Contents
Table of Contents
September 30, 2007
December 31, 2006
$
328,000
$
300,000
300,000
338,157
335,401
611,721
606,472
1,210,000
1,210,000
1,811,078
1,946,535
7,934
7,934
600,000
600,000
512,499
513,663
704,695
663,153
529,237
656,571
470,299
476,677
385,435
390,314
1,156,022
1,450,917
399,897
403,260
8,777
8,786
827,169
833,469
10,200,920
10,403,152
454,191
382,631
$
9,746,729
$
10,020,521
Table of Contents
Table of Contents
Initial Fair
Unamortized
Value
Fair Value
Book Value at
Fair Value at
Adjustment at
Adjustment at
January 31,
January 31,
January 31,
September 30,
(amounts in millions)
2006
2006
2006
2007
$
1,950.1
$
1,950.1
$
$
500.0
515.0
15.0
12.5
598.8
616.0
17.2
15.0
450.0
484.3
34.3
20.5
341.3
395.9
54.6
44.2
385.0
407.1
22.1
14.9
300.0
300.1
0.1
0.1
761.8
840.8
79.0
65.5
$
5,287.0
$
5,509.3
$
222.3
$
172.7
Table of Contents
$59.0 million in net income.
$489.4 million of net non-cash charges primarily consisting of $323.7 million of
depreciation and amortization, $61.1 million in bad debt provision, $30.0 million of
stock-based compensation expense, $37.9 million in other non-cash charges, primarily
related to the amortization of deferred financing costs and amortization of the fair
value adjustments required by GAAP as a result of the Dex Media Merger, and $36.7
million in deferred income taxes.
$80.4 million net use of cash from an increase in accounts receivable of $49.6
million and a decrease in deferred directory revenue of $30.8 million. The change in
deferred revenue and accounts receivable are analyzed together given the fact that when
a directory is published, the annual billable value of that directory is initially
deferred and unbilled accounts receivable are established. Each month thereafter,
typically one twelfth of the billing value is recognized as revenue and billed to
customers.
$34.6 million net source of cash from a decrease in other assets, consisting of a
$22.6 million decrease in prepaid expenses and a $12.0 million decrease in other current
and non-current assets, primarily relating to deferred commissions, print, paper and
delivery costs and changes in the fair value of the Companys interest rate swap
agreements.
Table of Contents
$41.4 million net use of cash from a decrease in accounts payable and accrued
liabilities, primarily reflecting an $11.9 million decrease in accrued liabilities,
which include accrued salaries and related bonuses and accrued income taxes, and a $33.9
million decrease in accrued interest payable on outstanding debt, offset by a $4.4
million increase in trade accounts payable.
$9.1 million increase in other non-current liabilities, including pension and
postretirement long-term liabilities.
$61.8 million used to purchase fixed assets, primarily computer equipment, software
and leasehold improvements.
$328.9 million of net cash payments to acquire Business.com.
$2.5 million used to fund an equity investment.
$1,128.4 million in principal payments on debt borrowed under each of the credit
facilities. Of this amount, $208.3 million represents scheduled principal payments,
$354.0 million represents principal payments made on an accelerated basis, at our
option, from available cash flow generated from operations and $566.1 million represents
principal payments on the revolvers.
$323.7 million source associated with borrowings under the RHD Credit Facility, which
was used to fund the Business.com Acquisition, net of costs.
$570.7 million source in borrowings under the revolvers.
$9.0 million source from the issuance of common stock in connection with the
Business.com Acquisition.
$12.7 million in proceeds from the exercise of employee stock options.
$2.0 million used in the decreased balance of checks not yet presented for payment.
$186.9 million in net loss.
$225.4 million of net non-cash charges primarily consisting of $233.2 million of
depreciation and amortization, $47.9 million in bad debt provision, $35.6 million of
stock-based compensation expense and $23.4 million in other non-cash charges, offset by
a $114.7 million change in deferred taxes.
$550.0 million net source of cash from a $581.3 million increase in deferred
directory revenue, offset by an increase in accounts receivable of $31.3 million. The
change in deferred revenue and accounts receivable are analyzed together given the fact
that when a directory is published, the annual billable value of that directory is
initially deferred and unbilled accounts receivable are established. Each month
thereafter, typically one twelfth of the billing value is recognized as revenue and
billed to customers. Additionally, under purchase accounting rules, deferred revenue
was not recorded on directories that were published prior to the Dex Media Merger,
however we retained all of the rights associated with the collection of amounts due
under the advertising contracts executed prior to the Dex Media Merger.
Table of Contents
$32.3 million net use of cash from an increase in other assets, consisting of a $43.5
million increase in prepaid expenses, primarily relating to deferred directory costs
associated with directories not yet published, offset by an $11.2 million decrease in
other current and non-current assets, primarily relating to changes in the fair value of
the Companys interest rate swap agreements.
$0.2 million net use of cash from a decrease in accounts payable and accrued
liabilities, primarily reflecting a $38.2 million decrease in accrued liabilities,
including accrued salaries and related bonuses, and a $1.0 million decrease in trade
accounts payable, offset by a $39.0 million increase in accrued interest payable on
outstanding debt.
$10.4 million increase in other non-current liabilities, including pension and
postretirement long-term liabilities.
$41.9 million used to purchase fixed assets, primarily computer equipment, software
and leasehold improvements.
$1,901.4 million in cash payments primarily in connection with the Dex Media Merger,
including merger fees net of cash received from Dex Media.
$2,514.4 million in net borrowings, consisting of $2,142.5 million related to the
Series A-2 Senior Discount Notes and Series A-3 Senior Notes, which were used to fund
the cash portion of the Dex Media Merger, and Series A-1 Senior Discount Notes, which
were used to fund the GS Repurchase. Net borrowings also consist of $444.2 million of
the Dex Media West tranche B-1 term loan, $150.0 million of which was used to fund the
cash portion of the Dex Media Merger and $294.2 million of which was used to fund the
purchase of the 5.875% Dex Media West Senior Notes, 9.875% Dex Media West Senior
Subordinated Notes and 9% Dex Media, Inc. Senior Discount Notes in conjunction with
change of control offers. These borrowings were net of financing costs of $72.3 million.
$1,315.2 million in principal payments on debt borrowed under each of the credit
facilities. Of this amount, $212.4 million represents scheduled principal payments,
$210.0 million represents principal payments made on an accelerated basis, at our
option, from excess cash flow generated from operations, $291.9 represents Dex Media
senior notes put back to the Company for repurchase and $600.9 million represents
principal payments on each of the revolvers.
$336.8 million used to repurchase the remaining 100,301 shares of our Preferred Stock
in January 2006 and to redeem preferred stock purchase rights under our stockholder
rights plan in May 2006.
$639.4 million source in borrowings under the revolvers.
$23.6 million in proceeds from the exercise of employee stock options.
$3.2 million in the decreased balance of checks not yet presented for payment.
Table of Contents
Table of Contents
By using derivative financial instruments to hedge exposures to changes in interest rates, the
Company exposes itself to credit risk and market risk. Credit risk is the possible failure of the
counterparty to perform under the terms of the derivative contract. When the fair value of a
derivative contract is positive, the counterparty owes the Company, which creates credit risk for
the Company. When the fair value of a derivative contract is negative, the Company owes the
counterparty and, therefore, it is not subject to credit risk. The Company minimizes the credit
risk in derivative financial instruments by entering into transactions with major financial
institutions with credit ratings of A or higher.
Table of Contents
(a)
Evaluation of Disclosure Controls and Procedures.
Based on their
evaluation, as of the end of the period covered by this Quarterly
Report on Form 10-Q, of the effectiveness of the Companys disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) the principal executive
officer and principal financial officer of the Company have each
concluded that such disclosure controls and procedures are effective
and sufficient to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange
Commissions rules and forms.
(b)
Changes in Internal Control Over Financial Reporting.
There have not
been any changes in the Companys internal control over financial
reporting that occurred during the Companys most recent fiscal
quarter that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial
reporting.
Table of Contents
47
48
Table of Contents
Exhibit No.
Document
Indenture, dated October 2, 2007, between R.H. Donnelly Corporation and
The Bank of New York, as trustee, relating to R.H. Donnelley
Corporations 8.875% Series A-4 Senior Notes due 2017 (incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with
the Securities and Exchange Commission on October 5, 2007, Commission
file No. 001-07155).
Form of 8.875% Series A-4 Senior Notes due 2017, included in Exhibit 4.1.
Fourth Supplemental Indenture, dated as of October 2, 2007, by and among
R.H. Donnelley Inc., as issuer, R.H. Donnelley Corporation, as
guarantor, the subsidiary guarantors named therein, as guarantors, and
The Bank of New York, as trustee (incorporated by reference to Exhibit
4.1 to the Current Report on Form 8-K, filed with the Securities and
Exchange Commission on October 5, 2007, Commission file No. 001-07155).
Credit Agreement, dated as of August 23, 2007, among R.H. Donnelley
Corporation, as borrower, JPMorgan Chase Bank, N.A., as administrative
agent, and the several banks and other financial institutions from time
to time party thereto (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on August 28, 2007, Commission File No. 001-07155). This
agreement is no longer in effect.
Registration Rights Agreement, dated October 2, 2007, by and between
R.H. Donnelley Corporation and the initial purchasers identified therein
(incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K, filed with the Securities and Exchange Commission on October 5,
2007, Commission file No. 001-07155).
Registration Rights Agreement, dated October 17, 2007, by and between
R.H. Donnelley Corporation and the initial purchasers identified therein
(incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K, filed with the Securities and Exchange Commission on October 17,
2007, Commission file No. 001-07155).
Credit Agreement, dated as of
October 24, 2007, by and among Dex Media East LLC, as borrower,
Dex Media East, Inc., Dex Media, Inc., JPMorgan Chase Bank, N.A., as
administrative agent and collateral agent, and the several banks and
other financial institutions or entities from time to time party
thereto (incorporated by reference to Exhibit 10.1 to Dex Media
East LLCs Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 26, 2007,
Commission File No. 333-102395).
Guarantee and Collateral Agreement,
dated as of October 24, 2007, by and among Dex Media East LLC,
Dex Media East Inc., the subsidiary guarantor a party thereto and
JPMorgan Chase Bank, NA, as Collateral Agent (incorporated by reference
to Exhibit 10.2 to Dex Media
East LLCs Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 26, 2007,
Commission File No. 333-102395).
Pledge Agreement, dated as of
October 24, 2007, by and between Dex Media, Inc. and JPMorgan
Chase Bank, NA, as Collateral Agent (incorporated by reference to
Exhibit 10.3 to Dex Media East LLCs Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 26, 2007,
Commission File No. 333-102395).
Certification of Quarterly Report on Form 10-Q for the period ended
September 30, 2007 by David C. Swanson, Chairman and Chief Executive
Officer of R.H. Donnelley Corporation under Section 302 of the
Sarbanes-Oxley Act
Certification of Quarterly Report on Form 10-Q for the period ended
September 30, 2007 by Steven M. Blondy, Executive Vice President and
Chief Financial Officer of R.H. Donnelley Corporation under Section 302
of the Sarbanes-Oxley Act
Certification of Quarterly Report on Form 10-Q for the period ended
September 30, 2007 under Section 906 of the Sarbanes-Oxley Act by David
C. Swanson, Chairman and Chief Executive Officer, and Steven M. Blondy,
Executive Vice President and Chief Financial Officer, for R.H. Donnelley
Corporation
*
Filed herewith.
Table of Contents
49
50
R.H. DONNELLEY CORPORATION
By:
/s/ Steven M. Blondy
Steven M. Blondy
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Karen E. Palczuk
Karen E. Palczuk
Interim Controller and Assistant Vice President -Process and
Performance Management
(Interim Principal Accounting Officer)
Table of Contents
Exhibit No.
Document
Indenture, dated October 2, 2007, between R.H. Donnelly Corporation and
The Bank of New York, as trustee, relating to R.H. Donnelley
Corporations 8.875% Series A-4 Senior Notes due 2017 (incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with
the Securities and Exchange Commission on October 5, 2007, Commission
file No. 001-07155).
Form of 8.875% Series A-4 Senior Notes due 2017, included in Exhibit 4.1.
Fourth Supplemental Indenture, dated as of October 2, 2007, by and among
R.H. Donnelley Inc., as issuer, R.H. Donnelley Corporation, as
guarantor, the subsidiary guarantors named therein, as guarantors, and
The Bank of New York, as trustee (incorporated by reference to Exhibit
4.1 to the Current Report on Form 8-K, filed with the Securities and
Exchange Commission on October 5, 2007, Commission file No. 001-07155).
Credit Agreement, dated as of August 23, 2007, among R.H. Donnelley
Corporation, as borrower, JPMorgan Chase Bank, N.A., as administrative
agent, and the several banks and other financial institutions from time
to time party thereto (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on August 28, 2007, Commission File No. 001-07155). This
agreement is no longer in effect.
Registration Rights Agreement, dated October 2, 2007, by and between
R.H. Donnelley Corporation and the initial purchasers identified therein
(incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K, filed with the Securities and Exchange Commission on October 5,
2007, Commission file No. 001-07155).
Registration Rights Agreement, dated October 17, 2007, by and between
R.H. Donnelley Corporation and the initial purchasers identified therein
(incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K, filed with the Securities and Exchange Commission on October 17,
2007, Commission file No. 001-07155).
Credit Agreement, dated as of
October 24, 2007, by and among Dex Media East LLC, as borrower,
Dex Media East, Inc., Dex Media, Inc., JPMorgan Chase Bank, N.A., as
administrative agent and collateral agent, and the several banks and
other financial institutions or entities from time to time party
thereto (incorporated by reference to Exhibit 10.1 to Dex Media
East LLCs Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 26, 2007,
Commission File No. 333-102395).
Guarantee and Collateral Agreement,
dated as of October 24, 2007, by and among Dex Media East LLC,
Dex Media East Inc., the subsidiary guarantor a party thereto and
JPMorgan Chase Bank, NA, as Collateral Agent (incorporated by reference
to Exhibit 10.2 to Dex Media
East LLCs Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 26, 2007,
Commission File No. 333-102395).
Pledge Agreement, dated as of
October 24, 2007, by and between Dex Media, Inc. and JPMorgan
Chase Bank, NA, as Collateral Agent (incorporated by reference to
Exhibit 10.3 to Dex Media East LLCs Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 26, 2007,
Commission File No. 333-102395).
Certification of Quarterly Report on Form 10-Q for the period ended
September 30, 2007 by David C. Swanson, Chairman and Chief Executive
Officer of R.H. Donnelley Corporation under Section 302 of the
Sarbanes-Oxley Act
Certification of Quarterly Report on Form 10-Q for the period ended
September 30, 2007 by Steven M. Blondy, Executive Vice President and
Chief Financial Officer of R.H. Donnelley Corporation under Section 302
of the Sarbanes-Oxley Act
Certification of Quarterly Report on Form 10-Q for the period ended
September 30, 2007 under Section 906 of the Sarbanes-Oxley Act by David
C. Swanson, Chairman and Chief Executive Officer, and Steven M. Blondy,
Executive Vice President and Chief Financial Officer, for R.H. Donnelley
Corporation
*
Filed herewith.
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