R.H. Donnelley Posts 15 Percent Growth in First-Quarter Diluted Earnings Versus As-Adjusted Earnings a Year Ago
First-Quarter Performance in Line with Company's Expectations; Goal for Low-Double-Digit EPS Growth in 1999 Remains on Track
PURCHASE, N.Y.--(BUSINESS WIRE)--April 28, 1999-- R.H. Donnelley Corporation (NYSE:RHD - news), the nation's largest independent marketer of yellow pages advertising, today reported first-quarter diluted earnings of 15 cents a share, up 15.4 percent compared with as-adjusted diluted earnings of 13 cents a share a year ago.
Frank R. Noonan, chairman and chief executive officer, said, ''R.H. Donnelley reported solid first-quarter results and we believe the company is on track to meet its full-year operational and financial goals. First-quarter growth in earnings per share was in line with the company's expectations and consistent with income levels typically reported by the company in the first quarter.''
R.H. Donnelley became an independent public company after separating from The Dun & Bradstreet Corporation on July 1, 1998. R.H. Donnelley's 1998 results have been adjusted to include estimated corporate overhead, interest expense and income taxes as if RHD had been an independent company prior to July 1, 1998.
R.H. Donnelley's first-quarter advertising sales for published directories increased by 5.5 percent to $204.7 million from $194.1 million a year ago. Excluding sales of $2.8 million from Bell Atlantic's Buffalo, N.Y., market, a contract won by the company in May 1998, sales increased by 4.0 percent.
Advertising sales at DonTech increased by 4.3 percent in the first quarter, to $134.8 million from $129.2 million a year ago. DonTech continues to generate good growth in advertising sales following the rebalancing of its directory publication schedule in 1997 and 1998. DonTech is RHD's perpetual joint-venture partnership with Ameritech that sells yellow pages advertising in Illinois and northwest Indiana.
Advertising sales in the Directory Advertising Services segment were up 7.7 percent, to $69.9 million from $64.9 million in the first quarter of 1998. Growth for the quarter was enhanced by the company's recent entry into Bell Atlantic's Buffalo market. Directory Advertising Services includes the company's relationships with Bell Atlantic and Sprint, as well as RHD's independent directory business in Cincinnati. Due to publication schedules, no Sprint directories were published in the first quarter of 1998 and 1999.
First-quarter operating income increased by 3.3 percent to $18.6 million from $18.0 million a year ago. Growth in first-quarter operating income was driven by 4.0 percent growth at DonTech and 21.8 percent growth at Directory Advertising Services, which was in line with the company's expectations. Improvement in the Bell Atlantic business was the main reason for growth in Directory Advertising Services, despite start-up costs at the company's new joint venture in China. First-quarter results also were affected by the timing of technology spending, which was the main reason that the Directory Publishing Services segment reported a first-quarter operating loss of $1.4 million compared with an operating loss of $0.3 million a year ago.
Outlook for R.H. Donnelley
R.H. Donnelley reaffirmed its goal to deliver low-double-digit growth in earnings per share in 1999 and over the long term. In 1999, RHD anticipates good sales and operating-income growth in its key businesses, reduced general and corporate expenses and interest costs, and solid growth in earnings per share. Longer term, the company expects growth to be enhanced by continued improvements in sales productivity and efficiency, as well as the further market penetration of multiple media product offerings.
The company noted that quarterly results will likely show significant variations from the anticipated annual growth rate due to the timing of sales campaigns and expenses.
Financial Position
At March 31, 1999, total assets were $368.8 million and total debt was $450.8 million. In the first quarter, operating cash flow, which is cash flow before capital expenditures and capitalized software spending, was $28.8 million, driven by seasonal collections of receivables. Capital expenditures and capitalized software spending for the first quarter were $1.2 million, which was somewhat below normal quarterly spending levels. Additionally, the company repurchased $7.5 million of stock in the quarter. Debt was reduced by $17.8 million in the quarter.
Reported Results
R.H. Donnelley's reported results include the company's performance as a unit of The Dun & Bradstreet Corporation up to the separation of the company from D&B on July 1, 1998, and the company's actual results since the separation. For the period prior to the separation, reported results include actual overhead, which was lower compared with the post-separation period. Reported results include a stand-alone tax rate for RHD for the period prior to the separation.
For the first quarter of 1999, RHD posted reported net income of $5.3 million, or 15 cents per diluted share, compared with net income of $12.1 million, or 35 cents per diluted share, in the first quarter of 1998.
R.H. Donnelley, headquartered in Purchase, N.Y., is the largest independent marketer of yellow pages advertising in the U.S. RHD sells approximately $1 billion in yellow pages advertising a year and is the publisher or sales agent for nearly 300 directories with a total circulation of more than 36 million copies. More information about R.H. Donnelley can be found on its Internet site at www.rhd.com.
Safe Harbor Provision
The statements contained in this press release regarding R.H. Donnelley's future operating results and performance and business prospects 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,'' ''should,'' ''planned,'' ''estimated,'' ''potential,'' ''goal,'' ''outlook,'' and similar expressions, as they relate to R.H. Donnelley or its management, have been used to identify such forward-looking statements. Without limiting the generality of the foregoing, the statements regarding earnings per share growth and advertising sales growth are forward looking statements set forth under the caption ''Outlook for R.H. Donnelley.'' These statements and all other forward looking statements reflect R.H. Donnelley's current beliefs and specific assumptions with respect to future business decisions and are based on information currently available to R.H. Donnelley. Accordingly, the statements are subject to significant risks, uncertainties and contingencies which could cause R.H. Donnelley's actual operating results, performance or business prospects to differ from those expressed in, or implied by, these statements. Such risks, uncertainties and contingencies include the following: (1) loss of market share through competition; (2) uncertainties caused by the consolidation of the telecommunications industry; (3) introduction of competing products or technologies by other companies; (4) complexity and uncertainty regarding the development of new high technology products; (5) pricing pressures from competitors and/or customers; (6) changes in the yellow pages industries and markets; (7) the company's inability to complete the implementation of its Year 2000 plans on a timely basis; (8) a sustained economic downturn in the United States. |
