Dex One Reports Fourth Quarter and Full Year 2012 Performance

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Dex One Reports Fourth Quarter and Full Year 2012 Performance

- Delivers on Financial Guidance -


- Posts Digital Bookings Growth in Excess of 30 Percent -

- Remains on Track to Close Merger in First Half of 2013 -

CARY, N.C.--(BUSINESS WIRE)-- Dex One Corporation (NYS: DEXO) today announced fourth quarter and full year 2012 results in line with previously provided guidance.

The quarter and year were highlighted by digital bookings growth of 29 percent and 34 percent, respectively.

Ad sales for the quarter and year declined 14 percent, in line with guidance. Quarterly bookings and revenue declined 13 percent and 14 percent, while annual bookings and revenue declined 13 percent and 12 percent.

"Dex One continued to deliver in 2012, as we met all stated guidance objectives," said Dex One CEO Alfred Mockett. "Our team found a way to achieve our business goals despite the continuing pressure on our print business. We have stemmed the rate of ad sales decline, thanks in large part to our bundled sales strategy, and are aggressively selling bundles across our business."

"Since early 2010, Dex One has retired $1.9 billion in debt and we have consistently met our financial obligations," said Dex One CFO Greg Freiberg. "Concurrently, we have built a digital business with growth exceeding industry averages."

2012 PERFORMANCE

(dollars in millions)

Metric

  

4Q 2012

  

FY 2012

   

Results

Year over year change in bookings      

Total

  (13%)  (13%)
Digital  29%  34%
Print  (23%)  (23%)
       
Year over year change in advertising sales  (14%)  (14%)
       
Net revenue  $301  $1,300
Adjusted EBITDA(1)  $133  $561
Adjusted EBITDA margin(1)  44%  43%
Adjusted free cash flow(1)  $88  $335
Adjusted net debt(1)  $1,874  $1,874
    

2012 GUIDANCE

(dollars in millions)

2012 Metric

  

Guidance(2)

 

FY 2012 Results

Fourth quarter year over year change in net advertising sales  (13%) to (14%) (14%)
      
Full year net revenue  $1,275 - $1,300 $1,300
Full year adjusted EBITDA(1,2)  $535 - $565 $561
Full year adjusted free cash flow(1,2)  $320 - $350 $335
   

Net loss and cash flow from operations in the fourth quarter were $35 million and $87 million, respectively. Net income, cash flow from operations and total debt (including fair value discount) for full year 2012 were $62 million, $348 million and $2,010 million, respectively.

Dex One-SuperMedia Merger Update

On March 13, 2013, stockholders of both Dex One and SuperMedia approved the merger. Earlier today, Dex One and SuperMedia each filed pre-packaged plans of reorganization for Chapter 11 Bankruptcy as a means to complete the merger. This process will allow both companies to finalize the proposed credit agreement amendments previously agreed to by a significant percentage of lenders. The companies expect to complete the merger in the first half of 2013.

2013 Guidance

The company will not be providing first quarter or full year 2013 guidance due to its pending merger with SuperMedia, Inc.

Additional Information

Important information regarding operating results and related reconciliations of non-GAAP financial measures to the most comparable GAAP measures can be found in the schedules and related footnotes to this press release, which should be thoroughly reviewed. All figures are preliminary and subject to change pending the filing of our Annual Report on Form 10-K.

Advertising sales is a non-GAAP statistical measure and consist of sales of advertising in print directories distributed during the period and Internet-based products and services with respect to which such advertising first appeared publicly during the period.

The year over year change in ad sales is calculated by dividing the difference between ad sales in the current period and adjusted ad sales in the prior year divided by adjusted ad sales in the prior year. The adjustments made to the prior year's ad sales are made to align publication dates.

Bookings is another non-GAAP statistical measure that represents sales activity associated with our print directories and Internet-based marketing solutions during the period. Bookings associated with our local customers represent signed contracts during the period. Bookings associated with our national customers represent what has been published or fulfilled during the period.

The year over year change in bookings is calculated by dividing the difference between bookings in the current period and bookings generated in the prior year divided by bookings generated in the prior year.

It is important to distinguish advertising sales and bookings from net revenue, which is recognized under the deferral and amortization method.

FOURTH QUARTER AND FULL YEAR CONFERENCE CALL

Dex One Corporation will be hosting a conference call to discuss its fourth quarter and full year 2012 results today at 11:30 a.m. (EDT). Individuals within the United States can access the call by dialing 888-456-0318 - others should dial 212-547-0460. The pass code for the call is "Dex One." In order to ensure a prompt start time, please dial into the call by 11:20 a.m. (EDT).

In addition, a live webcast will be available at www.DexOne.com and an archived version will be accessible for up to one year. A replay of the conference call can also be accessed from within the United States by dialing 866-424-4002 and internationally by dialing 203-369-0852. There is no pass code for the telephonic replay, which will be available through March 31, 2013.

Endnotes

1) These are non-GAAP financial measures. Please see the discussion of non-GAAP financial measures in the schedules and related footnotes at the end of this press release.

2) Full year guidance for net revenue, adjusted EBITDA, adjusted free cash flow and adjusted net debt originally provided on July 28, 2011. Fourth quarter ad sales guidance was provided on November 3, 2011.

ABOUT DEX ONE CORPORATION

Dex One Corporation (NYS: DEXO) is a leading marketing solutions provider helping local businesses and their customers connect wherever and whenever they choose to search. Building on its heritage of delivering print-based solutions, the company provides integrated products and services to help its clients establish their digital presence and generate leads. Dex One's locally based marketing experts offer a broad network of local marketing solutions including online, mobile and print search solutions, such as DexKnows.com. For more information, visit www.DexOne.com.

Safe Harbor Provision

Certain statements contained in this press release regarding Dex One's future operating results, performance, business plans, prospects, guidance, statements about the benefits of the proposed merger with SuperMedia Inc. ("SuperMedia") and the combined company, and other statements not constituting historical fact are "forward-looking statements" subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, the words "believe," "expect," "anticipate," "intend," "should," "will," "would," "planned," "estimated," "potential," "goal," "outlook," "may," "predicts," "could," or the negative of such terms, or other comparable expressions, as they relate to Dex One or its management, have been used to identify such forward-looking statements. All forward-looking statements reflect only Dex One's current beliefs and assumptions with respect to future business plans, prospects, decisions and results, and are based on information currently available to Dex One. Accordingly, the statements are subject to significant risks, uncertainties and contingencies, which could cause Dex One's or the combined company's actual operating results, performance or business plans or prospects to differ materially from those expressed in, or implied by, these statements.

Factors that could cause actual results to differ materially from current expectations include risks and other factors described in Dex One's publicly available reports filed with the SEC, which contain discussions of various factors that may affect the business or financial results of Dex One or the combined company. Such risks and other factors, which in some instances are beyond the company's control, include: the continuing decline in the use of print directories; increased competition, particularly from existing and emerging digital technologies; ongoing weak economic conditions and continued decline in advertising sales; our ability to collect trade receivables from customers to whom we extend credit; our ability to generate sufficient cash to service our debt; our ability to comply with the financial covenants contained in our debt agreements and the potential impact to operations and liquidity as a result of restrictive covenants in such debt agreements; our ability to refinance or restructure our debt on reasonable terms and conditions as might be necessary from time to time; increasing interest rates; changes in the company's and the company's subsidiaries credit ratings; changes in accounting standards; regulatory changes and judicial rulings impacting our business; adverse results from litigation, governmental investigations or tax related proceedings or audits; the effect of labor strikes, lock-outs and negotiations; successful realization of the expected benefits of acquisitions, divestitures and joint ventures; our ability to maintain agreements with CenturyLink, AT&T and other major Internet search and local media companies; our reliance on third-party vendors for various services; and other events beyond our control that may result in unexpected adverse operating results. Neither Dex One nor the combined company is responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet service providers.This press release is being furnished to the SEC through a Form 8-K.The company's Annual Report on Form 10-K for the year ended December 31, 2012 to be filed with the SEC may contain updates to the information included in this release.

With respect to the proposed merger with SuperMedia, important factors could cause actual results to differ materially from those indicated by forward-looking statements included herein, including, but not limited to, the ability of Dex One and SuperMedia to consummate the transaction on the terms set forth in the merger agreement; risks related to the impact that either Dex One's or SuperMedia's voluntary case under Chapter 11 of title 11 of the United States Code, filed to consummate the transaction, could have on our business operations, financial condition, liquidity or cash flow; the risk that anticipated cost savings, growth opportunities and other financial and operating benefits as a result of the transaction may not be realized or may take longer to realize than expected; the risk that benefits from the transaction may be significantly offset by costs incurred in integrating the companies; potential adverse impacts or delay in completing the transaction as a result of the bankruptcy cases; and difficulties in connection with the process of integrating Dex One and SuperMedia, including: coordinating geographically separate organizations; integrating business cultures, which could prove to be incompatible; difficulties and costs of integrating information technology systems; and the potential difficulty in retaining key officers and personnel.

(See attached schedules and related footnotes)

DEX ONE CORPORATION

     Schedule 1

INDEX OF SCHEDULES

  
 
Schedule 1:Index of Schedules
 
Schedule 2:

Unaudited Condensed Consolidated Statements of Operations for the three months and years ended December 31, 2012 and 2011

 
Schedule 3:Unaudited Condensed Consolidated Balance Sheets at December 31, 2012 and 2011
`
Schedule 4:Unaudited Condensed Consolidated Statements of Cash Flows for the three months and years ended December 31, 2012 and 2011
 
Schedule 5:Reconciliation of Non-GAAP Measures
 
Schedule 6:Statistical Measures - Advertising Sales and Bookings
 
Schedule 7:

Notes to Unaudited Condensed Consolidated Financial Statements and Non-GAAP Measures

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

 
DEX ONE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    Schedule 2
 
Amounts in millions, except earnings (loss) per share
 

Three Months Ended
December 31,

Years Ended
December 31,

2012 2011 2012 2011
Net revenue (1)$301.3$352.0$1,300.0$1,480.6
Expenses176.9203.0755.6858.0
Depreciation and amortization (2)105.569.8418.7251.8
Impairment charges (3) -   -   -   801.1 
Operating income (loss)18.979.2125.7(430.3)
Gain on Debt Repurchases, net (4)--139.6-
Gain on sale of assets, net (5)---13.4
Interest expense, net (44.3)  (55.7)  (196.0)  (226.8)
Income (loss) before income taxes(25.4)23.569.3(643.7)
(Provision) benefit for income taxes (10.0)  (18.0)  (6.9)  124.7 
Net income (loss)$(35.4) $5.5  $62.4  $(519.0)
 
Earnings (loss) per share (EPS):
Basic$(0.70)$0.11$1.23$(10.35)
Diluted$(0.70)$0.11$1.23$(10.35)
Shares used in computing EPS:
Basic50.950.250.650.1
Diluted 50.9   50.3   50.7   50.1 
 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements and Non-GAAP Measures - Schedule 7.
 
 
Note: These schedules are preliminary and subject to change pending the Company's filing of its Form 10-K.
 

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DEX ONE CORPORATIONSchedule 3

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 
Amounts in millions
December 31,
2012 2011
Assets
Cash and cash equivalents$172.0$257.9
Accounts receivable, net528.8605.7
Deferred directory costs100.3130.8
Short term deferred income taxes, net39.467.8
Other current assets 37.4  51.4 
Total current assets877.91,113.6
 
Fixed assets and computer software, net105.1151.5
Intangible assets, net (2)1,832.72,182.1
Other non-current assets 19.7  13.0 
Total Assets$2,835.4 $3,460.2 
 
Liabilities and Shareholders' Equity (Deficit)
Accounts payable and accrued liabilities$95.5$126.2
Accrued interest18.929.2
Deferred revenue529.9644.1
Current portion of long-term debt (7) (8) 2,009.6  326.3 
Total current liabilities2,653.91,125.8
 
Long-term debt (7) (8)-2,184.1
Deferred income taxes, net54.275.5
Other non-current liabilities 86.7  84.7 
Total liabilities2,794.83,470.1
 
Shareholders' equity (deficit) 40.6  (9.9)
 
Total Liabilities and Shareholders' Equity (Deficit)$2,835.4 $3,460.2 
 
 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements and Non-GAAP Measures - Schedule 7.