R.H. Donnelley Takes Impairment-Based Loss, Engages Lazard
R.H. Donnelley, a publisher of both print telephone directories and Internet Yellow Pages, took a $3.58 billion pre-tax loss on $2.62 billion in revenue during 2008, compared with $75.9 million in pre-tax income on $2.68 billion in revenue during 2007. The year ended Dec. 31.
During fourth-quarter 2008, the company generated $630.4 million and took a pre-tax loss of $700.3 million.
Much of the company’s losses were attributable to impairment charges of $3.87 billion for the year, and $746.6 million during the fourth quarter. The fourth-quarter and yearly charges were the result of goodwill impairment stemming from declines in the market value of the company’s debt and equity securities.
The company reduced headcount by 20% during the year, according to a statement accompanying its financial results.
R.H. Donnelley has retained Lazard to evaluate its capital structure, a review that will include exploring “various balance sheet restructuring alternatives,” according to the company statement.
Steven M. Blondy, executive vice president and CFO. “We have significant debt maturities commencing in 2010 that we are working to address,” said R.H. Donnelley executive VP and CFO Steven M. Blondy in a statement.
Blondy continued, “Though we intended to refinance this debt prior to maturity, it may no longer be possible to do so given the current state of the capital markets. In the meantime, the company continues to generate robust EBITDA and has significant liquidity to meet all our financial and business obligations.”
The Analyst’s Take: Expenses amounted to 46.4% of fourth-quarter 2008 revenue, an improvement from the 50.1% of fourth-quarter 2007’s revenue seen a year ago. Yes, some of this was due to headcount reduction, and there’s no way of knowing how much of the severance costs were accounted for during this quarter. Expense ratios showed similar improvement during the full year, albeit with the same caveats. It would be interesting to know the terms of the debts that are coming due in 2010, as well as how much luck the company is having in restructuring them. The company’s full SEC filing (as opposed to the press statement from which the above information is taken) will shed light on these questions.
