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Merger
6 Months Ended
Jun. 30, 2015
Business Combinations [Abstract]  
Merger
Merger

Dex Media was created as a result of the merger between Dex One Corporation (“Dex One”) and SuperMedia Inc. (“SuperMedia”) on April 30, 2013. The merger was completed pursuant to the Amended and Restated Agreement and Plan of Merger dated as of December 5, 2012 (the "Merger Agreement"), which provided, among other things, that if either Dex One or SuperMedia were unable to obtain the requisite consents to the merger from their respective stockholders and to the contemplated amendments to their respective financing agreements from their senior secured lenders to consummate the transactions on an out-of-court basis, the merger could be effected through voluntary pre-packaged plans of reorganization ("the Prepackaged Plans") under Chapter 11 of Title 11 of the United States Code ("Chapter 11"). Because neither Dex One nor SuperMedia were able to obtain the requisite consents to complete the merger out of court, each of Dex One and SuperMedia and all of their domestic subsidiaries voluntarily filed pre-packaged bankruptcy petitions under Chapter 11 on March 18, 2013, in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). On April 29, 2013, the Bankruptcy Court entered separate orders confirming each of the Prepackaged Plans. On April 30, 2013, Dex One and SuperMedia consummated the merger and other transactions contemplated by the Merger Agreement and emerged from Chapter 11 protection. Effective with the emergence from bankruptcy and the consummation of the merger, each share of Dex One common stock was converted into 0.2 shares of common stock of Dex Media and each share of SuperMedia common stock was converted into 0.4386 shares of common stock of Dex Media.

We accounted for the business combination using the acquisition method of accounting in accordance with ASC 805, "Business Combinations", with Dex One identified as the acquiring entity for accounting purposes. Dex One was considered the acquiring entity for accounting purposes based on certain criteria including, but not limited to, the fact that (1) upon consummation of the merger, Dex One shareholders held approximately 60% of the common stock of Dex Media as compared to approximately 40% held by SuperMedia shareholders and (2) Dex One's chairman of the board of directors continued as the chairman of the board of directors of Dex Media.

Prior to the merger with Dex One, SuperMedia had $386 million of deferred revenue and $122 million of deferred directory costs on its consolidated balance sheet. As a result of acquisition accounting, the fair value of deferred revenue at April 30, 2013 for SuperMedia was determined to have no value, equating to $386 million of revenue that would have been amortized by SuperMedia from May 2013 through April 2014, that was not recognized by Dex Media. SuperMedia had minimal, if any, remaining performance obligations related to its clients who previously contracted for advertising, thus, no value was assigned to its deferred revenue. The fair value of deferred directory costs as of April 30, 2013 for SuperMedia was determined to have no value, other than paper held in inventory and prepayments associated with future publications. These costs did not have any future value since SuperMedia has already incurred the costs to produce the clients' advertising and did not anticipate to incur any significant additional costs associated with those published directories. This equated to $93 million of cost that would have been amortized by SuperMedia from May 2013 through April 2014, that was not recognized by Dex Media. As a result, our financial results for the six months ended June 30, 2014 excluded revenue of approximately $30 million and net income of approximately $14 million, which would have been recognized absent the effect of acquisition accounting. The exclusion of these results from the consolidated statements of comprehensive (loss) of Dex Media, did not impact our cash flows.

Associated with the integration of the two companies, we incurred merger integration costs. Merger integration costs represent costs incurred to achieve synergies related to the merger of Dex One and SuperMedia. These costs include severance, professional fees and contract services. As part of the merger, there were a large number of processes, policies, procedures, operations, technologies and systems to be integrated. These costs were recorded as part of general and administrative expense on the Company's consolidated statements of comprehensive (loss). During the three and six months ended June 30, 2014 the Company incurred $8 million and $26 million, respectively, of merger integration costs, of which $3 million and $13 million, respectively, represents severance costs. The Company will not incur any merger integration costs in 2015.