##### 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 June 30, 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
 
   
 
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Title of class
    
    Shares Outstanding at July 15, 2008Common Stock, par value $1 per share
    
    
    68,805,374




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##### 



R.H. DONNELLEY CORPORATION
 INDEX TO FORM 10-Q
 PAGEPART I. FINANCIAL INFORMATION PAGEItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at June 30, 2008 and December 31,
2007
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss) for the three and six months ended June 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2008 and 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 4.
    
    Controls and Procedures
    
    
    40PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    41Item 1A.
    
    Risk Factors
    
    
    41Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    45Item 6.
    
    Exhibits
    
    
    46SIGNATURES
    
    
    47Exhibit 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)
 June 30,
    
    
    December 31,(in thousands, except share data)
    
    2008
    
    
    2007AssetsCurrent AssetsCash and cash equivalents
    
    $
    82,009
    
    
    $
    46,076Accounts receivableBilled
    
    
    268,941
    
    
    
    258,839Unbilled
    
    
    905,925
    
    
    
    847,446Allowance for doubtful accounts and sales claims
    
    
    (46,699
    )
    
    
    (42,817
    )Net accounts receivable
    
    
    1,128,167
    
    
    
    1,063,468Deferred directory costs
    
    
    197,981
    
    
    
    183,687Short-term deferred income taxes, net
    
    
    57,193
    
    
    
    47,759Prepaid expenses and other current assets
    
    
    77,410
    
    
    
    126,201Total current assets
    
    
    1,542,760
    
    
    
    1,467,191Fixed assets and computer software, net
    
    
    186,801
    
    
    
    187,680Other non-current assets
    
    
    194,071
    
    
    
    139,406Intangible assets, net
    
    
    10,962,740
    
    
    
    11,170,482Goodwill
    
    
    
    
    
    
    3,124,334Total Assets
    
    $
    12,886,372
    
    
    $
    16,089,093Liabilities and Shareholders (Deficit) EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    188,087
    
    
    $
    230,693Accrued interest
    
    
    166,931
    
    
    
    198,828Deferred directory revenues
    
    
    1,208,526
    
    
    
    1,172,035Current portion of long-term debt
    
    
    76,954
    
    
    
    177,175Total current liabilities
    
    
    1,640,498
    
    
    
    1,778,731Long-term debt
    
    
    9,819,397
    
    
    
    9,998,474Deferred income taxes, net
    
    
    1,338,934
    
    
    
    2,288,384Other non-current liabilities
    
    
    185,669
    
    
    
    200,768Total liabilities
    
    
    12,984,498
    
    
    
    14,266,357Commitments and contingenciesShareholders (Deficit) EquityCommon stock, par value $1 per share, authorized  400,000,000 shares; issued
 88,169,275 shares at June 30, 2008 and December 31, 2007; outstanding
 68,801,513
shares and 68,758,026 shares at June 30, 2008 and December 31, 2007,
respectively
    
    
    88,169
    
    
    
    88,169Additional paid-in capital
    
    
    2,418,387
    
    
    
    2,402,181Accumulated deficit
    
    
    (2,347,554
    )
    
    
    (385,540
    )Treasury stock, at cost, 19,367,762 shares at June 30, 2008 and 19,411,249
shares at December 31, 2007
    
    
    (256,283
    )
    
    
    (256,334
    )Accumulated other comprehensive loss
    
    
    (845
    )
    
    
    (25,740
    )Total shareholders (deficit) equity
    
    
    (98,126
    )
    
    
    1,822,736Total Liabilities and Shareholders (Deficit) Equity
    
    $
    12,886,372
    
    
    $
    16,089,093
  3




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R.H. Donnelley Corporation and Subsidiaries  Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenues
    
    $
    663,750
    
    
    $
    667,027
    
    
    $
    1,338,404
    
    
    $
    1,328,323ExpensesProduction, publication and distribution expenses
(exclusive of depreciation and amortization shown
separately below)
    
    
    103,453
    
    
    
    113,996
    
    
    
    212,630
    
    
    
    228,617Selling and support expenses
    
    
    175,591
    
    
    
    171,239
    
    
    
    361,906
    
    
    
    349,474General and administrative expenses
    
    
    30,109
    
    
    
    33,480
    
    
    
    64,998
    
    
    
    70,915Depreciation and amortization
    
    
    119,544
    
    
    
    109,149
    
    
    
    237,807
    
    
    
    212,179Goodwill impairment
    
    
    660,239
    
    
    
    
    
    
    
    3,123,854
    
    
    
    Total expenses
    
    
    1,088,936
    
    
    
    427,864
    
    
    
    4,001,195
    
    
    
    861,185Operating income (loss)
    
    
    (425,186
    )
    
    
    239,163
    
    
    
    (2,662,791
    )
    
    
    467,138Interest expense, net
    
    
    (236,385
    )
    
    
    (199,023
    )
    
    
    (432,259
    )
    
    
    (400,637
    )Gain on debt
exchanges, net
    
    
    161,315
    
    
    
    
    
    
    
    161,315
    
    
    
    Income (loss) before income taxes
    
    
    (500,256
    )
    
    
    40,140
    
    
    
    (2,933,735
    )
    
    
    66,501(Provision) benefit for income taxes
    
    
    161,352
    
    
    
    (15,217
    )
    
    
    971,721
    
    
    
    (25,629
    )Net income (loss)
    
    $
    (338,904
    )
    
    $
    24,923
    
    
    $
    (1,962,014
    )
    
    $
    40,872Earnings (loss) per share:Basic
    
    $
    (4.93
    )
    
    $
    0.35
    
    
    $
    (28.51
    )
    
    $
    0.58Diluted
    
    $
    (4.93
    )
    
    $
    0.34
    
    
    $
    (28.51
    )
    
    $
    0.57Shares used in computing earnings (loss) per share:Basic
    
    
    68,812
    
    
    
    71,034
    
    
    
    68,811
    
    
    
    70,656Diluted
    
    
    68,812
    
    
    
    72,511
    
    
    
    68,811
    
    
    
    72,021Comprehensive Income (Loss)Net income (loss)
    
    $
    (338,904
    )
    
    $
    24,923
    
    
    $
    (1,962,014
    )
    
    $
    40,872Unrealized gain (loss) on interest rate swaps, net of tax
    
    
    51,991
    
    
    
    5,249
    
    
    
    24,381
    
    
    
    (380
    )Benefit plans adjustment, net of tax
    
    
    259
    
    
    
    424
    
    
    
    514
    
    
    
    738Comprehensive income (loss)
    
    $
    (286,654
    )
    
    $
    30,596
    
    
    $
    (1,937,119
    )
    
    $
    41,230
  4




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R.H. Donnelley Corporation and Subsidiaries  Condensed Consolidated Statements of Cash Flows (Unaudited)
 Six months endedJune 30,(in thousands)
    
    2008
    
    
    2007Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    (1,962,014
    )
    
    $
    40,872Reconciliation of net income (loss) to net cash provided by
operating activities:Goodwill impairment
    
    
    3,123,854
    
    
    
    Gain on debt
exchanges, net
    
    
    (161,315
    )
    
    
    Loss on extinguishment of debt
    
    
    2,155
    
    
    
    Depreciation and amortization
    
    
    237,807
    
    
    
    212,179Deferred income tax (benefit) provision
    
    
    (974,588
    )
    
    
    25,273Provision for bad debts
    
    
    64,153
    
    
    
    40,174Stock based compensation expense
    
    
    16,327
    
    
    
    21,463Interest rate swap ineffectiveness
    
    
    38,443
    
    
    
    Other non-cash items, net
    
    
    26,493
    
    
    
    31,961Changes in assets and liabilities, net of effects from acquisitions:(Increase) in accounts receivable
    
    
    (128,851
    )
    
    
    (155,466
    )Decrease in other assets
    
    
    25,090
    
    
    
    8,622(Decrease) in accounts payable and accrued liabilities
    
    
    (71,266
    )
    
    
    (20,345
    )Increase in deferred directory revenues
    
    
    36,491
    
    
    
    101,529Increase in other non-current liabilities
    
    
    3,484
    
    
    
    8,080Net cash provided by operating activities
    
    
    276,263
    
    
    
    314,342Cash Flows from Investing ActivitiesAdditions to fixed assets and computer software
    
    
    (30,304
    )
    
    
    (37,395
    )Equity investment disposition (investment)
    
    
    4,318
    
    
    
    (2,500
    )Net cash used in investing activities
    
    
    (25,986
    )
    
    
    (39,895
    )Cash Flows from Financing ActivitiesAdditional borrowings under Credit Facilities, net of costs
    
    
    1,018,699
    
    
    
    Credit facilities repayments
    
    
    (1,191,244
    )
    
    
    (347,053
    )Revolver borrowings
    
    
    373,100
    
    
    
    361,650Revolver repayments
    
    
    (396,150
    )
    
    
    (390,550
    )Debt
issuance costs in connection with debt exchanges
    
    
    (8,497
    )
    
    
    Repurchase of common stock
    
    
    (6,112
    )
    
    
    Decrease in checks not yet presented for payment
    
    
    (4,234
    )
    
    
    (1,568
    )Proceeds from employee stock option exercises
    
    
    94
    
    
    
    11,831Net cash used in financing activities
    
    
    (214,344
    )
    
    
    (365,690
    )Increase (decrease) in cash and cash equivalents
    
    
    35,933
    
    
    
    (91,243
    )Cash and cash equivalents, beginning of year
    
    
    46,076
    
    
    
    156,249Cash and cash equivalents, end of period
    
    $
    82,009
    
    
    $
    65,006Supplemental Information:Cash paid:Interest, net
    
    $
    378,435
    
    
    $
    373,629Income taxes, net
    
    $
    1,629
    
    
    $
    398Non-cash financing activities:Reduction of
debt from debt exchanges
    
    $
    (172,804
    )
    
    $
    
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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
   Significant Business Developments
  Accreted or Par ValueRHD Notes Exchanged6.875% 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 Issued11.75% 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
  6




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Accounting for Derivative Instruments and Hedging Activities
  Reclassifications
  Three Months Ended June 30, 2007
    
    Six Months Ended June 30, 2007As Previously
    
    
    
    
    
    
    
    
    
    As PreviouslyReported
    
    Reclass
    
    As Reclassified
    
    Reported
    
    Reclass
    
    As ReclassifiedNet revenues
    
    $
    666,590
    
    
    $
    437
    
    
    $
    667,027
    
    
    $
    1,329,393
    
    
    $
    (1,070
    )
    
    $
    1,328,323Production,
publication and
distribution
expenses
    
    
    283,472
    
    
    
    (169,476
    )
    
    
    113,996
    
    
    
    578,036
    
    
    
    (349,419
    )
    
    
    228,617Selling and support
expenses
    
    
    
    
    
    
    171,239
    
    
    
    171,239
    
    
    
    
    
    
    
    349,474
    
    
    
    349,474General and
administrative
expenses
    
    
    34,806
    
    
    
    (1,326
    )
    
    
    33,480
    
    
    
    72,040
    
    
    
    (1,125
    )
    
    
    70,915
  7




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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
      8




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Interest Expense and Deferred Financing Costs
    Gain
on Debt Exchanges
  Advertising Expense
  Concentration of Credit Risk
  9




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##### Table of Contents



Earnings (Loss) Per Share
 Earnings Per
Share .
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Basic EPSNet income (loss)
    
    $
    (338,904
    )
    
    $
    24,923
    
    
    $
    (1,962,014
    )
    
    $
    40,872Weighted average common shares outstanding
    
    
    68,812
    
    
    
    71,034
    
    
    
    68,811
    
    
    
    70,656Basic earnings (loss) per share
    
    $
    (4.93
    )
    
    $
    0.35
    
    
    $
    (28.51
    )
    
    $
    0.58Diluted EPSNet income (loss)
    
    $
    (338,904
    )
    
    $
    24,923
    
    
    $
    (1,962,014
    )
    
    $
    40,872Weighted average common shares outstanding
    
    
    68,812
    
    
    
    71,034
    
    
    
    68,811
    
    
    
    70,656Dilutive effect of stock awards (1)
    
    
    
    
    
    
    1,477
    
    
    
    
    
    
    
    1,365Weighted average diluted shares outstanding
    
    
    68,812
    
    
    
    72,511
    
    
    
    68,811
    
    
    
    72,021Diluted earnings (loss) per share
    
    $
    (4.93
    )
    
    $
    0.34
    
    
    $
    (28.51
    )
    
    $
    0.57
 
 (1)
    
    Due to the reported net loss for the three and six months ended June 30, 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 June 30, 2008 and 2007, 8.8 million and less than 0.1
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. For the six
months ended June 30, 2008 and 2007, 6.2 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
 10




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Fair Value of Financial Instruments
 Fair
Value Measurements
 Fair Value Measurements atJune 30, 2008Description
    
    Using Significant Other Observable Inputs (Level 2)Derivatives  Assets
    
    $
    7,294Derivatives  Liabilities
    
    $
    (28,664
    )
 Effective Date of FASB Statement No.
157
 Estimates
  New Accounting Pronouncements
 Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133
 11




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3. Acquisitions
   4. Restructuring Charges
  Three months ended
    
    2003 Restructuring
    
    2006 Restructuring
    
    2007 Restructuring
    
    2008 RestructuringJune 30, 2008
    
    Actions
    
    Actions
    
    Actions
    
    Actions
    
    TotalBalance at March 31, 2008
    
    $
    696
    
    
    $
    2,746
    
    
    $
    4,717
    
    
    $
    
    
    
    $
    8,159Net increase (decrease)
to reserve charged
(credited) to earnings
    
    
    
    
    
    
    
    
    
    
    (156
    )
    
    
    4,591
    
    
    
    4,435Payments
    
    
    (7
    )
    
    
    (609
    )
    
    
    (1,001
    )
    
    
    (1,480
    )
    
    
    (3,097
    )Balance at June 30, 2008
    
    $
    689
    
    
    $
    2,137
    
    
    $
    3,560
    
    
    $
    3,111
    
    
    $
    9,497
 Six months ended
    
    2003 Restructuring
    
    2006 Restructuring
    
    2007 Restructuring
    
    2008 RestructuringJune 30, 2008
    
    Actions
    
    Actions
    
    Actions
    
    Actions
    
    TotalBalance at
December 31, 2007
    
    $
    763
    
    
    $
    3,327
    
    
    $
    5,542
    
    
    $
    
    
    
    $
    9,632Net increase to reserve
charged to earnings
    
    
    
    
    
    
    
    
    
    
    249
    
    
    
    4,591
    
    
    
    4,840Payments
    
    
    (74
    )
    
    
    (1,190
    )
    
    
    (2,231
    )
    
    
    (1,480
    )
    
    
    (4,975
    )Balance at June 30, 2008
    
    $
    689
    
    
    $
    2,137
    
    
    $
    3,560
    
    
    $
    3,111
    
    
    $
    9,497
   12




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5. Long-Term Debt, Credit Facilities and Notes
  June 30, 2008
    
    
    December 31, 2007RHD6.875% Senior Notes due 2013
    
    $
    252,320
    
    
    $
    300,0006.875% Series A-1 Senior Discount Notes due 2013
    
    
    312,096
    
    
    
    339,2226.875% Series A-2 Senior Discount Notes due 2013
    
    
    524,322
    
    
    
    613,6498.875% Series A-3 Senior Notes due 2016
    
    
    1,058,839
    
    
    
    1,210,0008.875% Series A-4 Senior Notes due 2017
    
    
    1,235,260
    
    
    
    1,500,000R.H. Donnelley Inc. (RHDI)Credit Facility
    
    
    1,433,941
    
    
    
    1,571,53611.75% Senior Notes due 2015
    
    
    412,871
    
    
    
    Dex Media, Inc.8% Senior Notes due 2013
    
    
    511,268
    
    
    
    512,0979% Senior Discount Notes due 2013
    
    
    748,835
    
    
    
    719,112Dex Media EastCredit Facility
    
    
    1,101,000
    
    
    
    1,106,050Dex Media WestNew Credit Facility
    
    
    1,080,000
    
    
    
    Former Credit Facility
    
    
    
    
    
    
    1,071,4918.5% Senior Notes due 2010
    
    
    396,352
    
    
    
    398,7365.875% Senior Notes due 2011
    
    
    8,768
    
    
    
    8,7749.875% Senior Subordinated Notes due 2013
    
    
    820,479
    
    
    
    824,982Total RHD Consolidated
    
    
    9,896,351
    
    
    
    10,175,649Less current portion
    
    
    76,954
    
    
    
    177,175Long-term debt
    
    $
    9,819,397
    
    
    $
    9,998,474
 Credit Facilities
  13




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##### Table of Contents



RHDI
    
    
    The highest of (i) a base rate as determined by the Administrative Agent, Deutsche
Bank Trust Company Americas, (ii) the Federal Funds Effective Rate (as defined) plus 0.50%,
and (iii) 4.0%, in each case, plus a 2.50% margin on the RHDI Revolver and a 2.75% margin
on Term Loan D-1 and Term Loan D-2; or
    
    The higher of (i) LIBOR rate and (ii) 3.0%, in each case, plus a 3.50% margin on the
RHDI Revolver and a 3.75% margin on Term Loan D-1 and Term Loan D-2. We may elect interest
periods of 1, 2, 3 or 6 months (or 9 or 12 months if, at the time of the borrowing, all
lenders agree to make such term available), for LIBOR borrowings.
 Dex Media East
  Dex Media West
   14




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##### Table of Contents




    
    The highest of (i) the base rate determined by the Administrative Agent, JP Morgan Chase
Bank, N.A., (ii) the Federal Funds Effective Rate (as defined) plus 0.50%, and (iii) 4.0%,
in each case, plus a 2.75% (or 2.50% if the leverage ratio is less than 3.00 to 1.00)
margin on the Dex Media West Revolver and Term Loan A and a 3.0% margin on Term Loan B; or
    
    The higher of (i) LIBOR rate and (ii) 3.0% plus a 3.75% (or 3.50% if the leverage ratio
is less than 3.00 to 1.00) margin on the Dex Media West Revolver and Term Loan A and a 4.0%
margin on Term Loan B. We may elect interest periods of 1, 2, 3, or 6 months (or 9 or 12
months if, at the time of the borrowing, all lenders agree to make such term available),
for LIBOR borrowings.
 Notes
  th th
  6. Income Taxes
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Statutory U.S. Federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of U.S. Federal tax benefit
    
    
    4.0
    
    
    
    3.1
    
    
    
    3.2
    
    
    
    3.3Non-deductible goodwill impairment charge
    
    
    (6.4
    )
    
    
    
    
    
    
    (5.0
    )
    
    
    Other non-deductible expenses
    
    
    (0.1
    )
    
    
    0.4
    
    
    
    
    
    
    
    0.6Change in valuation allowance
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    Other
    
    
    
    
    
    
    (0.6
    )
    
    
    
    
    
    
    (0.4
    )Effective tax rate
    
    
    32.3
    %
    
    
    37.9
    %
    
    
    33.1
    %
    
    
    38.5
    %
 15




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7. Benefit Plans
 Employers Disclosures About Pensions and Other Postretirement
Benefits (Revised 2003),
 Pension BenefitsThree Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    3,224
    
    
    $
    4,009
    
    
    $
    6,736
    
    
    $
    7,291Interest cost
    
    
    4,593
    
    
    
    4,326
    
    
    
    9,179
    
    
    
    8,859Expected return on plan assets
    
    
    (5,097
    )
    
    
    (4,720
    )
    
    
    (10,155
    )
    
    
    (9,660
    )Amortization of prior service cost
    
    
    49
    
    
    
    433
    
    
    
    98
    
    
    
    466Amortization of net loss
    
    
    196
    
    
    
    49
    
    
    
    392
    
    
    
    321Net periodic benefit cost
    
    $
    2,965
    
    
    $
    4,097
    
    
    $
    6,250
    
    
    $
    7,277
 Postretirement BenefitsThree Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    446
    
    
    $
    347
    
    
    $
    943
    
    
    $
    984Interest cost
    
    
    1,575
    
    
    
    1,285
    
    
    
    2,968
    
    
    
    2,662Amortization of prior service cost
    
    
    167
    
    
    
    (27
    )
    
    
    334
    
    
    
    403Amortization of net loss
    
    
    9
    
    
    
    
    
    
    
    18
    
    
    
    Net periodic benefit cost
    
    $
    2,197
    
    
    $
    1,605
    
    
    $
    4,263
    
    
    $
    4,049
  8. Business Segments
  9. Legal Proceedings
   16




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10. R.H. Donnelley Corporation (Parent Company) Financial Statements
   R.H. Donnelley Corporation
Condensed Parent Company Balance Sheets
 June 30,
    
    December 31,2008
    
    2007AssetsCash and cash equivalents
    
    $
    2,984
    
    
    $
    18,900Intercompany, net
    
    
    282,078
    
    
    
    279,244Short-term deferred income taxes, net
    
    
    764
    
    
    
    Prepaid and other current assets
    
    
    1,937
    
    
    
    8,948Total current assets
    
    
    287,763
    
    
    
    307,092Investment in subsidiaries
    
    
    2,735,151
    
    
    
    5,231,597Fixed assets and computer
software, net
    
    
    9,231
    
    
    
    10,462Other non-current assets
    
    
    74,449
    
    
    
    91,506Intercompany note receivable
    
    
    300,000
    
    
    
    300,000Total assets
    
    $
    3,406,594
    
    
    $
    5,940,657Liabilities and Shareholders (Deficit) EquityAccounts payable and accrued liabilities
    
    $
    4,100
    
    
    $
    14,032Accrued interest
    
    
    102,039
    
    
    
    123,882Total current liabilities
    
    
    106,139
    
    
    
    137,914Long-term debt
    
    
    3,382,837
    
    
    
    3,962,871Deferred income taxes, net
    
    
    5,147
    
    
    
    5,161Other non-current liabilities
    
    
    10,597
    
    
    
    11,975Shareholders (deficit) equity
    
    
    (98,126
    )
    
    
    1,822,736Total liabilities and shareholders (deficit)
equity
    
    $
    3,406,594
    
    
    $
    5,940,657
 17




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##### Table of Contents



R.H. Donnelley Corporation
Condensed Parent Company Statements of Operations
 For the Three Months Ended June 30,2008
    
    2007Expenses
    
    $
    5,979
    
    
    $
    3,738Partnership and equity income (loss)
    
    
    (588,534
    )
    
    
    97,448Operating income (loss)
    
    
    (594,513
    )
    
    
    93,710Interest expense, net
    
    
    (80,986
    )
    
    
    (53,570
    )Gain on debt
exchanges
    
    
    161,315
    
    
    
    Income (loss) before income taxes
    
    
    (514,184
    )
    
    
    40,140Benefit (provision) for income taxes
    
    
    175,280
    
    
    
    (15,217
    )Net income (loss)
    
    $
    (338,904
    )
    
    $
    24,923
 For the Six Months Ended June 30,2008
    
    2007Expenses
    
    $
    12,850
    
    
    $
    6,765Partnership and equity income (loss)
    
    
    (2,933,569
    )
    
    
    179,800Operating income (loss)
    
    
    (2,946,419
    )
    
    
    173,035Interest expense, net
    
    
    (162,559
    )
    
    
    (106,534
    )Gain on debt
exchanges
    
    
    161,315
    
    
    
    Income (loss) before income taxes
    
    
    (2,947,663
    )
    
    
    66,501Benefit (provision) for income taxes
    
    
    985,649
    
    
    
    (25,629
    )Net income (loss)
    
    $
    (1,962,014
    )
    
    $
    40,872
 R.H. Donnelley Corporation
Condensed Parent Company Statements of Cash Flows
 For the Six Months EndedJune 30,2008
    
    2007Cash flow from operating activities
    
    $
    (155,901
    )
    
    $
    (113,956
    )Cash flow from investing activities:Additions to fixed assets and computer
software
    
    
    (1,062
    )
    
    
    (2,794
    )Equity investment disposition (investment)
    
    
    4,318
    
    
    
    (2,500
    )Net cash provided by (used in) investing
activities
    
    
    3,256
    
    
    
    (5,294
    )Cash flow from financing activities:Increase (decrease) in checks not yet
presented for payment
    
    
    5
    
    
    
    (318
    )Proceeds from employee stock option exercises
    
    
    94
    
    
    
    11,831Note repayments
    
    
    (158
    )
    
    
    Repurchase of common stock
    
    
    (6,112
    )
    
    
    Dividends from subsidiaries
    
    
    142,900
    
    
    
    39,696Net cash provided by financing activities
    
    
    136,729
    
    
    
    51,209Change in cash
    
    
    (15,916
    )
    
    
    (68,041
    )Cash at beginning of year
    
    
    18,900
    
    
    
    122,565Cash at end of period
    
    $
    2,984
    
    
    $
    54,524
 18




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11. Subsequent Events
 Exchange Program
      Other
   19




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
  Corporate Overview
  TM TM ®
  20




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##### Table of Contents



® ® ®
  Significant Business Developments
  Accreted orPar ValueRHD Notes Exchanged6.875% 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 Issued11.75% 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
   Accounting for Derivative Instruments and Hedging Activities
 21




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##### Table of Contents



Recent Trends Related to Our Business
    Goodwill and Other Intangible Assets
 Segment Reporting
  New Accounting Pronouncements
 Disclosures
about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133
  22




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RESULTS OF OPERATIONS
Three and six months ended June 30, 2008 and 2007
 Factors Affecting Comparability
 Reclassifications
  Three Months Ended June 30, 2007
    
    Six Months Ended June 30, 2007As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    
    
    
    As
    
    Previously
    
    
    
    
    
    As(amounts in millions)
    
    Reported
    
    Reclass
    
    Reclassified
    
    Reported
    
    Reclass
    
    ReclassifiedNet revenues
    
    $
    666.6
    
    
    $
    0.4
    
    
    $
    667.0
    
    
    $
    1,329.4
    
    
    $
    (1.1
    )
    
    $
    1,328.3Production,
publication and
distribution
expenses
    
    
    283.5
    
    
    
    (169.5
    )
    
    
    114.0
    
    
    
    578.0
    
    
    
    (349.4
    )
    
    
    228.6Selling and support
expenses
    
    
    
    
    
    
    171.2
    
    
    
    171.2
    
    
    
    
    
    
    
    349.5
    
    
    
    349.5General and
administrative
expenses
    
    
    34.8
    
    
    
    (1.3
    )
    
    
    33.5
    
    
    
    72.0
    
    
    
    (1.1
    )
    
    
    70.9
 Acquisitions
  Impact of Purchase Accounting
  23




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##### Table of Contents



Net Revenues
  Three months ended June 30,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeGross directory advertising
revenues
    
    $
    665.6
    
    
    $
    670.8
    
    
    $
    (5.2
    )
    
    
    (0.8
    )%Sales claims and allowances
    
    
    (11.3
    )
    
    
    (14.3
    )
    
    
    3.0
    
    
    
    21.0Net directory advertising revenues
    
    
    654.3
    
    
    
    656.5
    
    
    
    (2.2
    )
    
    
    (0.3
    )Other revenues
    
    
    9.4
    
    
    
    10.5
    
    
    
    (1.1
    )
    
    
    (10.5
    )Total
    
    $
    663.7
    
    
    $
    667.0
    
    
    $
    (3.3
    )
    
    
    (0.5
    )%
 Six months ended June 30,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeGross directory advertising
revenues
    
    $
    1,342.5
    
    
    $
    1,339.4
    
    
    $
    3.1
    
    
    
    0.2
    %Sales claims and allowances
    
    
    (23.2
    )
    
    
    (32.5
    )
    
    
    9.3
    
    
    
    28.6Net directory advertising revenues
    
    
    1,319.3
    
    
    
    1,306.9
    
    
    
    12.4
    
    
    
    0.9Other revenues
    
    
    19.1
    
    
    
    21.4
    
    
    
    (2.3
    )
    
    
    (10.7
    )Total
    
    $
    1,338.4
    
    
    $
    1,328.3
    
    
    $
    10.1
    
    
    
    0.8
    %
     24




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##### Table of Contents



Expenses
   Three months ended June 30,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeProduction, publication and
distribution expenses
    
    $
    103.5
    
    
    $
    114.0
    
    
    $
    (10.5
    )
    
    
    (9.2
    )%Selling and support expenses
    
    
    175.6
    
    
    
    171.2
    
    
    
    4.4
    
    
    
    2.6General and administrative expenses
    
    
    30.1
    
    
    
    33.5
    
    
    
    (3.4
    )
    
    
    (10.1
    )Depreciation and amortization
    
    
    119.5
    
    
    
    109.2
    
    
    
    10.3
    
    
    
    9.4Goodwill impairment
    
    
    660.2
    
    
    
    
    
    
    
    660.2
    
    
    
    100.0Total
    
    $
    1,088.9
    
    
    $
    427.9
    
    
    $
    661.0
    
    
    
    154.5
    %
 Six months ended June 30,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeProduction, publication and
distribution expenses
    
    $
    212.6
    
    
    $
    228.6
    
    
    $
    (16.0
    )
    
    
    (7.0
    )%Selling and support expenses
    
    
    361.9
    
    
    
    349.5
    
    
    
    12.4
    
    
    
    3.5General and administrative expenses
    
    
    65.0
    
    
    
    70.9
    
    
    
    (5.9
    )
    
    
    (8.3
    )Depreciation and amortization
    
    
    237.8
    
    
    
    212.2
    
    
    
    25.6
    
    
    
    12.1Goodwill impairment
    
    
    3,123.9
    
    
    
    
    
    
    
    3,123.9
    
    
    
    100.0Total
    
    $
    4,001.2
    
    
    $
    861.2
    
    
    $
    3,140.0
    
    
    
    364.6
    %
 25




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##### Table of Contents



Production, Publication and Distribution Expenses
  Three months ended
    
    Six months ended(amounts in millions)
    
    June 30, 2008
    
    June 30, 2008$ ChangeDecreased information technology (IT) expenses
    
    $
    (9.3
    )
    
    $
    (12.9
    )Decreased print, paper and distribution costs
    
    
    (6.8
    )
    
    
    (9.7
    )Decreased cost uplift expense
    
    
    (3.9
    )
    
    
    (12.8
    )Increased internet production and distribution costs
    
    
    8.9
    
    
    
    17.5All other, net
    
    
    0.6
    
    
    
    1.9Total decrease in
production, publication
and distribution expenses
for the three and six
months ended June 30,
  2008
    
    $
    (10.5
    )
    
    $
    (16.0
    )
    26




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##### Table of Contents



Selling and Support Expenses
  Three months ended
    
    Six months ended(amounts in millions)
    
    June 30, 2008
    
    June 30, 2008$ ChangeIncreased bad debt expense
    
    $
    15.2
    
    
    $
    24.0Increased advertising and branding expenses
    
    
    4.5
    
    
    
    13.6Decreased salesperson costs
    
    
    (4.1
    )
    
    
    (7.7
    )Decreased cost uplift expense
    
    
    (3.7
    )
    
    
    (11.8
    )Decreased directory publishing support costs
    
    
    (3.1
    )
    
    
    (4.3
    )All other, net
    
    
    (4.4
    )
    
    
    (1.4
    )Total increase in
selling and support
expenses for the
three and six months
  ended June 30, 2008
    
    $
    4.4
    
    
    $
    12.4
      27




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##### Table of Contents



General and Administrative Expenses
  Three months ended
    
    Six months ended(amounts in millions)
    
    June 30, 2008
    
    June 30, 2008$ ChangeDecrease in
non-cash stock-based compensation expense under SFAS No.
123 (R)
    
    $
    (2.2
    )
    
    $
    (5.9
    )Decrease in IT expenses
    
    
    (1.2
    )
    
    
    (2.6
    )Increase in
restructuring expenses
    
    
    4.4
    
    
    
    4.8All other, net
    
    
    (4.4
    )
    
    
    (2.2
    )Total decrease in
G&A expenses for
the three and six
months ended June
  30, 2008
    
    $
    (3.4
    )
    
    $
    (5.9
    )
    Depreciation and Amortization
   Goodwill Impairment
 Accounting for the Impairment or Disposal of Long-Lived Assets
 28




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##### Table of Contents



Operating Income (Loss)
  Three months ended June 30,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeTotal
    
    $
    (425.2
    )
    
    $
    239.2
    
    
    $
    (664.4
    )
    
    
    (277.8
    )%
 Six months ended June 30,(amounts in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeTotal
    
    $
    (2,662.8
    )
    
    $
    467.1
    
    
    $
    (3,129.9
    )
    
    
    (670.1
    )%
  29




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##### Table of Contents



Interest Expense, Net
    Gain
on Debt Exchanges
  Income Taxes
  30




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##### Table of Contents



Net Income (Loss) and Earnings (Loss) Per Share
  Earnings Per
Share .
  31




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
  June 30, 2008
    
    December 31, 2007RHD6.875% Senior Notes due 2013
    
    $
    252,320
    
    
    $
    300,0006.875% Series A-1 Senior Discount Notes due 2013
    
    
    312,096
    
    
    
    339,2226.875% Series A-2 Senior Discount Notes due 2013
    
    
    524,322
    
    
    
    613,6498.875% Series A-3 Senior Notes due 2016
    
    
    1,058,839
    
    
    
    1,210,0008.875% Series A-4 Senior Notes due 2017
    
    
    1,235,260
    
    
    
    1,500,000R.H. Donnelley Inc. (RHDI)Credit Facility
    
    
    1,433,941
    
    
    
    1,571,53611.75% Senior Notes due 2015
    
    
    412,871
    
    
    
    Dex Media, Inc.8% Senior Notes due 2013
    
    
    511,268
    
    
    
    512,0979% Senior Discount Notes due 2013
    
    
    748,835
    
    
    
    719,112Dex Media EastCredit Facility
    
    
    1,101,000
    
    
    
    1,106,050Dex Media WestNew Credit Facility
    
    
    1,080,000
    
    
    
    Former Credit Facility
    
    
    
    
    
    
    1,071,4918.5% Senior Notes due 2010
    
    
    396,352
    
    
    
    398,7365.875% Senior Notes due 2011
    
    
    8,768
    
    
    
    8,7749.875% Senior Subordinated Notes due 2013
    
    
    820,479
    
    
    
    824,982Total RHD Consolidated
    
    
    9,896,351
    
    
    
    10,175,649Less current portion
    
    
    76,954
    
    
    
    177,175Long-term debt
    
    $
    9,819,397
    
    
    $
    9,998,474
 Credit Facilities
  RHDI
   32




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
    
    The highest of (i) a base rate as determined by the Administrative Agent, Deutsche
Bank Trust Company Americas, (ii) the Federal Funds Effective Rate (as defined) plus 0.50%,
and (iii) 4.0%, in each case, plus a 2.50% margin on the RHDI Revolver and a 2.75% margin
on Term Loan D-1 and Term Loan D-2; or
    
    The higher of (i) LIBOR rate and (ii) 3.0%, in each case, plus a 3.50% margin on the
RHDI Revolver and a 3.75% margin on Term Loan D-1 and Term Loan D-2. We may elect interest
periods of 1, 2, 3 or 6 months (or 9 or 12 months if, at the time of the borrowing, all
lenders agree to make such term available), for LIBOR borrowings.
 Dex Media East
  Dex Media West
    
    
    The highest of (i) the base rate determined by the Administrative Agent, JP Morgan Chase
Bank, N.A., (ii) the Federal Funds Effective Rate (as defined) plus 0.50%, and (iii) 4.0%,
in each case, plus a 2.75% (or 2.50% if the leverage ratio is less than 3.00 to 1.00)
margin on the Dex Media West Revolver and Term Loan A and a 3.0% margin on Term Loan B; or
    
    The higher of (i) LIBOR rate and (ii) 3.0% plus a 3.75% (or 3.50% if the leverage ratio
is less than 3.00 to 1.00) margin on the Dex Media West Revolver and Term Loan A and a 4.0%
margin on Term Loan B. We may elect interest periods of 1, 2, 3, or 6 months (or 9 or 12
months if, at the time of the borrowing, all lenders agree to make such term available),
for LIBOR borrowings.
 Notes
  33




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th th
   Refinancings
  Impact of Purchase Accounting
 Business Combinations
 Long-Term Debt atJune 30, 2008Unamortized Fair
    
    
    
    
    
    ExcludingValue Adjustment at
    
    Long-Term Debt at
    
    Unamortized Fair(amounts in millions)
    
    June 30, 2008
    
    June 30, 2008
    
    Value AdjustmentDex Media, Inc. 8% Senior Notes
    
    $
    11.3
    
    
    $
    511.3
    
    
    $
    500.0Dex Media, Inc. 9% Senior Discount Notes
    
    
    13.7
    
    
    
    748.8
    
    
    
    735.1Dex Media West 8.5% Senior Notes
    
    
    11.3
    
    
    
    396.4
    
    
    
    385.1Dex Media West 5.875% Senior Notes
    
    
    0.1
    
    
    
    8.8
    
    
    
    8.7Dex Media West 9.875% Senior Subordinated Notes
    
    
    58.8
    
    
    
    820.5
    
    
    
    761.7Total Dex Media Outstanding Debt at January
31, 2006
    
    $
    95.2
    
    
    $
    2,485.8
    
    
    $
    2,390.6
 34




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Liquidity and Cash Flows
      
    
    $(1,962.0) million in net loss, which includes the impact of the non-cash goodwill
impairment charge.
    
    $2,149.3 million of net non-cash items consisting of the non-cash goodwill impairment
charge of $3,123.9 million, offset by $(974.6) million in deferred income taxes, which
includes the tax impact of the non-cash goodwill impairment charge.
    
    $161.3 million of the net non-cash gain on the debt
exchanges.
    
    $385.4 million of other net non-cash items primarily consisting of $237.8 million of
depreciation and amortization, $64.2 million in bad debt provision, $38.4 million of net
additional interest expense associated with ineffective interest rate swaps, and $26.5
million in other non-cash items, primarily consisting of $36.4 million related to the
accretion of our discounted debt and $12.1 million related to
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the amortization of deferred financing costs, offset by $13.3 million associated with the
change in fair value of our interest rate swaps and $8.6 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. Other net non-cash items also include $16.3 million of
stock-based compensation expense and $2.2 million in loss on extinguishment of debt,
reflecting the write-off of unamortized deferred financing costs associated with the
former Dex Media West credit facility.
    
    $92.4 million net use of cash from an increase in accounts receivable of $128.9
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, offset by an increase in deferred
directory revenues of $36.5 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.
    
    $25.1 million net source of cash from a decrease in other assets, consisting of a
$46.9 million decrease in prepaid directory costs resulting from publication
seasonality, offset by a $21.8 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.
    
    $71.3 million net use of cash from a decrease in accounts payable and accrued
liabilities, primarily reflecting a $32.7 million decrease in trade accounts payable
resulting from timing of invoice processing versus payment thereon, a $31.9 million
decrease in accrued interest payable on outstanding debt and a
$6.7 million decrease in accrued liabilities, which include accrued salaries and related
bonuses and accrued income taxes.
    
    $3.5 million increase in other non-current liabilities, including pension and
postretirement long-term liabilities.
  
    
    $30.3 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.
  
    
    $1,018.7 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.
    
    $1,191.2 million in principal payments on term loans under our credit facilities and
notes. With regard to our credit facilities, $35.1 million represents scheduled
principal payments and $1,156.0 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.
    
    $373.1 million in borrowings under our revolvers, used primarily to fund temporary
working capital requirements.
    
    $396.2 million in principal payments on our revolvers.
    
    $8.5 million in fees associated with the issuance of the RHDI Senior Notes, which has
been accounted for as a non-cash financing activity.
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
    
    $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 decreased balance of checks not yet presented for payment.
    
    $0.1 million in proceeds from the exercise of employee stock options.
  
    
    $40.9 million in net income.
    
    $331.1 million of net non-cash charges primarily consisting of $212.2 million of
depreciation and amortization, $40.2 million in bad debt provision, $21.5 million of
stock-based compensation expense, $31.9 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 $25.3
million in deferred income taxes.
    
    $54.0 million net use of cash from an increase in accounts receivable of $155.5
million, offset by an increase in deferred directory revenue of $101.5 million. The
change in deferred revenue 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 revenue and
billed to customers.
    
    $8.6 million net source of cash from a decrease in other assets, consisting of a
$22.6 million decrease in prepaid expenses, offset by a $14.0 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.
    
    $20.3 million net use of cash from a decrease in accounts payable and accrued
liabilities, primarily reflecting a $17.9 million decrease in accrued liabilities,
including accrued salaries and related bonuses, and a $4.9 million decrease in accrued
interest payable on outstanding debt, offset by a $2.5 million increase in trade
accounts payable.
    
    $8.0 million increase in other non-current liabilities, including pension and
postretirement long-term liabilities.
  
    
    $37.4 million used to purchase fixed assets, primarily computer equipment, software
and leasehold improvements.
    
    $2.5 million used to fund an equity investment.
  
    
    $737.6 million in principal payments on debt borrowed under each of the credit
facilities. Of this amount, $143.0 million represents scheduled principal payments,
$204.0 million represents principal payments made on an accelerated basis, at our
option, from available cash flow generated from operations and $390.6 million represents
principal payments on the revolvers.
    
    $361.6 million source in borrowings under the revolvers.
    
    $11.8 million in proceeds from the exercise of employee stock options.
    
    $1.5 million used in the decreased balance of checks not yet presented for payment.
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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)
    
    $
    9,801.2
    
    
    $
    77.0
    
    
    $
    2,066.5
    
    
    $
    1,028.7
    
    
    $
    6,629.0Interest on long-term
debt(2)
    
    
    4,215.7
    
    
    
    700.0
    
    
    
    1,420.1
    
    
    
    1,176.2
    
    
    
    919.4Total long-term debt and
related interest contractual
obligations
    
    $
    14,016.9
    
    
    $
    777.0
    
    
    $
    3,486.6
    
    
    $
    2,204.9
    
    
    $
    7,548.4
 
 (1)
    
    Included in long-term debt are principal amounts owed under our credit facilities
and our senior notes and senior subordinated notes, including the current portion of long-term
debt.(2)
    
    Interest on debt represents cash interest payment obligations assuming all
indebtedness at June 30, 2008 will be paid in accordance with its contractual maturity and assumes
interest rates on variable interest debt as of June 30, 2008 will remain unchanged in future
periods. The weighted average interest rates under the RHDI, Dex Media East and new Dex Media West
Credit Facilities were 6.75%, 4.54% and 6.97%, respectively, at June 30, 2008. Please refer to
Liquidity and Capital Resources for interest rates on our senior notes and our senior
subordinated notes. 38




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##### Table of Contents



Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk and Risk Management
      Accounting for Derivative Instruments and Hedging Activities
  39




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##### Table of Contents



Market Risk Sensitive Instruments
 , 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
appropriately and 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.
 40




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
     
 Item1A. Risk Factors
  3) Competition
    41




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42




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##### Table of Contents



5)
Recognition of impairment charges for our intangible assets, other
long-lived assets or goodwill
 Accounting for the
Impairment or Disposal of Long-lived Assets
     9) Future changes in directory publishing obligations in Qwest and AT&T markets and other regulatory matters
   43




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##### Table of Contents



10) Reliance on, and extension of credit to, small and medium-sized businesses.
  44




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##### Table of Contents



Item 4.
    
    Submission of Matters to a Vote of Security Holders
  VotesName
    
    Votes For
    
    Withheld/Against
    
    AbstentionsMichael P. Connors
    
    
    52,299,458
    
    
    
    1,608,446
    
    
    
    35,183Thomas J. Reddin
    
    
    52,679,586
    
    
    
    1,229,209
    
    
    
    34,292David M. Veit
    
    
    52,670,144
    
    
    
    1,238,396
    
    
    
    35,547
   VotesVotes For
    
    Withheld/Against
    
    AbstentionsRatification of the appointment of KPMG
    
    
    53,713,748
    
    
    
    210,278
    
    
    
    19,061
  VotesVotes For
    
    Withheld/Against
    
    AbstentionsExchange program proposal
    
    
    33,076,245
    
    
    
    13,790,674
    
    
    
    37,577
  VotesVotes For
    
    Withheld/Against
    
    AbstentionsShareholder
proposal regarding
classified board
structure
    
    
    11,752,947
    
    
    
    35,121,280
    
    
    
    30,269
  VotesVotes For
    
    Withheld/Against
    
    AbstentionsManagement proposal regarding
the amendment of the Companys
Certificate of Incorporation in
order to
declassify the Board of Directors
    
    
    53,496,609
    
    
    
    414,119
    
    
    
    32,183
 45




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##### Table of Contents



Item 6.
    
    Exhibits
 Exhibit No.
    
    Document3.1
    
    Amended and Restated Certificate of
Incorporation of R.H. Donnelley Corporation (incorporated by
reference to Exhibit 3.1 to the Companys Current Report on
Form 8-K, filed with the Securities and Exchange Commission on
May 16, 2008 (SEC No.
001-07155)).4.1
    
    Indenture, dated June 25, 2008, among The Bank of New York, as
trustee, R.H. Donnelley Inc., as issuer, R.H. Donnelley
Corporation, as guarantor, and the subsidiary guarantors party
thereto (incorporated by reference to Exhibit 4.1 to the
Registrants Form 8-K, filed on June 25, 2008 (SEC No.
001-07155)).10.1
    
    Second Amendment, dated as of June 6, 2008, to the Second
Amended and Restated Credit Agreement, dated as of December
13, 2005 as amended by the First Amendment, dated as of April
24, 2006, among R.H. Donnelley Corporation, R.H. Donnelley
Inc., the several banks and other financial institutions or
entities from time to time parties thereto, Deutsche Bank
Trust Company Americas, as administrative agent, and the other
agents parties thereto (incorporated by reference to Exhibit
10.1 to the Registrants Form 8-K, filed on June 9, 2008 (SEC
No. 001-07155)).10.2
    
    Reaffirmation, dated as of June 6, 2008, among R.H. Donnelley
Corporation, R.H. Donnelley Inc. and its subsidiaries and
Deutsche Bank Trust Company Americas, as administrative agent
(incorporated by reference to Exhibit 10.2 to the Registrants
Form 8-K, filed on June 9, 2008 (SEC No. 001-07155)).10.3
    
    Credit Agreement, dated June 6, 2008, among Dex Media, Inc.,
Dex Media West, Inc., Dex Media West LLC, the several banks
and other financial institutions or entities from time to time
parties thereto as lenders, J.P. Morgan Securities Inc. and
Banc of America Securities LLC, as co-lead arrangers and
joint-bookrunners, JPMorgan Chase Bank, N.A., as
administrative agent, and Bank of America, N.A., as
syndication agent (incorporated by reference to Exhibit 10.3
to the Registrants Form 8-K, filed on June 9, 2008 (SEC No.
001-07155)).10.4
    
    Guarantee and Collateral Agreement, dated as of June 6, 2008,
among Dex Media West LLC, Dex Media West, Inc., the subsidiary
guarantor party thereto and JPMorgan Chase Bank, N.A., as
collateral agent (incorporated by reference to Exhibit 10.4 to
the Registrants Form 8-K, filed on June 9, 2008 (SEC No.
001-07155)).10.5
    
    Pledge Agreement, dated as of June 6, 2008, among Dex Media,
Inc. and JPMorgan Chase Bank, N.A., as collateral agent
(incorporated by reference to Exhibit 10.5 to the Registrants
Form 8-K, filed on June 9, 2008 (SEC No. 001-07155)).31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended June 30, 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 June 30, 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 June 30, 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. 46




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##### Table of Contents



SIGNATURES
  R.H. DONNELLEY CORPORATIONDate: July 30, 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) 47




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Exhibit Index
 Exhibit No.
    
    Document3.1
    
    Amended and Restated Certificate of
Incorporation of R.H. Donnelley Corporation (incorporated by
reference to Exhibit 3.1 to the Companys Current Report on
Form 8-K, filed with the Securities and Exchange Commission on
May 16, 2008 (SEC No.
001-07155)).4.1
    
    Indenture, dated June 25, 2008, among The Bank of New York, as
trustee, R.H. Donnelley Inc., as issuer, R.H. Donnelley Corporation,
as guarantor, and the subsidiary guarantors party thereto
(incorporated by reference to Exhibit 4.1 to the Registrants Form
8-K, filed on June 25, 2008 (SEC No. 001-07155)).10.1
    
    Second Amendment, dated as of June 6, 2008, to the Second Amended
and Restated Credit Agreement, dated as of December 13, 2005 as
amended by the First Amendment, dated as of April 24, 2006, among
R.H. Donnelley Corporation, R.H. Donnelley Inc., the several banks
and other financial institutions or entities from time to time
parties thereto, Deutsche Bank Trust Company Americas, as
administrative agent, and the other agents parties thereto
(incorporated by reference to Exhibit 10.1 to the Registrants Form
8-K, filed on June 9, 2008 (SEC No. 001-07155)).10.2
    
    Reaffirmation, dated as of June 6, 2008, among R.H. Donnelley
Corporation, R.H. Donnelley Inc. and its subsidiaries and Deutsche
Bank Trust Company Americas, as administrative agent (incorporated
by reference to Exhibit 10.2 to the Registrants Form 8-K, filed on
June 9, 2008 (SEC No. 001-07155)).10.3
    
    Credit Agreement, dated June 6, 2008, among Dex Media, Inc., Dex
Media West, Inc., Dex Media West LLC, the several banks and other
financial institutions or entities from time to time parties thereto
as lenders, J.P. Morgan Securities Inc. and Banc of America
Securities LLC, as co-lead arrangers and joint-bookrunners, JPMorgan
Chase Bank, N.A., as administrative agent, and Bank of America,
N.A., as syndication agent (incorporated by reference to Exhibit
10.3 to the Registrants Form 8-K, filed on June 9, 2008 (SEC No.
001-07155)).10.4
    
    Guarantee and Collateral Agreement, dated as of June 6, 2008, among
Dex Media West LLC, Dex Media West, Inc., the subsidiary guarantor
party thereto and JPMorgan Chase Bank, N.A., as collateral agent
(incorporated by reference to Exhibit 10.4 to the Registrants Form
8-K, filed on June 9, 2008 (SEC No. 001-07155)).10.5
    
    Pledge Agreement, dated as of June 6, 2008, among Dex Media, Inc.
and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by
reference to Exhibit 10.5 to the Registrants Form 8-K, filed on
June 9, 2008 (SEC No. 001-07155)).31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period ended
June 30, 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
June 30, 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
June 30, 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. 48