**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 THESECURITIES EXCHANGE ACT OF 1934******For the quarterly period ended March 31, 2007******OR**   o **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES 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)*N/A(Former Name, Former Address and FormerFiscal Year, if Changed Since Last Report)Indicate by check mark whether the registrant: (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes þ No oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act (Check one):Large Accelerated Filer o      Accelerated Filer o      Non-Accelerated Filer þIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o No þAs of May 1, 2007, R.H. Donnelley Corporation indirectly owned all of the registrant’sowner’s equity.**THE REGISTRANT IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF R.H. DONNELLEY CORPORATION. THE REGISTRANTMEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1)(a) AND (b) OF FORM 10-Q AND ISTHEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.**  
 

 
**DEX MEDIA EAST LLC****INDEX TO FORM 10-Q**       **PAGE****PART I: FINANCIAL INFORMATION**         Item 1. Financial Statements (Unaudited)         Consolidated Balance Sheets at March 31, 2007 and December 31, 2006 (Successor Company)  3      Consolidated Statements of Operations and Comprehensive Income (Loss) for the ThreeMonths Ended March 31, 2007, the Two Months Ended March 31, 2006 (Successor Company)and the One Month Ended January 31, 2006 (Predecessor Company)  4      Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007, theTwo Months Ended March 31, 2006 (Successor Company) and the One Month Ended January31, 2006 (Predecessor Company)  5      Notes to Consolidated Financial Statements  6      Item 2. Management’s Narrative Analysis of Results of Operations*  17      Item 3. Quantitative and Qualitative Disclosures About Market Risk**  23      Item 4T. Controls and Procedures  23      **PART II: OTHER INFORMATION**         Item 1. Legal Proceedings  24      Item 1A. Risk Factors  24      Item 2. Unregistered Sales of Equity Securities and Use of Proceeds***  24      Item 3. Defaults Upon Senior Securities***  24      Item 4. Submission of Matters to a Vote of Security Holders***  24      Item 5. Other Information  24      Item 6. Exhibits  25      SIGNATURES  29  * Pursuant to General Instruction H(2)(a) of Form 10-Q: (i) theinformation called for by Item 2 of Part I, Management’s Discussionand Analysis of Financial Condition and Results of Operations hasbeen omitted and (ii) the registrant is providing a Management’sNarrative 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

 
**PART I. FINANCIAL INFORMATION**Item I. Financial Statements**Dex Media East LLC****Consolidated Balance Sheets (Unaudited)**           **Successor Company***(in thousands)* **March 31, 2007** **December 31, 2006** **Assets**        **Current Assets**        Cash and cash equivalents **$****3,828**  $— Accounts receivable        Billed  **48,284**   59,921 Unbilled  **281,691**   189,801 Allowance for doubtful accounts and sales claims  **(7,058****)**  (6,673)   Net accounts receivable  **322,917**   243,049 Deferred directory costs  **62,933**   56,393 Short-term deferred income taxes, net  **8,028**   7,117 Prepaid expenses and other current assets  **17,746**   27,905    Total current assets  **415,452**   334,464  Fixed assets and computer software, net  **27,303**   29,351 Other non-current assets  **8,515**   8,563 Affiliate receivable, net  **34,353**   13,587 Intangible assets, net  **3,652,156**   3,681,004 Goodwill  **1,130,615**   1,130,468    Total Assets **$****5,268,394**  $5,197,437    **Liabilities and Owner’s Equity**        **Current Liabilities**        Accounts payable and accrued liabilities **$****45,446**  $46,515 Accrued interest  **36,031**   15,835 Deferred directory revenue  **380,662**   293,179 Current portion of long-term debt  **136,666**   135,878    Total current liabilities  **598,805**   491,407  Long-term debt  **1,329,825**   1,387,684 Amounts due to affiliate primarily related to post-retirement and otherpost-employment obligations  **59,754**   59,518 Deferred income taxes, net  **857,052**   850,507 Other non-current liabilities  **3,289**   3,106    Total liabilities  **2,848,725**   2,792,222 Commitments and contingencies        **Owner’s Equity**        Owner’s interest  **2,464,318**   2,462,730 Accumulated deficit  **(43,665****)**  (56,624)Accumulated other comprehensive loss  **(984****)**  (891)   Total owner’s equity  **2,419,669**   2,405,215    Total Liabilities and Owner’s Equity **$****5,268,394**  $5,197,437    The accompanying notes are an integral part of the consolidated financial statements.
3

 
**Dex Media East LLC****Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)**                         **Predecessor**  **Successor Company**  **Company**  **Three Months** **Two Months**  **One Month**  **Ended** **Ended**  **Ended**  **March 31,** **March 31,**  **January 31,***(in thousands)* **2007** **2006**  **2006**    Net revenue **$****171,157**  $37,984   $61,091 Expenses             Cost of revenue (exclusive of depreciation and amortization shown separately below)  **82,211**   37,327    26,646 General and administrative expenses  **6,883**   6,176    4,097 Depreciation and amortization  **32,433**   17,716    12,148       Total expenses  **121,527**   61,219    42,891 Operating income (loss)  **49,630**   (23,235)   18,200 Interest expense, net  **28,924**   18,452    12,105       Income (loss) before income taxes  **20,706**   (41,687)   6,095 Provision (benefit) for income taxes  **7,747**   (16,216)   2,418       Net income (loss) **$****12,959**  $(25,471)  $3,677 **Comprehensive Income (Loss)**             Net income (loss) **$****12,959**  $(25,471)  $3,677 Unrealized (loss) gain on interest rate swaps, net of tax  **(93****)**  —    90       Comprehensive income (loss) **$****12,866**  $(25,471)  $3,767       The accompanying notes are an integral part of the consolidated financial statements.
4

 
**Dex Media East LLC****Consolidated Statements of Cash Flows (Unaudited)**                         **Predecessor**  **Successor Company**  **Company**  **Three Months** **Two Months**  **One Month**  **Ended** **Ended**  **Ended**  **March 31,** **March 31,**  **January 31,***(in thousands)* **2007** **2006**  **2006**    **Cash Flows from Operating Activities**             Net income (loss) $**12,959**  $(25,471)  $3,677 Reconciliation of net income (loss) to net cash provided by operating activities:             Depreciation and amortization  **32,433**   17,716    12,148 Deferred income tax provision (benefit)  **3,924**   (16,216)   1,306 Provision for bad debts  **6,790**   (160)   3,682 Stock-based compensation expense  **3,613**   730    1,238 Interest rate swap ineffectiveness  **440**   (564)   **—** Amortization of deferred financing costs  **81**   81    983 Amortization of debt fair value adjustment  **(3,677****)**  (2,824)   — Changes in assets and liabilities:             (Increase) decrease in accounts receivable  **(85,797****)**  (153,398)   1,764 Decrease (increase) in other assets  **3,163**   (6,094)   2,101 (Increase)decrease in affiliates receivable  **(22,555****)**  (5,113)   806 Increase (decrease) in accounts payable and accrued liabilities  **24,229**   12,136    (10,500)Increase (decrease) in deferred directory revenue  **87,483**   242,785    (3,270)Increase in other non-current liabilities  **516**   162    36 Increase in amounts due to affiliates related to post-retirement andother post-employment benefits  **—**   699    350       Net cash provided by operating activities  **63,602**   64,469    14,321 **Cash Flows from Investing Activities**             Additions to fixed assets and computer software  **(1,537****)**  (1,983)   (605)      Net cash used in investing activities  **(1,537****)**  (1,983)   (605)**Cash Flows from Financing Activities**             Revolver borrowings  **37,000**   60,000    — Revolver repayments  **(43,300****)**  (12,000)   (5,000)Debt and credit facility repayments  **(47,094****)**  (27,098)   — Decrease in checks not yet presented for payment  **(6,431****)**  —    (827)Excess tax benefits from exercise of stock options  **1,588**   —    1,112 Distributions to Owner  **—**   (84,043)   (7,376)      Net cash used in financing activities  **(58,237****)**  (63,141)   (12,091)      Increase (decrease) in cash and cash equivalents  **3,828**   (655)   1,625 Cash and cash equivalents, beginning of period  **—**   1,625    —       Cash and cash equivalents, end of period **$****3,828**  $970   $1,625       **Supplemental Information:**             Cash paid:             Interest **$****11,580**  $7,844   $6,380 The accompanying notes are an integral part of the consolidated financial statements.
5

 
**Dex Media East LLC****Notes to Consolidated Financial Statements (Unaudited)***(tabular amounts in thousands, except share and per share data)***1. Business and Basis Presentation**Dex Media East LLC is anindirect wholly-owned subsidiary of R.H. Donnelley Corporation (“RHD”).The interim consolidated financial statements of Dex Media East LLC and its directwholly-owned subsidiaries (the “Company,” “Dex Media East,” “we,” “us” and “our”) have beenprepared in accordance with the instructions to Quarterly Report on Form 10-Q and should be read inconjunction with the financial statements and related notes included in our Annual Report on Form10-K for the year ended December 31, 2006 (“2006 10-K”). The results of interim periods are notnecessarily indicative of results for the full year or any subsequent period. In the opinion ofmanagement, all adjustments (consisting of normal recurring adjustments) considered necessary for afair statement of financial position, results of operations and cash flows at the dates and for theperiods presented have been included.Dex Media, Inc. (“Dex Media” or “Owner”) is the largest directory publisher in the Dex East States,as defined below. Together with its parent, RHD, Dex Media is one of the nation’s largest YellowPages and online local commercial search companies, based on revenue. During 2006, Dex Media East’sprint and online solutions helped more than 200,000 national and local businesses in 7 states reachconsumers who were actively seeking to purchase products and services. During 2006, we publishedand distributed more than 23 million print directories. Two of our largest markets are Albuquerqueand Denver.Dex Media East LLC is a subsidiary of Dex Media East, Inc. and an indirect wholly-owned subsidiaryof Dex Media, which is a direct wholly-owned subsidiary of RHD. Dex Media East is the exclusivepublisher of the “official” yellow pages and white pages directories for Qwest Corporation, thelocal exchange carrier of Qwest Communications International Inc. (“Qwest”), in Colorado, Iowa,Minnesota, Nebraska, New Mexico, North Dakota and South Dakota (collectively, the “Dex EastStates”).Certain prior period amounts have been reclassified to conform to RHD’s presentation.***Significant Business Developments***On January 31, 2006, our indirect parent Dex Media merged with and into Forward AcquisitionCorporation (“FAC”), a wholly-owned subsidiary of RHD. Pursuant to the Agreement and Plan of Mergerdated October 3, 2005, each share of Dex Media common stock was converted into the right to receive$12.30 in cash and 0.24154 of a share of RHD common stock, resulting in an aggregate cash value of$1.9 billion and aggregate stock value of $2.2 billion, based on 36,547,381 newly issued shares ofRHD common stock valued at $61.82 per share, for an equity purchase price of $4.1 billion. RHD alsoassumed all of Dex Media’s outstanding indebtedness on January 31, 2006 with a fair value of $5.5billion (together with other costs described in Note 3 for a total aggregate purchase price of $9.8billion). In addition, all outstanding Dex Media stock options were converted into stock options ofRHD at a ratio of 1 to 0.43077 and the Dex Media, Inc. Stock Option Plan and the Dex Media, Inc.2004 Incentive Award Plan, which governed those Dex Media stock options, were terminated. Inconnection with the consummation of this merger (the “RHD Merger”), the name of FAC was changed toDex Media, Inc. As a result of the RHD Merger, Dex Media became a wholly-owned subsidiary of RHD.For ease of reference throughout this quarterly report on Form 10-Q, “Dex Media” means (a) at alltimes prior to the RHD Merger, Dex Media, Inc., the predecessor of FAC and a direct subsidiary ofDex Holdings, LLC and (b) at all times following the RHD Merger, Dex Media, Inc., formerly known asFAC, a direct subsidiary of RHD.On September 6, 2006, RHD acquired Local Launch (the “Local Launch Acquisition”). Local Launch is aleading local search products, platform and fulfillment provider that enables resellers to sellInternet advertising solutions to local advertisers. Local Launch specializes in search throughpublishing, distribution, directory and organic marketing solutions. The purpose of the LocalLaunch Acquisition was to support the expansion of RHD’s and the Company’s current local searchengine marketing (“SEM”) and search engine optimization (“SEO”) offerings and provide new,innovative solutions to enhance RHD’s and the Company’s local SEM and SEO capabilities. The LocalLaunch business now operates as a direct wholly-owned subsidiary of RHD. As such, the results ofthe Local Launch business are not included in the Company’s operating results.On November 9, 2006, certain affiliates of The Carlyle Group and Welsh, Carson, Anderson & Stowe(the “Selling Shareholders”) sold 9,424,360 shares and 9,424,359 shares, respectively, of RHDcommon stock. The Selling Shareholders were former shareholders of Dex Media and becameshareholders of RHD in conjunction with the RHD Merger. After this sale, the Selling Shareholdersno
6

 
longer hold any shares of RHD common stock that they acquired in connection with the RHD Merger.Neither RHD nor the Company received any proceeds from this transaction.“Predecessor Company” refers to the operations of Dex Media East prior to the consummation of theRHD Merger on January 31, 2006. “Successor Company” refers to the operations of Dex Media Eastsubsequent to the consummation of the RHD Merger.***History***Dex Media’s directory business was acquired from Qwest Dex, Inc. (“Qwest Dex”) in a two phasepurchase between Dex Holdings LLC (“Dex Holdings”), the former parent of Dex Media, and Qwest Dex.Dex Holdings and Dex Media were formed by two private equity firms, the Selling Shareholders. Inthe first phase of the purchase, which was consummated on November 8, 2002, Dex Holdings assignedits right to purchase the directory business of Qwest Dex in the Dex East States to Dex Media (the“Dex East Acquisition”). In the second phase of the purchase, which was consummated on September 9,2003, Dex Holdings assigned its right to purchase the directory business of Qwest Dex in Arizona,Idaho, Oregon, Montana, Utah, Washington and Wyoming (collectively, the “Dex West States”) to DexMedia (the “Dex West Acquisition”). Dex Holdings was dissolved effective January 1, 2005. The DexEast States and Dex West States are collectively referred to as the “Dex States.”**2. Summary of Significant Accounting Policies***Principles of Consolidation.*The consolidated financial statements include the accounts of DexMedia East and its two wholly-owned subsidiaries, Dex Media East Finance Co. and Dex MediaInternational Inc. All intercompany transactions and balances between Dex Media East and itssubsidiaries have been eliminated.*Revenue Recognition.*We earn revenue principally from the sale of advertising into our yellow pagesdirectories. Revenue from the sale of such advertising is deferred when a directory is published,net of estimated sales claims, and recognized ratably over the life of a directory, which istypically 12 months (the “deferral and amortization method”). The Company also recognizes revenuefor those Internet-based advertising products that are bundled with print advertising using thedeferral and amortization method. Revenue with respect to Internet-based advertising that is notbundled with print advertising is recognized ratably over the period the advertisement appears onthe site. Revenue with respect to our other products and services, such as SEM and SEO services, isrecognized as delivered or fulfilled. In the Predecessor Company financial statements, revenue fromthe sale of local advertising was recorded net of actual sales claims received. In the SuccessorCompany financial statements, revenue and deferred revenue from the sale of advertising is recordednet of an allowance for sales claims, estimated based on historical experience. We increase ordecrease this estimate as information or circumstances indicate that the estimate may no longerrepresent the amount of claims we may incur in the future. For the three months ended March 31,2007 and the two months ended March 31, 2006, the adjustment to revenue for sales claims was $6.0million and $2.2 million, respectively.The Company enters into transactions, such as exclusivity arrangements, sponsorships and othermedia access transactions, where the Company’s products and services are promoted by a third partyand, in exchange, the Company carries the third party’s advertisement. The Company accounts forthese transactions in accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-17*Accounting for Advertising Barter Transactions*. Revenue and expense related to such transactionsare included in the consolidated statements of operations consistent with, and only to the extentof, reasonably similar and recent items sold or purchased for cash.In certain cases, the Company enters into agreements with customers that involve the delivery ofmore than one product or service. Revenue for such arrangements is allocated in accordance withEITF Issue No. 00-21 *Revenue Arrangements with Multiple Deliverables.**Deferred Directory Costs.*Costs directly related to the selling and production of our directoriesare initially deferred when incurred and recognized ratably over the life of a directory, which istypically 12 months. These costs are specifically identifiable to a particular directory andinclude sales commissions and print, paper and initial distribution costs. Such costs that are paidprior to directory publication are classified as prepaid expenses and other current assets untilpublication, when they are then reclassified as deferred directory costs. In the PredecessorCompany financial statements, deferred directory costs also included employee and systems supportcosts directly associated with the publication of directories.*Cash and Cash Equivalents.*Cash equivalents include liquid investments with a maturity of less thanthree months at their time of purchase. The Company places its investments with high qualityfinancial institutions. At times, such investments may be in excess of federally insured limits**.**
7

 
*Accounts Receivable.*Accounts receivable consist of balances owed to us by our advertisingcustomers. Advertisers typically enter into a twelve-month contract for their advertising. Mostlocal advertisers are billed a pro rata amount of their contract value on a monthly basis. Onbehalf of national advertisers, certified marketing representatives (“CMRs”) pay to the Company thetotal contract value of their advertising, net of their commission, within 60 days after thepublication month. Billed receivables represent the amount that has been billed to advertisers. Inthe Successor Company financial statements, unbilled receivables represent contractually owedamounts, net of an allowance for sales claims, for published directories that have yet to be billedto advertisers. Billed receivables are recorded net of an allowance for doubtful accounts and salesclaims, estimated based on historical experience. We increase or decrease this estimate asinformation or circumstances indicate that the estimate may no longer represent the amount of baddebts and sales claims we may incur.The Predecessor Company reported its accounts receivable net of an allowance for doubtful accounts.The allowance for doubtful accounts for the Predecessor Company billed local trade receivables wasestimated based upon a combination of historical experience of actual sales write-offs and ananalysis of amounts past due more than 75 days, as determined by the contractual term of each sale.The allowance for doubtful accounts for national trade receivables included specifically identifieduncollectible accounts. Receivables were charged against the allowance for doubtful accounts whendeemed uncollectible by collection managers and any recoveries of previous charges were recorded asan increase to the allowance for doubtful accounts.For accounts receivable purchased by Qwest, the Predecessor Company used a rolling 12-month averageof write-offs compared to the prior 12 months of billings to estimate the allowance for doubtfulaccounts. When a receivable was deemed to be uncollectible, the Predecessor Company reduced itsreceivable against the allowance for doubtful accounts. Any recoveries of amounts previouslycharged against the allowance for doubtful accounts were recorded as an increase to the allowancefor doubtful accounts.*Fixed Assets and Computer Software.*Fixed assets and computer software are recorded at cost.Depreciation and amortization is provided over the estimated useful lives of the assets using thestraight-line method. Estimated useful lives are five years for machinery and equipment, ten yearsfor furniture and fixtures, and three to five years for computer equipment and computer software.Leasehold improvements are amortized on a straight-line basis over the shorter of the term of thelease or the estimated useful life of the improvement.*Interest Expense and Deferred Financing Costs.*Certain costs associated with the issuance of debtinstruments are capitalized on the consolidated balance sheet. These costs are amortized tointerest expense over the terms of the related debt agreements. For the Successor Company, thePredecessor Company’s deferred financing costs were eliminated as a result of purchase accountingrequired under generally accepted accounting principles (“GAAP”); in addition, an adjustment wasestablished to record the debt at fair value at the date of the RHD Merger. This fair valueadjustment is amortized as a reduction to interest expense over the remaining terms of the relateddebt agreements using the effective interest method. Since the RHD Merger, the Successor Companyhas recorded deferred financing costs of $0.8 million. Both the Predecessor and Successor Companyused the bond outstanding method to amortize deferred financing costs relating to debt instrumentswith respect to which we make accelerated principal payments. Other deferred financing costs areamortized using the effective interest method. Amortization of deferred financing costs included ininterest expense was $0.1 million for both the three months ended March 31, 2007 and the two monthsended March 31, 2006. Amortization of deferred financing costs included in interest expense for thePredecessor Company was $1.0 million for the one month ended January 31, 2006. Amortization of thefair value adjustment was $3.7 million and $2.8 million for the three months ended March 31, 2007and the two months ended March 31, 2006, respectively. Apart from business combinations, the Company’s policy isto recognize losses incurred in conjunction with debt extinguishments as a component of interestexpense.*Advertising Expense.*We recognize advertising expenses as incurred. These expenses include publicrelations, media, on-line advertising, and other promotional and sponsorship costs. Totaladvertising expense was $2.8 million and $1.7 million for the three months ended March 31, 2007 andthe two months ended March 31, 2006, respectively. Total advertising expense for the PredecessorCompany was $2.2 million for the one month ended January 31, 2006.*Concentration of Credit Risk.*Approximately 85% of our directory advertising revenue is derivedfrom the sale of advertising to local small- and medium-sized businesses. These advertiserstypically enter into 12-month advertising sales contracts and make monthly payments over the termof the contract. Some advertisers prepay the full amount or a portion of the contract value. Mostnew advertisers and advertisers desiring to expand their advertising programs are subject to acredit review. If the advertisers qualify, we may extend credit to them for their advertisingpurchase. Small- and medium-sized businesses tend to have fewer financial resources and higherfailure rates than large businesses. In addition, full collection of delinquent accounts can takean extended period of time and involve significant costs. While we do not believe that extendingcredit to our local advertisers will have a material adverse effect
8

 
on our results of operations or financial condition, no assurances can be given. We do not requirecollateral from our advertisers, although we do charge interest to advertisers that do not pay byspecified due dates.The remaining approximately 15% of our directory advertising revenue is derived from the sale ofadvertising to national or large regional chains, such as rental car companies, automobile repairshops and pizza delivery businesses. Substantially all of the revenue derived through nationalaccounts is serviced through CMRs from which we accept orders. CMRs are independent third partiesthat act as agents for national advertisers. The CMRs are responsible for billing the nationalcustomers for their advertising. We receive payment for the value of advertising placed in ourdirectories, net of the CMR’s commission, directly from the CMR. While we are still exposed tocredit risk, the amount of losses from these accounts has been historically less than the localaccounts as the advertisers, and in some cases, the CMRs tend to be larger companies with greaterfinancial resources than local advertisers.At March 31, 2007, we had interest rate swap agreements with major financial institutions with anotional value of $0.4 billion. We are exposed to credit risk in the event that one or more of thecounterparties to the agreements does not, or cannot, meet their obligation. The notional amount isused to measure interest to be paid or received and does not represent the amount of exposure tocredit loss. Any loss would be limited to the amount that would have been received over theremaining life of the swap agreement. The counterparties to the swap agreements are major financialinstitutions with credit ratings of A or higher. We do not currently foresee a material credit riskassociated with these swap agreements; however, no assurances can be given.*Derivative Financial Instruments.*The Company accounts for its derivative financial instruments andhedging activities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133,*Accounting for Derivative Instruments and Hedging Activities*(“SFAS No. 133”)*,*as amended by SFASNo. 138, *Accounting for Certain Derivative Instruments and Certain Hedging Activities, an Amendmentof FAS 133*and SFAS No. 149, *Amendment of Statement 133 on Derivative Instruments and HedgingActivities.*The Company does not use derivative financial instruments for trading or speculativepurposes and its derivative financial instruments are limited to interest rate swap agreements. TheCompany utilizes a combination of fixed rate and variable rate debt to finance its operations. Thevariable rate debt exposes the Company to variability in interest payments due to changes ininterest rates. Management believes that it is prudent to mitigate the interest rate risk on aportion of its variable rate borrowings. Additionally, the Company’s credit facility requires thatit maintain hedge agreements to provide a fixed rate on at least 33% of its indebtedness. Tosatisfy this objective and requirement, the Company has entered into fixed interest rate swapagreements to manage fluctuations in cash flows resulting from changes in interest rates onvariable rate debt. Our interest rate swap agreements effectively convert $0.4 billion, orapproximately 62%, of our variable rate debt to fixed rate debt, mitigating our exposure toincreases in interest rates. At March 31, 2007, approximately 41% of our total debt outstandingconsists of variable rate debt, excluding the effect of our interest rate swaps. Including theeffect of our interest rate swaps, total fixed rate debt comprised approximately 84% of our totaldebt portfolio as of March 31, 2007.On the day a derivative contract is executed, the Company may designate the derivative instrumentas a hedge of the variability of cash flows to be received or paid (cash flow hedge). For allhedging relationships the Company formally documents the hedging relationship and itsrisk-management objective and strategy for undertaking the hedge, the hedging instrument, thehedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness inoffsetting the hedged risk will be assessed, and a description of the method of measuringineffectiveness. The Company also formally assesses, both at the hedge’s inception and on anongoing basis, whether the derivatives that are used in hedging transactions are highly effectivein offsetting changes in cash flows of hedged items.All derivative financial instruments are recognized as either assets or liabilities on theconsolidated balance sheets with measurement at fair value. On a quarterly basis, the fair valuesof the interest rate swaps are determined based on quoted market prices and, to the extent theswaps provide an effective hedge, the differences between the fair value and the book value of theswaps are recognized in accumulated other comprehensive loss, a component of owner’s equity. Forderivative instruments that are not designated or do not qualify as hedged transactions, theinitial fair value, if any, and any subsequent gains or losses on the change in the fair value arereported in earnings as a component of interest expense. Any gains or losses related to thequarterly fair value adjustments are presented as a non-cash operating activity on the consolidatedstatements of cash flows.The Company discontinues hedge accounting prospectively when it is determined that the derivativeis no longer effective in offsetting changes in the cash flows of the hedged item, the derivativeor hedged item is expired, sold, terminated, exercised or management determines that designation ofthe derivative as a hedging instrument is no longer appropriate. In situations in which hedgeaccounting is discontinued, the Company continues to carry the derivative at its fair value on theconsolidated balance sheet and recognizes any subsequent changes in its fair value in earnings as acomponent of interest expense. See Note 6 for additional information regarding our derivativefinancial instruments and hedging activities.
9

 
*Income Taxes.*We account for income taxes under the asset and liability method in accordance withSFAS No. 109, *Accounting for Income Taxes*(“SFAS No. 109”). Deferred tax liabilities or assetsreflect temporary differences between amounts of assets and liabilities for financial and taxreporting. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected tobe in effect when the temporary differences reverse. A valuation allowance is established to offsetany deferred tax assets if, based upon the available information, it is more likely than not thatsome or all of the deferred tax assets will not be realized.In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48,*Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109*(“FIN No.48”). This interpretation clarifies the accounting for uncertainty in income taxes recognized in anentity’s financial statements in accordance with SFAS No. 109. FIN No. 48 prescribes a recognitionthreshold and measurement principles for the financial statement recognition and measurement of taxpositions taken or expected to be taken on a tax return. Under FIN No. 48, the impact of anuncertain income tax position on an income tax return must be recognized at the largest amount thatis more likely than not to be sustained upon audit by the relevant taxing authority. An uncertainincome tax position will not be recognized if it is has less than a 50% likelihood of beingsustained. Additionally, FIN No. 48 provides guidance on derecognition, classification, interestand penalties, accounting in interim periods, disclosures and transition requirements. Thisinterpretation is effective for fiscal years beginning after December 15, 2006 and as such, weadopted FIN No. 48 on January 1, 2007. The adoption of FIN No. 48 had no impact on Dex Media East.*Pension and Postretirement Benefits.*Pension and other postretirement benefits represent estimatedamounts to be paid to employees in the future. The accounting for benefits reflects the recognitionof these benefit costs over the employee’s approximate service period based on the terms of theplan and the investment and funding decisions made. The determination of the benefit obligation andthe net periodic pension and other postretirement benefit costs requires RHD management to makeassumptions regarding the discount rate, return on retirement plan assets, increase in futurecompensation and healthcare cost trends. Changes in these assumptions can have a significant impacton the projected benefit obligation, funding requirement and net periodic benefit cost. The assumeddiscount rate is the rate at which the pension benefits could be settled. For the three monthsended March 31, 2007, the two months ended March 31, 2006 and the one month ended January 31, 2006,we used the Citigroup Pension Liability Index as the appropriate discount rate for our definedbenefit pension plan. The expected long-term rate of return on plan assets is based on the mix ofassets held by the plan and the expected long-term rates of return within each asset class. Theanticipated trend of future healthcare costs is based on historical experience and externalfactors. Please refer to Note 7 for additional information.*Stock-Based Awards**Successor Company*RHD maintains a shareholder approved stock incentive plan, the 2005 Stock Award and Incentive Plan(“2005 Plan”), whereby certain RHD employees and non-employee directors are eligible to receivestock options, stock appreciation rights (“SARs”), limited stock appreciation rights in tandem withstock options and restricted stock. Prior to adoption of the 2005 Plan, RHD maintained ashareholder approved stock incentive plan, the 2001 Stock Award and Incentive Plan (“2001 Plan”).Under the 2005 Plan and 2001 Plan, 5 million and 4 million shares, respectively, were originallyauthorized for grant. Stock awards are typically granted at the market value of RHD’s common stockat the date of the grant, become exercisable in ratable installments or otherwise, over a period ofone to five years from the date of grant, and may be exercised up to a maximum of ten years fromthe date of grant. RHD’s Compensation Committee determines termination, vesting and other relevantprovisions at the date of the grant. RHD has implemented a policy of issuing treasury shares heldby RHD to satisfy stock issuances associated with stock-based award exercises.Non-employee directors of RHD receive options to purchase 1,500 shares and an award of 1,500 sharesof restricted stock upon election to the Board. Non-employee directors also receive, on an annualbasis, options to purchase 1,500 shares and an award of 1,500 shares of restricted stock.Non-employee directors may also elect to receive additional equity awards in lieu of all or aportion of their cash fees.RHD and the Company account for stock-based compensation under SFAS No. 123 (R), *Share-BasedPayment*(“SFAS No. 123 (R)”). RHD allocates compensation expense to its subsidiaries, including theCompany, consistent with the method it utilizes to allocate employee wages and benefits to itssubsidiaries. The Company recorded stock-based compensation expense related to stock-based awardsgranted under RHD’s various employee and non-employee stock incentive plans of $3.6 million and$0.7 million for the three months ended March 31, 2007 and the two months ended March 31, 2006,respectively.
10

 
On February 27, 2007, RHD granted 1.1 million SARs to certain employees, including executiveofficers, in conjunction with its annual grant of stock incentive awards. These SARs, which aresettled in RHD common stock, were granted at a grant price of $74.31 per share, which was equal tothe market value of RHD’s common stock on the grant date, and vest ratably over three years. Inaccordance with SFAS No. 123 (R), we recognized non-cash compensation expense related to these SARsof $1.8 million, which includes $1.7 million related to non-substantive vesting, for the threemonths ended March 31, 2007.Predecessor CompanyFor the one month ended January 31, 2006, the Predecessor Company accounted for the stock-basedawards under the recognition and measurement principles of SFAS No. 123 (R). The Company recordedstock-based compensation expense related to stock-based awards granted under Dex Media’s variousemployee and non-employee stock incentive plans of $1.2 millionfor the one month ended January 31,2006.*Estimates.*The preparation of financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets, liabilities, revenue andcertain expenses and the disclosure of contingent assets and liabilities. Actual results coulddiffer materially from those estimates and assumptions. Estimates and assumptions are used in thedetermination of sales allowances, allowances for doubtful accounts, depreciation and amortization,employee benefit plans, restructuring reserves, and certain assumptions pertaining to RHD’sstock-based awards, among others.*NewAccounting Pronouncements.*In February 2007, the FASB issued SFAS No. 159, *The Fair Value Optionfor Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115*(“SFAS No. 159”). SFAS No. 159 permits companies to choose to measure many financial instrumentsand certain other items at fair value that are not currently required to be measured at fair value.The objective of SFAS No. 159 is to provide opportunities to mitigate volatility in reportedearnings caused by measuring related assets and liabilities differently without having to applyhedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirementsdesigned to facilitate comparisons between companies that choose different measurement attributesfor similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginningafter November 15, 2007. We are currently assessing the impact the adoption of SFAS No. 159 willhave on our consolidated financial position and results of operations.In September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*(“SFAS No. 157”), whichdefines fair value, establishes a framework for measuring fair value in GAAP and expandsdisclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginningafter November 15, 2007, and interim periods within those fiscal years. We are currently assessingthe impact the adoption of SFAS No. 157 will have on our consolidated financial position andresults of operations.We have reviewed other new accounting standards not identified above and do not believe any othernew standards will have a material impact on our financial position or operating results.**3. RHD Merger**On January 31, 2006, our indirect parent, Dex Media, was acquired by RHD for an equity purchaseprice of $4.1 billion. Additionally, RHD assumed Dex Media’s outstanding indebtedness on January31, 2006 with a fair value of $5.5 billion (together with other costs described below for a totalaggregate purchase price of $9.8 billion). Pursuant to the Agreement and Plan of Merger, datedOctober 3, 2005 (“Merger Agreement”), each issued and outstanding share of Dex Media common stockwas converted into $12.30 in cash and 0.24154 of a share of RHD common stock, resulting in anaggregate cash value of $1.9 billion and aggregate stock value of $2.2 billion, based on 36,547,381newly issued shares of RHD common stock valued at $61.82 per share. The $61.82 share price used tovalue the common shares issued in the RHD Merger was based on the average closing price of RHD’scommon stock for the two business days before and after the announcement of the RHD Merger onOctober 3, 2005, in accordance with EITF 95-19, *Determination of the Measurement Date for theMarket Price of Securities Issued in a Purchase Business Combination.*The total allocable purchaseprice also includes transaction costs of $26.7 million that were directly related to the RHDMerger, severance and related costs for certain Dex Media employees of $17.7 million and Dex Mediavested equity awards outstanding as of January 31, 2006 with an estimated fair value of $77.4million. Upon completion of the RHD Merger, RHD’s stockholders immediately prior to the merger andDex Media’s former stockholders owned approximately 47% and 53% of RHD’s common stock,respectively.As a result of the RHD Merger, our assets and liabilities were recorded based on their fair valuesat the date of the RHD Merger, and certain other assets and liabilities were recorded by us uponconsummation of the RHD Merger. Thus, the bases of the assets and liabilities of the PredecessorCompany are not comparable to those of the Successor Company.
11

 
The RHD Merger was accounted for in accordance with SFAS No. 141, *Business Combinations*. Thepurchase price was allocated to the related tangible and identifiable intangible assets acquiredand liabilities assumed by RHD based on their respective estimated fair values on the acquisitiondate with the remaining consideration recorded as goodwill. Certain long-term intangible assetswere identified and recorded at their estimated fair values. Identifiable intangible assetsacquired by RHD include directory services agreements between the Company and Qwest, customerrelationships and acquired trademarks and trade names. In accordance with SFAS No. 142, *Goodwilland Other Intangible Assets*(“SFAS No. 142”), the fair values of the identifiable intangible assetsare being amortized over their estimated useful lives in a manner that best reflects the economicbenefits derived from such assets. Goodwill is not amortized but is subject to impairment testingon an annual basis. See Note 4 for a further description of our intangible assets and goodwill.Under purchase accounting rules, RHD did not assume or record the deferred revenue balance of theCompany of $34.4 million at January 31, 2006. This amount represented revenue that would have beenrecognized subsequent to the RHD Merger under the deferral and amortization method in the absenceof purchase accounting. Accordingly, we did not and will not record revenue associated withdirectories that were published prior to the RHD Merger, as well as directories that were publishedin the month of the RHD Merger. Although the deferred revenue balances were eliminated, we retainedall the rights associated with the collection of amounts due under and contractual obligationsunder the advertising contracts executed prior to the RHD Merger. As a result, the billed andunbilled accounts receivable balances acquired by RHD remained assets of the Company. Also underpurchase accounting rules, RHD did not assume or record the deferred directory costs related tothose directories that were published prior to the RHD Merger as well as directories that publishedin the month of the RHD Merger, totaling $86.6 million. These costs represent cost of revenue thatwould have been recognized subsequent to the acquisition under the deferral and amortization methodin the absence of purchase accounting.The table below shows the activity in our restructuring reserves related to the RHD Merger for thethree months ended March 31, 2007.     **Three months ended March 31, 2007**    Balance at December 31, 2006 $3,338 Additions to reserve charged to goodwill  34 Payments  (518)    Balance at March 31, 2007 $2,854     As a result of the RHD Merger, approximately 120 Dex Media employees were affected by arestructuring plan, of which 110 were terminated and 10 were relocated to our corporateheadquarters in Cary, North Carolina. Additionally, Dex Media has vacated certain of its leasedfacilities in Colorado, Minnesota, Nebraska, and Oregon. We estimated our share of the costsassociated with terminated employees, including Dex Media executive officers, and abandonment ofcertain of the leased facilities, net of estimated sublease income, to be approximately $8.2million and such costs were charged to goodwill during 2006. During January 2007, we finalizedcosts associated with terminated employees and we recognized a charge to goodwill of less than $0.1million. Payments made with respect to severance during the three months ended March 31, 2007totaled $0.3 million. Payments of $0.2 million were made during the three months ended March 31,2007 with respect to the vacated leased facilities. No payments were made during the two monthsended March 31, 2006 with respect to severance and relocation and the vacated leased Dex Mediafacilities. The remaining lease payments for these facilities will be made through 2016.The Successor Company recognized merger related expenses of $0.5 million during the two monthsended March 31, 2006, with no comparable expense for the three months ended March 31, 2007. Thesemerger related costs for the two months ended March 31, 2006 included $0.4 million for bonuses toretain certain employees through the transition of the RHD Merger. The Predecessor Companyrecognized merger related expenses of $1.3 million during the one month ended January 31, 2006.These costs included legal and financial advisory fees, as well as stock compensation expenserelated to the acceleration of vesting of certain stock-based awards upon consummation of the RHDMerger. These costs are included in general and administrative expenses in the consolidatedstatements of operations.**4. Intangible Assets and Goodwill**As a result of the RHD Merger, certain intangible assets were identified and recorded at theirestimated fair value. The Successor Company’s amortization expense was $28.8 million and $15.2million for the three months ended March 31, 2007 and the two months ended March 31, 2006,respectively. The Predecessor Company’s amortization expense was $10.9 for the one month endedJanuary
12

 
31, 2006. The intangible assets established at the RHD Merger and their respective book values atMarch 31, 2007 are shown in the table below.                           **Successor Company**  **March 31, 2007**  **Directory** **Local** **National**        **Services** **Customer** **CMR** **Trade** **Advertising**    **Agreements** **Relationships** **Relationships** **Names** **Commitment** **Total**Fair value $3,080,000  $380,000  $85,000  $210,000  $10,000  $3,765,000 Accumulated amortization  (85,556)  (5,950)  (4,033)  (16,333)  (972)  (112,844)   Net intangible assets $2,994,444  $374,050  $80,967  $193,667  $9,028  $3,652,156    In connection with the RHD Merger, RHD acquired directory services agreements (collectively, the“Dex Directory Services Agreements”) which Dex Media had entered into with Qwest, including, (1) apublishing agreement with a term of 50 years commencing November 8, 2002 (subject to automaticrenewal for additional one-year terms), which grants us the right to be the exclusive officialdirectory publisher of listings and classified advertisements of Qwest’s telephone customers in thegeographic areas in the Dex States in which Qwest (and its successors) provided local telephoneservices as of November 8, 2002, as well as having the exclusive right to use certain Qwestbranding on directories in those markets and (2) a non-competition agreement with a term of 40years commencing November 8, 2002, pursuant to which Qwest (on behalf of itself and its affiliatesand successors) has agreed not to sell directory products consisting principally of listings andclassified advertisements for subscribers in the geographic areas in the Dex States in which Qwestprovided local telephone service as of November 8, 2002 that are directed primarily at consumers inthose geographic areas. The fair value assigned to the Dex Media Directory Services Agreements forDex Media East of $3.1 billion was based on the multi-period excess earnings method and is beingamortized under the straight-line method over 42 years. Under the multi-period excess earningsmethod, the projected cash flows of the intangible assets are computed indirectly, which means thatfuture cash flows are projected with deductions made to recognize returns on appropriatecontributory assets, leaving the excess, or residual net cash flow, as indicative of the intangibleasset fair value.As a result of the RHD Merger, RHD also acquired (1) an advertising commitment agreement wherebyQwest has agreed to purchase an aggregate of $20.0 million of advertising per year through 2017from Dex Media at pricing on terms at least as favorable as those offered to similar largecustomers and (2) an intellectual property contribution agreement pursuant to which Qwest assignedand or licensed to Dex Media the Qwest intellectual property previously used in the Qwest directoryservices business along with (3) a trademark license agreement pursuant to which Qwest granted toDex Media the right until November 2007 to use the Qwest Dex and Qwest Dex Advantage marks inconnection with directory products and related marketing material in the Dex States and the rightto use these marks in connection with DexOnline.com(R) (the intangible assets in (2) and (3)collectively, “Trade Names”). The fair value assigned to the Dex Media advertising commitment wasbased on the multi-period excess earnings method and is being amortized under the straight-linemethod over 12 years.The fair values of the local and national customer relationships were determined based on themulti-period excess earnings method. As a result of cost uplift from purchase accounting beingsubstantially amortized, during the three months ended March 31, 2007, we commenced amortization oflocal customer relationships established as a result of the RHD Merger. These intangible assets arebeing amortized under the “income forecast” method, which assumes the value derived from customerrelationships is greater in the earlier years and steadily declines over time. The weighted averageuseful life of these relationships is approximately 20 years.The fair value of the Trade Names was determined based on the “relief from royalty” method, whichvalues the Trade Names based on the estimated amount that a company would have to pay in an armslength transaction to use these Trade Names. This asset is being amortized under the straight linemethod over 15 years.The excess of purchase price over the net tangible and identifiable intangible assets acquired of$1.1 billion was recorded as goodwill. The total amount of goodwill that is expected to bedeductible for tax purposes related to the RHD Merger is approximately $0.7 billion. DuringJanuary 2007, Dex Media recorded adjustments to goodwill totaling $1.6 million associated with theRHD Merger that primarily relate to deferred income taxes.In accordance with SFAS No. 142, goodwill is not amortized, but is subject to periodic impairmenttesting. The Successor Company recorded no impairment losses during the three months ended March31, 2007 or the two months ended March 31, 2006. The Predecessor Company recorded no impairmentlosses during the one month ended January 31, 2006.
13

 
**5. Long-Term Debt, Credit Facility and Notes**Long-term debt of the Company at March 31, 2007 and December 31, 2006, including fair valueadjustments required by GAAP as a result of the RHD Merger, consisted of the following:           **Successor Company**  **March 31,** **December 31,**  **2007** **2006**   **Dex Media East**        Credit Facility $603,177  $656,571 9.875% Senior Notes due 2009  474,591   476,677 12.125% Senior Subordinated Notes due 2012  388,723   390,314    Total  1,466,491   1,523,562 Less: current portion  136,666   135,878    Long-term debt $1,329,825  $1,387,684    ***Credit Facility***As of March 31, 2007, the Dex Media East credit facility, as amended and restated in connectionwith the RHD Merger, consists of revolving loan commitments (“Dex Media East Revolver”) and termloan commitments. The Dex Media East term loans consist of a tranche A term loan with an initialtotal principal amount of $690.0 million and a tranche B term loan with an initial total principalamount of $429.0 million. The Dex Media East Revolver consists of a total principal amount of$100.0 million, which is available for general corporate purposes, subject to certain conditions.As of March 31, 2007, the principal amounts owing under the tranche A and tranche B term loanstotaled $582.0 million, comprised of approximately $196.5 million and $385.5 million, respectively,and $21.2 million was outstanding under the Dex Media East Revolver (with an additional $1.4million utilized under standby letters of credit). The Dex Media East Revolver and tranche A termloan will mature in November 2008, and the tranche B term loan will mature in May 2009. Theweighted average interest rate of outstanding debt under the Dex Media East credit facility was6.82% and 6.85% at March 31, 2007 and December 31, 2006, respectively.As amended, as of March 31, 2007, our credit facility bears interest, at our option, at either: **•** The higher of (i) the base rate determined by the Administrative Agent, JP Morgan ChaseBank, N.A. and (ii) the Federal Funds Effective Rate (as defined) plus 0.50%, and in eachcase, plus a 0.25% margin on the Dex Media East Revolver and Term Loan A and a 0.50% marginon Term Loan B; or  **•** The LIBOR rate plus a 1.25% margin on the Dex Media East Revolver and Term Loan A, and a1.50% margin on Term Loan B. We may elect interest periods of 1, 2, 3 or 6 months, (or 9 or12 months if, at the time of borrowing, all lenders agree to make such term available) forLIBOR borrowings.The Credit Facility and the indentures governing the notes contain usual and customary affirmativeand negative covenants that, among other things, place limitations on our ability to (i) incuradditional indebtedness; (ii) pay dividends and repurchase our capital stock; (iii) enter intomergers, consolidations, acquisitions, asset dispositions and sale-leaseback transactions; (iv)make capital expenditures; (v) issue capital stock of our subsidiaries; (vi) engage in transactionswith our affiliates; and (vii) make investments, loans and advances. The Credit Facility alsocontains financial covenants relating to maximum consolidated leverage, minimum interest coverageand maximum senior secured leverage as defined therein. Substantially all of the assets of DexMedia East and its subsidiaries, including their equity interests, are pledged to secure theobligations under its credit facility.***Notes***Dex Media East issued $450.0 million aggregate principal amount of 9.875% Senior Notes due 2009.These Senior Notes are unsecured obligations of Dex Media East and interest is payable on May 15thand November 15th of each year. As of March 31, 2007, $449.7 million aggregate principal amount wasoutstanding, excluding fair value adjustments.Dex Media East issued $525.0 million aggregate principal amount of 12.125% Senior SubordinatedNotes due 2012. These Senior Subordinated Notes are unsecured obligations of Dex Media East andinterest is payable on May 15th and November 15th of each year. As of March 31, 2007, $341.3million aggregate principal amount was outstanding, excluding fair value adjustments.
14

 
***Impact of RHD Merger***The completion of the RHD Merger triggered change of control offers on all of the Company’soutstanding notes, requiring us to make offers to repurchase the notes. Approximately $0.3 millionof the 9.875% Senior Notes due 2009 were tendered in the applicable change of control offer andrepurchased by us.As a result of the RHD Merger, an adjustment was established to record our debt at fair value atthe date of the RHD Merger. This fair value adjustment is amortized as a reduction of interestexpense over the remaining term of the respective debt agreements using the effective interestmethod and does not impact future scheduled interest or principal payments. Amortization of thefair value adjustment included as a reduction of interest expense was $3.7 million and $2.8 for thethree months ended March 31, 2007 and the two months ended March 31, 2006, respectively. A totalfair value adjustment of $88.9 million was recorded upon consummation of the RHD Merger, of which$72.4 million remains unamortized at March 31, 2007, as shown in the following table:           **Initial Fair Value** **Unamortized Fair**  **Adjustment at** **Value Adjustment at**  **January 31, 2006** **March 31, 2007****Dex Media East**        Credit Facility $—  $— 9.875% Senior Notes due 2009  34,290   24,884 12.125% Senior Subordinated Notes due 2012  54,600   47,474    **Total** $88,890  $72,358    **6. Derivative Financial Instruments**The Dex Media East credit facility bears interest at variable rates and, accordingly, our earningsand cash flow are affected by changes in interest rates. The Dex Media East credit facilityrequires that we maintain hedge agreements to provide a fixed rate on at least 33% of ourindebtedness. The Company has entered into the following interest rate swaps that effectivelyconvert approximately 62% of the Company’s variable rate debt to fixed rate debt as of March 31,2007. Including the effect of our interest rate swaps, total fixed rate debt comprisedapproximately 84% of our total debt portfolio as of March 31, 2007. Under the terms of theagreements, the Company receives variable interest based on three-month LIBOR and pays a fixed rateof interest.             **Effective Dates** **Notional Amount**  **Pay Rates**  **Maturity Dates** ***(amounts in millions)***            May 8, 2003 $125(1),(3)  3.638% - 4.085% November 8, 2007 - May 8, 2008June 12, 2006  250(2)  5.294% - 5.295% June 12, 2008            Total $375                      (1) Consists of two swaps(2) Consists of three swaps(3) Swaps have not been designated as cash flow hedgesBy using derivative financial instruments to hedge exposures to changes in interest rates, theCompany exposes itself to credit risk and market risk. Credit risk is the possible failure of thecounterparty to perform under the terms of the derivative contract. When the fair value of aderivative contract is positive, the counterparty owes the Company, which creates credit risk forthe Company. When the fair value of a derivative contract is negative, the Company owes thecounterparty and, therefore, it is not subject to credit risk. The Company minimizes the creditrisk in derivative financial instruments by entering into transactions with major financialinstitutions with credit ratings of A or higher.Market risk is the adverse effect on the value of a financial instrument that results from a changein interest rates. The market risk associated with interest-rate contracts is managed byestablishing and monitoring parameters that limit the types and degree of market risk that may beundertaken.These interest rate swap agreements effectively convert $0.4 billion of our variable rate debt tofixed rate debt, mitigating our exposure to increases in interest rates. Under the terms of the DexMedia East swap agreements that have been designated as cash flow hedges, we receive variableinterest based on the three-month LIBOR and as of March 31, 2007, pay a weighted average fixed rateof 5.29%. Under the terms of the Dex Media East swap agreements that have not been designated ascash flow hedges, we receive variable interest based on the three-month LIBOR and as of March 31,2007, pay a weighted average rate of 3.91%. The interest rate
15

 
swaps mature at varying dates from November 2007 through June 2008. The weighted average ratereceived on our interest rate swaps was 5.35% during the three months ended March 31, 2007. Theseperiodic payments and receipts are recorded as interest expense.Interest rate swaps with a notional value of $250.0 million (of the total $375.0 million ininterest rate swaps) have been designated as cash flow hedges to hedge three-month LIBOR-basedinterest payments on $250.0 million of bank debt. As of March 31, 2007, these respective interestrate swaps provided an effective hedge of the three-month LIBOR-based interest payments on $250.0million of bank debt.For derivative instruments that are not designated or do not qualify as hedged transactions, theinitial fair value, if any, and any subsequent gains or losses in the change in the fair value arereported in earnings as a component of interest expense. For the three months ended March 31, 2007,the Company recorded an increase to interest expense of $0.4 million, as a result of the change infair value of these interest rate swaps. For the two months ended March 31, 2006, the Companyrecorded a reduction to interest expense of $0.6 million, as a result of the change in fair valueof these interest rate swaps. For the one month ended January 31, 2006, the Company did not haveany derivative instruments that were not designated. At March 31, 2007, interest rate swaps with anotional amount of $125.0 million are not designated as cash flow hedges.**7. Benefit Plans***Pension Plan.*Dex Media has a noncontributory defined benefit pension plan covering substantiallyall management and occupational (union) employees. Annual pension costs are determined using theprojected unit credit actuarial cost method. Our funding policy is to contribute an amount at leastequal to the minimum legal funding requirement. No contributions were required or made for thethree months ended March 31, 2007, the two months ended March 31, 2006 and the one month endedJanuary 31, 2006. The underlying pension plan assets are invested in diversified portfoliosconsisting primarily of equity and debt securities.*Savings Plan.*Dex Media offers a defined contribution 401(k) savings plan to substantially allemployees. For management employees, Dex Media contributes 100% of the first 4% of eachparticipating employee’s salary and 50% of the next 2% contributed. For management employees, theDex Media match is limited to 5% of each participating employee’s eligible earnings. Foroccupational employees, Dex Media contributes 81% of the first 6% of each participating employee’ssalary not to exceed 4.86% of eligible earnings for any one pay period. Dex Media’s matchingcontributions are limited to $4,860 per occupational employee annually.*Postretirement Benefits.*Dex Media has an unfunded postretirement benefit plan that providescertain healthcare and life insurance benefits to certain full-time employees who reach retirementeligibility while working for Dex Media.Costs associated with Dex Media’s benefit plans are allocated to the Company as discussed in Note10. In accordance with SFAS No. 132, *Employers’ Disclosures About Pension and Other PostretirementBenefits (Revised 2003)*, the following tables provide the components of net periodic benefit costfor the three months ended March 31, 2007, the two months ended March 31, 2006 and the one monthended January 31, 2006:                             **Successor Company**  **Predecessor Company**  **Three Months**  **Two Months**  **One Month**  **Ended**  **Ended**  **Ended**  **March 31,**  **March 31,**  **January 31,**  **2007**  **2006**  **2006**  **Pension** **Post-Retirement**  **Pension** **Post-Retirement**  **Pension** **Post-Retirement**  **Benefit** **Benefits**  **Benefit** **Benefits**  **Benefit** **Benefits**         Service cost $836  $189   $597  $115   $310  $73 Interest cost  1,114   428    809   296    385   135 Expected return on plan assets  (1,560)  —    (1,188)  —    (462)  — Amortization of unrecognizedprior service costs  —   89    8   17    (8)  (17)         Net periodic benefit expense $390  $706   $226  $428   $225  $191          As previously disclosed in our 2006 10-K, the Company expects to make contributions ofapproximately $4.3 million and $1.9 million to Dex Media’s pension plan and postretirement plan,respectively, in 2007.
16

 
**8. Business Segments**Management reviews and analyzes its business of publishing yellow pages directories and relatedlocal commercial search as one operating segment.**9. Legal Proceedings**We are involved in various legal proceedings arising in the ordinary course of our business. Inmany of these matters, plaintiffs allege they have suffered damages from errors or omissions ofimproper listings contained in directories published by us. We periodically assess our liabilitiesand contingencies in connection with these matters based upon the latest information available tous. For those matters where it is probable that we have incurred a loss and the loss or range ofloss can be reasonably estimated, we record reserves in our consolidated financial statements. Inother instances, we are unable to make a reasonable estimate of any liability because of theuncertainties related to both the probable outcome and amount or range of loss. As additionalinformation becomes available, we adjust our assessment and estimates of such liabilitiesaccordingly.The Company is exposed to potential defamation and breach of privacy claims arising from ourpublication of directories and our methods of collecting, processing and using advertiser andtelephone subscriber data. If such data were determined to be inaccurate or if data stored by uswere improperly accessed and disseminated by us or by unauthorized persons, the subjects of ourdata and users of the data we collect and publish could submit claims against the Company. Althoughto date we have not experienced any material claims relating to defamation or breach of privacy, wemay be party to such proceedings in the future that could have a material adverse effect on ourbusiness.Based on our review of the latest information available, we believe our ultimate liability inconnection with pending or threatened legal proceedings will not have a material adverse effect onour results of operations, cash flows or financial position. No material amounts have been accruedin our consolidated financial statements with respect to any of such matters.**10. Related Party Transactions**Effective January 1, 2004, all employees were transferred to Dex Media Service LLC (“Service Co.”).As such, employee-related liabilities, including pension and other post- retirement obligations areprimarily included in Service Co.’s reported liabilities with an offsetting asset recorded as anaffiliate receivable from Dex Media East for the portion of the liabilities associated with the DexMedia East employees. Dex Media East is charged and carries an affiliate payable for the portion ofthe liabilities associated with employees providing services to Dex Media East. Under the SharedServices and Employees Agreement dated September 9, 2003, expenses related to Dex Media Eastemployees providing services entirely for Dex Media East are allocated 100% to Dex Media East.Shared employee expenses are allocated and charged to Dex Media East based upon Dex Media East’sproportional share of consolidated Dex Media revenue. All cash related affiliate balances aresettled at least monthly. In addition, after the RHD Merger, certain transactions are managed byRHD on a centralized basis. Under this centralized cash management program, RHD and the Companyadvance funds and allocate certain operating expenditures to each other.The change in net intercompany balances came as a result of operatingtransactions; therefore, they have been presented as operating activities on the consolidated statements ofcash flows for the three months ended March 31, 2007, the two months ended March 31, 2006 and theone month ended January 31, 2006.In general, substantially all of the net assets of the Company and its subsidiaries are restrictedfrom being paid as dividends to any third party, and our subsidiaries are restricted from payingdividends, loans or advances to Dex Media with very limited exceptions, under the terms of the DexMedia East Credit Facility and indenture. There were no dividends paid to Dex Media during thethree months ended March 31, 2007. Dividends were paid to our Owner during the two months endedMarch 31, 2006 and the one month ended January 31, 2006 of $84.0 million, and $7.4 million,respectively and classified as financing activities on the consolidated statements of cash flows.See Note 5 for a further description of our debt instruments.**Item 2.**Management’s Narrative Analysis of Results of OperationsPursuant to General Instruction H(2)(a) of Form 10-Q: (i) the information called for by Item 2,Management’s Discussion and Analysis of Financial Condition and Results of Operations, has beenomitted and (ii) we are providing the following Management’s Narrative Analysis and Results ofOperations.
17

 
**Forward-Looking Information**Certain statements contained in this Quarterly Report on Form 10-Q regarding our future operatingresults, performance, business plans or prospects and any other statements not constitutinghistorical fact are “forward-looking statements” subject to the safe harbor created by the PrivateSecurities Litigation Reform Act of 1995. Where possible, words such as “believe,” “expect,”“anticipate,” “should,” “will,” “would,” “planned,” “estimated,” “potential,” “goal,” “outlook,”“could,” and similar expressions, are used to identify such forward-looking statements. Allforward-looking statements reflect only our current beliefs and assumptions with respect to ourfuture results, business plans and prospects, and are based solely on information currentlyavailable to us. Accordingly, these statements are subject to significant risks and uncertaintiesand our actual results, business plans and prospects could differ significantly from thoseexpressed in, or implied by, these statements. We caution readers not to place undue reliance on,and we undertake no obligation to update, other than imposed by law, any forward-lookingstatements. Such risks, uncertainties and contingencies include, but are not limited to, statementsabout the benefits of the merger between R.H. Donnelley Corporation (“RHD”) and Dex Media, Inc.(“Dex Media”) (the “RHD Merger”), including future financial and operating results, Dex MediaEast’s plans, objectives, expectations and intentions and other statements that are not historicalfacts. The following factors, among others, could cause actual results to differ from those setforth in the forward-looking statements: (1) the risk that the legacy Dex Media and RHD businesseswill not continue to be integrated successfully; (2) the risk that the expected strategicadvantages and remaining cost savings from the RHD Merger may not be fully realized or may takelonger to realize than expected; (3) disruption from the RHD Merger making it more difficult tomaintain relationships with customers, employees or suppliers; and (4) general economic conditionsand consumer sentiment in our markets. Additional risks and uncertainties are described in detailin Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2006(“2006 10-K”). Unless otherwise indicated, the terms “Dex Media East,” the “Company,” “we,” “us”and “our” refer collectively to Dex Media East LLC, its direct wholly-ownedsubsidiaries and its and their predecessors. “Predecessor Company” refers to the operations of DexMedia East prior to the consummation of the RHD Merger on January 31, 2006. “Successor Company”refers to the operations of Dex Media East subsequent to the consummation of the RHD Merger. Forease of reference throughout this quarterly report on Form 10-Q, “Dex Media” means (a) at all timesprior to the RHD Merger, Dex Media, Inc., the predecessor of FAC and a direct subsidiary of DexHoldings, LLC and (b) at all times following the RHD Merger, Dex Media, Inc., formerly known asFAC, a direct subsidiary of RHD.**Corporate Overview**Dex Media East is the largest directory publisher in the Dex East States, as defined below.Together with its parent, RHD, Dex Media is one of the nation’s largest Yellow Pages and onlinelocal commercial search companies, based on revenue. RHD’s “triple-play” integrated marketingsolutions assist advertisers by attracting large volumes of ready-to-buy consumers through thecombination of our print directories, Internet Yellow Pages (“IYP”) and search engine marketing(“SEM”) and search engine optimization (“SEO”) services. During 2006, Dex Media East’s print andonline solutions helped approximately 200,000 national and local businesses in 7 states reachconsumers who were actively seeking to purchase products and services. Dex Media’s approximately1,100 sales representatives work on a daily basis to help bring these local businesses andconsumers together to satisfy their mutual objectives utilizing our “triple play” products andservices.During 2006, we published and distributed more than 23 million print directories in many of thecountry’s most attractive growth markets including Albuquerque and Denver. Our print directoriesprovide comprehensive local information to consumers, facilitating their active search for productsand services offered by local merchants.Dex Media’s Internet-based directory, DexOnline.com®, which is bundled with our printproduct to provide web-based access to Dex Media’s directories, further expands the distribution ofour advertisers’ content. Published directories are distributed to residents and businesses in theDex East States, as defined below, through third-party vendors. RHD’s online products and services(IYP, SEM and SEO) provide merchants with additional reach to connect with consumers who areactively seeking to purchase products and services on the Internet. These powerful offerings notonly distribute local advertisers’ content to our proprietary IYP sites, including DexOnline.com,but extend to other major online search platforms, including Google®andYahoo!®, providing additional qualified leads for our advertisers. Dex Media helps localbusinesses take advantage of the expanding online market by assisting them to determine the optimaldisplay of information in their IYP profile or the right combination of SEM and SEO tactics forprominent appearance on the Internet.
18

 
This compelling set of “triple play” products and services, in turn, generates among the strongestreturns for advertisers of any advertising media available today. This strong advertiser returnuniquely positions Dex Media, and its approximately 1,100 sales representatives as trusted advisorsfor marketing support and service in the local markets we serve.RHD recently announced a new Dex market brand for all of its print and online products across itsentire footprint. As part of this branding strategy, RHD also announced DexKnows.com® asits new uniform resource locator (“URL”) across its entire footprint that will upgradeits existing online sites over the remainder of 2007. This initiative was undertaken as IYP is acornerstone of the “triple play” strategy and this platform will make our rich, accurate contentavailable on a single search site. RHD will continue to leverage the recognizable Embarq and AT&Tbrands on its print products in those respective markets while also creating a single look and feelfor both print and online products by highlighting the Dex name. The Dex brand has tremendous namerecognition within its markets where DexOnline.com is the leader in online local search. TheDexKnows.com site leverages this success and adds enhanced capabilities, new features and anintuitive interface. The conversion of existing online sites will occur in stages over theremainder of 2007 starting with DexOnline.com market followed by the Embarq and AT&T markets.Dex Media East LLC is a subsidiary of Dex Media East, Inc. and an indirect wholly-owned subsidiaryof Dex Media. Dex Media East is the exclusive publisher of the “official” yellow pages and whitepages directories for Qwest Corporation, the local exchange carrier of Qwest CommunicationsInternational Inc. (“Qwest”), in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota andSouth Dakota (collectively, the “Dex East States”).Dex Media’s directory business was acquired from Qwest Dex, Inc. (“Qwest Dex”) in a two phasepurchase between Dex Holdings LLC (“Dex Holdings”), the former parent of Dex Media, and Qwest Dex.Dex Holdings and Dex Media were formed by two private equity firms: The Carlyle Group and Welsh,Carson, Anderson & Stowe (the “Selling Shareholders”). In the first phase of the purchase, whichwas consummated on November 8, 2002, Dex Holdings assigned its right to purchase the directorybusiness of Qwest Dex in the Dex East States to Dex Media (the “Dex East Acquisition”). In thesecond phase of the purchase, which was consummated on September 9, 2003, Dex Holdings assigned itsright to purchase the directory business of Qwest Dex in Arizona, Idaho, Oregon, Montana, Utah,Washington and Wyoming (collectively, the “Dex West States”) to Dex Media (the “Dex WestAcquisition”). Dex Holdings was dissolved effective January 1, 2005. The Dex East States and DexWest States are collectively referred to as the “Dex States.”**Significant Business Developments**On January 31, 2006, our indirect parent Dex Media merged with and into Forward AcquisitionCorporation (“FAC”), a wholly-owned subsidiary of RHD. Pursuant to the Agreement and Plan of Mergerdated October 3, 2005, each share of Dex Media common stock was converted into the right to receive$12.30 in cash and 0.24154 of a share of RHD common stock, resulting in an aggregate cash value of$1.9 billion and aggregate stock value of $2.2 billion, based on 36,547,381 newly issued shares ofRHD common stock valued at $61.82 per share, for an equity purchase price of $4.1 billion. RHD alsoassumed all of Dex Media’s outstanding indebtedness on January 31, 2006 with a fair value of $5.5billion (together with other costs for a total aggregate purchase price of $9.8 billion). Inaddition, all outstanding Dex Media stock options were converted into stock options of RHD at aratio of 1 to 0.43077 and the Dex Media, Inc. Stock Option Plan and the Dex Media, Inc. 2004Incentive Award Plan, which governed those Dex Media stock options, were terminated. In connectionwith the consummation of the RHD Merger, the name of FAC was changed to Dex Media, Inc. As a resultof the RHD Merger, Dex Media became a wholly-owned subsidiary of RHD.On September 6, 2006, RHD acquired Local Launch (the “Local Launch Acquisition”). Local Launch is aleading local search products, platform and fulfillment provider that enables resellers to sellInternet advertising solutions to local advertisers. Local Launch specializes in search throughpublishing, distribution, directory and organic marketing solutions. The purpose of RHD’s LocalLaunch Acquisition was to support the expansion of RHD’s and the Company’s current local SEM andSEO offerings and provide new, innovative solutions to enhance our local SEM and SEO capabilities.The Local Launch business now operates as a direct wholly-owned subsidiary of RHD. As such, theresults of the Local Launch business are not included in the Company’s operating results.On November 9, 2006, certain affiliates of the Selling Shareholders sold 9,424,360 shares and9,424,359 shares, respectively, of RHD common stock. The Selling Shareholders were formershareholders of Dex Media and became shareholders of RHD in conjunction with the RHD Merger. Afterthis sale, the Selling Shareholders no longer hold any shares of RHD common stock that theyacquired in connection with the RHD Merger. Neither RHD nor the Company received any proceeds fromthis transaction.
19

 
**Segment Reporting**Management reviews and analyzes its business of publishing yellow pages directories and relatedlocal commercial search as one operating segment.**New Accounting Pronouncements**In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement ofFinancial Accounting Standards (“SFAS”) No. 159, *The Fair Value Option for Financial Assets andFinancial Liabilities — Including an amendment of FASB Statement No. 115*(“SFAS No. 159”). SFAS No.159 permits companies to choose to measure many financial instruments and certain other items atfair value that are not currently required to be measured at fair value. The objective of SFAS No.159 is to provide opportunities to mitigate volatility in reported earnings caused by measuringrelated assets and liabilities differently without having to apply hedge accounting provisions.SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitatecomparisons between companies that choose different measurement attributes for similar types ofassets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15,2007. We are currently assessing the impact the adoption of SFAS No. 159 will have on ourconsolidated financial position and results of operations.In September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*(“SFAS No. 157”), whichdefines fair value, establishes a framework for measuring fair value in Generally AcceptedAccounting Principles (“GAAP”) and expands disclosures about fair value measurements. SFAS No. 157is effective for fiscal years beginning after November 15, 2007, and interim periods within thosefiscal years. We are currently assessing the impact the adoption of SFAS No. 157 will have on ourconsolidated financial position and results of operations.We have reviewed other new accounting standards not identified above and do not believe any othernew standards will have a material impact on our financial position or operating results.**Factors Affecting Comparability**As a result of the RHD Merger, the related financings and associated purchase accounting, our 2007results reported in accordance with GAAP are not comparable to our 2006 reported GAAP results.Under the deferral and amortization method of revenue recognition, the billable value ofdirectories published is recognized as revenue in subsequent reporting periods. However, purchaseaccounting precluded us from recognizing directory revenue and certain expenses associated withdirectories that published prior to the RHD Merger, including all directories published in themonth the RHD Merger was completed. Thus, our reported 2006 GAAP results are not indicative of ourunderlying operating and financial performance. Our revenue and operating expenses for the twomonths ended March 31, 2006 were $82.3 million and $13.4 million lower, respectively, than ourrevenue and operating expenses would have otherwise been because of the RHD Merger. These purchaseaccounting adjustments are non-recurring and have no historical or future cash impact.**RESULTS OF OPERATIONS, INCLUDING COMBINED RESULTS***In addition to the GAAP presentation of our results for the three months ended March 31, 2007, thetwo months ended March 31, 2006 and the one month ended January 31, 2006, we have provided thefollowing combined results of Dex Media East for the three months ended March 31, 2006 because webelieve that such financial information is important to gain an understanding of the impact of theRHD Merger on Dex Media East’s underlying historical performance and future financial results. Thefinancial information for the combined three months ended March 31, 2006 includes the financialinformation of the Predecessor Company for the one month ended January 31, 2006 and of theSuccessor Company for the two months ended March 31, 2006. Although we have provided these combinedresults in order to provide a more meaningful discussion of the periods presented, the results ofperiods presented are not strictly comparable due to the change in basis of assets and accountingpolicies that resulted from the RHD Merger.***Three months ended March 31, 2007 and the combined three months ended March 31, 2006****Net Revenue**The components of our net revenue for the three months ended March 31, 2007 and the combined threemonths ended March 31, 2006 were as follows:
20

 
                                 **Predecessor**         **Successor Company**   **Company**  **Combined**      **Three Months**  **Two Months**   **One Month**  **Three Months**      **Ended**  **Ended**   **Ended**  **Ended**      **March 31,**  **March 31,**   **January 31,**  **March 31,**    *(amounts in thousands)* **2007**  **2006**   **2006**  **2006**  **$ Change**       Gross directory advertising revenue  172,768   38,737    59,434   98,171   74,597 Sales claims and allowances  (6,042)  (2,191)   (4)  (2,195)  (3,847)      Net directory advertising revenue  166,726   36,546    59,430   95,976   70,750 Other revenue  4,431   1,438    1,661   3,099   1,332       Total Net Revenue $171,157  $37,984   $61,091  $99,075  $72,082       Our directory advertising revenue is earned primarily from the sale of advertising in yellow pagesdirectories we publish, net of estimated sales claims and allowances. Directory advertising revenuealso includes revenue for those Internet-based advertising products that are bundled with printadvertising, including certain IYP products, and Internet-based advertising products not bundledwith print advertising, such as our SEM and SEO services. Directory advertising revenue is affectedby several factors, including changes in the quantity and size of advertisements sold, defectorsand new advertisers as well as the proportion of premium advertisements sold, changes in thepricing of advertising, changes in the quantity and mix of advertising purchased per account andthe introduction of additional products which generate incremental revenue. Revenue with respect toprint advertising, and Internet-based advertising products that are bundled with print advertising,is recognized under the deferral and amortization method, whereby revenue is initially deferredwhen a directory is published and recognized ratably over the directory’s life, which is typically12 months. Revenue with respect to Internet-based advertising that is not bundled with printadvertising is recognized ratably over the period the advertisement appears on the site. Revenuewith respect to our other products and services, such as SEM and SEO services, is recognized asdelivered or fulfilled.Net directory advertising revenue in the three months ended March 31, 2007 and the combined threemonths ended March 31, 2006 was $166.7 million and $96.0 million, respectively. The increase in netdirectory advertising revenue of $70.8 million is primarily due to recognizing a full period ofresults for the Dex Media East publication cycle, as well as the effects of purchase accountingassociated with the RHD Merger in 2006. Net directory advertising revenue for the combined threemonths ended March 31, 2006 excluded the amortization of net directory advertising revenue for DexMedia-branded directories published before February 2006 under the deferral and amortization methodtotaling $80.3 million, which would have been reported in the period absent purchase accounting.Other revenue includes barter revenue, late fees received on outstanding customer balances, salesof directories and certain other print and Internet products. Other revenue in the three monthsended March 31, 2007 and the combined three months ended March 31, 2006 was $4.4 million and $3.1million, respectively. The increase in other revenue of $1.3 million is primarily due torecognizing a full period of results for the Dex Media publication cycle. For the combined threemonths ended March 31, 2006, other revenue was $2.0 million lower than it would have been due tothe impact of purchase accounting, primarily due to barter revenue.Total net revenue in the three months ended March 31, 2007 and the combined three months endedMarch 31, 2006 was $171.2 million and $99.1 million, respectively. The increase in total netrevenue is primarily a result of the impacts of purchase accounting during the combined threemonths ended March 31, 2006 described above. Purchase accounting related to the RHD Merger willhave no impact on reported net revenue in 2007**Expenses**The components of total expenses for the three months ended March 31, 2007 and the combined threemonths ended March 31, 2006 are as follows:
21

 
                                 **Predecessor**         **Successor Company**   **Company**  **Combined**      **Three Months**  **Two Months**   **One Month**  **Three Months**      **Ended**  **Ended**   **Ended**  **Ended**      **March 31,**  **March 31,**   **January 31,**  **March 31,**    *(amounts in thousands)* **2007**  **2006**   **2006**  **2006**  **$ Change**       Cost of revenue $82,211  $37,327   $26,646  $63,973  $18,238 G&A expenses  6,883   6,176    4,097               10,273              (3,390)D&A expenses  32,433   17,716    12,148   29,864   2,569       Total $121,527  $61,219   $42,891  $104,110  $17,417       Substantially all expenses are derived from our directory publishing business and Internet-basedadvertising products and services. Certain costs directly related to the selling and production ofdirectories are initially deferred and recognized ratably over the life of the directory. Thesecosts are specifically identifiable to a particular directory and include sales commissions andprint, paper and initial distribution costs. Sales commissions include commissions paid toemployees for sales to local advertisers and to certified marketing representatives (“CMRs”), whichact as our channel to national advertisers. All other expenses, such as sales person salaries,sales manager compensation, sales office occupancy, publishing and information technology services,are not specifically identifiable to a particular directory and are recognized as incurred. In thePredecessor Company financial statements, deferred directory costs also included employee andsystems support costs directly associated with the publication of directories. Our costs recognizedin a reporting period consist of: (i) costs incurred in that period and fully recognized in thatperiod; (ii) costs incurred in a prior period, a portion of which is amortized and recognized inthe current period; and (iii) costs incurred in the current period, a portion of which is amortizedand recognized in the current period and the balance of which is deferred until future periods.Consequently, there will be a difference between costs recognized in any given period and costsincurred in the given period, which may be significant. All deferred costs related to the sale andproduction of directories are recognized ratably over the life of each directory under the deferraland amortization method of accounting, with cost recognition commencing in the month of directorydistribution.***Cost of Revenue***Total cost of revenue for the three months ended March 31, 2007 and the combined three months endedMarch 31, 2006 was $82.2 million and $64.0 million, respectively. The increase in cost of revenueof $18.2 million is primarily due to the impact of purchase accounting for the RHD Merger in 2006.Similar to the deferral and amortization method of revenue recognition, certain costs directlyrelated to the selling and production of our directories are initially deferred when incurred andrecognized ratably over the life of a directory. As a result of purchase accounting required byGAAP, deferred commissions and print and delivery costs totaling $19.0 million for directories thatpublished prior to the RHD Merger were not reported in the combined three months ended March 31,2006. Directory expenses for the combined three months ended March 31, 2006 include theamortization of deferred directory costs relating to the Dex Media East directories publishedbeginning in February 2006. As a result of purchase accounting required by GAAP, we recorded thedeferred directory costs related to directories that were scheduled to publish subsequent to theRHD Merger at their fair value of $89.0 million, determined as (a) the estimated billable value ofthe published directory less (b) the expected costs to complete the directories, plus (c) a normalprofit margin. We refer to this purchase accounting entry as “cost uplift.” These costs areamortized as cost of revenue over the terms of the applicable directories and such amortizationtotaled $8.1 million representing an increase of $2.5 million for the three months ended March 31,2007 as compared to the prior period. Reported results for cost of revenue in 2007 will continue tobe impacted by the cost uplift aspect of purchase accounting. Excluding these effects of purchaseaccounting, cost of revenue decreased due to office space reductions and a decrease in salaries andwages due to headcount reductions, as a result of the RHD Merger.***General and Administrative Expenses***General and administrative (“G&A”) expenses for the three months ended March 31, 2007 and thecombined three months ended March 31, 2006 were $6.9 million and $10.3 million, respectively. Thedecrease of $3.4 million was primarily driven by the reduction in bonuses to retain certainemployees through the transition related to the RHD Merger, as well as office space reductions anda decrease in salaries and wages due to headcount reductions, as a result of the RHD Merger.***Depreciation and Amortization Expenses***Depreciation and amortization (“D&A”) expenses for the three months ended March 31, 2007 and thecombined three months ended March 31, 2006 were $32.4 million and $29.9 million, respectively. Theincrease in D&A expense of $2.6 million is primarily related to commencing amortization of thelocal customer intangible assets offset by lower amortization expense for the new intangible assets
22

 
established at the RHD Merger. The amortization of the local customer intangible was $5.9 millionfor the three months ended March 31, 2007 with no comparable expense in the combined three monthsended March 31, 2006. Upon consummation of the RHD Merger, the identified intangible assets relatedto the Dex East Acquisition were eliminated and replaced with the identified intangible assetsrelated to the RHD Merger. As a result, the Predecessor Company had approximately $3.3 millionhigher intangible amortization expense during the one month ended January 31, 2006.**Operating Income (Loss)**Operating income (loss) for the three months ended March 31, 2007 and the combined three monthsended March 31, 2006 was as follows:                                 **Predecessor**         **Successor Company**   **Company**  **Combined**      **Three**  **Two Months**   **One Month**  **Three Months**      **Months**  **Ended**   **Ended**  **Ended**      **Ended**  **March 31,**   **January 31,**  **March31,**    *(amounts in thousands)* **March 31, 2007**  **2006**   **2006**  **2006**  **$ Change**       Total $49,630  $(23,235)  $18,200  $(5,035) $54,665       The increase in operating income for the three months ended March 31, 2007, compared to operatingloss for the combined three months ended March 31, 2006 resulted from an increase in net revenue,partially offset by increases in cost of revenue and D&A expenses as described above. Since alldeferred net revenue related to directories published prior to the RHD Merger is eliminated inpurchase accounting, but only certain direct expenses related to these directories are eliminatedunder purchase accounting, purchase accounting has a disproportionately adverse effect on reportedrevenue in 2006. Operating income in 2007 will continue to be impacted by the cost uplift aspectof purchase accounting.**Interest Expense, Net**Net interest expense for the three months ended March 31, 2007 and the combined three months endedMarch 31, 2006 was $28.9 million and $30.6 million, respectively. The decrease in net interestexpense is primarily due to decreased amortization of deferred financing costs as the PredecessorCompany’s deferred financing costs were eliminated in accordance with purchase accounting. Netinterest expense for the three months ended March 31, 2007 and combined three months ended March31, 2006 included $0.1 million and $1.1 million, respectively, of amortization of deferredfinancing costs. In addition, the Successor Company amortized a portion of the fair valueadjustment, which was recorded at the consummation of the RHD Merger. The Company recognizes anoffset to interest expense each period for the amortization of the corresponding fair valueadjustment over the life of the respective debt. This fair value adjustment was amortized as areduction to interest expense of $3.7 million and $2.8 million during the three months ended March31, 2007 and the two months ended March 31, 2006, respectively.**Income Taxes**The effective tax rate on income (loss) before income taxes for the three months ended March 31,2007, the two months ended March 31, 2006 and the one month ended January 31, 2006 was 37.4%, 38.9%and 39.7%, respectively. The effective rate for the three months ended March 31, 2007 reflects adecrease in the estimate for the unitary state tax apportionment. The effective rate in the twomonths ended March 31, 2006 reflected the impact of the integration related to the RHD Mergercombined with favorable treatment of certain purchase accounting adjustments.**Item 3.**Quantitative and Qualitative Disclosures About Market RiskOmitted pursuant to General Instruction H(2)(c) of Form 10-Q.**Item 4T.**Controls and Procedures*(a) Evaluation of Disclosure Controls and Procedures.*Based on their evaluation, as of the end ofthe period covered by this Quarterly Report on Form 10-Q, of the effectiveness of the Company’sdisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934) the principal executive officer and principal financial officer ofthe Company have each concluded that such disclosure controls and procedures are effective andsufficient to ensure that information required to be
23

 
disclosed by the Company in reports that it files or submits under the Securities Exchange Act of1934 is recorded, processed, summarized and reported within the time periods specified in theSecurities and Exchange Commission’s rules and forms.*(b) Changes in Internal Control Over Financial Reporting.*There have not been any changes in theCompany’s internal control over financial reporting that occurred during the Company’s most recentfiscal quarter that has materially affected, or is reasonably likely to materially affect, theCompany’s internal control over financial reporting.**PART II. OTHER INFORMATION****Item 1.**Legal Proceedings We are involved in various legal proceedings arising in the ordinary course of our business. Inmany of these matters, plaintiffs allege that they have suffered damages from errors or omissionsof improper listings contained in directories published by us. We periodically assess ourliabilities and contingencies in connection with these matters based upon the latest informationavailable to us. For those matters where it is probable that we have incurred a loss and the lossor range of loss can be reasonably estimated, we record reserves in our consolidated financialstatements. In other instances, we are unable to make a reasonable estimate of any liabilitybecause of the uncertainties related to both the probable outcome and amount or range of loss. Asadditional information becomes available, we adjust our assessment and estimates of suchliabilities accordingly.The Company is exposed to potential defamation and breach of privacy claims arising from ourpublication of directories and our methods of collecting, processing and using advertiser andtelephone subscriber data. If such data were determined to be inaccurate or if data stored by uswere improperly accessed and disseminated by us or by unauthorized persons, the subjects of ourdata and users of the data we collect and publish could submit claims against the Company. Althoughto date we have not experienced any material claims relating to defamation or breach of privacy, wemay be party to such proceedings in the future that could have a material adverse effect on ourbusiness.Based on our review of the latest information available, we believe our ultimate liability inconnection with pending or threatened legal proceedings will not have a material adverse effect onour results of operations, cash flows or financial position. No material amounts have been accruedin our consolidated financial statements with respect to any of such matters.**Item 1A.**Risk FactorsNone.**Item 2.**Unregistered Sales of Equity Securities and Use of ProceedsOmitted pursuant to General Instruction H(2)(b) of Form 10-Q.**Item 3.**Defaults Upon Senior SecuritiesOmitted pursuant to General Instruction H(2)(b) of Form 10-Q.**Item 4.**Submission of Matters to a Vote of Security HoldersOmitted pursuant to General Instruction H(2)(b) of Form 10-Q.**Item 5.**Other InformationNone.
24

 
**Item 6.**Exhibits   **Exhibit**  **Number** **Document**2.1+ Agreement of Merger of Dex Media East LLC and SGN LLC, dated November 8, 2002.   2.2 Agreement and Plan of Merger, dated as of October 3, 2005, by and among Dex Media, Inc., and R. H.Donnelley Corporation and Forward Acquisition Corp. (incorporated by reference to Exhibit 2.1 of R.H.Donnelley Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission onOctober 6, 2005, Commission File No. 001-07155).   3.1++ Certificate of Formation of Dex Media East LLC (f/k/a SGN LLC), filed July 15, 2002.   3.2+ Amendment to Certificate of Formation of Dex Media East LLC, filed November 12, 2002.   3.3++ Certificate of Merger of SGN LLC and Dex Media East LLC, filed November 8, 2002.   3.4++ Amendment to Certificate of Formation of Dex Media East LLC, filed October 8, 2003.   3.5+ Certificate of Incorporation of Dex Media East Finance Co., filed October 8, 2002.   3.6+ Second Amended and Restated Certificate of Incorporation of LCI International, Inc., filed December 19,2000 (Dex Media International, Inc.).   3.7+ Amendment No. One to the Amended and Restated Certificate of Incorporation of LCI International, Inc.(Dex Media International, Inc.).   3.8+ Amended and Restated Limited Liability Company Agreement of Dex Media East LLC, dated November 8, 2002.   3.9+ By-laws of Dex Media East Finance Co.   3.10+ Amended and Restated By-laws of LCI International, Inc. (Dex Media International, Inc.).   4.1+ Senior Note Indenture with respect to the 9 7/8% Senior Notes due 2009, among Dex Media East LLC, DexMedia East Finance Co., LCI International, Inc., and U.S. Bank National Association, as trustee, datedNovember 8, 2002.   4.2+ Form of 9 7/8% Senior Notes due 2002 (included in exhibit 4.1)   4.3+ Senior Subordinated Note Indenture with respect to the 12 1/8% Senior Subordinated Notes due 2012, amongDex Media East LLC, Dex Media East Finance Co., LCI International, Inc., and U.S. Bank NationalAssociation, as trustee, dated November 8, 2002.   4.4+ Form of 12 1/8% Senior Subordinated Notes due 2012 (included in exhibit 4.3)   10.1++ Second Amendment and Restatement of Credit Agreement, dated as of October 31, 2003, by and among DexMedia, Inc., Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, as administrative agent, J.P.Morgan Europe, Limited, as London Agent, and Bank of America, N.A., Lehman Commercial Paper Inc.,Wachovia Bank, National Association and Deutsche Bank Trust Company Americas, as co-syndication agents.   10.2+ Guarantee and Collateral Agreement, dated November 8, 2002, by and among Dex Media East, Inc., Dex MediaEast LLC (f/k/a/SGN LLC), Dex Media East Finance Co., LCI International, Inc. (Dex Media International,Inc.) and JPMorgan Chase Bank, as administrative agent.   10.3++ Reaffirmation Agreement, dated November 10, 2003, by and among Dex Media East Finance Co., Dex MediaInternational, Inc. and JP Morgan Chase Bank, as administrative agent.   10.4++ Amended and Restated Billing and Collection Agreement, dated September 1, 2003, by and between QwestCorporation and Dex Media East LLC (f/k/a SGN LLC).   10.5+ Non-Competition and Non-Solicitation Agreement, dated November 8, 2002, by and among Dex Media East LLC(f/k/a SGN LLC), Dex Holdings LLC and Qwest Corporation, Qwest Communications International Inc. andQwest Dex, Inc.   10.6+ Publishing Agreement by and among Dex Holdings LLC, SGN LLC (Dex Media East LLC), GPP LLC (Dex Media WestLLC) and Qwest Corporation, dated November 8, 2002.   10.7++ Employee Cost Sharing Agreement, by and among Dex Media Service LLC, Dex Media East LLC and Dex MediaWest LLC, effective as of December 31, 2003.
25

 
   **Exhibit**  **Number** **Document**10.8++ Shared Services Agreement, by and among Dex Media, Inc., Dex Media East LLC, Dex Media West LLC, and anydirect or indirect subsidiary of Dex Media that becomes a party thereto, effective as of December 31,2003.   10.9++ Intercompany License Agreement, by and among Dex Media, Inc., Dex Media East LLC and Dex Media West LLC,effective as of September 9, 2003.   10.10++* Employment Agreement, effective as of November 8, 2002, by and between George Burnett and Dex Media, Inc.   10.11 Separation Agreement and Release, dated as of May 5, 2006, by and between R.H. Donnelley Corporation andGeorge A. Burnett (incorporated by reference to Exhibit 10.32 to R.H. Donnelley Corporation’s QuarterlyReport on Form 10Q, filed with the Securities and Exchange Commission on November 8, 2006, CommissionFile No. 001-07155).   10.12++* Employment Agreement, effective as of January 2, 2003, by and between Robert M. Neumeister, Jr. and DexMedia, Inc.   10.13++* Employment Agreement, effective as of November 8, 2002, by and between Marilyn B. Neal and Dex Media, Inc.   10.14++* Employment Agreement, effective as of November 8, 2002, by and between Maggie Le Beau and Dex Media, Inc.   10.15++* Employment Agreement, effective as of January 2, 2003, by and between Linda Martin and Dex Media, Inc.   10.16++* Employment Agreement, effective as of November 8, 2002, by and between Kristine Shaw and Dex Media, Inc.   10.17++* Amended and Restated Management Stockholders Agreement of Dex Media, Inc., entered into as of November11, 2003, by and among Dex Media, Inc., Dex Holdings LLC, and those members of management who becomeparties thereto from time to time.   10.18++* Stock Option Plan of Dex Media, Inc., effective as of November 8, 2002.   10.19++* First Amendment to Stock Option Plan of Dex Media, Inc., effective as of September 9, 2003.   10.20++* Second Amendment to Stock Option Plan of Dex Media, Inc., effective as of December 18, 2003.   10.21* Dex Media, Inc. 2004 Incentive Award Plan (incorporated by reference to Dex Media Inc.’s RegistrationStatement on Form S-8 (File No. 333-120631), filed on November 19, 2004).   10.22* Dex Media, Inc. Senior Executive Incentive Bonus Plan (incorporated by reference to Dex Media Inc.’sCurrent Report on Form 8-K dated February 17, 2005, File No. 001-32249).   10.23* Form of Restricted Stock Agreement pursuant to the 2004 Incentive Award Plan of Dex Media, Inc.(incorporated by reference to Dex Media, Inc.’s Current Report on Form 8-K dated March 4, 2005, File No.001-32249).   10.24 Master Agreement for Printing Services dated as of March 31, 2005, by and between Dex Media, Inc., onbehalf of itself and it subsidiaries Dex Media East LLC and Dex Media West LLC, and Quebecor World (USA)Inc. (incorporated by reference to Exhibit 10.3 to Dex Media, Inc.’s Quarterly Report on Form 10-Q forthe quarter ended March 31, 2005, Commission File No. 1-32249).   10.25* Dex Media, Inc. Deferred Compensation Plan (incorporated by reference to Dex Media Inc.’s Current Reporton Form 8-K dated May 17, 2005).   10.26* Dex Media, Inc. Corporate Aircraft Policy (incorporated by reference to Dex Media Inc.’s Current Reporton Form 8-K dated May 17, 2005).   10.27* Dex Media, Inc. Financial Planning Benefit (incorporated by reference to Dex Media Inc.’s Current Reporton Form 8-K dated May 17, 2005).   10.28* Dex Media, Inc. 2005 Bonus Plan Targets (incorporated by reference to Dex Media Inc.’s Current Report onForm 8-K dated May 17, 2005).   10.29 Fifth Amendment, dated as of June 16, 2005, to the Credit Agreement, dated as of November 8, 2002, asamended and restated as of October 31, 2003, by and among Dex Media, Inc., Dex Media East, Inc., DexMedia East LLC, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Securities Inc. and Banc ofAmerica Securities LLC, as joint bookrunners and co-lead arrangers, and Bank of America, N.A., WachoviaBank, National Association, Lehman Commercial Paper Inc. and Deutsche Bank Trust company Americas, asco-syndication agents (incorporated by reference to Exhibit 10.6 to Dex Media Inc.’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2005).
26

 
   **Exhibit**  **Number** **Document**10.30* Retirement and General Release Agreement dated October 5, 2005, by and between Dex Media, Inc. and RobertM. Neumeister, Jr. (incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K datedOctober 2, 2005).   10.31* Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and George Burnett (incorporatedby reference to Dex Media Inc.’s Current Report on Form 8-K/A dated October 18, 2005).   10.32* Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and Marilyn Neal (incorporated byreference to Dex Media Inc.’s Current Report on Form 8-K/A dated October 18, 2005).   10.33* Form of Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and each of its SeniorVice Presidents (incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K/A dated October18, 2005).   10.34* Form of Letter Agreement dated October 2, 2005, by and between Dex Media, Inc. and each of its VicePresidents (incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K/A dated October 18,2005).   10.35* Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Linda A. Martin(incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K/A dated December 21, 2005).   10.36* Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and George A. Burnett(incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K dated December 19, 2005).   10.37* Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Scott A. Pomeroy(incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K dated December 19, 2005).   10.38* Form of Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and each of its SeniorVice Presidents and Vice Presidents (incorporated by reference to Dex Media Inc.’s Current Report on Form8-K dated December 19, 2005).   10.39* Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Robert M. Neumeister, Jr.(incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K dated December 19, 2005).   10.40* Letter Agreement dated December 19, 2005, by and between Dex Media, Inc. and Marilyn B. Neal(incorporated by reference to Dex Media Inc.’s Current Report on Form 8-K dated December 19, 2005).   10.41 Amended and Restated Credit Agreement, dated January 31, 2006, by and among Dex Media, Inc. (f/k/aForward Acquisition Corp.), Dex Media East, Inc., Dex Media East LLC, JPMorgan Chase Bank, N.A., asadministrative agent, and the other entities from time to time parties thereto (incorporated by referenceto Exhibit 10.3 to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities and ExchangeCommission on February 6, 2006, Commission File No. 333-131626).   10.42 Reaffirmation Agreement, dated January 31, 2006, among Dex Media, Inc., Dex Media East, Inc., Dex MediaEast LLC, Dex Media East Finance Co. and JPMorgan Chase Bank, N.A., as collateral agent (incorporated byreference to Exhibit 10.4 to Dex Media, Inc.’s Current Report on Form 8-K filed with the Securities andExchange Commission on February 6, 2006, Commission File No. 333-131626).   10.43 First Amendment, dated as of April 24, 2006, to the Credit Agreement, dated as of November 8, 2002, asamended and restated as of January 31, 2006, among Dex Media, Inc., Dex Media East, Inc., Dex Media EastLLC, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent andcollateral agent, and the other agents parties thereto (incorporated by reference to Exhibit 10.3 to DexMedia, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 28,2006).   10.44 Reaffirmation Agreement, dated as of April 24, 2006, among Dex Media, Inc., Dex Media East, Inc., DexMedia East LLC, Dex Media East Finance Co., Dex Media International, Inc. and JPMorgan Chase Bank, N.A.,as collateral agent (incorporated by reference to Exhibit 10.4 to Dex Media, Inc.’s Current Report onForm 8-K, filed with the Securities and Exchange Commission on April 28, 2006).   31.1+++ Certification of Quarterly Report on Form 10-Q for the period ended March 31, 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 March 31, 2007 by Steven M. Blondy,Executive Vice President and Chief Financial Officer of Dex Media East LLC under Section 302 of theSarbanes Oxley Act.   32.1+++ Certification of Quarterly Report on Form 10-Q for the period ended March 31, 2007 under Section 906 ofthe 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.
27

 
 + Incorporated by reference to our Registration Statement on Form S-4 (Commission File No.333-102395) and amendments thereto, declared effective on April 4, 2003. ++ Incorporated by reference to our Annual Report on Form 10-K for the year ended December 31,2003. (Commission FileNo. 333-102395) +++ Filed herewith. * Identifies each management contract or compensatory plan or arrangement.
28

 
**SIGNATURES**Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly causedthis report to be signed on its behalf by the undersigned thereunto duly authorized.      DEX MEDIA EAST LLC