##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 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
 (Registrants telephone number, including area code)
  (Former Name, Former Address and Former
 þ o
  þ o o o
  o þ
  Title of class
    
    Shares Outstanding at May 1, 2008Common Stock, par value $1 per share
    
    68,789,555




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##### 



R.H. DONNELLEY CORPORATION
 INDEX TO FORM 10-Q
 PART I.FINANCIAL INFORMATION
    
    
    PAGEItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at March 31, 2008 and December 31,
2007
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive (Loss)
Income for the three months ended March 31, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 2008 and 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    32PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    33Item 1A. Risk Factors
    
    
    33Item 6. Exhibits
    
    
    37SIGNATURES
    
    
    38Exhibit 31.1Exhibit 31.2Exhibit 32.1
  2




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##### Table of Contents



Part I. FINANCIAL INFORMATION
 
  R.H. Donnelley Corporation and Subsidiaries
 
 Condensed Consolidated Balance Sheets (Unaudited)
 March 31,
    
    December 31,(in thousands, except share data)
    
    2008
    
    2007AssetsCurrent AssetsCash and cash equivalents
    
    $
    29,901
    
    
    $
    46,076Accounts receivableBilled
    
    
    249,981
    
    
    
    258,839Unbilled
    
    
    892,500
    
    
    
    847,446Allowance for doubtful accounts and sales claims
    
    
    (43,129
    )
    
    
    (42,817
    )Net accounts receivable
    
    
    1,099,352
    
    
    
    1,063,468Deferred directory costs
    
    
    193,674
    
    
    
    183,687Short-term deferred income taxes, net
    
    
    60,989
    
    
    
    47,759Prepaid expenses and other current assets
    
    
    88,452
    
    
    
    126,201Total current assets
    
    
    1,472,368
    
    
    
    1,467,191Fixed assets and computer software, net
    
    
    182,251
    
    
    
    187,680Other non-current assets
    
    
    137,514
    
    
    
    139,406Intangible assets, net
    
    
    11,066,523
    
    
    
    11,170,482Goodwill
    
    
    660,239
    
    
    
    3,124,334Total Assets
    
    $
    13,518,895
    
    
    $
    16,089,093Liabilities and Shareholders EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    217,451
    
    
    $
    230,693Accrued interest
    
    
    156,900
    
    
    
    198,828Deferred directory revenues
    
    
    1,198,459
    
    
    
    1,172,035Current portion of long-term debt
    
    
    186,343
    
    
    
    177,175Total current liabilities
    
    
    1,759,153
    
    
    
    1,778,731Long-term debt
    
    
    9,894,503
    
    
    
    9,998,474Deferred income taxes, net
    
    
    1,471,905
    
    
    
    2,288,384Other non-current liabilities
    
    
    210,330
    
    
    
    200,768Total liabilities
    
    
    13,335,891
    
    
    
    14,266,357Commitments and contingenciesShareholders EquityCommon stock, par value $1 per share, authorized - 400,000,000 shares;
issued - 88,169,275
shares at March 31, 2008 and December 31, 2007; outstanding -
68,788,331 shares and 68,758,026 shares at March 31, 2008 and December
31, 2007, respectively
    
    
    88,169
    
    
    
    88,169Additional paid-in capital
    
    
    2,412,878
    
    
    
    2,402,181Accumulated deficit
    
    
    (2,008,651
    )
    
    
    (385,540
    )Treasury
stock, at cost, 19,380,944 shares at March 31, 2008 and 19,411,249
shares at December 31, 2007
    
    
    (256,296
    )
    
    
    (256,334
    )Accumulated other comprehensive loss
    
    
    (53,096
    )
    
    
    (25,740
    )Total shareholders equity
    
    
    183,004
    
    
    
    1,822,736Total Liabilities and Shareholders Equity
    
    $
    13,518,895
    
    
    $
    16,089,093
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##### Table of Contents



R.H. Donnelley Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)
 Three months endedMarch 31,(in thousands, except per share data)
    
    2008
    
    2007Net revenues
    
    $
    674,654
    
    
    $
    661,296ExpensesProduction, publication and distribution
expenses (exclusive of depreciation and
amortization shown separately below)
    
    
    109,177
    
    
    
    114,621Selling and support expenses
    
    
    186,316
    
    
    
    178,236General and administrative expenses
    
    
    34,889
    
    
    
    37,431Depreciation and amortization
    
    
    118,263
    
    
    
    103,030Goodwill impairment
    
    
    2,463,615
    
    
    
    Total expenses
    
    
    2,912,260
    
    
    
    433,318Operating (loss) income
    
    
    (2,237,606
    )
    
    
    227,978Interest expense, net
    
    
    (195,874
    )
    
    
    (201,615
    )(Loss) income before income taxes
    
    
    (2,433,480
    )
    
    
    26,363Benefit (provision) for income taxes
    
    
    810,369
    
    
    
    (10,412
    )Net (loss) income
    
    $
    (1,623,111
    )
    
    $
    15,951(Loss) earnings per share:Basic
    
    $
    (23.60
    )
    
    $
    0.23Diluted
    
    $
    (23.60
    )
    
    $
    0.22Shares used in computing (loss) earnings per share:Basic
    
    
    68,778
    
    
    
    70,663Diluted
    
    
    68,778
    
    
    
    72,003Comprehensive (Loss) IncomeNet (loss) income
    
    $
    (1,623,111
    )
    
    $
    15,951Unrealized loss on interest rate swaps, net of tax
    
    
    (27,610
    )
    
    
    (5,629
    )Benefit plans adjustment, net of tax
    
    
    254
    
    
    
    314Comprehensive (loss) income
    
    $
    (1,650,467
    )
    
    $
    10,636
  4




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R.H. Donnelley Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Three months endedMarch 31,(in thousands)
    
    2008
    
    2007Cash Flows from Operating ActivitiesNet (loss) income
    
    $
    (1,623,111
    )
    
    $
    15,951Reconciliation of net (loss) income to net cash provided by
operating activities:Goodwill impairment
    
    
    2,463,615
    
    
    
    Depreciation and amortization
    
    
    118,263
    
    
    
    103,030Deferred income tax (benefit) provision
    
    
    (812,114
    )
    
    
    10,207Provision for bad debts
    
    
    29,782
    
    
    
    21,009Stock based compensation expense
    
    
    10,816
    
    
    
    13,938Other non-cash items, net
    
    
    (8,414
    )
    
    
    11,383Changes in assets and liabilities, net of effects from acquisitions:(Increase) in accounts receivable
    
    
    (65,666
    )
    
    
    (58,054
    )Decrease in other assets
    
    
    21,622
    
    
    
    31,487(Decrease) in accounts payable and accrued liabilities
    
    
    (52,918
    )
    
    
    (56,453
    )Increase in deferred directory revenues
    
    
    26,424
    
    
    
    43,086(Decrease) increase in other non-current liabilities
    
    
    (8,363
    )
    
    
    8,168Net cash provided by operating activities
    
    
    99,936
    
    
    
    143,752Cash Flows from Investing ActivitiesAdditions to fixed assets and computer software
    
    
    (10,118
    )
    
    
    (13,120
    )Equity investment disposition (investment)
    
    
    4,318
    
    
    
    (2,500
    )Net cash used in investing activities
    
    
    (5,800
    )
    
    
    (15,620
    )Cash Flows from Financing ActivitiesCredit facilities repayments and note repurchases
    
    
    (91,418
    )
    
    
    (193,528
    )Revolver borrowings
    
    
    215,300
    
    
    
    207,250Revolver repayments
    
    
    (232,350
    )
    
    
    (226,350
    )Repurchase of common stock
    
    
    (6,112
    )
    
    
    Increase (decrease) in checks not yet presented for payment
    
    
    4,180
    
    
    
    (6,203
    )Proceeds from employee stock option exercises
    
    
    89
    
    
    
    9,111Net cash used in financing activities
    
    
    (110,311
    )
    
    
    (209,720
    )Decrease in cash and cash equivalents
    
    
    (16,175
    )
    
    
    (81,588
    )Cash and cash equivalents, beginning of year
    
    
    46,076
    
    
    
    156,249Cash and cash equivalents, end of period
    
    $
    29,901
    
    
    $
    74,661Supplemental Information:Cash paid:Interest
    
    $
    214,322
    
    
    $
    217,221Income taxes, net
    
    $
    551
    
    
    $
    142
  5




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R.H. Donnelley Corporation and Subsidiaries
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 (tabular amounts in thousands, except share and per share data)
 1. Business and Basis of Presentation
   Reclassifications
  Three Months Ended March 31, 2007AsPreviously
    
    
    
    
    
    AsReported
    
    Reclass
    
    ReclassifiedNet revenues
    
    $
    662,804
    
    
    $
    (1,508
    )
    
    $
    661,296Production, publication and
distribution expenses
    
    
    294,170
    
    
    
    (179,549
    )
    
    
    114,621Selling and support expenses
    
    
    
    
    
    
    178,236
    
    
    
    178,236General and administrative
expenses
    
    
    37,626
    
    
    
    (195
    )
    
    
    37,431
  6




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##### Table of Contents



2. Summary of Significant Accounting Policies
 Identifiable Intangible Assets and Goodwill
 Business Combinations Goodwill and Other Intangible Assets
 Accounting for
the Impairment or Disposal of Long-Lived Assets
     Interest Expense and Deferred Financing Costs
  7




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Advertising Expense
  Concentration of Credit Risk
   (Loss) Earnings Per Share
 Earnings Per
Share .
  Three Months Ended March 31,2008
    
    2007Basic EPSNet (loss) income
    
    $
    (1,623,111
    )
    
    $
    15,951Weighted average common shares outstanding
    
    
    68,778
    
    
    
    70,663Basic (loss) earnings per share
    
    $
    (23.60
    )
    
    $
    0.23
 8




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##### Table of Contents



Three Months Ended March 31,2008
    
    2007Diluted EPSNet (loss) income
    
    $
    (1,623,111
    )
    
    
    15,951Weighted average common shares outstanding
    
    
    68,778
    
    
    
    70,663Dilutive effect of stock awards (1)
    
    
    
    
    
    
    1,340Weighted average diluted shares outstanding
    
    
    68,778
    
    
    
    72,003Diluted (loss) earnings per share
    
    $
    (23.60
    )
    
    $
    0.22
 
 (1)
    
    Due to the reported net loss for the three months ended March 31, 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 March 31, 2008 and 2007, 6.1 million and 1.1 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
 Share-Based Payment
  Fair Value of Financial Instruments
 Fair
Value Measurements
 Fair Value Measurements atMarch 31, 2008Using Significant OtherDescription
    
    Observable Inputs (Level 2)Derivatives  Assets
    
    $
    1,703Derivatives  Liabilities
    
    $
    (69,816
    )
 Effective Date of FASB Statement No.
157
 Estimates
  9




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New Accounting Pronouncements
 Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities,
  3. Acquisitions
   4. Restructuring Charges
  2003
    
    2006
    
    2007Restructuring
    
    Restructuring
    
    RestructuringActions
    
    Actions
    
    Actions
    
    TotalBalance at December 31, 2007
    
    $
    763
    
    
    $
    3,327
    
    
    $
    5,542
    
    
    $
    9,632Additions to reserve charged to earnings
    
    
    
    
    
    
    
    
    
    
    404
    
    
    
    404Payments
    
    
    (67
    )
    
    
    (581
    )
    
    
    (1,229
    )
    
    
    (1,877
    )Balance at March 31, 2008
    
    $
    696
    
    
    $
    2,746
    
    
    $
    4,717
    
    
    $
    8,159
    10




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##### Table of Contents



5. Credit Facilities
  RHDI
   Dex Media East
  Dex Media West
   6. Income Taxes
  11




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##### Table of Contents



Three Months Ended March 31,2008
    
    2007Statutory U.S. Federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of U.S. Federal tax benefit
    
    
    3.1
    
    
    
    3.5Non-deductible goodwill impairment charge
    
    
    (4.7
    )
    
    
    Other non-deductible expenses
    
    
    
    
    
    
    1.0Change in valuation allowance
    
    
    (0.1
    )
    
    
    Effective tax rate
    
    
    33.3
    %
    
    
    39.5
    %
 7. Benefit Plans
 Employers Disclosures About Pensions and Other Postretirement
Benefits (Revised 2003),
 PostretirementPension Benefits
    
    BenefitsThree Months
    
    Three MonthsEnded March 31,
    
    Ended March 31,2008
    
    2007
    
    2008
    
    2007Service cost
    
    $
    3,512
    
    
    $
    3,282
    
    
    $
    497
    
    
    $
    637Interest cost
    
    
    4,586
    
    
    
    4,533
    
    
    
    1,393
    
    
    
    1,377Expected return on plan assets
    
    
    (5,058
    )
    
    
    (4,940
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    49
    
    
    
    33
    
    
    
    167
    
    
    
    430Amortization of net loss
    
    
    196
    
    
    
    272
    
    
    
    9
    
    
    
    Net periodic benefit cost
    
    $
    3,285
    
    
    $
    3,180
    
    
    $
    2,066
    
    
    $
    2,444
  8. Business Segments
  9. Legal Proceedings
   12




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10. R.H. Donnelley Corporation (Parent Company) Financial Statements
   R.H. Donnelley Corporation
Condensed Parent Company Balance Sheets
 March 31,
    
    December 31,2008
    
    2007AssetsCash and cash equivalents
    
    $
    1,637
    
    
    $
    18,900Intercompany, net
    
    
    210,422
    
    
    
    279,244Prepaid and other current assets
    
    
    3,935
    
    
    
    8,948Total current assets
    
    
    215,994
    
    
    
    307,092Investment in subsidiaries
    
    
    3,663,321
    
    
    
    5,231,597Fixed assets and computer
software, net
    
    
    9,240
    
    
    
    10,462Other non-current assets
    
    
    88,600
    
    
    
    91,506Intercompany note receivable
    
    
    300,000
    
    
    
    300,000Total assets
    
    $
    4,277,155
    
    
    $
    5,940,657Liabilities and Shareholders EquityAccounts payable and accrued liabilities
    
    $
    4,231
    
    
    $
    14,032Accrued interest
    
    
    107,543
    
    
    
    123,882Total current liabilities
    
    
    111,774
    
    
    
    137,914Long-term debt
    
    
    3,965,649
    
    
    
    3,962,871Deferred income taxes, net
    
    
    5,331
    
    
    
    5,161Other non-current liabilities
    
    
    11,397
    
    
    
    11,975Shareholders equity
    
    
    183,004
    
    
    
    1,822,736Total liabilities and shareholders equity
    
    $
    4,277,155
    
    
    $
    5,940,657
 13




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R.H. Donnelley Corporation
Condensed Parent Company Statements of Operations
 For the Three Months Ended March 31,2008
    
    2007Expenses
    
    $
    6,872
    
    
    $
    3,024Partnership and equity (loss) income
    
    
    (2,345,035
    )
    
    
    82,352Operating (loss) income
    
    
    (2,351,907
    )
    
    
    79,328Interest expense, net
    
    
    (81,573
    )
    
    
    (52,965
    )(Loss) income before income taxes
    
    
    (2,433,480
    )
    
    
    26,363Benefit (provision) for income taxes
    
    
    810,369
    
    
    
    (10,412
    )Net (loss) income
    
    $
    (1,623,111
    )
    
    $
    15,951
 R.H. Donnelley Corporation
Condensed Parent Company Statements of Cash Flows
 For the Three MonthsEnded March 31,2008
    
    
    2007Cash flow from operating activities
    
    $
    (65,372
    )
    
    $
    (107,756
    )Cash flow from investing activities:Additions to fixed assets and computer
software
    
    
    (182
    )
    
    
    (2,556
    )Equity investment disposition (investment)
    
    
    4,318
    
    
    
    (2,500
    )Net cash provided by (used in) investing
activities
    
    
    4,136
    
    
    
    (5,056
    )Cash flow from financing activities:Increase in checks not yet presented for
payment
    
    
    96
    
    
    
    232Proceeds from employee stock option exercises
    
    
    89
    
    
    
    9,111Repurchase of common stock
    
    
    (6,112
    )
    
    
    Dividends from subsidiaries
    
    
    49,900
    
    
    
    39,696Net cash provided by financing activities
    
    
    43,973
    
    
    
    49,039Change in cash
    
    
    (17,263
    )
    
    
    (63,773
    )Cash at beginning of year
    
    
    18,900
    
    
    
    122,565Cash at end of period
    
    $
    1,637
    
    
    $
    58,792
 11. Subsequent Events
 RHDI
  Dex Media West
   14




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Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
  Corporate Overview
  TM TM ®
  15




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##### Table of Contents



® ® ®
  Recent Trends Related to Our Business
    Goodwill
and Other Intangible Assets Accounting for the Impairment
or Disposal of Long-Lived Assets
 Segment Reporting
  16




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New Accounting Pronouncements
 Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities,
  17




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RESULTS OF OPERATIONS
Three months ended March 31, 2008 and 2007
 Factors Affecting Comparability
 Reclassifications
  Three months ended March 31, 2007AsPreviously
    
    
    
    
    
    As(amounts in millions)
    
    Reported
    
    Reclass
    
    ReclassifiedNet revenues
    
    $
    662.8
    
    
    $
    (1.5
    )
    
    $
    661.3Production, publication and
distribution expenses
    
    
    294.2
    
    
    
    (179.6
    )
    
    
    114.6Selling and support expenses
    
    
    
    
    
    
    178.2
    
    
    
    178.2General and administrative
expenses
    
    
    37.6
    
    
    
    (0.1
    )
    
    
    37.5
 Acquisitions
  Impact of Purchase Accounting
  18




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Net Revenues
  Three months ended March 31,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeGross directory advertising
revenues
    
    $
    676.8
    
    
    $
    668.6
    
    
    $
    8.2
    
    
    
    1.2
    %Sales claims and allowances
    
    
    (11.8
    )
    
    
    (18.2
    )
    
    
    6.4
    
    
    
    35.2Net directory advertising revenues
    
    
    665.0
    
    
    
    650.4
    
    
    
    14.6
    
    
    
    2.2Other revenues
    
    
    9.7
    
    
    
    10.9
    
    
    
    (1.2
    )
    
    
    (11.0
    )Total
    
    $
    674.7
    
    
    $
    661.3
    
    
    $
    13.4
    
    
    
    2.0
    %
      19




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Expenses
  Three months ended March 31,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeProduction, publication and
distribution expenses
    
    $
    109.2
    
    
    $
    114.6
    
    
    $
    (5.4
    )
    
    
    (4.7
    )%Selling and support expenses
    
    
    186.3
    
    
    
    178.2
    
    
    
    8.1
    
    
    
    4.5General and administrative expenses
    
    
    34.9
    
    
    
    37.5
    
    
    
    (2.6
    )
    
    
    (6.9
    )Depreciation and amortization
    
    
    118.3
    
    
    
    103.0
    
    
    
    15.3
    
    
    
    14.9Goodwill impairment
    
    
    2,463.6
    
    
    
    
    
    
    
    2,463.6
    
    
    
    100.0Total
    
    $
    2,912.3
    
    
    $
    433.3
    
    
    $
    2,479.0
    
    
    
    572.1
    %
   Production, Publication and Distribution Expenses
  (amounts in millions)
    
    $ ChangeIncreased internet production and distribution costs
    
    $
    8.6Decreased cost uplift expense
    
    
    (8.9
    )Decreased information technology (IT) expenses
    
    
    (3.6
    )Decreased print, paper and distribution costs
    
    
    (2.9
    )All other, net
    
    
    1.4Total decrease in
production, publication
and distribution expenses
for the three months
  ended March 31, 2008
    
    $
    (5.4
    )
 20




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##### Table of Contents



Selling and Support Expenses
  (amounts in millions)
    
    $ ChangeIncreased advertising and branding expenses
    
    $
    9.1Increased bad debt expense
    
    
    8.8Decreased cost uplift expense
    
    
    (8.1
    )All other, net
    
    
    (1.7
    )Total increase in selling and support
expenses for the three months ended
  March 31, 2008
    
    $
    8.1
    21




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##### Table of Contents



General and Administrative Expenses
  (amounts in millions)
    
    $ ChangeDecrease in non-cash stock-based compensation expense under SFAS No. 123 (R)
    
    $
    (3.7
    )Decrease in IT expenses
    
    
    (1.3
    )All other, net
    
    
    2.4Total decrease in G&A expenses for the three months ended March 31, 2008
    
    $
    (2.6
    )
   Depreciation and Amortization
   Goodwill Impairment
   22




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##### Table of Contents



Operating (Loss) Income
  Three months ended March 31,(amounts in millions)
    
    2008
    
    2007
    
    $ ChangeTotal
    
    $
    (2,237.6
    )
    
    $
    228.0
    
    
    $
    (2,465.6
    )
  Interest Expense, Net
   23




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Income Taxes
  Net (Loss) Income and (Loss) Earnings Per Share
  Earnings Per
Share .
  24




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
  (Amounts in thousands)
    
    March 31, 2008
    
    December 31, 2007RHD6.875% Senior Notes due 2013
    
    $
    300,000
    
    
    $
    300,0006.875% Series A-1 Senior Discount Notes due 2013
    
    
    340,211
    
    
    
    339,2226.875% Series A-2 Senior Discount Notes due 2013
    
    
    615,438
    
    
    
    613,6498.875% Series A-3 Senior Notes due 2016
    
    
    1,210,000
    
    
    
    1,210,0008.875% Series A-4 Senior Notes due 2017
    
    
    1,500,000
    
    
    
    1,500,000R.H. Donnelley Inc. (RHDI)Credit Facility
    
    
    1,507,648
    
    
    
    1,571,536Dex Media, Inc.8% Senior Notes due 2013
    
    
    511,686
    
    
    
    512,0979% Senior Discount Notes due 2013
    
    
    733,824
    
    
    
    719,112Dex Media EastCredit Facility
    
    
    1,101,900
    
    
    
    1,106,050Dex Media WestCredit Facility
    
    
    1,031,061
    
    
    
    1,071,4918.5% Senior Notes due 2010
    
    
    397,554
    
    
    
    398,7365.875% Senior Notes due 2011
    
    
    8,770
    
    
    
    8,7749.875% Senior Subordinated Notes due 2013
    
    
    822,754
    
    
    
    824,982Total RHD Consolidated
    
    
    10,080,846
    
    
    
    10,175,649Less current portion
    
    
    186,343
    
    
    
    177,175Long-term debt
    
    $
    9,894,503
    
    
    $
    9,998,474
 Credit Facilities
  RHDI
   25




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##### Table of Contents



Dex Media East
  Dex Media West
   Impact of Purchase Accounting
 Business Combinations
 Long-TermDebt at MarchUnamortized
    
    Long-
    
    31, 2008Fair Value
    
    Term
    
    ExcludingAdjustment at
    
    Debt at
    
    UnamortizedMarch 31,
    
    March 31,
    
    Fair Value(amounts in millions)
    
    2008
    
    2008
    
    AdjustmentDex Media, Inc. 8% Senior Notes
    
    $
    11.7
    
    
    $
    511.7
    
    
    $
    500.0Dex Media, Inc. 9% Senior Discount Notes
    
    
    14.1
    
    
    
    733.8
    
    
    
    719.7Dex Media West 8.5% Senior Notes
    
    
    12.5
    
    
    
    397.6
    
    
    
    385.1Dex Media West 5.875% Senior Notes
    
    
    0.1
    
    
    
    8.8
    
    
    
    8.7Dex Media West 9.875% Senior Subordinated Notes
    
    
    61.1
    
    
    
    822.8
    
    
    
    761.7Total Dex Media Outstanding Debt at January
31, 2006
    
    $
    99.5
    
    
    $
    2,474.7
    
    
    $
    2,375.2
 26




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##### Table of Contents



Proposed
Refinancings
  RHDI
  Dex Media West
  Liquidity and Cash Flows
     27




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##### Table of Contents




    
    $(1,623.1) million in net loss, which includes the impact of the non-cash goodwill
impairment charge.
    
    $1,651.5 million of net non-cash items consisting of the non-cash goodwill impairment
charge of $2,463.6 million, offset by $(812.1) million in deferred income taxes, which
includes the tax impact of the non-cash goodwill impairment charge.
    
    $150.5 million of other net non-cash items primarily consisting of $118.3 million of
depreciation and amortization, $29.8 million in bad debt provision and $10.8 million of
stock-based compensation expense, partially offset by $(8.4) million in other non-cash
items, primarily related to the amortization of deferred financing costs and
amortization of the fair value adjustments required by GAAP as a result of the Dex Media
Merger, which reduced interest expense.
    
    $39.3 million net use of cash from an increase in accounts receivable of $65.7
million due to an increase in days outstanding of customer balances and deterioration in
accounts receivable aging categories, which has been driven by weaker economic
conditions, as well as publication cycle seasonality, offset by an increase in deferred
directory revenues of $26.4 million. 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.
    
    $21.6 million net source of cash from a decrease in other assets, primarily
consisting of a $34.3 million decrease in prepaid directory costs resulting from
publication seasonality, offset by a $12.7 million increase 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.
    
    $52.9 million net use of cash from a decrease in accounts payable and accrued
liabilities, primarily reflecting a $41.9 million decrease in accrued interest payable
on outstanding debt resulting from interest payments of $247.8 million, partially offset
by $205.9 million in accruals during the period, and a $41.0 million decrease in trade
accounts payable resulting from timing of invoice processing versus payment thereon,
offset by a $30.0 million increase in accrued liabilities, which include accrued
salaries and related bonuses and accrued income taxes.
    
    $8.4 million decrease in other non-current liabilities, including pension and
postretirement long-term liabilities.
 28




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##### Table of Contents




    
    $10.1 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.
  
    
    $91.4 million in principal payments on term loans under our credit facilities. Of
this amount, $31.4 million represents scheduled principal payments and $60.0 million
represents principal payments made on an accelerated basis, at our option, from
available cash flow generated from operations.
    
    $215.3 million in borrowings under our revolvers, used primarily to fund temporary
working capital requirements.
    
    $232.4 million in principal payments on our revolvers.
    
    $6.1 million used to repurchase our common stock. This use of cash pertains to common
stock repurchases made during 2007 that had not settled as of December 31, 2007.
    
    $4.2 million in the increased balance of checks not yet presented for payment.
    
    $0.1 million in proceeds from the exercise of employee stock options.
  
    
    $16.0 million in net income.
    
    $159.5 million of net non-cash charges primarily consisting of $103.0 million of
depreciation and amortization, $21.0 million in bad debt provision, $13.9 million of
stock-based compensation expense and $11.4 million in other non-cash charges, primarily
related to the amortization of deferred financing costs and amortization of the fair
value adjustments required by GAAP as a result of the Dex Media Merger, and $10.2
million in deferred income taxes.
    
    $15.0 million net use of cash from an increase in accounts receivable of $58.1
million offset by an increase in deferred directory revenues of $43.1 million. 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.
    
    $31.5 million net source of cash from an decrease in other assets, consisting of a
$35.4 million decrease in prepaid expenses and other current assets, offset by a $3.9
million increase in other non-current assets, primarily relating to changes in the fair
value of the Companys interest rate swap agreements.
    
    $56.4 million net use of cash from a decrease in accounts payable and accrued
liabilities, primarily reflecting a $29.7 million decrease in accrued liabilities,
including accrued salaries and related bonuses, and a $32.6 million decrease in accrued
interest payable on outstanding debt, offset by a $5.9 million increase in trade
accounts payable.
    
    $8.2 million net source of cash from an increase in other non-current liabilities,
including pension and postretirement long-term liabilities.
 29




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##### Table of Contents




    
    $13.1 million used to purchase fixed assets, primarily computer equipment, software
and leasehold improvements.
    
    $2.5 million used to fund an equity investment.
  
    
    $419.9 million in principal payments on debt borrowed under each of the credit
facilities. Of this amount, $73.5 million represents scheduled principal payments,
$120.0 million represents principal payments made on an accelerated basis, at our
option, from excess cash flow generated from operations and $226.4 million represents
principal payments on the revolvers.
    
    $207.3 million source in borrowings under the revolvers.
    
    $9.1 million in proceeds from the exercise of employee stock options.
    
    $6.2 million in the decreased balance of checks not yet presented for payment.
 30




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##### Table of Contents



Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk and Risk Management
        31




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##### Table of Contents



Market Risk Sensitive Instruments
 Accounting for Derivative
Instruments and Hedging Activities , Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an Amendment of FAS 133 Amendment of Statement 133 on Derivative Instruments and Hedging Activities
  
 Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures.Based on their
evaluation, as of the end of the period covered by this Quarterly
Report on Form 10-Q, of the effectiveness of the Companys disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) the principal executive
officer and principal financial officer of the Company have each
concluded that such disclosure controls and procedures are effective
and sufficient to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange
Commissions rules and forms.(b)
    
    Changes in Internal Control Over Financial Reporting.There have not
been any changes in the Companys internal control over financial
reporting that occurred during the Companys most recent fiscal
quarter that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial
reporting.
 32




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
     
 Item 1A. Risk Factors
  3) Competition
    33




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##### Table of Contents



34




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##### Table of Contents



5) Recognition of impairment charges for our intangible assets or goodwill
 Accounting for
the Impairment or Disposal of Long-lived Assets Goodwill and Other Intangible Assets
   9) Future changes in directory publishing obligations in Qwest and AT&T markets and other
regulatory matters
   35




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36




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##### Table of Contents



Exhibits
 Exhibit No.
    
    Document31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended March 31, 2008 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 March 31, 2008 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 March 31, 2008 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. 37




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##### Table of Contents



SIGNATURES
  R.H. DONNELLEY CORPORATIONDate: May 8, 2008
    
    By:
    
    /s/ Steven M. BlondySteven M. BlondyExecutive Vice President and Chief Financial Officer(Principal Financial Officer)/s/ R. Barry SauderR. Barry SauderVice President, Corporate Controller and Chief
Accounting Officer(Principal Accounting Officer)
 38




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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
March 31, 2008 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
March 31, 2008 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
March 31, 2008 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. 39