##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedJune 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 333-102395
 DEX MEDIA EAST LLC
 (Exact name of registrant as specified in its charter)
 Delaware
    
    42-1554575(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)1001 Winstead Drive, Cary, N.C.
    
    27513(Address of principal executive offices)
    
    (Zip Code)
 (919) 297-1600  (Registrants telephone number, including area code)
 (Former Name, Former Address and Former
  þ o
  o o þ
 o þ
  THE REGISTRANT IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF R.H. DONNELLEY CORPORATION. THE REGISTRANT
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1)(a) AND (b) OF FORM 10-Q AND IS
THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.




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##### 



DEX MEDIA EAST LLC
 INDEX TO FORM 10-Q
  PAGEPART I: FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at June 30, 2007 and December 31, 2006 (Successor Company)
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three
Months Ended June 30, 2007 and June 30, 2006 (Successor Company)
    
    
    4Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Six
Months Ended June 30, 2007, the Five Months Ended June 30, 2006 (Successor Company) and the One
Month Ended January 31, 2006 (Predecessor Company)
    
    
    5Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007, the
Five Months Ended June 30, 2006 (Successor Company) and the One Month Ended January 31, 2006
(Predecessor Company)
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Narrative Analysis of Results of Operations*
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk**
    
    
    17Item 4. Controls and Procedures
    
    
    17PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds***
    
    
    17Item 3. Defaults Upon Senior Securities***
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders***
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    18SIGNATURES
    
    
    19Exhibit 31.1Exhibit 31.2Exhibit 32.1
  
 *
    
    Pursuant to General Instruction H(2)(a) of Form 10-Q: (i) the
information called for by Item 2 of Part I, Managements Discussion
and Analysis of Financial Condition and Results of Operations has
been omitted and (ii) the registrant is providing a Managements
Narrative Analysis of Results of Operations.**
    
    Omitted pursuant to General Instruction H(2)(c) of Form 10-Q.***
    
    Omitted pursuant to General Instruction H(2)(b) of Form 10-Q. 2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
  Dex Media East LLC
 
 Condensed Consolidated Balance Sheets (Unaudited)
 Successor Company(in thousands)
    
    June 30, 2007
    
    December 31, 2006AssetsCurrent AssetsCash and cash equivalents
    
    $
    2,762
    
    
    $
    Accounts receivableBilled
    
    
    54,208
    
    
    
    59,921Unbilled
    
    
    277,193
    
    
    
    189,801Allowance for doubtful accounts and sales claims
    
    
    (6,920
    )
    
    
    (6,673
    )Net accounts receivable
    
    
    324,481
    
    
    
    243,049Deferred directory costs
    
    
    63,184
    
    
    
    56,393Short-term deferred income taxes, net
    
    
    10,712
    
    
    
    7,117Affiliate receivable, net
    
    
    27,166
    
    
    
    13,587Prepaid expenses and other current assets
    
    
    16,892
    
    
    
    27,905Total current assets
    
    
    445,197
    
    
    
    348,051Fixed assets and computer software, net
    
    
    27,282
    
    
    
    29,351Other non-current assets
    
    
    7,509
    
    
    
    8,563Intangible assets, net
    
    
    3,620,334
    
    
    
    3,681,004Goodwill
    
    
    1,130,615
    
    
    
    1,130,468Total Assets
    
    $
    5,230,937
    
    
    $
    5,197,437Liabilities and Owners EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    40,103
    
    
    $
    46,515Accrued interest
    
    
    14,593
    
    
    
    15,835Deferred directory revenue
    
    
    371,470
    
    
    
    293,179Current portion of long-term debt
    
    
    152,155
    
    
    
    135,878Total current liabilities
    
    
    578,321
    
    
    
    491,407Long-term debt
    
    
    1,289,190
    
    
    
    1,387,684Amounts due to affiliate primarily related to post-retirement and other
post-employment obligations
    
    
    59,560
    
    
    
    59,518Deferred income taxes, net
    
    
    861,311
    
    
    
    850,507Other non-current liabilities
    
    
    1,485
    
    
    
    3,106Total liabilities
    
    
    2,789,867
    
    
    
    2,792,222Commitments and contingenciesOwners EquityOwners interest
    
    
    2,465,115
    
    
    
    2,462,730Accumulated deficit
    
    
    (23,477
    )
    
    
    (56,624
    )Accumulated other comprehensive loss
    
    
    (568
    )
    
    
    (891
    )Total owners equity
    
    
    2,441,070
    
    
    
    2,405,215Total Liabilities and Owners Equity
    
    $
    5,230,937
    
    
    $
    5,197,437
  3




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##### Table of Contents



Dex Media East LLC
 
 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
 Successor CompanyThree Months
    
    Three MonthsEnded
    
    EndedJune 30,
    
    June 30,(in thousands)
    
    2007
    
    2006Net revenue
    
    $
    171,066
    
    
    $
    90,721ExpensesCost of revenue (exclusive of depreciation and amortization shown separately below)
    
    
    69,751
    
    
    
    68,570General and administrative expenses
    
    
    4,187
    
    
    
    9,785Depreciation and amortization
    
    
    35,142
    
    
    
    28,420Total expenses
    
    
    109,080
    
    
    
    106,775Operating income (loss)
    
    
    61,986
    
    
    
    (16,054
    )Interest expense, net
    
    
    28,345
    
    
    
    29,610Income (loss) before income taxes
    
    
    33,641
    
    
    
    (45,664
    )Provision (benefit) for income taxes
    
    
    13,453
    
    
    
    (17,765
    )Net income (loss)
    
    $
    20,188
    
    
    $
    (27,899
    )Comprehensive Income (Loss)Net income (loss)
    
    $
    20,188
    
    
    $
    (27,899
    )Unrealized gain on interest rate swaps, net of tax
    
    
    416
    
    
    
    560Comprehensive income (loss)
    
    $
    20,604
    
    
    $
    (27,339
    )
  4




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##### Table of Contents



Dex Media East LLC
 
 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
 PredecessorSuccessor Company
    
    
    CompanySix Months
    
    Five Months
    
    
    One MonthEnded
    
    Ended
    
    
    EndedJune 30,
    
    June 30,
    
    
    January 31,(in thousands)
    
    2007
    
    2006
    
    
    2006Net revenue
    
    $
    342,223
    
    
    $
    128,705
    
    
    
    $
    61,091ExpensesCost of revenue (exclusive of depreciation and amortization shown separately below)
    
    
    152,057
    
    
    
    105,897
    
    
    
    
    26,646General and administrative expenses
    
    
    10,974
    
    
    
    15,961
    
    
    
    
    4,097Depreciation and amortization
    
    
    67,576
    
    
    
    46,136
    
    
    
    
    12,148Total expenses
    
    
    230,607
    
    
    
    167,994
    
    
    
    
    42,891Operating income (loss)
    
    
    111,616
    
    
    
    (39,289
    )
    
    
    
    18,200Interest expense, net
    
    
    57,269
    
    
    
    48,062
    
    
    
    
    12,105Income (loss) before income taxes
    
    
    54,347
    
    
    
    (87,351
    )
    
    
    
    6,095Provision (benefit) for income taxes
    
    
    21,200
    
    
    
    (33,981
    )
    
    
    
    2,418Net income (loss)
    
    $
    33,147
    
    
    $
    (53,370
    )
    
    
    $
    3,677Comprehensive Income (Loss)Net income (loss)
    
    $
    33,147
    
    
    $
    (53,370
    )
    
    
    $
    3,677Unrealized gain on interest rate swaps, net of tax
    
    
    323
    
    
    
    560
    
    
    
    
    90Comprehensive income (loss)
    
    $
    33,470
    
    
    $
    (52,810
    )
    
    
    $
    3,767
  5




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##### Table of Contents



Dex Media East LLC
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 PredecessorSuccessor Company
    
    
    CompanySix Months
    
    Five Months
    
    
    One MonthEnded
    
    Ended
    
    
    EndedJune 30,
    
    June 30,
    
    
    January 31,(in thousands)
    
    2007
    
    2006
    
    
    2006Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    33,147
    
    
    $
    (53,370
    )
    
    
    $
    3,677Reconciliation of net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    67,576
    
    
    
    46,136
    
    
    
    
    12,148Deferred income tax provision (benefit)
    
    
    6,407
    
    
    
    (52,457
    )
    
    
    
    1,306Provision for bad debts
    
    
    10,411
    
    
    
    6,166
    
    
    
    
    3,682Stock-based compensation expense
    
    
    5,564
    
    
    
    3,133
    
    
    
    
    1,238Interest rate swap ineffectiveness
    
    
    674
    
    
    
    (883
    )
    
    
    
    Amortization of deferred financing costs
    
    
    175
    
    
    
    126
    
    
    
    
    983Amortization of debt fair value adjustment
    
    
    (7,428
    )
    
    
    (7,057
    )
    
    
    
    Changes in assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (91,704
    )
    
    
    (91,811
    )
    
    
    
    1,764Decrease (increase) in other assets
    
    
    4,072
    
    
    
    (14,626
    )
    
    
    
    2,101(Increase) decrease in affiliates receivable
    
    
    (19,046
    )
    
    
    20,287
    
    
    
    
    806Decrease in accounts payable and accrued liabilities
    
    
    (4,625
    )
    
    
    (20,199
    )
    
    
    
    (10,500
    )Increase (decrease) in deferred directory revenue
    
    
    78,291
    
    
    
    263,021
    
    
    
    
    (3,270
    )(Decrease) increase in other non-current liabilities
    
    
    (588
    )
    
    
    386
    
    
    
    
    36Increase in amounts due to affiliates related to post-retirement and
other post-employment benefits
    
    
    
    
    
    
    1,295
    
    
    
    
    350Net cash provided by operating activities
    
    
    82,926
    
    
    
    100,147
    
    
    
    
    14,321Cash Flows from Investing ActivitiesAdditions to fixed assets and computer software
    
    
    (4,894
    )
    
    
    (4,205
    )
    
    
    
    (605
    )Net cash used in investing activities
    
    
    (4,894
    )
    
    
    (4,205
    )
    
    
    
    (605
    )Cash Flows from Financing ActivitiesRevolver borrowings
    
    
    137,600
    
    
    
    170,700
    
    
    
    
    Revolver repayments
    
    
    (139,100
    )
    
    
    (134,100
    )
    
    
    
    (5,000
    )Debt and credit facility repayments
    
    
    (73,289
    )
    
    
    (53,903
    )
    
    
    
    Payment of debt refinancing costs
    
    
    
    
    
    
    (341
    )
    
    
    
    (Decrease) increase in checks not yet presented for payment
    
    
    (2,866
    )
    
    
    3,494
    
    
    
    
    (827
    )Excess tax benefits from exercise of stock options
    
    
    2,385
    
    
    
    625
    
    
    
    
    1,112Distributions to Owner
    
    
    
    
    
    
    (84,042
    )
    
    
    
    (7,376
    )Net cash used in financing activities
    
    
    (75,270
    )
    
    
    (97,567
    )
    
    
    
    (12,091
    )Increase (decrease) in cash and cash equivalents
    
    
    2,762
    
    
    
    (1,625
    )
    
    
    
    1,625Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    1,625
    
    
    
    
    Cash and cash equivalents, end of period
    
    $
    2,762
    
    
    $
    
    
    
    
    $
    1,625Supplemental Information:Cash paid:Interest
    
    $
    64,547
    
    
    $
    64,263
    
    
    
    $
    6,380
  6




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##### Table of Contents



Dex Media East LLC
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (tabular amounts in thousands)
 1. Business and Basis Presentation
      History
  2. Summary of Significant Accounting Policies
 Intangible Assets and Goodwill
 Business Combinations Goodwill and
Other Intangible Assets
 7




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##### Table of Contents



Interest Expense and Deferred Financing Costs
  Advertising Expense
  Concentration of Credit Risk
   8




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##### Table of Contents



Income Taxes
 Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109
 Stock-Based Awards
 Successor Company
 Share-Based
Payment
  Predecessor Company
  Estimates
  New Accounting Pronouncements
  9




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##### Table of Contents



3. RHD Merger
 Determination of
the Measurement Date for the Market Price of Securities Issued in a Purchase Business Combination.
  4. Restructuring Charges
  Three months ended June 30, 2007Balance at March 31, 2007
    
    $
    2,854Payments
    
    
    (825
    )Balance at June 30, 2007
    
    $
    2,029Six months ended June 30, 2007Balance at December 31, 2006
    
    $
    3,338Additions to reserve charged to goodwill
    
    
    34Payments
    
    
    (1,343
    )Balance at June 30, 2007
    
    $
    2,029
   10




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##### Table of Contents



5. Benefit Plans
 Employers Disclosures About Pension and Other Postretirement
Benefits (Revised 2003)
 Successor CompanyThree Months
    
    Three MonthsEnded
    
    EndedJune 30,
    
    June 30,2007
    
    2006Pension
    
    Post-Retirement
    
    Pension
    
    Post-RetirementBenefit
    
    Benefits
    
    Benefit
    
    BenefitsService cost
    
    $
    395
    
    
    $
    5
    
    
    $
    884
    
    
    $
    245Interest cost
    
    
    567
    
    
    
    314
    
    
    
    1,026
    
    
    
    345Expected return on plan assets
    
    
    (229
    )
    
    
    
    
    
    
    (1,594
    )
    
    
    Unrecognized prior service costs
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    Amortization of net gain
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (21
    )Net periodic benefit expense
    
    $
    733
    
    
    $
    228
    
    
    $
    308
    
    
    $
    569
 Successor Company
    
    
    Predecessor CompanySix Months
    
    Five Months
    
    
    One MonthEnded
    
    Ended
    
    
    EndedJune 30,
    
    June 30,
    
    
    January 31,2007
    
    2006
    
    
    2006Pension
    
    Post-Retirement
    
    Pension
    
    Post-Retirement
    
    
    Pension
    
    Post-RetirementBenefit
    
    Benefits
    
    Benefit
    
    Benefits
    
    
    Benefit
    
    BenefitsService cost
    
    $
    1,231
    
    
    $
    194
    
    
    $
    1,481
    
    
    $
    360
    
    
    
    $
    310
    
    
    $
    73Interest cost
    
    
    1,681
    
    
    
    742
    
    
    
    1,835
    
    
    
    641
    
    
    
    
    385
    
    
    
    135Expected return on plan assets
    
    
    (1,789
    )
    
    
    
    
    
    
    (2,782
    )
    
    
    
    
    
    
    
    (462
    )
    
    
    Unrecognized prior service costs
    
    
    
    
    
    
    (2
    )
    
    
    8
    
    
    
    17
    
    
    
    
    (8
    )
    
    
    (17
    )Amortization of net gain
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (21
    )
    
    
    
    
    
    
    
    Net periodic benefit expense
    
    $
    1,123
    
    
    $
    934
    
    
    $
    534
    
    
    $
    997
    
    
    
    $
    225
    
    
    $
    191
  6. Business Segments
  7. Legal Proceedings
  11




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##### Table of Contents



8. Related Party Transactions
    9.
Credit Facility
  
 Item 2. Managements Narrative Analysis of Results of Operations
  Forward-Looking Information
  12




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##### Table of Contents



Corporate Overview
  ®
  Segment Reporting
  New Accounting Pronouncements
  Factors Affecting Comparability
  13




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##### Table of Contents



RESULTS OF OPERATIONS, INCLUDING COMBINED RESULTS
 In addition to the GAAP presentation of our results for the six months ended June 30, 2007, the
five months ended June 30, 2006 and the one month ended January 31, 2006, we have provided the
following combined results of Dex Media East for the six months ended June 30, 2006 because we
believe that such financial information is important to gain an understanding of the impact of the
RHD Merger on Dex Media Easts underlying historical performance and future financial results. The
financial information for the combined six months ended June 30, 2006 includes the financial
information of the Predecessor Company for the one month ended January 31, 2006 and of the
Successor Company for the five months ended June 30, 2006. Although we have provided these combined
results in order to provide a more meaningful discussion of the periods presented, the results of
periods presented are not strictly comparable due to the change in basis of assets and accounting
policies that resulted from the RHD Merger.
 Six months ended June 30, 2007 and the combined six months ended June 30, 2006
 Net Revenue
  PredecessorSuccessor Company
    
    
    Company
    
    CombinedSix Months
    
    Five Months
    
    
    One Month
    
    Six MonthsEnded
    
    Ended
    
    
    Ended
    
    EndedJune 30,
    
    June 30,
    
    
    January 31,
    
    June 30,(amounts in thousands)
    
    2007
    
    2006
    
    
    2006
    
    2006
    
    $ ChangeGross directory advertising revenue
    
    $
    346,484
    
    
    $
    130,105
    
    
    
    $
    59,434
    
    
    $
    189,539
    
    
    $
    156,945Sales claims and allowances
    
    
    (11,043
    )
    
    
    (5,154
    )
    
    
    
    (4
    )
    
    
    (5,158
    )
    
    
    (5,885
    )Net directory advertising revenue
    
    
    335,441
    
    
    
    124,951
    
    
    
    
    59,430
    
    
    
    184,381
    
    
    
    151,060Other revenue
    
    
    6,782
    
    
    
    3,754
    
    
    
    
    1,661
    
    
    
    5,415
    
    
    
    1,367Total Net Revenue
    
    $
    342,223
    
    
    $
    128,705
    
    
    
    $
    61,091
    
    
    $
    189,796
    
    
    $
    152,427
   14




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##### Table of Contents



Expenses
  PredecessorSuccessor Company
    
    
    Company
    
    CombinedSix Months
    
    Five Months
    
    
    One Month
    
    Six MonthsEnded
    
    Ended
    
    
    Ended
    
    EndedJune 30,
    
    June 30,
    
    
    January 31,
    
    June 30,(amounts in thousands)
    
    2007
    
    2006
    
    
    2006
    
    2006
    
    $ ChangeCost of revenue
    
    $
    152,057
    
    
    $
    105,897
    
    
    
    $
    26,646
    
    
    $
    132,543
    
    
    $
    19,514G&A expenses
    
    
    10,974
    
    
    
    15,961
    
    
    
    
    4,097
    
    
    
    20,058
    
    
    
    (9,084
    )D&A expenses
    
    
    67,576
    
    
    
    46,136
    
    
    
    
    12,148
    
    
    
    58,284
    
    
    
    9,292Total
    
    $
    230,607
    
    
    $
    167,994
    
    
    
    $
    42,891
    
    
    $
    210,885
    
    
    $
    19,722
  Cost of Revenue
  15




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##### Table of Contents



General and Administrative Expenses
  Depreciation and Amortization Expenses
  Operating Income (Loss)
  PredecessorSuccessor Company
    
    
    Company
    
    CombinedSix
    
    Five Months
    
    
    One Month
    
    Six MonthsMonths
    
    Ended
    
    
    Ended
    
    EndedEnded
    
    June 30,
    
    
    January 31,
    
    June 30,(amounts in thousands)
    
    June 30, 2007
    
    2006
    
    
    2006
    
    2006
    
    $ ChangeTotal
    
    $
    111,616
    
    
    $
    (39,289
    )
    
    
    $
    18,200
    
    
    $
    (21,089
    )
    
    $
    132,705
  Interest Expense, Net
  16




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##### Table of Contents



Income Taxes
  
 Quantitative and Qualitative Disclosures About Market Risk
  
 Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures.
 (b) Changes in Internal Control Over Financial Reporting.
 
 PART II. OTHER INFORMATION
 
 Legal Proceedings
  
 Risk Factors
  
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 Defaults Upon Senior Securities
  
 Submission of Matters to a Vote of Security Holders
  
 Other Information
  17




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##### Table of Contents



ExhibitNumber
    
    Document31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended June 30, 2007 by David C. Swanson, Chairman and Chief
Executive Officer of Dex Media East LLC under Section 302 of
the Sarbanes Oxley Act.31.2*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended June 30, 2007 by Steven M. Blondy, Executive Vice
President and Chief Financial Officer of Dex Media East LLC
under Section 302 of the Sarbanes Oxley Act.32.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended June 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 of Dex Media East LLC.
 
 *
    
    Filed herewith. 18




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##### Table of Contents



SIGNATURES
  DEX MEDIA EAST LLCBy:
    /s/ Steven M. BlondySteven M. BlondyExecutive Vice President and Chief Financial
Officer (Principal Financial Officer)  By:
    /s/ Karen E. PalczukKaren E. PalczukInterim Controller and Assistant Vice President -
Process and Performance Management
(Interim Principal Accounting Officer)  19




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##### Table of Contents



Exhibit Index
 Exhibit 31.1*
    
    Certification of Quarterly Report on Form 10-Q for the
period ended June 30, 2007 by David C. Swanson, Chairman and
Chief Executive Officer of Dex Media East LLC under Section
302 of the Sarbanes Oxley Act.Exhibit 31.2*
    
    Certification of Quarterly Report on Form 10-Q for the
period ended June 30, 2007 by Steven M. Blondy, Executive
Vice President and Chief Financial Officer of Dex Media East
LLC under Section 302 of the Sarbanes Oxley Act.Exhibit 32.1*
    
    Certification of Quarterly Report on Form 10-Q for the
period ended June 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 of Dex Media East LLC.
 
 *
    
    Filed herewith. 20