##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-07155
 R.H. DONNELLEY CORPORATION
  Delaware
    
    13-2740040(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)1001 Winstead Drive, Cary, N.C.
    
    27513(Address of principal executive offices)
    
    (Zip Code)
 (919) 297-1600
  
 
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o
  o þ
  Title of class
    
    Shares Outstanding at October 15, 2009Common Stock, par value $1 per share
    
    68,930,296




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##### 



R.H. DONNELLEY CORPORATION
 INDEX TO FORM 10-Q
 PAGEPART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at September 30, 2009 and December
31, 2008
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss) for the three and nine months ended September 30, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    53Item 4.
    
    Controls and Procedures
    
    
    55PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    56Item 1A.
    
    Risk Factors
    
    
    56Item 3.
    
    Defaults Upon Senior Securities
    
    
    57Item 6.
    
    Exhibits
    
    
    58SIGNATURES
    
    
    59EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



Part I. FINANCIAL INFORMATION
 
  
 R.H. Donnelley Corporation and Subsidiaries  Debtor and Debtor-In-Possession as of May 28, 2009  Condensed Consolidated Balance Sheets (Unaudited)
 September 30,
    
    December 31,(in thousands, except share data)
    
    2009
    
    2008AssetsCurrent AssetsCash and cash equivalents
    
    $
    606,471
    
    
    $
    131,199Accounts receivableBilled
    
    
    245,973
    
    
    
    303,338Unbilled
    
    
    655,119
    
    
    
    777,684Allowance for doubtful accounts and sales claims
    
    
    (55,035
    )
    
    
    (53,995
    )Net accounts receivable
    
    
    846,057
    
    
    
    1,027,027Deferred directory costs
    
    
    144,583
    
    
    
    164,248Short-term deferred income taxes, net
    
    
    15,448
    
    
    
    97,973Prepaid expenses and other current assets
    
    
    66,903
    
    
    
    95,084Total current assets
    
    
    1,679,462
    
    
    
    1,515,531Fixed assets and computer software, net
    
    
    164,836
    
    
    
    188,695Other non-current assets
    
    
    68,400
    
    
    
    167,222Intangible assets, net
    
    
    9,624,186
    
    
    
    10,009,261Total Assets
    
    $
    11,536,884
    
    
    $
    11,880,709Liabilities and Shareholders DeficitCurrent Liabilities Not Subject to CompromiseAccounts payable and accrued liabilities
    
    $
    161,801
    
    
    $
    216,093Accrued interest
    
    
    4,665
    
    
    
    181,102Deferred directory revenues
    
    
    872,561
    
    
    
    1,076,271Current portion of long-term debt
    
    
    796,926
    
    
    
    113,566Total current liabilities not subject to compromise
    
    
    1,835,953
    
    
    
    1,587,032Long-term debt
    
    
    2,792,330
    
    
    
    9,508,690Deferred income taxes, net
    
    
    1,052,814
    
    
    
    998,071Other non-current liabilities
    
    
    366,168
    
    
    
    280,291Total liabilities not subject to compromise
    
    
    6,047,265
    
    
    
    12,374,084Liabilities subject to compromise
    
    
    6,409,487
    
    
    
    Commitments and contingenciesShareholders DeficitCommon
stock, par value $1 per share, authorized  400,000,000 shares; issued 
88,169,275
shares at September 30, 2009 and December 31, 2008; outstanding  68,929,954
shares and 68,807,446 shares at September 30, 2009 and December 31, 2008,
respectively
    
    
    88,169
    
    
    
    88,169Additional paid-in capital
    
    
    2,440,232
    
    
    
    2,431,411Accumulated deficit
    
    
    (3,136,628
    )
    
    
    (2,683,867
    )Treasury stock, at cost, 19,239,321 shares at September 30, 2009 and 19,361,829
shares at December 31, 2008
    
    
    (256,140
    )
    
    
    (256,277
    )Accumulated other comprehensive loss
    
    
    (55,501
    )
    
    
    (72,811
    )Total shareholders deficit
    
    
    (919,868
    )
    
    
    (493,375
    )Total Liabilities and Shareholders Deficit
    
    $
    11,536,884
    
    
    $
    11,880,709
  3




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##### Table of Contents



R.H. Donnelley Corporation and Subsidiaries  Debtor and Debtor-In-Possession as of May 28, 2009  Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
 Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,(in thousands, except per share data)
    
    2009
    
    2008
    
    2009
    
    2008Net revenues
    
    $
    533,990
    
    
    $
    647,984
    
    
    $
    1,701,604
    
    
    $
    1,986,387Expenses:Production and distribution expenses (exclusive of
depreciation and amortization shown separately below)
    
    
    83,736
    
    
    
    105,062
    
    
    
    268,387
    
    
    
    317,692Selling and support expenses
    
    
    162,393
    
    
    
    185,601
    
    
    
    499,461
    
    
    
    547,507General and administrative expenses
    
    
    28,775
    
    
    
    45,975
    
    
    
    82,002
    
    
    
    110,973Depreciation and amortization
    
    
    142,580
    
    
    
    125,445
    
    
    
    427,746
    
    
    
    363,252Impairment charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,123,854Total expenses
    
    
    417,484
    
    
    
    462,083
    
    
    
    1,277,596
    
    
    
    4,463,278Operating income (loss)
    
    
    116,506
    
    
    
    185,901
    
    
    
    424,008
    
    
    
    (2,476,891
    )Interest expense, net
    
    
    (63,544
    )
    
    
    (200,249
    )
    
    
    (423,849
    )
    
    
    (630,352
    )Gain on debt transactions, net
    
    
    
    
    
    
    72,380
    
    
    
    
    
    
    
    231,539Income (loss) before reorganization items, net and
income taxes
    
    
    52,962
    
    
    
    58,032
    
    
    
    159
    
    
    
    (2,875,704
    )Reorganization items, net
    
    
    (7,107
    )
    
    
    
    
    
    
    (77,887
    )
    
    
    Income (loss) before income taxes
    
    
    45,855
    
    
    
    58,032
    
    
    
    (77,728
    )
    
    
    (2,875,704
    )(Provision) benefit for income taxes
    
    
    (21,925
    )
    
    
    (31,949
    )
    
    
    (375,033
    )
    
    
    939,772Net income (loss)
    
    $
    23,930
    
    
    $
    26,083
    
    
    $
    (452,761
    )
    
    $
    (1,935,932
    )Earnings (loss) per share:Basic
    
    $
    0.35
    
    
    $
    0.38
    
    
    $
    (6.57
    )
    
    $
    (28.15
    )Diluted
    
    $
    0.35
    
    
    $
    0.38
    
    
    $
    (6.57
    )
    
    $
    (28.15
    )Shares used in computing earnings (loss) per share:Basic
    
    
    68,930
    
    
    
    68,808
    
    
    
    68,895
    
    
    
    68,783Diluted
    
    
    68,969
    
    
    
    68,909
    
    
    
    68,895
    
    
    
    68,783Comprehensive Income (Loss)Net income (loss)
    
    $
    23,930
    
    
    $
    26,083
    
    
    $
    (452,761
    )
    
    $
    (1,935,932
    )Unrealized gain (loss) on interest rate swaps, net of tax
    
    
    4,120
    
    
    
    (4,422
    )
    
    
    236
    
    
    
    19,959Benefit plans adjustment, net of tax
    
    
    (158
    )
    
    
    266
    
    
    
    17,074
    
    
    
    780Comprehensive income (loss)
    
    $
    27,892
    
    
    $
    21,927
    
    
    $
    (435,451
    )
    
    $
    (1,915,193
    )
  4




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R.H. Donnelley Corporation and Subsidiaries  Debtor and Debtor-In-Possession as of May 28, 2009  Condensed Consolidated Statements of Cash Flows (Unaudited)
 Nine months endedSeptember 30,(in thousands)
    
    2009
    
    2008Cash Flows from Operating ActivitiesNet loss
    
    $
    (452,761
    )
    
    $
    (1,935,932
    )Reconciliation of net loss to net cash provided by operating activities:Impairment charges
    
    
    
    
    
    
    3,123,854Gain on debt transactions, net
    
    
    
    
    
    
    (231,539
    )Depreciation and amortization
    
    
    427,746
    
    
    
    363,252Deferred income tax provision (benefit)
    
    
    372,676
    
    
    
    (942,970
    )Provision for bad debts
    
    
    113,530
    
    
    
    102,470Stock based compensation expense
    
    
    9,051
    
    
    
    23,427Change in fair value of interest rate swaps
    
    
    1,834
    
    
    
    30,276Other non-cash items, net
    
    
    26,071
    
    
    
    44,312Non-cash reorganization items, net
    
    
    18,709
    
    
    
    Changes in assets and liabilities:Decrease (increase) in accounts receivable
    
    
    67,440
    
    
    
    (74,647
    )Decrease in other assets
    
    
    56,461
    
    
    
    49,508Increase (decrease) in accounts payable and accrued liabilities
    
    
    60,225
    
    
    
    (99,119
    )(Decrease) in deferred directory revenues
    
    
    (202,521
    )
    
    
    (74,369
    )(Decrease) increase in other non-current liabilities
    
    
    (89,874
    )
    
    
    8,123Net cash provided by operating activities
    
    
    408,587
    
    
    
    386,646Cash Flows from Investing ActivitiesAdditions to fixed assets and computer software
    
    
    (18,193
    )
    
    
    (47,304
    )Equity investment disposition
    
    
    
    
    
    
    4,318Net cash used in investing activities
    
    
    (18,193
    )
    
    
    (42,986
    )Cash Flows from Financing ActivitiesAdditional borrowings under credit facilities, net of costs
    
    
    
    
    
    
    1,018,202Credit facilities repayments
    
    
    (255,593
    )
    
    
    (1,224,716
    )Note repurchases and related costs
    
    
    
    
    
    
    (84,682
    )Revolver borrowings
    
    
    361,000
    
    
    
    398,100Revolver repayments
    
    
    (18,749
    )
    
    
    (422,150
    )Debt issuance costs in connection with debt transactions
    
    
    
    
    
    
    (9,617
    )Repurchase of common stock
    
    
    
    
    
    
    (6,112
    )(Decrease) increase in checks not yet presented for payment
    
    
    (1,780
    )
    
    
    1,932Proceeds from employee stock option exercises
    
    
    
    
    
    
    96Net cash provided by (used in) financing activities
    
    
    84,878
    
    
    
    (328,947
    )Increase in cash and cash equivalents
    
    
    475,272
    
    
    
    14,713Cash and cash equivalents, beginning of year
    
    
    131,199
    
    
    
    46,076Cash and cash equivalents, end of period
    
    $
    606,471
    
    
    $
    60,789Supplemental Information:Cash paid:Interest, net
    
    $
    336,877
    
    
    $
    584,394Income taxes, net
    
    $
    1,411
    
    
    $
    1,713Non-cash financing activities:Reduction of debt from Debt Exchanges
    
    $
    
    
    
    $
    (172,804
    )
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R.H. Donnelley Corporation and Subsidiaries  Debtor and Debtor-In-Possession as of May 28, 2009
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)  (tabular amounts in thousands, except share and per share data)
 1. Business and Basis of Presentation
  ®
  Chapter 11 Bankruptcy Proceedings and Plan of Reorganization
 Filing of Voluntary Petitions in Chapter 11
 et al.
   Commencement of Chapter 11 Cases
  6




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##### Table of Contents



Proposed Plan of Reorganization
 .
  (i)
    
    Elimination of approximately $6.4 billion of indebtedness, including the payment of
$700.0 million of secured indebtedness, and $500.0 million of annual interest expense;(ii)
    
    The exchange of all pre-petition publicly issued unsecured note debt for (a) 100% of
the reorganized RHD equity that is subject to dilution pursuant to a stock-based management
incentive plan, which is expected to permit equity-based compensation in an amount of not
less than 10% of the fully diluted RHD equity, if approved in accordance with the Plan and
(b) in the case of the holders of the Dex Media West LLC (Dex Media West) 8.5% Senior
Notes due 2010 and 5.875% Senior Notes due 2011, $300.0 million of new seven-year RHD
unsecured notes on a pro rata basis in addition to their share of the reorganized RHD
equity;(iii)
    
    The obligations of the lenders under the RHDI revolving credit facility (the RHDI
Revolver) to make additional advances terminated on the Petition Date and the outstanding
loans under the RHDI Revolver will be converted to a term loan with a maturity date of
October 2014 and an interest rate of LIBOR plus 625 basis points (bps), subject to a
reduction upon satisfaction of a specified financial covenant threshold, and the current
RHDI term loans will be amended to extend the maturity date to October 2014 with an
interest rate of LIBOR plus 625 bps, subject to a reduction upon satisfaction of a
specified financial covenant threshold;
 7




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##### Table of Contents



(iv)
    
    The obligations of the lenders under the Dex Media East LLC (Dex Media East) revolving
credit facility (Dex Media East Revolver) to make additional advances terminated on
the Petition Date, and the outstanding loans under the Dex Media East Revolver will be
converted to a term loan with a maturity date of October 2014 and an interest rate of
LIBOR plus 250 bps, subject to reductions upon satisfaction of certain financial
covenant thresholds, the current Dex Media East Term Loan A will be amended to extend
the maturity date to October 2014 and increase the interest rate to LIBOR plus 250 bps,
subject to reductions upon satisfaction of certain financial covenant thresholds, and
the Dex Media East Term Loan B will be amended to increase the interest rate to LIBOR
plus 250 bps, subject to reductions upon satisfaction of certain financial covenant
thresholds;(v)
    
    The obligations of the lenders under the Dex Media West revolving credit facility (Dex
Media West Revolver) to make additional advances terminated on the Petition Date and the
outstanding loans under the Dex Media West Revolver will be converted to a term loan with a
maturity date of October 2014 and an interest rate of LIBOR plus 450 bps, subject to
reductions upon satisfaction of certain financial covenant thresholds, the current Dex
Media West Term Loan A will be amended to extend the maturity date to October 2014 and
increase the interest rate to LIBOR plus 450 bps, subject to reductions upon satisfaction
of certain financial covenant thresholds, and the Dex Media West Term Loan B will be
amended to increase the interest rate to LIBOR plus 450 bps, subject to reductions upon
satisfaction of certain financial covenant thresholds; and(vi)
    
    Enhancement of the collateral and guarantees of the Dex Media East, Dex Media West and
RHDI secured debt. As of emergence, the Companys proposed Plan would, if adopted in its
present form, result in consolidated debt of approximately $3.4 billion, of which $3.1
billion would be secured.
  Going Concern
   8




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Accounting Matters
    Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code
  9




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##### Table of Contents



Other Significant Financing Developments
  Description
    
    AmountRHDITerm Loan D-1
    
    $
    13,797Term Loan D-2
    
    
    54,912Revolver
    
    
    8,938Dex Media WestTerm Loan A
    
    
    6,971Term Loan B
    
    
    50,941Revolver
    
    
    4,826Dex Media EastTerm Loan A
    
    
    34,176Term Loan B
    
    
    20,454Revolver
    
    
    4,985Total repayment
    
    $
    200,000
  Description
    
    AmountRHDI11.75% Senior Notes due 2015
    
    $
    24,256Dex Media, Inc.8% Senior Notes due 2013
    
    
    20,0009% Senior Discount Notes due 2013
    
    
    33,744Dex Media West5.875% Senior Notes due 2011
    
    
    256Total interest payments
    
    $
    78,256
     10




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2. Summary of Significant Accounting Policies
 Identifiable Intangible Assets and Goodwill
     
    
    Historical financial information, including revenue, profit margins, customer attrition
data and price premiums enjoyed relative to competing independent publishers;
    
    Long-term financial projections, including, but not limited to, revenue trends and
profit margin trends; and
    
    Intangible asset carrying values.
  11




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Interest Expense and Deferred Financing Costs
     12




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Gain on Debt Transactions, Net
  Accreted or Par ValueNotes Repurchased  Third Quarter 20086.875% Senior Notes due 2013
    
    $
    45,5296.875% Series A-1 Senior Discount Notes due 2013
    
    
    12,1946.875% Series A-2 Senior Discount Notes due 2013
    
    
    72,1958.875% Series A-3 Senior Notes due 2016
    
    
    30,000Total Notes repurchased
    
    
    159,918Total purchase price including fees
    
    
    (84,682
    )Write-off of unamortized deferred financing costs
    
    
    (2,856
    )Net gain on September 2008 Debt Repurchases
    
    $
    72,380
  Accreted or Par ValueRHD Notes Exchanged  Second Quarter 20086.875% Senior Notes due 2013
    
    $
    47,6636.875% Series A-1 Senior Discount Notes due 2013
    
    
    29,1856.875% Series A-2 Senior Discount Notes due 2013
    
    
    93,0318.875% Series A-3 Senior Notes due 2016
    
    
    151,1198.875% Series A-4 Senior Notes due 2017
    
    
    264,677Total RHD Notes exchanged
    
    
    585,675RHDI Notes Issued  Second Quarter 200811.75% Senior Notes due 2015
    
    
    412,871Reduction of debt from Debt Exchanges
    
    
    172,804Write-off of unamortized deferred financing costs
    
    
    (11,489
    )Net gain on Debt Exchanges
    
    $
    161,315
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Advertising Expense
  Concentration of Credit Risk
    Earnings (Loss) Per Share
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Basic EPSNet income (loss)
    
    $
    23,930
    
    
    $
    26,083
    
    
    $
    (452,761
    )
    
    $
    (1,935,932
    )Weighted average common shares outstanding
    
    
    68,930
    
    
    
    68,808
    
    
    
    68,895
    
    
    
    68,783Basic EPS
    
    $
    0.35
    
    
    $
    0.38
    
    
    $
    (6.57
    )
    
    $
    (28.15
    )Diluted EPSNet income (loss)
    
    $
    23,930
    
    
    $
    26,083
    
    
    $
    (452,761
    )
    
    $
    (1,935,932
    )Weighted average common shares outstanding
    
    
    68,930
    
    
    
    68,808
    
    
    
    68,895
    
    
    
    68,783Dilutive effect of stock awards (1)
    
    
    39
    
    
    
    101
    
    
    
    
    
    
    
    Weighted average diluted shares outstanding
    
    
    68,969
    
    
    
    68,909
    
    
    
    68,895
    
    
    
    68,783Diluted EPS
    
    $
    0.35
    
    
    $
    0.38
    
    
    $
    (6.57
    )
    
    $
    (28.15
    )
 14




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##### Table of Contents



(1)
    
    Due to the reported net loss for the nine months ended September 30, 2009 and 2008, the
effect of all stock-based awards was anti-dilutive and therefore not included in the
calculation of diluted EPS. For the three months ended September 30, 2009 and 2008, 4.7
million and 4.4 million shares, respectively, of stock-based awards had exercise prices that
exceeded the average market price of the Companys common stock for the respective period.
For the nine months ended September 30, 2009 and 2008, 4.7 million shares and 1.7 million
shares, respectively, of stock based awards had exercise prices that exceeded the average
market price of the Companys common stock for the respective period. Stock-Based Awards
  Long-Term Incentive Program
  Fair Value of Financial Instruments
  Fair Value Measurements
 15




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Fair Value Measurements atSeptember 30, 2009Description
    
    
    Using Significant Other Observable Inputs (Level 2)Derivatives  Liabilities
    
    
    $
    (7,441
    )
        16




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Effective Date of FASB Statement No.
157
 Estimates
 Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No.
 New Accounting Pronouncements
 Revenue Arrangements with Multiple Deliverables Revenue Arrangements with Multiple Deliverables
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162
 Subsequent Events
  17




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3. Reorganization Items, Net and Liabilities Subject to Compromise
 Reorganization Items, Net
  Three Months Ended
    
    Nine Months EndedSeptember 30, 2009
    
    September 30, 2009Write-off of unamortized deferred financing costs
    
    $
    
    
    
    $
    64,475Professional fees
    
    
    8,815
    
    
    
    59,278Write-off of net premiums / discounts on long-term debt
    
    
    
    
    
    
    34,886Write-off of fair value adjustments
    
    
    
    
    
    
    (78,511
    )Lease rejections, abandoned property and other
    
    
    (1,708
    )
    
    
    (2,241
    )Total reorganization items
    
    $
    7,107
    
    
    $
    77,887
     Liabilities Subject to Compromise
  18




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September 30, 2009Notes in default
    
    $
    6,071,756Accrued interest
    
    
    240,989Tax related liabilities
    
    
    50,052Accounts payable and accrued liabilities
    
    
    32,616Lease related liabilities
    
    
    14,074Total liabilities subject to compromise
    
    $
    6,409,487
 4. Restructuring Charges
  Three months endedSeptember 30, 2009
    
    2003 Actions
    
    2006 Actions
    
    2007 Actions
    
    2008 Actions
    
    2009 Actions
    
    TotalBalance at June 30, 2009
    
    $
    
    
    
    $
    
    
    
    $
    49
    
    
    $
    354
    
    
    $
    
    
    
    $
    403Net increase (decrease) to
reserve charged (credited) to
earnings
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    1,052
    
    
    
    740
    
    
    
    1,770Payments
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    (611
    )
    
    
    (740
    )
    
    
    (1,378
    )Balance at September 30, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    795
    
    
    $
    
    
    
    $
    795
 Nine months endedSeptember 30, 2009
    
    2003 Actions
    
    2006 Actions
    
    2007 Actions
    
    2008 Actions
    
    2009 Actions
    
    TotalBalance at December 31, 2008
    
    $
    603
    
    
    $
    567
    
    
    $
    376
    
    
    $
    10,203
    
    
    $
    
    
    
    $
    11,749Net increase to reserve
charged to earnings
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    10,050
    
    
    
    2,815
    
    
    
    12,875Payments
    
    
    (71
    )
    
    
    (133
    )
    
    
    (386
    )
    
    
    (17,474
    )
    
    
    (1,077
    )
    
    
    (19,141
    )Reclass to reorganization
items, net
    
    
    (532
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (532
    )Reclass to liabilities
subject to compromise
    
    
    
    
    
    
    (434
    )
    
    
    
    
    
    
    (1,984
    )
    
    
    (1,738
    )
    
    
    (4,156
    )Balance at September 30,
2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    795
    
    
    $
    
    
    
    $
    795
   19




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##### Table of Contents



5. Long-Term Debt
  Notes in Default
    
    
    Credit FacilitiesSeptember 30, 2009
    
    
    December 31, 2008RHD6.875% Senior Notes due 2013
    
    $
    206,791
    
    
    $
    
    
    
    $
    206,7916.875% Series A-1 Senior Discount Notes due 2013
    
    
    320,903
    
    
    
    
    
    
    
    301,8626.875% Series A-2 Senior Discount Notes due 2013
    
    
    483,365
    
    
    
    
    
    
    
    455,2048.875% Series A-3 Senior Notes due 2016
    
    
    1,012,839
    
    
    
    
    
    
    
    1,012,8398.875% Series A-4 Senior Notes due 2017
    
    
    1,229,760
    
    
    
    
    
    
    
    1,229,760R.H. Donnelley Inc.Credit Facility
    
    
    
    
    
    
    1,427,354
    
    
    
    1,341,09811.75% Senior Notes due 2015
    
    
    412,871
    
    
    
    
    
    
    
    412,871Dex Media, Inc.8% Senior Notes due 2013
    
    
    500,000
    
    
    
    
    
    
    
    510,4089% Senior Discount Notes due 2013
    
    
    749,857
    
    
    
    
    
    
    
    771,488Dex Media EastCredit Facility
    
    
    
    
    
    
    1,065,286
    
    
    
    1,081,500Dex Media WestCredit Facility
    
    
    
    
    
    
    1,096,616
    
    
    
    1,080,0008.5% Senior Notes due 2010
    
    
    385,000
    
    
    
    
    
    
    
    393,8835.875% Senior Notes due 2011
    
    
    8,720
    
    
    
    
    
    
    
    8,7619.875% Senior Subordinated Notes due 2013
    
    
    761,650
    
    
    
    
    
    
    
    815,791Total RHD consolidated
    
    
    6,071,756
    
    
    
    3,589,256
    
    
    
    9,622,256Less current portion not subject to compromise
    
    
    
    
    
    
    796,926
    
    
    
    113,566Long-term debt subject to compromise
    
    $
    6,071,756
    
    
    
    
    
    
    
    Long-term debt not subject to compromise
    
    
    
    
    
    $
    2,792,330
    
    
    $
    9,508,690
 Credit Facilities
  20




---



##### Table of Contents



RHDI
  Dex Media East
  Dex Media West
  6. Derivative Financial Instruments
 Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133
  21




---



##### Table of Contents



Effective Dates
    
    Notional Amount
    
    
    Pay Rates
    
    
    Maturity Dates(amounts in millions)February 28, 2008
    
    $
    100
    (1)
    
    
    3.212
    %
    
    February 28, 2011March 31, 2008
    
    
    100
    (1)
    
    
    3.50
    %
    
    March 29, 2013Total
    
    $
    200
 
 (1)
    
    Consists of one swap.  (Gain) Loss Recognized(Gain) Loss Recognized in
    
    in AccumulatedInterest Expense
    
    Other ComprehensiveFrom the Change in Fair Value of
    
    Loss From Effective InterestInterest Rate Swaps
    
    Rate SwapsFair Value
    
    Three Months
    
    Nine Months
    
    Three Months
    
    Nine MonthsMeasurements
    
    Ended
    
    Ended
    
    Ended
    
    Endedat September 30,
    
    September 30,
    
    September 30,
    
    September 30,
    
    September 30,2009
    
    2009
    
    2009
    
    2009
    
    2009Accounts Payable and Accrued
Liabilities
    
    $
    (5,026
    )
    
    $
    3,098
    
    
    $
    13,517
    
    
    $
    (4,120
    )
    
    $
    7,930Other Non-Current Liabilities
    
    
    (2,415
    )
    
    
    846
    
    
    
    (11,683
    )
    
    
    
    
    
    
    (8,166
    )Total Liabilities
    
    $
    (7,441
    )
    
    $
    3,944
    
    
    $
    1,834
    
    
    $
    (4,120
    )
    
    $
    (236
    )
     22




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##### Table of Contents



7. Income Taxes
       23




---



##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember 30
    
    September 302009
    
    2008
    
    2009
    
    2008Income (loss) before income taxes
    
    $
    45,855
    
    
    $
    58,032
    
    
    $
    (77,728
    )
    
    $
    (2,875,704
    )Statutory U.S. Federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of U.S. Federal tax benefit
    
    
    (8.0
    )
    
    
    15.1
    
    
    
    1.4
    
    
    
    3.0Non-deductible goodwill impairment charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.1
    )Other non-deductible expenses
    
    
    27.7
    
    
    
    1.2
    
    
    
    (25.0
    )
    
    
    Section 382 limitation
    
    
    
    
    
    
    
    
    
    
    (482.9
    )
    
    
    Change in state tax regulations
    
    
    (6.9
    )
    
    
    
    
    
    
    1.0
    
    
    
    Change in valuation allowance
    
    
    0.2
    
    
    
    4.5
    
    
    
    (2.2
    )
    
    
    (0.2
    )State tax benefit correction
    
    
    (12.7
    )
    
    
    
    
    
    
    
    
    
    
    Stock option forfeitures
    
    
    12.5
    
    
    
    
    
    
    
    (8.6
    )
    
    
    Other
    
    
    
    
    
    
    (0.7
    )
    
    
    (1.2
    )
    
    
    Effective tax rate
    
    
    47.8
    %
    
    
    55.1
    %
    
    
    (482.5
    )%
    
    
    32.7
    %
  8. Benefit Plans
  
    
    Effective as of December 31, 2009, the Company will freeze the Dex Media, Inc. Pension
Plan covering IBEW employees. In connection with the freeze, all pension plan benefit
accruals for IBEW plan participants will cease as of December 31, 2009, however, all plan
balances remain intact and interest credits on participant account balances, as well as
service credits for vesting and retirement eligibility, continue in accordance with the
terms of the plan. In addition, supplemental transition credits have been provided to
certain plan participants nearing retirement who would otherwise lose a portion of their
anticipated pension benefit at age 65 as a result of freezing the current plan. Similar
supplemental transition credits have been provided to certain plan participants who were
grandfathered under a final average pay formula when the defined benefit plan was
previously converted from a traditional pension plan to a cash balance plan.
    
    The elimination of all non-subsidized access to retiree health care and life insurance
benefits effective January 1, 2010.
    
    The elimination of subsidized retiree health care benefits for any Medicare-eligible
retirees effective January 1, 2010.
    
    The phase out of subsidized retiree health care benefits over a three-year period
beginning January 1, 2010. With respect to the phase out of subsidized retiree health care
benefits, if an eligible retiree becomes Medicare-eligible at any point in time during the
phase out process noted above, such retiree will no longer be eligible for retiree health
care coverage.
 24




---



##### Table of Contents



Pension BenefitsThree Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2009
    
    2008
    
    2009
    
    2008Service cost
    
    $
    1,253
    
    
    $
    2,986
    
    
    $
    4,116
    
    
    $
    9,722Interest cost
    
    
    3,515
    
    
    
    4,730
    
    
    
    10,966
    
    
    
    13,909Expected return on plan assets
    
    
    (4,387
    )
    
    
    (4,864
    )
    
    
    (13,512
    )
    
    
    (15,019
    )Amortization of prior service cost
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    145Amortization of net (gain)/ loss
    
    
    (81
    )
    
    
    205
    
    
    
    (108
    )
    
    
    597Settlement loss
    
    
    
    
    
    
    
    
    
    
    3,546
    
    
    
    Net periodic benefit cost
    
    $
    300
    
    
    $
    3,104
    
    
    $
    5,008
    
    
    $
    9,354
 Postretirement BenefitsThree Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2009
    
    2008
    
    2009
    
    2008Service cost
    
    $
    122
    
    
    $
    471
    
    
    $
    525
    
    
    $
    1,414Interest cost
    
    
    603
    
    
    
    1,484
    
    
    
    2,006
    
    
    
    4,452Amortization of prior service cost
    
    
    (1
    )
    
    
    167
    
    
    
    (4
    )
    
    
    501Amortization of net (gain)/ loss
    
    
    (174
    )
    
    
    9
    
    
    
    (436
    )
    
    
    27Curtailment gain
    
    
    
    
    
    
    
    
    
    
    (13,460
    )
    
    
    Net periodic benefit cost
    
    $
    550
    
    
    $
    2,131
    
    
    $
    (11,369
    )
    
    $
    6,394
  25




---



##### Table of Contents



9. Business Segments
  10. Legal Proceedings
      26




---



##### Table of Contents



11. R.H. Donnelley Corporation (Parent Company) Financial Statements
   R.H. Donnelley Corporation
Condensed Parent Company Balance Sheets
 September 30,
    
    December 31,2009
    
    2008AssetsCash and cash equivalents
    
    $
    3,048
    
    
    $
    948Intercompany, net
    
    
    103,460
    
    
    
    350,490Short-term
deferred income taxes, net
    
    
    24,352
    
    
    
    Intercompany note receivable
    
    
    5,000
    
    
    
    Prepaid and other current assets
    
    
    2,739
    
    
    
    6,964Total current assets
    
    
    138,599
    
    
    
    358,402Investment in subsidiaries
    
    
    2,035,532
    
    
    
    2,098,154Fixed assets and computer
software, net
    
    
    5,211
    
    
    
    7,844Other non-current assets
    
    
    
    
    
    
    65,651Intercompany note receivable
    
    
    300,000
    
    
    
    300,000Total assets
    
    $
    2,479,342
    
    
    $
    2,830,051Liabilities and Shareholders DeficitAccounts payable and accrued liabilities
    
    $
    5,264
    
    
    $
    7,978Accrued interest
    
    
    
    
    
    
    97,025Total current liabilities not
subject to compromise
    
    
    5,264
    
    
    
    105,003Long-term debt
    
    
    
    
    
    
    3,206,456Deferred income taxes, net
    
    
    3,966
    
    
    
    2,928Other non-current liabilities
    
    
    6,098
    
    
    
    9,039Total liabilities not subject to
compromise
    
    
    15,328
    
    
    
    3,323,426Liabilities subject to compromise
    
    
    3,383,882
    
    
    
    Shareholders deficit
    
    
    (919,868
    )
    
    
    (493,375
    )Total liabilities and shareholders deficit
    
    $
    2,479,342
    
    
    $
    2,830,051
 27




---



##### Table of Contents



R.H. Donnelley Corporation
Condensed Parent Company Statements of Operations
 For the Three Months Ended September 30,2009
    
    2008Expenses
    
    $
    6,588
    
    
    $
    6,431Partnership and equity income
    
    
    51,756
    
    
    
    60,146Operating income
    
    
    45,168
    
    
    
    53,715Interest expense, net
    
    
    
    
    
    
    (68,062
    )Gain on debt transactions, net
    
    
    
    
    
    
    72,379Income before reorganization
items, net and income taxes
    
    
    45,168
    
    
    
    58,032Reorganization items, net
    
    
    687
    
    
    
    Income before income taxes
    
    
    45,855
    
    
    
    58,032Provision for income taxes
    
    
    (21,925
    )
    
    
    (31,949
    )Net income
    
    $
    23,930
    
    
    $
    26,083For the Nine Months Ended September 30,2009
    
    2008Expenses
    
    $
    16,841
    
    
    $
    19,279Partnership and equity income (loss)
    
    
    143,784
    
    
    
    (2,873,423
    )Operating income (loss)
    
    
    126,943
    
    
    
    (2,892,702
    )Interest expense, net
    
    
    (106,036
    )
    
    
    (230,621
    )Gain on debt transactions, net
    
    
    
    
    
    
    233,694Income (loss) before reorganization
items, net and income taxes
    
    
    20,907
    
    
    
    (2,889,629
    )Reorganization items, net
    
    
    (98,635
    )
    
    
    Loss before income taxes
    
    
    (77,728
    )
    
    
    (2,889,629
    )(Provision) benefit for income taxes
    
    
    (375,033
    )
    
    
    953,697Net loss
    
    $
    (452,761
    )
    
    $
    (1,935,932
    )
 R.H. Donnelley Corporation
Condensed Parent Company Statements of Cash Flows
 For the Nine Months EndedSeptember 30,2009
    
    2008Cash flow from operating activities
    
    $
    (121,360
    )
    
    $
    (248,790
    )Cash flow from investing activities:Additions to fixed assets and computer
software, net
    
    
    (200
    )
    
    
    (1,092
    )Intercompany loan
    
    
    (5,000
    )
    
    
    Equity investment disposition
    
    
    
    
    
    
    4,318Net cash (used in) provided by investing
activities
    
    
    (5,200
    )
    
    
    3,226Cash flow from financing activities:(Decrease) increase in checks not yet
presented for payment
    
    
    (940
    )
    
    
    172Debt issuance costs
    
    
    
    
    
    
    (349
    )Proceeds from employee stock
option exercises
    
    
    
    
    
    
    96Note repurchases
    
    
    
    
    
    
    (84,426
    )Repurchase of common stock
    
    
    
    
    
    
    (6,112
    )Excess tax benefits from the exercise of
stock options
    
    
    
    
    
    
    (47
    )Dividends from subsidiaries
    
    
    129,600
    
    
    
    319,100Net cash provided by financing activities
    
    
    128,660
    
    
    
    228,434Change in cash
    
    
    2,100
    
    
    
    (17,130
    )Cash at beginning of year
    
    
    948
    
    
    
    18,900Cash at end of period
    
    $
    3,048
    
    
    $
    1,770
 28




---



##### Table of Contents



12. Subsequent Events
     29




---



##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Forward-Looking Information
  Corporate Overview
  
    
    We provide simple, cost effective marketing solutions to our advertisers that generate a
large volume of ready-to-buy consumers for their local businesses.
    
    We provide local search solutions to consumers that are easy to use and deliver highly
relevant search results through a variety of print and online media platforms.
  30




---



##### Table of Contents




    
    Brand:Our Dex brand provides differentiation and an ability to leverage the
capabilities of our print products into other media, such as online and mobile;
    
    Advertisers:Strong, long-term relationships with our advertisers;
    
    Products:Our multiple media local search solutions target consumers who are closer to
making purchase decisions;
    
    Channel:We manage a large, established local sales organization; and
    
    Content:Our proprietary database contains up-to-date information for national and
local businesses in 28 states and an infrastructure to service these national and local
advertisers.
 Chapter 11 Bankruptcy Proceedings and Plan of Reorganization
 Filing of Voluntary Petitions in Chapter 11
 et al.
   Commencement of Chapter 11 Cases
   31




---



##### Table of Contents



Proposed Plan of Reorganization
 .
  (i)
    
    Elimination of approximately $6.4 billion of indebtedness, including the payment of
$700.0 million of secured indebtedness, and $500.0 million of annual interest expense;(ii)
    
    The exchange of all pre-petition publicly issued unsecured note debt for (a) 100% of
the reorganized RHD equity that is subject to dilution pursuant to a stock-based management
incentive plan, which is expected to permit equity-based compensation in an amount of not
less than 10% of the fully diluted RHD equity, if approved in accordance with the Plan and
(b) in the case of the holders of the Dex Media West LLC (Dex Media West) 8.5% Senior
Notes due 2010 and 5.875% Senior Notes due 2011, $300.0 million of new seven-year RHD
unsecured notes on a pro rata basis in addition to their share of the reorganized RHD
equity;(iii)
    
    The obligations of the lenders under the RHDI revolving credit facility (the RHDI
Revolver) to make additional advances terminated on the Petition Date and the outstanding
loans under the RHDI Revolver will be converted to a term loan with a maturity date of
October 2014 and an interest rate of LIBOR plus 625 basis points (bps), subject to a
reduction upon satisfaction of a specified financial covenant threshold, and the current
RHDI term loans will be amended to extend the maturity date to October 2014 with an
interest rate of LIBOR plus 625 bps, subject to a reduction upon satisfaction of a
specified financial covenant threshold;(iv)
    
    The obligations of the lenders under the Dex Media East LLC (Dex Media East)
revolving credit facility (Dex Media East Revolver) to make additional advances
terminated on the Petition Date, and the outstanding loans under the Dex Media East
Revolver will be converted to a term loan with a maturity date of October 2014 and an
interest rate of LIBOR plus 250 bps, subject to reductions upon satisfaction of certain
financial covenant thresholds, the current Dex Media East Term Loan A will be amended to
extend the maturity date to October 2014 and increase the interest rate to LIBOR plus 250
bps, subject to reductions upon satisfaction of certain financial covenant thresholds, and
the Dex Media East Term Loan B will be amended to increase the interest rate to LIBOR plus
250 bps, subject to reductions upon satisfaction of certain financial covenant thresholds;
 32




---



##### Table of Contents



(v)
    
    The obligations of the lenders under the Dex Media West revolving credit facility (Dex
Media West Revolver) to make additional advances terminated on the Petition Date and the
outstanding loans under the Dex Media West Revolver will be converted to a term loan with a
maturity date of October 2014 and an interest rate of LIBOR plus 450 bps, subject to
reductions upon satisfaction of certain financial covenant thresholds, the current Dex
Media West Term Loan A will be amended to extend the maturity date to October 2014 and
increase the interest rate to LIBOR plus 450 bps, subject to reductions upon satisfaction
of certain financial covenant thresholds, and the Dex Media West Term Loan B will be
amended to increase the interest rate to LIBOR plus 450 bps, subject to reductions upon
satisfaction of certain financial covenant thresholds; and(vi)
    
    Enhancement of the collateral and guarantees of the Dex Media East, Dex Media West and
RHDI secured debt. As of emergence, the Companys proposed Plan would, if adopted in its
present form, result in consolidated debt of approximately $3.4 billion, of which $3.1
billion would be secured.
  Recent Trends Related to Our Business
   33




---



##### Table of Contents



Going Concern
  Accounting Matters
  34




---



##### Table of Contents



Other Significant Financing Developments
  Description
    
    AmountRHDITerm Loan D-1.
    
    $
    13,797Term Loan D-2.
    
    
    54,912Revolver
    
    
    8,938Dex Media WestTerm Loan A
    
    
    6,971Term Loan B
    
    
    50,941Revolver
    
    
    4,826Dex Media EastTerm Loan A
    
    
    34,176Term Loan B
    
    
    20,454Revolver
    
    
    4,985Total repayment
    
    $
    200,000
  Description
    
    AmountRHDI11.75% Senior Notes due 2015
    
    $
    24,256Dex Media, Inc.8% Senior Notes due 2013
    
    
    20,0009% Senior Discount Notes due 2013
    
    
    33,744Dex Media West5.875% Senior Notes due 2011
    
    
    256Total interest payments
    
    $
    78,256
     35




---



##### Table of Contents



Employee Retirement Savings and Pension Plans
  
    
    Effective as of December 31, 2009, the Company will freeze the Dex Media, Inc. Pension
Plan covering IBEW employees. In connection with the freeze, all pension plan benefit
accruals for IBEW plan participants will cease as of December 31, 2009, however, all plan
balances remain intact and interest credits on participant account balances, as well as
service credits for vesting and retirement eligibility, continue in accordance with the
terms of the plan. In addition, supplemental transition credits have been provided to
certain plan participants nearing retirement who would otherwise lose a portion of their
anticipated pension benefit at age 65 as a result of freezing the current plan. Similar
supplemental transition credits have been provided to certain plan participants who were
grandfathered under a final average pay formula when the defined benefit plan was
previously converted from a traditional pension plan to a cash balance plan.
    
    The elimination of all non-subsidized access to retiree health care and life insurance
benefits effective January 1, 2010.
    
    The elimination of subsidized retiree health care benefits for any Medicare-eligible
retirees effective January 1, 2010.
    
    The phase out of subsidized retiree health care benefits over a three-year period
beginning January 1, 2010. With respect to the phase out of subsidized retiree health care
benefits, if an eligible retiree becomes Medicare-eligible at any point in time during the
phase out process noted above, such retiree will no longer be eligible for retiree health
care coverage.
  Segment Reporting
  New Accounting Pronouncements
 Revenue Arrangements with Multiple Deliverables Revenue Arrangements with Multiple Deliverables
 36




---



##### Table of Contents



The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles   a replacement of FASB Statement No. 162
 Subsequent Events
  37




---



##### Table of Contents



RESULTS OF OPERATIONS
Three and nine months ended September 30, 2009 and 2008
 Net Revenues
  Three months ended September 30,(amounts in millions)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeGross advertising revenues
    
    $
    535.4
    
    
    $
    649.5
    
    
    $
    (114.1
    )
    
    
    (17.6
    )%Sales claims and allowances
    
    
    (8.7
    )
    
    
    (11.1
    )
    
    
    2.4
    
    
    
    21.6Net advertising revenues
    
    
    526.7
    
    
    
    638.4
    
    
    
    (111.7
    )
    
    
    (17.5
    )Other revenues
    
    
    7.3
    
    
    
    9.6
    
    
    
    (2.3
    )
    
    
    (24.0
    )Total
    
    $
    534.0
    
    
    $
    648.0
    
    
    $
    (114.0
    )
    
    
    (17.6
    )%
 Nine months ended September 30,(amounts in millions)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeGross advertising revenues
    
    $
    1,713.5
    
    
    $
    1,992.0
    
    
    $
    (278.5
    )
    
    
    (14.0
    )%Sales claims and allowances
    
    
    (34.6
    )
    
    
    (34.2
    )
    
    
    (0.4
    )
    
    
    (1.2
    )Net advertising revenues
    
    
    1,678.9
    
    
    
    1,957.8
    
    
    
    (278.9
    )
    
    
    (14.2
    )Other revenues
    
    
    22.7
    
    
    
    28.6
    
    
    
    (5.9
    )
    
    
    (20.6
    )Total
    
    $
    1,701.6
    
    
    $
    1,986.4
    
    
    $
    (284.8
    )
    
    
    (14.3
    )%
    38




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##### Table of Contents



Expenses
  Three months ended September 30,(amounts in millions)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeProduction
and distribution expenses
    
    $
    83.7
    
    
    $
    105.1
    
    
    $
    (21.4
    )
    
    
    (20.4
    )%Selling and support expenses
    
    
    162.4
    
    
    
    185.6
    
    
    
    (23.2
    )
    
    
    (12.5
    )General and administrative expenses
    
    
    28.8
    
    
    
    46.0
    
    
    
    (17.2
    )
    
    
    (37.4
    )Depreciation and amortization
    
    
    142.6
    
    
    
    125.4
    
    
    
    17.2
    
    
    
    13.7Total
    
    $
    417.5
    
    
    $
    462.1
    
    
    $
    (44.6
    )
    
    
    (9.7
    )%
 Nine months ended September 30,(amounts in millions)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeProduction and distribution
expenses
    
    $
    268.4
    
    
    $
    317.7
    
    
    $
    (49.3
    )
    
    
    (15.5
    )%Selling and support expenses
    
    
    499.5
    
    
    
    547.5
    
    
    
    (48.0
    )
    
    
    (8.8
    )General and administrative expenses
    
    
    82.0
    
    
    
    111.0
    
    
    
    (29.0
    )
    
    
    (26.1
    )Depreciation and amortization
    
    
    427.7
    
    
    
    363.2
    
    
    
    64.5
    
    
    
    17.8Impairment charges
    
    
    
    
    
    
    3,123.9
    
    
    
    (3,123.9
    )
    
    
    N/MTotal
    
    $
    1,277.6
    
    
    $
    4,463.3
    
    
    $
    (3,185.7
    )
    
    
    (71.4
    )%
 (N/M: Not Meaningful)
  39




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##### Table of Contents



Production and Distribution Expenses
  Three months ended
    
    Nine months ended(amounts in millions)
    
    September 30, 2009
    
    September 30, 2009$ ChangeDecreased internet production and distribution costs
    
    $
    (8.0
    )
    
    $
    (15.9
    )Decreased print, paper and distribution costs
    
    
    (7.7
    )
    
    
    (20.1
    )Decreased information technology (IT) expenses
    
    
    (3.7
    )
    
    
    (7.8
    )All other, net
    
    
    (2.0
    )
    
    
    (5.5
    )Total decrease in
production and
distribution expenses for
the three and nine months
ended September 30,
2009
    
    $
    (21.4
    )
    
    $
    (49.3
    )
    Selling and Support Expenses
  Three months ended
    
    Nine months ended(amounts in millions)
    
    September 30, 2009
    
    September 30, 2009$ ChangeDecreased commissions and salesperson costs
    
    $
    (14.4
    )
    
    $
    (41.4
    )(Decreased) increased bad debt expense
    
    
    (5.4
    )
    
    
    11.1Decreased directory publishing costs
    
    
    (2.8
    )
    
    
    (8.2
    )Decreased incentive compensation expense
    
    
    (1.8
    )
    
    
    (5.2
    )Decreased billing, credit and collection expenses
    
    
    (1.4
    )
    
    
    (4.3
    )Increased advertising expenses
    
    
    4.6
    
    
    
    8.4All other, net
    
    
    (2.0
    )
    
    
    (8.4
    )Total decrease in selling
and support expenses for
the three and nine months
ended September 30,
2009
    
    $
    (23.2
    )
    
    $
    (48.0
    )
 40




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##### Table of Contents



General and Administrative Expenses
  Three months ended
    
    Nine months ended(amounts in millions)
    
    September 30, 2009
    
    September 30, 2009$ ChangeDecrease in restructuring expenses
    
    $
    (13.1
    )
    
    $
    (6.7
    )Decreased incentive compensation expense
    
    
    (1.2
    )
    
    
    (4.5
    )Curtailment gains, net
    
    
    
    
    
    
    (13.5
    )All other, net
    
    
    (2.9
    )
    
    
    (4.3
    )Total decrease in G&A
expenses for the
three and nine months
ended September 30,
2009
    
    $
    (17.2
    )
    
    $
    (29.0
    )
 41




---



##### Table of Contents



Depreciation and Amortization
    42




---



##### Table of Contents



Impairment Charges
   
    
    Historical financial information, including revenue, profit margins, customer attrition
data and price premiums enjoyed relative to competing independent publishers;
    
    Long-term financial projections, including, but not limited to, revenue trends and
profit margin trends; and
    
    Intangible asset carrying values.
   Operating Income (Loss)
  Three months ended September 30,(amounts in millions)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeTotal
    
    $
    116.5
    
    
    $
    185.9
    
    
    $
    (69.4
    )
    
    
    (37.3
    )%
 Nine months ended September 30,(amounts in millions)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeTotal
    
    $
    424.0
    
    
    $
    (2,476.9
    )
    
    $
    2,900.9
    
    
    
    N/M
 43




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##### Table of Contents



Interest Expense, Net
      44




---



##### Table of Contents



Gain on Debt Transactions, Net
     Reorganization Items, Net
  Three months ended
    
    Nine months endedSeptember 30, 2009
    
    September 30, 2009Write-off of unamortized deferred financing costs
    
    $
    
    
    
    $
    64,475Professional fees
    
    
    8,815
    
    
    
    59,278Write-off of net premiums / discounts on long-term debt
    
    
    
    
    
    
    34,886Write-off of fair value adjustments
    
    
    
    
    
    
    (78,511
    )Lease rejections, abandoned property and other
    
    
    (1,708
    )
    
    
    (2,241
    )Total reorganization items
    
    $
    7,107
    
    
    $
    77,887
     45




---



##### Table of Contents



Income Taxes
    Net Income (Loss) and Earnings (Loss) Per Share
   46




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Debt
  Notes in Default
    
    
    Credit FacilitiesSeptember 30, 2009
    
    
    December 31, 2008RHD6.875% Senior Notes due 2013
    
    $
    206,791
    
    
    $
    
    
    
    $
    206,7916.875% Series A-1 Senior Discount Notes due 2013
    
    
    320,903
    
    
    
    
    
    
    
    301,8626.875% Series A-2 Senior Discount Notes due 2013
    
    
    483,365
    
    
    
    
    
    
    
    455,2048.875% Series A-3 Senior Notes due 2016
    
    
    1,012,839
    
    
    
    
    
    
    
    1,012,8398.875% Series A-4 Senior Notes due 2017
    
    
    1,229,760
    
    
    
    
    
    
    
    1,229,760R.H. Donnelley Inc.Credit Facility
    
    
    
    
    
    
    1,427,354
    
    
    
    1,341,09811.75% Senior Notes due 2015
    
    
    412,871
    
    
    
    
    
    
    
    412,871Dex Media, Inc.8% Senior Notes due 2013
    
    
    500,000
    
    
    
    
    
    
    
    510,4089% Senior Discount Notes due 2013
    
    
    749,857
    
    
    
    
    
    
    
    771,488Dex Media EastCredit Facility
    
    
    
    
    
    
    1,065,286
    
    
    
    1,081,500Dex Media WestCredit Facility
    
    
    
    
    
    
    1,096,616
    
    
    
    1,080,0008.5% Senior Notes due 2010
    
    
    385,000
    
    
    
    
    
    
    
    393,8835.875% Senior Notes due 2011
    
    
    8,720
    
    
    
    
    
    
    
    8,7619.875% Senior Subordinated Notes due 2013
    
    
    761,650
    
    
    
    
    
    
    
    815,791Total RHD consolidated
    
    
    6,071,756
    
    
    
    3,589,256
    
    
    
    9,622,256Less current portion not subject to compromise
    
    
    
    
    
    
    796,926
    
    
    
    113,566Long-term debt subject to compromise
    
    $
    6,071,756
    
    
    
    
    
    
    
    Long-term debt not subject to compromise
    
    
    
    
    
    $
    2,792,330
    
    
    $
    9,508,690
 Credit Facilities
  47




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##### Table of Contents



RHDI
  Dex Media East
  Dex Media West
  Impact of Purchase Accounting
  Impact of Economic Instability on Prospective Pension Funding
  48




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##### Table of Contents



Liquidity and Cash Flows
        
    
    $452.8 million in net loss.
    
    $969.6 million of net non-cash items primarily consisting of $427.7 million of
depreciation and amortization, $372.7 million in deferred income taxes, $113.5 million
in bad debt provision, $26.1million in other non-cash items, primarily related to the
change in the fair value of our interest rate swap agreements, $18.7 million associated
with net reorganization items, $9.1million of stock-based compensation expense and an
increase in interest expense of $1.8 million associated with the change in fair value of
our interest rate swaps.
    
    $135.1 million net use of cash from a decrease in deferred directory revenues of
$202.5 million, primarily due to lower advertising sales, offset by a net decrease in
accounts receivable of $67.4 million, which is comprised of a decrease in accounts
receivable of $180.9 million, offset by the provision for bad debts of $113.5 million.
During 2009, the Company has experienced deterioration in its accounts receivable aging
categories, which has been driven by weaker economic conditions. The change in deferred
revenues and accounts receivable are analyzed together given the fact that when a
directory is published, the annual billable value of that directory is initially
deferred and unbilled accounts receivable are established. Each month thereafter,
typically one twelfth of the billing value is recognized as revenues and billed to
customers.
 49




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##### Table of Contents




    
    $56.5 million net source of cash from a decrease in other assets, consisting of a
$38.5 million decrease in other current and non-current assets, primarily relating to
deferred commissions, print, paper and delivery costs and changes in the fair value of
the Companys interest rate swap agreements, as well as a $18.0 million decrease in
prepaid directory costs resulting from publication seasonality.
    
    $60.2 million net source of cash from an increase in accounts payable and accrued
liabilities, primarily resulting from an increase in accrued interest payable of $64.6
million and a $22.2 million increase in other accrued liabilities, offset by a $26.6
million decrease in trade accounts payable. These changes comprise items included in
liabilities subject to compromise on the condensed consolidated balance sheet at
September 30, 2009. The source of cash from an increase in accounts payable and accrued
liabilities is a direct result of filing the Chapter 11 petitions, whereby payment of
pre-petition obligations has been delayed.
    
    $89.9 million decrease in other non-current liabilities primarily resulting from the
change in fair value of our interest rate swaps as well as the change in pension and
postretirement long-term liabilities.
  
    
    $18.2 million used to purchase fixed assets, primarily computer equipment, software
and leasehold improvements.
  
    
    $255.6 million in principal payments on term loans under our secured credit
facilities.
    
    $361.0 million in borrowings under our revolvers. The Company made the borrowings
under the various revolving credit facilities to preserve its financial flexibility in
light of the continuing uncertainty in the global credit markets.
    
    $18.7 million in principal payments on our revolvers.
    
    $1.8 million in the decreased balance of checks not yet presented for payment.
  
    
    $(1,935.9) million in net loss, which includes the impact of the non-cash goodwill
impairment charges.
    
    $2,180.9 million of net non-cash items consisting of the non-cash goodwill impairment
charge of $3,123.9 million, offset by $943.0 million in deferred income taxes, which
includes the tax impact of the non-cash goodwill impairment charges.
    
    $231.5 million net gain on the debt transactions.
    
    $563.7 million of other net non-cash items primarily consisting of $363.2 million of
depreciation and amortization, $102.5 million in bad debt provision, $30.3 million of
net additional interest expense associated with ineffective interest rate swaps, $23.4
million of stock-based compensation expense and $44.3 million in other non-cash items,
primarily consisting of $54.4 million related to the accretion of our discounted debt,
$20.5 million related to the amortization of deferred financing costs, offset by $17.5
million associated with the change in fair value of our interest rate swaps and $13.1
million associated with the amortization of the fair value adjustments required by GAAP
as a result of the Dex Media Merger, which reduced interest expense.
 50




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##### Table of Contents




    
    $149.1 million net use of cash from a decrease in deferred directory revenues of $74.4
million due to lower advertising sales and an increase in accounts receivable of $74.7
million due to an increase in days outstanding of customer balances and deterioration in
accounts receivable aging categories, which has been driven by the extension of the
write-off policy in our Qwest markets to conform to the legacy RHD markets, weaker
economic conditions, the transition to in-house billing and collection services for
certain local customers in our Qwest markets that were previously performed by Qwest on
our behalf, as well as publication cycle seasonality. The change in deferred revenues and
accounts receivable are analyzed together given the fact that when a directory is
published, the annual billable value of that directory is initially deferred and unbilled
accounts receivable are established. Each month thereafter, typically one twelfth of the
billing value is recognized as revenues and billed to customers.
    
    $49.5 million net source of cash from a decrease in other assets, consisting of a
$42.7 million decrease in prepaid directory costs resulting from publication seasonality
as well as a $6.8 million decrease in other current and non-current assets, primarily
relating to deferred commissions, print, paper and delivery costs and changes in the
fair value of the Companys interest rate swap agreements.
    
    $99.1 million net use of cash from a decrease in accounts payable and accrued
liabilities, primarily reflecting a $47.5 million decrease in trade accounts payable
resulting from timing of invoice processing versus payment thereon, a $51.3 million
decrease in accrued interest payable on outstanding debt and a $0.3 million decrease in
other accrued liabilities.
    
    $8.1 million increase in other non-current liabilities, including pension and
postretirement long-term liabilities.
  
    
    $47.3 million used to purchase fixed assets, primarily computer equipment, software
and leasehold improvements.
    
    $4.3 million in cash proceeds from the disposition of an equity investment in the
fourth quarter of 2007, which were received in January 2008.
  
    
    $1,018.2 million in proceeds, net of costs, from borrowings under our new Dex Media
West credit facility, which was used to refinance the former Dex Media West credit
facility and pay related fees and expenses.
    
    $1,224.7 million in principal payments on term loans under our credit facilities and
notes. With regard to our credit facilities, $38.7 million represents scheduled
principal payments and $1,186.0 million represents principal payments made on an
accelerated basis, at our option, from proceeds received with the new Dex Media West
credit facility and from available cash flow generated from operations.
    
    $398.1 million in borrowings under our revolvers, used primarily to fund temporary
working capital requirements.
    
    $422.1 million in principal payments on our revolvers.
    
    $84.7 million associated with the September 2008 Debt Repurchases.
    
    $9.6 million in fees associated with the issuance of the RHDI Senior Notes, which has
been accounted for as a non-cash financing activity.
    
    $6.1 million used to repurchase our common stock. This use of cash pertains to common
stock repurchases made during 2007 that settled in January 2008.
    
    $1.9 million in the increased balance of checks not yet presented for payment.
    
    $0.1 million in proceeds from the exercise of employee stock options.
 51




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##### Table of Contents



Contractual Obligations
  Payment Due by PeriodLess than
    
    1-3
    
    3-5
    
    More than 5(amounts in millions)
    
    Total
    
    1 Year
    
    Years
    
    Years
    
    YearsLong-term debt (1)
    
    $
    3,589.3
    
    
    $
    796.9
    
    
    $
    1,056.2
    
    
    $
    528.9
    
    
    $
    1,207.3Interest on
long-term
debt (2)
    
    
    702.4
    
    
    
    208.0
    
    
    
    289.9
    
    
    
    198.2
    
    
    
    6.3Total long-term debt
and related interest
contractual
obligations
    
    $
    4,291.7
    
    
    $
    1,004.9
    
    
    $
    1,346.1
    
    
    $
    727.1
    
    
    $
    1,213.6
 
 (1)
    
    Included in long-term debt are principal amounts owed under our credit facilities,
including the current portion.(2)
    
    Interest on long-term debt represents cash interest payment obligations assuming
all indebtedness at September 30, 2009 will be paid in accordance with its contractual maturity and
assumes interest rates on variable interest debt as of September 30, 2009 will remain unchanged in
future periods. The weighted average interest rates under the RHDI, Dex Media East and Dex Media
West Credit Facilities were 6.72%, 2.11% and 6.95%, respectively, at September 30, 2009. Our notes
in default of $6.1 billion at September 30, 2009 have been excluded from this schedule as a result
of filing the Chapter 11 petitions and the Plan.In addition to amounts presented in the table above, our unrecognized tax benefits as of September
30, 2009 total $286.7 million, including accrued interest and penalties. It is reasonably possible
that this amount of unrecognized tax benefits could decrease within the next twelve months. We are
currently under audit in New York State for taxable years 2003 through 2004 and North Carolina for
taxable years 2003 through 2006. If the New York State or North Carolina audits are resolved within
the next twelve months, the total amount of unrecognized tax benefits could decrease by
approximately $18.1 million. The unrecognized tax benefits related to the New York State and North
Carolina audits relate to apportionment and allocation of income among our various legal entities. 52




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##### Table of Contents



Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk and Risk Management
         53




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##### Table of Contents



Market Risk Sensitive Instruments
   54




---



##### Table of Contents



Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
 ,
 Remediation Plan for Material Weakness in Internal Control Over Financial Reporting
   
    
    During 2008, the
Company began to
implement, and
during 2009 it
intends to fully
implement controls
to formalize its
evaluation of
deferred income tax
balances including
a comprehensive
reconciliation
between deferred
income tax balances
determined on a
basis in conformity
with U.S. generally
accepted accounting
principles for
financial reporting
purposes and those
determined for tax
reporting purposes;
    
    During 2008, the
Company began to
implement, and
during 2009 it
intends to fully
implement an
acceleration of the
timing of certain
tax review
activities,
including
apportionment and
allocation for
income tax
reporting purposes,
during the
financial statement
closing process;
    
    The Company intends
to improve
documentation and
institute more
formalized review
of tax positions
taken, with senior
management and
external experts,
to ensure proper
evaluation and
accounting
treatment of
complex tax issues;
and
    
    The Company intends
to evaluate and
supplement and/or
train internal
resources, as
necessary, and
evaluate external
experts.
  55




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
       
 Item 1A. Risk Factors
  56




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##### Table of Contents



Item 3. Defaults Upon Senior Securities
     57




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##### Table of Contents



Exhibits
 Exhibit No.
    
    Document31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2009 by David C. Swanson, Chairman and
Chief Executive Officer of R.H. Donnelley Corporation under
Section 302 of the Sarbanes-Oxley Act31.2*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2009 by Steven M. Blondy, Executive Vice
President and Chief Financial Officer of R.H. Donnelley
Corporation under Section 302 of the Sarbanes-Oxley Act32.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2009 under Section 906 of the
Sarbanes-Oxley Act by David C. Swanson, Chairman and Chief
Executive Officer, and Steven M. Blondy, Executive Vice
President and Chief Financial Officer, for R.H. Donnelley
Corporation
 
 *
    
    Filed herewith. 58




---



##### Table of Contents



SIGNATURES
  R.H. DONNELLEY CORPORATIONDate: November 3, 2009
    By:
    /s/ Steven M. BlondySteven M. BlondyExecutive Vice President and Chief Financial Officer
(Principal Financial Officer)/s/ Sylvester J. JohnsonSylvester J. JohnsonVice President, Corporate Controller and Chief
Accounting Officer
(Principal Accounting Officer) 59




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Document31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2009 by David C. Swanson, Chairman and
Chief Executive Officer of R.H. Donnelley Corporation under
Section 302 of the Sarbanes-Oxley Act31.2*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2009 by Steven M. Blondy, Executive Vice
President and Chief Financial Officer of R.H. Donnelley
Corporation under Section 302 of the Sarbanes-Oxley Act32.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2009 under Section 906 of the
Sarbanes-Oxley Act by David C. Swanson, Chairman and Chief
Executive Officer, and Steven M. Blondy, Executive Vice
President and Chief Financial Officer, for R.H. Donnelley
Corporation
 
 *
    
    Filed herewith. 60