##### 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 March 31, 2010
 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
 DEX ONE 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
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ
  þ o
  Title of class
    
    Shares Outstanding at April 30, 2010Common Stock, par value $.001 per share
    
    50,015,691




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##### 



DEX ONE CORPORATION
 INDEX TO FORM 10-Q
 PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at March 31, 2010 (Successor
Company) and December 31, 2009 (Predecessor Company)
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss) for the two months ended March 31, 2010 (Successor Company), the
one month ended January 31, 2010 and the three months ended March 31,
2009 (Predecessor Company)
    
    
    4Condensed Consolidated Statements of Cash Flows for the two months ended
March 31, 2010 (Successor Company), the one month ended January 31, 2010
and the three months ended March 31, 2009 (Predecessor Company)
    
    
    5Condensed Consolidated Statements of Changes in Shareholders Equity
(Deficit) for the two months ended March 31, 2010 (Successor Company) and
the one month ended January 31, 2010 (Predecessor Company)
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    42Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    70Item 4. Controls and Procedures
    
    
    72PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    73Item 6. Exhibits
    
    
    74SIGNATURES
    
    
    75EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



Part I. FINANCIAL INFORMATION
 
  Dex One Corporation and Subsidiaries
 
 Condensed Consolidated Balance Sheets (Unaudited)
 Successor Company
    
    
    
    Predecessor Company(in thousands, except share data)
    
    March 31, 2010
    
    
    
    December 31, 2009AssetsCurrent AssetsCash and cash equivalents
    
    $
    147,527
    
    
    
    $
    665,940Accounts receivable:Billed
    
    
    189,169
    
    
    
    
    244,048Unbilled
    
    
    593,657
    
    
    
    
    636,350Allowance for doubtful accounts
    
    
    (29,518
    )
    
    
    
    (54,612
    )Net accounts receivable
    
    
    753,308
    
    
    
    
    825,786Deferred directory costs
    
    
    68,005
    
    
    
    
    138,061Prepaid expenses and other current assets
    
    
    75,882
    
    
    
    
    90,928Total current assets
    
    
    1,044,722
    
    
    
    
    1,720,715Fixed assets and computer software, net
    
    
    202,043
    
    
    
    
    157,272Deferred income taxes, net
    
    
    
    
    
    
    
    399,885Other non-current assets
    
    
    8,377
    
    
    
    
    62,699Intangible assets, net
    
    
    2,527,029
    
    
    
    
    2,158,223Goodwill
    
    
    2,097,124
    
    
    
    
    Total Assets
    
    $
    5,879,295
    
    
    
    $
    4,498,794Liabilities and Shareholders Equity (Deficit)Current Liabilities Not Subject to CompromiseAccounts payable and accrued liabilities
    
    $
    139,165
    
    
    
    $
    168,488Short-term deferred income taxes, net
    
    
    82,534
    
    
    
    
    108,184Accrued interest
    
    
    23,362
    
    
    
    
    4,643Deferred directory revenues
    
    
    284,400
    
    
    
    
    848,775Current portion of long-term debt
    
    
    228,860
    
    
    
    
    993,528Total current liabilities not subject to compromise
    
    
    758,321
    
    
    
    
    2,123,618Long-term debt
    
    
    2,888,056
    
    
    
    
    2,561,248Deferred income taxes, net
    
    
    415,427
    
    
    
    
    Other non-current liabilities
    
    
    108,659
    
    
    
    
    380,163Total liabilities not subject to compromise
    
    
    4,170,463
    
    
    
    
    5,065,029Liabilities subject to compromise
    
    
    
    
    
    
    
    6,352,813Commitments and contingenciesShareholders Equity (Deficit)Successor Company common stock, par value $.001 per share,
authorized  300,000,000 shares;
issued and outstanding50,015,691 shares at March 31, 2010
    
    
    50
    
    
    
    
    Predecessor Company common stock, par value $1 per share,
authorized  400,000,000 shares; issued88,169,275 shares and
outstanding68,955,674 shares at December 31,
2009
    
    
    
    
    
    
    
    88,169Additional paid-in capital
    
    
    1,451,564
    
    
    
    
    2,442,549Retained earnings (accumulated deficit)
    
    
    257,218
    
    
    
    
    (9,137,160
    )Predecessor
Company treasury stock, at cost, 19,213,601 shares at December 31, 2009
    
    
    
    
    
    
    
    (256,114
    )Accumulated other comprehensive loss
    
    
    
    
    
    
    
    (56,492
    )Total shareholders equity (deficit)
    
    
    1,708,832
    
    
    
    
    (6,919,048
    )Total Liabilities and Shareholders Equity (Deficit).
    
    $
    5,879,295
    
    
    
    $
    4,498,794
  3




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##### Table of Contents



Dex One Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
 Successor Company
    
    
    Predecessor CompanyTwo Months Ended
    
    
    One Month Ended
    
    
    Three Months Ended(in thousands, except per share data)
    
    March 31, 2010
    
    
    
    January 31, 2010
    
    
    
    March 31, 2009Net revenues
    
    $
    53,145
    
    
    $
    160,372
    
    
    $
    601,986Expenses:Production and distribution expenses (exclusive of
depreciation and amortization shown separately below)
    
    
    29,008
    
    
    
    27,069
    
    
    
    101,901Selling and support expenses
    
    
    58,354
    
    
    
    40,882
    
    
    
    152,004General and administrative expenses
    
    
    21,728
    
    
    
    8,186
    
    
    
    41,592Depreciation and amortization
    
    
    39,425
    
    
    
    20,161
    
    
    
    142,845Total expenses
    
    
    148,515
    
    
    
    96,298
    
    
    
    438,342Operating income (loss)
    
    
    (95,370
    )
    
    
    64,074
    
    
    
    163,644Interest expense, net
    
    
    (48,934
    )
    
    
    (19,656
    )
    
    
    (198,835
    )Income (loss) before reorganization items, net and
income taxes
    
    
    (144,304
    )
    
    
    44,418
    
    
    
    (35,191
    )Reorganization items, net
    
    
    
    
    
    
    7,793,132
    
    
    
    Income (loss) before income taxes
    
    
    (144,304
    )
    
    
    7,837,550
    
    
    
    (35,191
    )(Provision) benefit for income taxes
    
    
    401,522
    
    
    
    (917,541
    )
    
    
    (366,019
    )Net income (loss)
    
    $
    257,218
    
    
    $
    6,920,009
    
    
    $
    (401,210
    )Earnings (loss) per share:Basic
    
    $
    5.14
    
    
    $
    100.3
    
    
    $
    (5.83
    )Diluted
    
    $
    5.14
    
    
    $
    100.2
    
    
    $
    (5.83
    )Shares used in computing earnings (loss) per share:Basic
    
    
    50,008
    
    
    
    69,013
    
    
    
    68,798Diluted
    
    
    50,008
    
    
    
    69,052
    
    
    
    68,798Comprehensive Income (Loss)Net income (loss)
    
    $
    257,218
    
    
    $
    6,920,009
    
    
    $
    (401,210
    )Amortization of loss on interest rate swaps, net of tax
    
    
    
    
    
    
    1,083
    
    
    
    328Benefit plans adjustment, net of tax
    
    
    
    
    
    
    (4,535
    )
    
    
    17Comprehensive income (loss)
    
    $
    257,218
    
    
    $
    6,916,557
    
    
    $
    (400,865
    )
  4




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##### Table of Contents



Dex One Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Successor Company
    
    
    Predecessor CompanyTwo Months
    
    
    One Month
    
    
    Three MonthsEnded
    
    
    Ended
    
    
    EndedMarch 31,
    
    
    January 31,
    
    
    March 31,(in thousands)
    
    2010
    
    
    2010
    
    
    2009Cash Flows Provided By Operating Activities
    
    $
    105,283
    
    
    $
    71,741
    
    
    $
    56,135Cash Flows from Investing ActivitiesAdditions to fixed assets and computer software
    
    
    (6,386
    )
    
    
    (1,766
    )
    
    
    (3,937
    )Net cash used in investing activities
    
    
    (6,386
    )
    
    
    (1,766
    )
    
    
    (3,937
    )Cash Flows from Financing ActivitiesCredit facilities repayments
    
    
    (153,179
    )
    
    
    (511,272
    )
    
    
    (21,985
    )Debt issuance and other financing costs
    
    
    (949
    )
    
    
    (22,096
    )
    
    
    Revolver borrowings
    
    
    
    
    
    
    
    
    
    
    361,000Increase (decrease) in checks not yet presented for payment
    
    
    3,303
    
    
    
    (3,092
    )
    
    
    10,889Net cash provided by (used in) financing activities
    
    
    (150,825
    )
    
    
    (536,460
    )
    
    
    349,904Increase (decrease) in cash and cash equivalents
    
    
    (51,928
    )
    
    
    (466,485
    )
    
    
    402,102Cash and cash equivalents, beginning of year
    
    
    199,455
    
    
    
    665,940
    
    
    
    131,199Cash and cash equivalents, end of period
    
    $
    147,527
    
    
    $
    199,455
    
    
    $
    533,301Supplemental Information:Cash paid:Interest, net
    
    $
    19,208
    
    
    $
    15,460
    
    
    $
    203,304Income taxes, net
    
    $
    2,002
    
    
    $
    
    
    
    $
    (10
    )
  5




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##### Table of Contents



Dex One Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Changes in Shareholders Equity (Deficit)
 Retained
    
    
    
    
    
    
    AccumulatedEarnings
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Additional
    
    
    (Accumulated
    
    
    Treasury
    
    
    Comprehensive
    
    
    Shareholders(in thousands)
    
    Stock
    
    
    Paid-in Capital
    
    
    Deficit)
    
    
    Stock
    
    
    Income (Loss)
    
    
    Equity (Deficit)Balance, December 31, 2009 (Predecessor Company)
    
    $
    88,169
    
    
    $
    2,442,549
    
    
    $
    (9,137,160
    )
    
    $
    (256,114
    )
    
    $
    (56,492
    )
    
    $
    (6,919,048
    )Net income
    
    
    
    
    
    
    
    
    
    
    6,920,009
    
    
    
    
    
    
    
    
    
    
    
    6,920,009Compensatory stock awards
    
    
    
    
    
    
    613
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    613Other adjustments related to compensatory
stock awards
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    103
    
    
    
    
    
    
    
    Amortization of loss on interest rate swaps,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,083
    
    
    
    1,083Benefit plans adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,535
    )
    
    
    (4,535
    )Cancellation of Predecessor Company
common stock
    
    
    (88,169
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,169
    )Elimination of Predecessor Company
additional paid-in capital, accumulated
deficit, treasury stock and accumulated
other comprehensive loss
    
    
    
    
    
    
    (2,443,059
    )
    
    
    2,217,151
    
    
    
    256,011
    
    
    
    59,944
    
    
    
    90,047Balance, January 31, 2010 (Predecessor Company)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Issuance of Successor Company Common
Stock
    
    $
    50
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    50Establishment of Successor Company
additional paid-in capital
    
    
    
    
    
    
    1,450,734
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,450,734Balance, February 1, 2010 (Successor
Company)
    
    
    50
    
    
    
    1,450,734
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,450,784Net income
    
    
    
    
    
    
    
    
    
    
    257,218
    
    
    
    
    
    
    
    
    
    
    
    257,218Compensatory stock awards
    
    
    
    
    
    
    830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    830Balance, March 31, 2010 (Successor Company)
    
    $
    50
    
    
    $
    1,451,564
    
    
    $
    257,218
    
    
    $
    
    
    
    $
    
    
    
    $
    1,708,832
  6




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##### Table of Contents



Dex One Corporation and Subsidiaries
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 (tabular amounts in thousands, except share and per share data and where otherwise indicated)
 1. Business and Basis of Presentation
   Corporate Overview
 ® ® ® ®
 Reclassifications
  Three Months Ended March 31, 2009AsPreviously
    
    
    
    
    
    
    AsReported
    
    
    Reclass
    
    
    ReclassifiedProduction and distribution
expenses
    
    $
    96,152
    
    
    $
    5,749
    
    
    $
    101,901Selling and support
expenses
    
    
    164,883
    
    
    
    (12,879
    )
    
    
    152,004General and administrative
expenses
    
    
    34,462
    
    
    
    7,130
    
    
    
    41,592
 7




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##### Table of Contents



Filing of Voluntary Petitions in Chapter 11
  Confirmed Plan of Reorganization and Emergence from the Chapter 11 Proceedings
  In re R.H.
Donnelley Corporation
 Restructuring
  
    
    DonTech Holdings, LLC and R.H. Donnelley Publishing & Advertising of Illinois
Holdings, LLC were merged into their sole member, RHDI;
    
    The DonTech II Partnership and R.H. Donnelley Publishing & Advertising of
Illinois Partnership technically terminated their respective partnership agreements
due to the loss of a second partner;
    
    Dex Media East Finance Co. was merged into Dex Media East LLC;
    
    Dex Media West Finance Co. was merged into Dex Media West LLC;
    
    Work.com, Inc. was merged into Business.com, Inc.;
    
    GetDigitalSmart.com, Inc. was merged into RHDI;
    
    Dex Media East LLC was merged into Dex Media East, Inc. (DME Inc.);
    
    Dex Media West LLC was merged into Dex Media West, Inc. (DMW Inc.); and
    
    R.H. Donnelley Publishing & Advertising, Inc. was merged into RHDI.
  Consummation of the Plan
 Issuance of New Common Stock
  8




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##### Table of Contents



Distributions Pursuant to the Plan
  
    
    On the Effective Date, in accordance with the Plan, the Company issued the
following number of shares of Dex One common stock (i) approximately 10.5 million
shares, representing 21.0% of total outstanding common stock, to all holders of
notes issued by RHD; (ii) approximately 11.65 million shares, representing 23.3% of
total outstanding common stock, to all holders of notes issued by Dex Media, Inc.;
(iii) approximately 12.9 million shares, representing 25.8% of total outstanding
common stock, to all holders of notes issued by RHDI; (iv) approximately 6.5
million shares, representing 13.0% of total outstanding common stock, to all
holders of senior notes issued by Dex Media West; and (v) approximately 8.45
million shares, representing 16.9% of total outstanding common stock, to all
holders of senior subordinated notes issued by Dex Media West.
    
    On the Effective Date, in accordance with the terms of the Plan, holders of the
Dex Media West 8.5% Senior Notes due 2010 and 5.875% Senior Notes due 2011 also
received their pro rata share of Dex Ones $300.0 million aggregate principal
amount of 12%/14% Senior Subordinated Notes due 2017 (Dex One Senior Subordinated
Notes).
   Discharge, Releases, and Injunctions Pursuant to the Plan and the Confirmation Order
  Registration Rights Agreement
  9




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Impact on Long-Term Debt Upon Emergence from the Chapter 11 Proceedings
  Accounting Matters Resulting from the Chapter 11 Proceedings
    Reorganizations
  Going Concern
  10




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2. Summary of Significant Accounting Policies
 Identifiable Intangible Assets and Goodwill
 st
  Technology,Directory
    
    
    Local
    
    
    National
    
    
    Trade
    
    
    AdvertisingServices
    
    
    Customer
    
    
    Customer
    
    
    Names and
    
    
    CommitmentsAgreements
    
    
    Relationships
    
    
    Relationships
    
    
    Trademarks
    
    
    & Other
    
    
    TotalNet intangible
assets at February
1, 2010
    
    $
    1,330,000
    
    
    $
    562,900
    
    
    $
    175,000
    
    
    $
    389,400
    
    
    $
    100,500
    
    
    $
    2,557,800Accumulated
amortization
    
    
    (14,547
    )
    
    
    (9,065
    )
    
    
    (1,189
    )
    
    
    (3,584
    )
    
    
    (2,386
    )
    
    
    (30,771
    )Net intangible
assets at March 31,
2010
    
    $
    1,315,453
    
    
    $
    553,835
    
    
    $
    173,811
    
    
    $
    385,816
    
    
    $
    98,114
    
    
    $
    2,527,029
  Weighted Average
    
    AmortizationIntangible Asset
    
    Useful Lives
    
    MethodologyDirectory services
agreements
    
    27 years
    
    Income forecast method (1)Local customer
relationships
    
    15 years
    
    Income forecast method (1)National customer
relationships
    
    26 years
    
    Income forecast method (1)Trade names and
trademarks
    
    15 years
    
    Straight-line methodTechnology, advertising commitments
and other
    
    9 years
    
    Income forecast method (1)
 
 (1)
    
    The initial fair value assigned to these identifiable intangible assets is
amortized under the income forecast method, which assumes the value derived from these intangible
assets is greater in the earlier years and steadily declines over time.   11




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
    
    Historical financial information, including revenue, profit margins, customer attrition
data and price premiums enjoyed relative to competing independent publishers;
    
    Long-term financial projections, including, but not limited to, revenue trends and
profit margin trends; and
    
    Intangible asset carrying values.
      Interest Expense and Deferred Financing Costs
  12




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Advertising Expense
  13




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Concentration of Credit Risk
   Earnings (Loss) Per Share
  Successor Company
    
    
    Predecessor CompanyTwo Months Ended
    
    
    One Month Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    January 31, 2010
    
    
    March 31, 2009Basic EPSNet income (loss)
    
    $
    257,218
    
    
    $
    6,920,009
    
    
    $
    (401,210
    )Weighted average common shares outstanding
    
    
    50,008
    
    
    
    69,013
    
    
    
    68,798Basic EPS
    
    $
    5.14
    
    
    $
    100.3
    
    
    $
    (5.83
    )Diluted EPSNet income (loss)
    
    $
    257,218
    
    
    $
    6,920,009
    
    
    $
    (401,210
    )Weighted average common shares outstanding
    
    
    50,008
    
    
    
    69,013
    
    
    
    68,798Dilutive effect of stock awards (1)
    
    
    
    
    
    
    39
    
    
    
    Weighted average diluted shares outstanding
    
    
    50,008
    
    
    
    69,052
    
    
    
    68,798Diluted EPS
    
    $
    5.14
    
    
    $
    100.2
    
    
    $
    (5.83
    )
 
 (1)
    
    Due to the Predecessor Companys reported net loss for the three months ended March 31,
2009, the effect of all Predecessor Company stock-based awards was anti-dilutive and therefore
not included in the calculation of diluted EPS. For the two months ended March 31, 2010, 1.3
million shares of the Companys stock-based awards had exercise prices that exceeded the
average market price of the Companys common stock for the period. For the one month ended
January 31, 2010 and the three months ended March 31, 2009, 4.6 million shares and 5.8 million
shares, respectively, of the Predecessor Companys stock-based awards had exercise prices that
exceeded the average market price of the Predecessor Companys common stock for the respective
period. 14




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Stock-Based Awards
     Long-Term Incentive Program
   15




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Fair Value of Financial Instruments
  Fair Value Measurements and Disclosures
     Fair Value MeasurementsUsing Significant Other Observable Inputs (Level 2)Successor Company
    
    
    Predecessor CompanyDerivatives:
    
    March 31, 2010
    
    
    December 31, 2009Interest Rate Swap  Assets
    
    $
    2,511
    
    
    
    $
    Interest Rate Swap  Liabilities
    
    $
    (3,134
    )
    
    
    $
    (6,695
    )Interest Rate Cap  Assets
    
    $
    1,666
    
    
    
    $
    
    16




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##### Table of Contents



Estimates
  New Accounting Pronouncements
 Improving Disclosures
about Fair Value Measurements
 17




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##### Table of Contents



Revenue Arrangements with Multiple Deliverables Revenue Arrangements with Multiple Deliverables
  3. Fresh Start Accounting
   Materiality Considering the Effects of
Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements
  Enterprise Value / Reorganization Value Determination
  18




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##### Table of Contents



Business Combinations
  Methodology, Analysis and Assumptions
    Discounted Cash Flow Methodology
  19




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##### Table of Contents



Publicly Traded Company Analysis
  Precedent Transaction Analysis
  Analysis of Post-Emergence Tax Attributes
  20




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##### Table of Contents



Final Enterprise Value, Accounting Policies and Reorganized Consolidated Balance Sheet
    Reorganized Condensed Consolidated Balance Sheet
As of January 31, 2010
(Unaudited)
 January 31, 2010Predecessor
    
    
    Reorganization
    
    
    Fresh Start
    
    
    SuccessorCompany
    
    
    Adjustments(1)
    
    
    Adjustments(2)
    
    
    Company(10)AssetsCurrent AssetsCash and cash equivalents
    
    $
    725,955
    
    
    $
    (526,500
    )(3)
    
    $
    
    
    
    $
    199,455Net accounts receivable
    
    
    798,113
    
    
    
    
    
    
    
    (41,156
    )(2)
    
    
    756,957Deferred directory costs
    
    
    135,479
    
    
    
    
    
    
    
    (135,479
    )(2)
    
    
    Prepaid expenses and other current assets
    
    
    86,925
    
    
    
    (1,401
    )(4)(7)
    
    
    9,657
    (2)
    
    
    95,181Total current assets
    
    
    1,746,472
    
    
    
    (527,901
    )
    
    
    (166,978
    )
    
    
    1,051,593Fixed assets and computer software, net
    
    
    154,439
    
    
    
    
    
    
    
    49,814
    (2)
    
    
    204,253Other non-current assets
    
    
    60,664
    
    
    
    
    
    
    
    (57,952
    )(9)
    
    
    2,712Deferred income taxes, net
    
    
    423,485
    
    
    
    (333,275
    )(7)
    
    
    (90,210
    )(2)
    
    
    Intangible assets, net
    
    
    2,142,668
    
    
    
    
    
    
    
    415,132
    (2)
    
    
    2,557,800Goodwill
    
    
    
    
    
    
    
    
    
    
    2,097,124
    (2)
    
    
    2,097,124Total Assets
    
    $
    4,527,728
    
    
    $
    (861,176
    )
    
    $
    2,246,930
    
    
    $
    5,913,482Liabilities and Shareholders (Deficit)
EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    150,974
    
    
    $
    13,910
    (4)(7)
    
    $
    (3,172
    )(2)
    
    $
    161,712Short-term deferred income taxes, net
    
    
    134,080
    
    
    
    (66,651
    )(7)
    
    
    153,573
    (2)
    
    
    221,002Accrued interest
    
    
    20,417
    
    
    
    (20,417
    )(3)(4)
    
    
    
    
    
    
    Deferred directory revenues
    
    
    811,999
    
    
    
    
    
    
    
    (791,034
    )(2)
    
    
    20,965Current portion of long-term debt
    
    
    993,526
    
    
    
    (827,579
    )(3)(4)
    
    
    (31,575
    )(4)(8)
    
    
    134,372Total current liabilities
    
    
    2,110,996
    
    
    
    (900,737
    )
    
    
    (672,208
    )
    
    
    538,051Long-term debt
    
    
    2,561,248
    
    
    
    657,628
    (3)(4)
    
    
    (88,670
    )(4)(8)
    
    
    3,130,206Deferred income taxes, net
    
    
    
    
    
    
    245,025
    (7)
    
    
    66,322
    (2)
    
    
    311,347Other non-current liabilities
    
    
    380,091
    
    
    
    120,391
    (4)(7)
    
    
    (17,388
    )(2)
    
    
    483,094Liabilities subject to compromise
    
    
    6,352,813
    
    
    
    (6,352,813
    )(5)
    
    
    
    
    
    
    Total liabilities
    
    
    11,405,148
    
    
    
    (6,230,506
    )
    
    
    (711,944
    )
    
    
    4,462,698Shareholders (Deficit) EquityCommon stock  Predecessor
    
    
    88,169
    
    
    
    (88,169
    )(6)
    
    
    
    
    
    
    Additional paid-in capital  Predecessor
    
    
    2,443,059
    
    
    
    (2,443,059
    )(6)
    
    
    
    
    
    
    (Accumulated deficit) retained earnings
    
    
    (9,092,693
    )
    
    
    6,133,819
    (6)
    
    
    2,958,874
    (2)
    
    
    Treasury Stock  Predecessor
    
    
    (256,011
    )
    
    
    256,011
    (6)
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (59,944
    )
    
    
    59,944
    (6)
    
    
    
    
    
    
    Common stock  Successor
    
    
    
    
    
    
    50
    (5)
    
    
    
    
    
    
    50Additional paid-in capital  Successor
    
    
    
    
    
    
    1,450,734
    (5)
    
    
    
    
    
    
    1,450,734Total shareholders (deficit) equity
    
    
    (6,877,420
    )
    
    
    5,369,330
    
    
    
    2,958,874
    
    
    
    1,450,784Total Liabilities and Shareholders
(Deficit) Equity
    
    $
    4,527,728
    
    
    $
    (861,176
    )
    
    $
    2,246,930
    
    
    $
    5,913,482
 21




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##### Table of Contents



(1)
    
    Represents amounts to be recorded on the Fresh Start Reporting Date for the
implementation of the Plan, including the settlement of liabilities subject to compromise and
related payments, distributions of cash and new shares of Dex One common stock to pre-petition
creditors, the cancellation of RHD common stock and the elimination of the Predecessor Companys
additional paid-in capital, a portion of accumulated deficit, treasury stock and accumulated other
comprehensive loss. The reorganization adjustments also include the establishment of Dex One
additional paid-in capital of $1.5 billion based on the fair value of equity of $1.5 billion less
the par value of Dex One common stock of less than $0.1 million. Common shares outstanding of the
Predecessor Company immediately prior to their cancellation on the Effective Date were 69,058,991.(2)
    
    Represents the adjustments for fresh start accounting primarily related to recording
goodwill, recording our intangible assets, accounts receivable, fixed assets and computer software
and other assets and liabilities at fair value and related deferred income taxes in accordance with
ASC 805. Additionally, such fresh start accounting adjustments reflect the elimination of
substantially all of our deferred directory revenue of $791.0 million and all of the related
deferred directory costs of $135.5 million, based on the minimal obligations we have subsequent to
the Fresh Start Reporting Date for advertising sales fulfilled prior to the Fresh Start
Reporting Date. The remaining deferred directory revenues of $21.0 million have been recorded at
fair value in fresh start accounting and pertain to billings ahead of publications and revenues
associated with our internet products and services for which we have future obligations subsequent
to the Fresh Start Reporting Date. Prepaid expenses and other current assets include $14.4 million
of cost-uplift, which is defined and discussed below. The fresh start accounting adjustments also
include the elimination of (1) the remaining portion of the Predecessor Companys accumulated
deficit, (2) prepaid director and officer insurance included in prepaid expenses and other current
assets and (3) deferred rent included in accounts payable and accrued liabilities as well as other
non-current liabilities.  Enterprise value attributed to Dex One
    
    $
    4,515,907Plus: cash and cash equivalents
    
    
    199,455Plus: liabilities (excluding amended and restated credit
facilities and Dex One Senior Subordinated Notes)
    
    
    1,198,120Total reorganization value to be allocated to assets
    
    
    5,913,482Less: fair value assigned to tangible and intangible
assets
    
    
    (3,816,358
    )Value of Dex One assets in excess of fair value (goodwill)
    
    $
    2,097,124Total reorganization value to be allocated to assets
    
    $
    5,913,482Less: amended and restated credit facilities and Dex One
Senior Subordinated Notes
    
    
    (3,264,578
    )Less: other liabilities
    
    
    (1,198,120
    )New Dex One common stock (less than $0.1 million) and
additional paid-in capital ($1,450.7 million)
    
    $
    1,450,784
  Fresh start accounting adjustments:Goodwill
    
    $
    2,097,124Write off of deferred revenue and deferred directory costs
    
    
    655,555Fair value adjustment to intangible assets
    
    
    415,132Fair value adjustment to the amended and restated credit
facilities
    
    
    120,245Fair value adjustment to fixed assets and computer
software
    
    
    49,814Write-off of deferred financing costs
    
    
    (48,443
    )Other fresh start accounting adjustments
    
    
    (20,450
    )Impact of fresh start accounting on statement of operations
    
    
    3,268,977Adjustment to income tax provision
    
    
    (310,103
    )Total impact on retained earnings for fresh start accounting
adjustments
    
    $
    2,958,874
 22




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##### Table of Contents



Directory services agreements
    
    $
    (92,061
    )Local customer relationships
    
    
    303,326National customer relationships
    
    
    116,976Trade names and trademarks
    
    
    16,074Technology, advertising commitments and other
    
    
    70,817Total increase in fair value of intangible assets
    
    $
    415,132
 
 (3)
    
    In accordance with the Plan, cash disbursements of $526.5 million were made on
the Effective Date related to the repayment of principal and accrued interest on outstanding debt.(4)
    
    Reflects the amendment and restatement of our credit facilities as well as the
issuance of the $300.0 million Dex One Senior Subordinated Notes completed on the Effective Date.
The following tables present a reconciliation of outstanding debt, including the current portion,
at January 31, 2010 to reorganized outstanding debt, including the current portion, at January 31,
2010. January 31, 2010Current portion of long-term debt
    
    $
    993,526Reclass of current portion of long-term debt
    
    
    (827,579
    )Adjustment to record the current portion of
long-term debt at fair value
    
    
    (31,575
    )Reorganized current portion of long-term debt
    
    $
    134,372
 January 31, 2010Long-term debt
    
    $
    2,561,248Reorganization adjustments:Repayment of long-term debt
    
    
    (511,272
    )Reclass of current portion of long-term debt
    
    
    827,579Dex One Senior Subordinated Notes
    
    
    300,000Interest rate swaps and accrued interest
    
    
    41,321Total reorganization adjustments
    
    
    657,628Adjustment to record long-term debt at fair value
    
    
    (88,670
    )Reorganized long-term debt
    
    $
    3,130,206
 
 (5)
    
    Liabilities subject to compromise generally refer to pre-petition obligations,
secured or unsecured, that may be impaired by a plan of reorganization. FASB ASC 852 requires such
liabilities, including those that became known after filing the Chapter 11 petitions, be reported
at the amounts expected to be allowed, even if they may be settled for lesser amounts. These
liabilities represented the estimated amount expected to be resolved on known or potential claims
through the Chapter 11 process. Liabilities subject to compromise also includes items that may be
assumed under the plan of reorganization, and may be subsequently reclassified to liabilities not
subject to compromise. The Company has classified all of its notes in default as liabilities
subject to compromise at January 31, 2010. Liabilities subject to compromise also include certain
pre-petition liabilities including accrued interest, accounts payable and accrued liabilities, tax
related liabilities and lease related liabilities. The table below identifies the principal
categories of liabilities subject to compromise at January 31, 2010: January 31, 2010Notes in default
    
    $
    6,071,756Accrued interest
    
    
    241,585Tax related liabilities
    
    
    28,845Accounts payable and accrued liabilities
    
    
    10,627Total liabilities subject to compromise
    
    $
    6,352,813
 23




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##### Table of Contents



One Month EndedJanuary 31, 2010Liabilities subject to compromise
    
    $
    6,352,813Less:Issuance of new Dex One common stock (par value)
    
    
    (50
    )Dex One additional paid-in capital
    
    
    (1,450,734
    )Dex One Senior Subordinated Notes
    
    
    (300,000
    )Reclassified into other balance sheet liability accounts
    
    
    (39,471
    )Professional fees and other
    
    
    (38,403
    )Gain on reorganization / settlement of liabilities subject
to compromise
    
    $
    4,524,155
   
 (6)
    
    Represents the impact of reorganization adjustments on accumulated deficit: Gain on reorganization / settlement of liabilities subject
to compromise
    
    $
    4,524,155Elimination of Predecessor Company common stock
    
    
    88,169Elimination of Predecessor Company additional
paid-in capital
    
    
    2,443,059Elimination of Predecessor Company treasury stock
    
    
    (256,011
    )Elimination of Predecessor Company accumulated
other comprehensive loss
    
    
    (59,944
    )Adjustment to income tax provision
    
    
    (607,487
    )Other charges
    
    
    1,878Total impact on accumulated deficit for reorganization
adjustments
    
    $
    6,133,819
  Interest rate swaps, net
    
    $
    15,278Employee benefit plans, net
    
    
    44,666Total
    
    $
    59,944
 
 (7)
    
    Represents reorganization adjustments associated with the Predecessor Companys
deferred income taxes, interest rate swap liabilities and related interest receivables that have
been converted into a new tranche of term loans under the amended and restated credit facilities
and the reclass of certain liabilities from liabilities subject to compromise. 24




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##### Table of Contents



(8)
    
    Represents the adjustment to record our long-term debt, including the current
portion, at fair value as of the Fresh Start Reporting Date. See Note 2, Summary of Significant
Accounting Policies  Interest Expense and Deferred Financing Costs and Note 6,
Long-Term Debt, Credit Facilities and Notes for additional information. The following tables
present the fair value adjustments to our long-term debt, including the current portion, by
issuance: Current portion of long-term debt:RHDI Amended and Restated Credit Facility
    
    $
    4,149Dex Media East Amended and Restated Credit Facility
    
    
    22,424Dex Media West Amended and Restated Credit Facility
    
    
    5,002Total fair value adjustments
    
    $
    31,575Long-term debt:RHDI Amended and Restated Credit Facility
    
    $
    14,224Dex Media East Amended and Restated Credit Facility
    
    
    63,633Dex Media West Amended and Restated Credit Facility
    
    
    10,813Total fair value adjustments
    
    $
    88,670
 
 (9)
    
    Represents elimination of deferred financing costs associated with the Predecessor
Companys existing credit facilities and the write-off of other non-current assets as a result of
fresh start accounting.10)
    
    The following table summarizes the allocation of fair values of the Predecessor
Companys assets and liabilities as shown in the reorganized condensed consolidated balance sheet
at January 31, 2010: January 31, 2010Cash and cash equivalents
    
    $
    199,455Net accounts receivable
    
    
    756,957Prepaid expenses and other current assets
    
    
    95,181Fixed assets and computer software, net
    
    
    204,253Other non-current assets
    
    
    2,712Goodwill
    
    
    2,097,124Intangible assets, net
    
    
    2,557,800Total assets
    
    
    5,913,482Less: accounts payable and accrued liabilities
    
    
    161,712Less: short-term deferred income taxes, net
    
    
    221,002Less: deferred directory revenues
    
    
    20,965Less: current portion of long-term debt
    
    
    134,372Less: long-term debt
    
    
    3,130,206Less: deferred income taxes, net
    
    
    311,347Less: other non-current liabilities
    
    
    483,094Net assets acquired
    
    $
    1,450,784
  Cash
  Accounts Receivable
  25




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##### Table of Contents



Deferred Directory Costs
  Deferred income taxes, net
 Income Taxes,
  Successor Company
    
    
    
    Predecessor CompanyFebruary 1, 2010
    
    
    
    December 31, 2009Gross deferred tax assets
    
    $
    139,326
    
    
    
    $
    1,988,997Valuation allowance
    
    
    (7,876
    )
    
    
    
    (1,531,905
    )Gross deferred tax liabilities
    
    
    (663,799
    )
    
    
    
    (165,391
    )Net deferred tax asset (liability)
    
    $
    (532,349
    )
    
    
    $
    291,701
  Prepaid expenses & other current assets
   Fixed Assets
  26




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##### Table of Contents



Other non-current assets
  Intangible Assets
  Directory Services Agreements 
 Local and National Customer Relationships
 Trade Names and Trademarks
 Technology, Advertising Commitments and Other 
  27




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##### Table of Contents



4. Reorganization Items, Net
  Predecessor CompanyOne Month EndedJanuary 31, 2010Liabilities subject to compromise
    
    $
    6,352,813Issuance of new Dex One common stock (par value)
    
    
    (50
    )Dex One additional paid-in capital
    
    
    (1,450,734
    )Dex One Senior Subordinated Notes
    
    
    (300,000
    )Reclassified into other balance sheet liability accounts
    
    
    (39,471
    )Professional fees and other
    
    
    (38,403
    )Gain on reorganization / settlement of liabilities subject to compromise
    
    
    4,524,155Fresh start accounting adjustments:Goodwill
    
    
    2,097,124Write off of deferred revenue and deferred directory costs
    
    
    655,555Fair value adjustment to intangible assets
    
    
    415,132Fair value adjustment to the amended and restated credit facilities
    
    
    120,245Fair value adjustment to fixed assets and computer software
    
    
    49,814Write-off of deferred financing costs
    
    
    (48,443
    )Other fresh start accounting adjustments
    
    
    (20,450
    )Total fresh start accounting adjustments
    
    
    3,268,977Total reorganization items, net
    
    $
    7,793,132
  5. Restructuring Charges
   28




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##### Table of Contents



6. Long-Term Debt
  Successor CompanyFair Market Value
    
    
    Carrying ValueMarch 31, 2010
    
    
    March 31, 2010RHDI Amended and Restated Credit Facility
    
    $
    1,127,257
    
    
    $
    1,141,490Dex Media East Amended and Restated Credit Facility
    
    
    828,710
    
    
    
    848,949Dex Media West Amended and Restated Credit Facility
    
    
    801,412
    
    
    
    826,477Dex One 12%/14% Senior Subordinated Notes due 2017
    
    
    304,500
    
    
    
    300,000Total Dex One consolidated
    
    
    3,061,879
    
    
    
    3,116,916Less current portion
    
    
    241,739
    
    
    
    228,860Long-term debt
    
    $
    2,820,140
    
    
    $
    2,888,056
 RHDI Amended and Restated Credit Facility
  
    
    The highest (subject to a floor of 4.00%) of (i) the Prime Rate (as
defined in the RHDI Amended and Restated Credit Facility), (ii) the Federal Funds
Effective Rate (as defined in the RHDI Amended and Restated Credit Facility) plus
0.50%, and (iii) one month LIBOR plus 1.00% in each case, plus an interest rate
margin for base rate loans. The interest rate margin for base rate loans is
initially 5.25% per annum, and such interest rate margin adjusts pursuant to a
pricing grid that provides for a margin equal to 5.25% per annum if RHDIs
consolidated leverage ratio is greater than or equal to 4.25 to 1.00, and equal to
5.00% per annum if RHDIs consolidated leverage ratio is less than 4.25 to 1.00; or
    
    The higher of (i) LIBOR rate and (ii) 3.00%, in each case, plus an
interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar
loans is initially 6.25% per annum, and such interest rate margin adjusts pursuant
to a pricing grid that provides for a margin equal to 6.25% per annum if RHDIs
consolidated leverage ratio is greater than or equal to 4.25 to 1.00, and equal to
6.00% per annum if RHDIs consolidated leverage ratio is less than 4.25 to 1.00.
RHDI may elect interest periods of 1, 2, 3 or 6 months for LIBOR borrowings.
  Dex Media East Amended and Restated Credit Facility
  
    
    The highest of (i) the Prime Rate (as defined in the Dex Media East
Amended and Restated Credit Facility), (ii) the Federal Funds Effective Rate (as
defined in the Dex Media East Amended and Restated Credit Facility) plus 0.50%, and
(iii) one month LIBOR plus 1.00% in each case, plus an interest rate margin for
base rate loans. The interest rate margin for base rate loans is initially 1.50%
per annum, and such interest rate margin adjusts pursuant to a pricing grid that
provides for a margin equal to 1.50% per annum if DME Inc.s consolidated leverage
ratio is greater than or equal to 2.75 to 1.00, equal to 1.25% per annum if DME
Inc.s consolidated leverage ratio is greater than or equal to 2.50 to 1.00 but
less than 2.75 to 1.00 and equal to 1.00% per annum if DME Inc.s consolidated
leverage ratio is less than 2.50 to 1.00; or
 29




---



##### Table of Contents




    
    The LIBOR rate plus an interest rate margin for Eurodollar loans. The interest rate
margin for Eurodollar loans is initially 2.50% per annum, and such interest rate
margin adjusts pursuant to a pricing grid that provides for a margin equal to 2.50%
per annum if DME Inc.s consolidated leverage ratio is greater than or equal to 2.75
to 1.00, equal to 2.25% per annum if DME Inc.s consolidated leverage ratio is
greater than or equal to 2.50 to 1.00 but less than 2.75 to 1.00 and equal to 2.00%
per annum if DME Inc.s consolidated leverage ratio is less than 2.50 to 1.00. DME
Inc. may elect interest periods of 1, 2, 3 or 6 months for LIBOR borrowings.
  Dex Media West Amended and Restated Credit Facility
  
    
    The highest (subject to a floor of 4.00%) of (i) the Prime Rate (as
defined in the Dex Media West Amended and Restated Credit Facility), (ii) the
Federal Funds Effective Rate (as defined in the Dex Media West Amended and Restated
Credit Facility) plus 0.50%, and (iii) one month LIBOR plus 1.00% in each case,
plus an interest rate margin for base rate loans. The interest rate margin for
base rate loans is initially 3.50% per annum, and such interest rate margin adjusts
pursuant to a pricing grid that provides for a margin equal to 3.50% per annum if
DMW Inc.s consolidated leverage ratio is greater than or equal to 2.75 to 1.00,
equal to 3.25% per annum if DMW Inc.s consolidated leverage ratio is greater than
or equal to 2.50 to 1.00 but less than 2.75 to 1.00 and equal to 3.00% per annum if
DMW Inc.s consolidated leverage ratio is less than 2.50 to 1.00; or
    
    The higher of (i) LIBOR rate and (ii) 3.00%, in each case, plus an
interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar
loans is initially 4.50% per annum, and such interest rate margin adjusts pursuant
to a pricing grid that provides for a margin equal to 4.50% per annum if DMW Inc.s
consolidated leverage ratio is greater than or equal to 2.75 to 1.00, equal to
4.25% per annum if DMW Inc.s consolidated leverage ratio is greater than or equal
to 2.50 to 1.00 but less than 2.75 to 1.00 and equal to 4.00% per annum if DMW
Inc.s consolidated leverage ratio is less than 2.50 to 1.00. DMW Inc. may elect
interest periods of 1, 2, 3 or 6 months for LIBOR borrowings.
    30




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##### Table of Contents



Dex One Senior Subordinated Notes
 st th
  31




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##### Table of Contents



Redemption Year
    
    Price2011
    
    
    106.000
    %2012
    
    
    102.000
    %2013
    
    
    101.000
    %2014 and thereafter
    
    
    100.000
    %
  Predecessor CompanyNotes in Default
    
    
    Credit FacilitiesDecember 31, 2009RHD6.875% Senior Notes due 2013
    
    $
    206,791
    
    
    $
    6.875% Series A-1 Senior Discount Notes due
2013
    
    
    320,903
    
    
    
    6.875% Series A-2 Senior Discount Notes due
2013
    
    
    483,365
    
    
    
    8.875% Series A-3 Senior Notes due 2016
    
    
    1,012,839
    
    
    
    8.875% Series A-4 Senior Notes due 2017
    
    
    1,229,760
    
    
    
    R.H. Donnelley Inc.Credit Facility
    
    
    
    
    
    
    1,424,04811.75% Senior Notes due 2015
    
    
    412,871
    
    
    
    Dex Media, Inc.8% Senior Notes due 2013
    
    
    500,000
    
    
    
    9% Senior Discount Notes due 2013
    
    
    749,857
    
    
    
    Dex Media EastCredit Facility
    
    
    
    
    
    
    1,039,436Dex Media WestCredit Facility
    
    
    
    
    
    
    1,091,2928.5% Senior Notes due 2010
    
    
    385,000
    
    
    
    5.875% Senior Notes due 2011
    
    
    8,720
    
    
    
    9.875% Senior Subordinated Notes due 2013
    
    
    761,650
    
    
    
    Total Predecessor Company consolidated
    
    
    6,071,756
    
    
    
    3,554,776Less current portion not subject to compromise
    
    
    
    
    
    
    993,528Long-term debt subject to compromise
    
    $
    6,071,756
    
    
    
    Long-term debt not subject to compromise
    
    
    
    
    
    $
    2,561,248
 32




---



##### Table of Contents



Impact of Fresh Start Accounting
  Outstanding Debt atUnamortized Fair
    
    
    March 31, 2010 ExcludingCarrying Value at
    
    
    Value Adjustments
    
    
    the Impact of UnamortizedMarch 31, 2010
    
    
    at March 31, 2010
    
    
    Fair Value AdjustmentsRHDI Amended and Restated Credit Facility
    
    $
    1,141,490
    
    
    $
    17,644
    
    
    $
    1,159,134Dex Media East Amended and Restated
Credit Facility
    
    
    848,949
    
    
    
    82,186
    
    
    
    931,135Dex Media West Amended and Restated
Credit Facility
    
    
    826,477
    
    
    
    14,901
    
    
    
    841,378Dex One 12%/14% Senior Subordinated
Notes due 2017
    
    
    300,000
    
    
    
    
    
    
    
    300,000Total
    
    $
    3,116,916
    
    
    $
    114,731
    
    
    $
    3,231,647
 7. Derivative Financial Instruments
  Successor Company
  Interest Rate Swaps  Dex Media East
 Effective Dates
    
    Notional Amount
    
    
    Pay Rates
    
    Maturity Dates(amounts in millions)February 26, 2010
    
    $
    300
    (2)
    
    1.20% - 1.796%
    
    February 29, 2012  February 28, 2013March 5, 2010
    
    
    100
    (1)
    
    1.668%
    
    January 31, 2013March 10, 2010
    
    
    100
    (1)
    
    1.75%
    
    January 31, 2013Total
    
    $
    500
  33




---



##### Table of Contents



Interest Rate Caps  RHDI
 Effective Dates
    
    Notional Amount
    
    
    Cap Rates
    
    Maturity Dates(amounts in millions)February 26, 2010
    
    $
    200
    (3)
    
    3.0% - 3.5%
    
    February 28, 2012  February 28, 2013March 8, 2010
    
    
    100
    (4)
    
    3.5%
    
    January 31, 2013March 10, 2010
    
    
    100
    (4)
    
    3.0%
    
    April 30, 2012Total
    
    $
    400
 
 (1)
    
    Consists of one swap(2)
    
    Consists of three swaps(3)
    
    Consists of two caps(4)
    
    Consists of one cap  (Gain) Loss Recognized inInterest ExpenseFrom the Change in FairValue of Interest RateFair Value
    
    
    SwapsMeasurements
    
    
    Two Months Endedat March 31, 2010
    
    
    March 31, 2010Interest Rate Swaps:Other non-current assets
    
    $
    2,511
    
    
    $
    (2,511
    )Accounts payable and accrued liabilities
    
    
    (3,134
    )
    
    
    3,134Total
    
    $
    (623
    )
    
    $
    623
 Loss Recognized inInterest ExpenseFrom the Change in FairValue of Interest RateFair Value
    
    
    CapsMeasurements
    
    
    Two Months Endedat March 31, 2010
    
    
    March 31, 2010Interest Rate Caps:Prepaid expenses and other current assets
    
    $
    25
    
    
    $
    43Other non-current assets
    
    
    1,641
    
    
    
    429Total
    
    $
    1,666
    
    
    $
    472
  34




---



##### Table of Contents



Predecessor Company
  (Gain) Loss Recognized inInterest ExpenseFrom the Change in FairValue of Interest RateFair Value
    
    
    SwapsMeasurements at
    
    
    One Month EndedDecember 31, 2009
    
    
    January 31, 2010Interest Rate Swaps:Accounts payable and accrued liabilities
    
    $
    (5,043
    )
    
    $
    3,898Other non-current liabilities
    
    
    (1,652
    )
    
    
    (1,600
    )Total
    
    $
    (6,695
    )
    
    $
    2,298
   RHDI Amended and Restated Credit Facility
    
    $
    11,346Dex Media East Amended and Restated Credit Facility
    
    
    26,301Dex Media West Amended and Restated Credit Facility
    
    
    121Total
    
    $
    37,768
   35




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##### Table of Contents



8. Income Taxes
  Successor Company
    
    
    
    Predecessor CompanyTwo Months Ended
    
    
    
    One Month Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    January 31, 2010
    
    
    March 31, 2009Income (loss) before income taxes
    
    $
    (144,304
    )
    
    
    $
    7,837,550
    
    
    $
    (35,191
    )Statutory U.S. Federal tax rate
    
    
    35.0
    %
    
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of U.S. Federal tax benefit
    
    
    0.7
    
    
    
    
    2.6
    
    
    
    2.5Tax-exempt reorganization gain
    
    
    
    
    
    
    
    (28.0
    )
    
    
    Other non-deductible expenses
    
    
    (0.2
    )
    
    
    
    
    
    
    
    (0.2
    )Section 382 limitation
    
    
    243.8
    
    
    
    
    1.1
    
    
    
    (1,066.6
    )Section 108 tax attribution reduction
    
    
    
    
    
    
    
    21.4
    
    
    
    Change in valuation allowance
    
    
    (1.0
    )
    
    
    
    (19.5
    )
    
    
    (0.3
    )Change in state tax law
    
    
    
    
    
    
    
    
    
    
    
    (6.8
    )Other
    
    
    (0.1
    )
    
    
    
    (0.9
    )
    
    
    (3.7
    )Effective tax rate
    
    
    278.2
    %
    
    
    
    11.7
    %
    
    
    (1,040.1
    )%
  36




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##### Table of Contents



9. Benefit Plans
  Pension BenefitsSuccessor Company
    
    
    
    Predecessor CompanyTwo Months Ended
    
    
    
    One Month Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    January 31, 2010
    
    
    March 31, 2009Service cost
    
    $
    
    
    
    
    $
    
    
    
    $
    1,441Interest cost
    
    
    2,235
    
    
    
    
    1,124
    
    
    
    3,608Expected return on plan assets
    
    
    (2,424
    )
    
    
    
    (1,385
    )
    
    
    (4,579
    )Amortization of prior service cost
    
    
    
    
    
    
    
    81
    
    
    
    Amortization of net loss
    
    
    
    
    
    
    
    122
    
    
    
    30Net periodic benefit (credit) cost
    
    $
    (189
    )
    
    
    $
    (58
    )
    
    $
    500Postretirement BenefitsSuccessor Company
    
    
    
    Predecessor CompanyTwo Months Ended
    
    
    
    One Month Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    January 31, 2010
    
    
    March 31, 2009Service cost
    
    $
    
    
    
    
    $
    
    
    
    $
    268Interest cost
    
    
    25
    
    
    
    
    10
    
    
    
    759Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Amortization of net (gain)
    
    
    
    
    
    
    
    (21
    )
    
    
    Net periodic benefit (credit) cost
    
    $
    25
    
    
    
    $
    (11
    )
    
    $
    1,025
 37




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##### Table of Contents



10. Capital Stock
  Common Stock
 
    
    Voting Rights All shares of our Common Stock have identical powers, preferences and
rights. Except as otherwise provided by applicable law, or by the powers, preferences or
rights of any series of Preferred Stock, the entire voting power of the shares of the
Company for the election of directors and for all other purposes shall be vested
exclusively in the Common Stock. Each share of Common Stock shall have one vote upon all
matters to be voted on by the holders of Common Stock. Holders of Common Stock have no
cumulative voting rights.
    
    Dividend Rights  Subject to applicable laws, the rights and preferences of any series
of Preferred Stock and contractual restrictions, the holders of Common Stock shall be
entitled to receive dividends and distributions, payable in cash, property or capital stock
of the Company, when, as and if declared by the Companys Board of Directors, out of any
assets or funds of the Company legally available and shall share equally on a per share
basis in such dividends and distributions.
    
    Liquidation Preference  Upon any voluntary or involuntary liquidation, dissolution or
other winding up of the Company, after payment in full of all amounts owed to our creditors
and holders of any outstanding shares of any series of our Preferred Stock, each share of
Common Stock shall share equally upon any distribution of the remaining assets of the
Company.
    
    Other Rights.Holders of our Common Stock do not have preemptive, subscription,
redemption or conversion rights.
 38




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##### Table of Contents



Preferred Stock
  
    
    dividend rights and dividend rates;
    
    voting rights;
    
    liquidation preferences;
    
    terms of any redemption (including any sinking or purchase fund provisions);
    
    redemption price or prices or rate or rates;
    
    conversion and exchange rights;
    
    restrictions on the issuance of shares of the same series or of any other class or
series of stock of the Company;
    
    restrictions upon the creation of indebtedness of the Company or any subsidiary of the
Company; and
    
    restrictions upon the payment of dividends or the making of other distributions on, and
the purchase, redemption or other acquisition by the Company or any subsidiary of the
Company of, any outstanding stock of the Company.
 11. Business Segments
  12. Legal Proceedings
    39




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##### Table of Contents



13. Dex One Corporation (Parent Company) Financial Statements
   Condensed Parent Company Balance Sheets
 Successor
    
    
    
    PredecessorCompany
    
    
    
    CompanyMarch 31,
    
    
    
    December, 312010
    
    
    
    2009AssetsCash and cash equivalents
    
    $
    1,269
    
    
    
    $
    5,007Intercompany, net
    
    
    
    
    
    
    
    109,102Intercompany loan receivable
    
    
    1,900
    
    
    
    
    5,000Prepaid and other current assets
    
    
    729
    
    
    
    
    8,055Total current assets
    
    
    3,898
    
    
    
    
    127,164Investment in subsidiaries
    
    
    2,035,967
    
    
    
    
    Fixed assets and computer software, net
    
    
    
    
    
    
    
    5,990Deferred income taxes, net
    
    
    302
    
    
    
    
    71,878Intercompany note receivable
    
    
    
    
    
    
    
    300,000Total assets
    
    $
    2,040,167
    
    
    
    $
    505,032Liabilities and Shareholders Equity (Deficit)Accounts payable, accrued liabilities and other
    
    $
    514
    
    
    
    $
    80,061Accrued interest
    
    
    98
    
    
    
    
    Intercompany, net
    
    
    17,717
    
    
    
    
    Short-term deferred income taxes, net
    
    
    11,242
    
    
    
    
    Total current liabilities not subject to compromise
    
    
    29,571
    
    
    
    
    80,061Long-term debt
    
    
    300,000
    
    
    
    
    Deficit in subsidiaries
    
    
    
    
    
    
    
    3,950,031Other non-current liabilities
    
    
    1,764
    
    
    
    
    8,232Total liabilities not subject to compromise
    
    
    331,335
    
    
    
    
    4,038,324Liabilities subject to compromise
    
    
    
    
    
    
    
    3,385,756Shareholders equity (deficit)
    
    
    1,708,832
    
    
    
    
    (6,919,048
    )Total liabilities and shareholders equity (deficit)
    
    $
    2,040,167
    
    
    
    $
    505,032
 40




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##### Table of Contents



Condensed Parent Company Statements of Operations
 Successor Company
    
    
    Predecessor CompanyTwo Months Ended
    
    
    One Month Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    January 31, 2010
    
    
    March 31, 2009Expenses
    
    $
    2,903
    
    
    $
    891
    
    
    $
    5,305Partnership and equity income (loss)
    
    
    (135,110
    )
    
    
    643,971
    
    
    
    34,663Operating income (loss)
    
    
    (138,013
    )
    
    
    643,080
    
    
    
    29,358Interest expense, net
    
    
    (6,291
    )
    
    
    
    
    
    
    (64,549
    )Income (loss) before reorganization
items, net and income taxes
    
    
    (144,304
    )
    
    
    643,080
    
    
    
    (35,191
    )Reorganization items, net
    
    
    
    
    
    
    7,194,470
    
    
    
    Income (loss) before income taxes
    
    
    (144,304
    )
    
    
    7,837,550
    
    
    
    (35,191
    )(Provision) benefit for income taxes
    
    
    401,522
    
    
    
    (917,541
    )
    
    
    (366,019
    )Net income (loss)
    
    $
    257,218
    
    
    $
    6,920,009
    
    
    $
    (401,210
    )
 Condensed Parent Company Statements of Cash Flows
 Successor Company
    
    
    Predecessor CompanyTwo Months Ended
    
    
    One Month Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    January 31, 2010
    
    
    March 31, 2009Cash flow used in operating
activities
    
    $
    (5,423
    )
    
    $
    (531
    )
    
    $
    (81,269
    )Cash flow from investing activities:Additions to fixed assets and
computer software, net
    
    
    
    
    
    
    (643
    )
    
    
    (757
    )Intercompany loan
    
    
    (1,900
    )
    
    
    
    
    
    
    (8,000
    )Net cash used in investing activities
    
    
    (1,900
    )
    
    
    (643
    )
    
    
    (8,757
    )Cash flow from financing activities:Debt issuance and other
financing costs
    
    
    
    
    
    
    (370
    )
    
    
    Decrease in checks not yet
presented for payment
    
    
    (989
    )
    
    
    (182
    )
    
    
    (686
    )Dividends from subsidiaries
    
    
    6,300
    
    
    
    
    
    
    
    92,100Net cash provided by (used in)
financing activities
    
    
    5,311
    
    
    
    (552
    )
    
    
    91,414Change in cash
    
    
    (2,012
    )
    
    
    (1,726
    )
    
    
    1,388Cash at beginning of period
    
    
    3,281
    
    
    
    5,007
    
    
    
    948Cash at end of period
    
    $
    1,269
    
    
    $
    3,281
    
    
    $
    2,336
 14. Subsequent Events
  41




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
   Corporate Overview
 ® ® ® ®
 42




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##### Table of Contents



Filing of Voluntary Petitions in Chapter 11
  Confirmed Plan of Reorganization and Emergence from the Chapter 11 Proceedings
  In re R.H.
Donnelley Corporation
 Restructuring
  
    
    DonTech Holdings, LLC and R.H. Donnelley Publishing & Advertising of Illinois
Holdings, LLC were merged into their sole member, RHDI;
    
    The DonTech II Partnership and R.H. Donnelley Publishing & Advertising of
Illinois Partnership technically terminated their respective partnership agreements
due to the loss of a second partner;
    
    Dex Media East Finance Co. was merged into Dex Media East LLC;
    
    Dex Media West Finance Co. was merged into Dex Media West LLC;
    
    Work.com, Inc. was merged into Business.com, Inc.;
    
    GetDigitalSmart.com, Inc. was merged into RHDI;
    
    Dex Media East LLC was merged into Dex Media East, Inc. (DME Inc.);
    
    Dex Media West LLC was merged into Dex Media West, Inc. (DMW Inc.); and
    
    R.H. Donnelley Publishing & Advertising, Inc. was merged into RHDI.
  Consummation of the Plan
 Issuance of New Common Stock
  43




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##### Table of Contents



Distributions Pursuant to the Plan
  
    
    On the Effective Date, in accordance with the Plan, the Company issued the
following number of shares of Dex One common stock (i) approximately 10.5 million
shares, representing 21.0% of total outstanding common stock, to all holders of
notes issued by RHD; (ii) approximately 11.65 million shares, representing 23.3% of
total outstanding common stock, to all holders of notes issued by Dex Media, Inc.;
(iii) approximately 12.9 million shares, representing 25.8% of total outstanding
common stock, to all holders of notes issued by RHDI; (iv) approximately 6.5
million shares, representing 13.0% of total outstanding common stock, to all
holders of senior notes issued by Dex Media West; and (v) approximately 8.45
million shares, representing 16.9% of total outstanding common stock, to all
holders of senior subordinated notes issued by Dex Media West.
    
    On the Effective Date, in accordance with the terms of the Plan, holders of the
Dex Media West 8.5% Senior Notes due 2010 and 5.875% Senior Notes due 2011 also
received their pro rata share of Dex Ones $300.0 million aggregate principal
amount of 12%/14% Senior Subordinated Notes due 2017 (Dex One Senior Subordinated
Notes).
   Discharge, Releases, and Injunctions Pursuant to the Plan and the Confirmation Order
  Registration Rights Agreement
  Impact on Long-Term Debt Upon Emergence from the Chapter 11 Proceedings
  44




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##### Table of Contents



Accounting Matters Resulting from the Chapter 11 Proceedings
  Fresh Start Accounting
  st
  Recent Trends Related to Our Business
    45




---



##### Table of Contents



Climate Change
  Going Concern
  Segment Reporting
  New Accounting Pronouncements
 Improving Disclosures
about Fair Value Measurements
 46




---



##### Table of Contents



Revenue Arrangements with Multiple Deliverables Revenue Arrangements with Multiple Deliverables
  47




---



##### Table of Contents



RESULTS OF OPERATIONS
 Factors Affecting Comparability
 Fresh Start Accounting Adjustments
   Business Combinations
   48




---



##### Table of Contents



Reclassifications
  Three Months Ended March 31, 2009As Previously(amounts in millions)
    
    Reported
    
    
    Reclass
    
    
    As ReclassifiedProduction and
distribution
expenses
    
    $
    96.1
    
    
    $
    5.8
    
    
    $
    101.9Selling and support
expenses
    
    
    164.9
    
    
    
    (12.9
    )
    
    
    152.0General and
administrative
expenses
    
    
    34.5
    
    
    
    7.1
    
    
    
    41.6
 GAAP Reported Results
 Successor Company  Two Months Ended March 31, 2010
 Net Revenues
  Successor CompanyTwo Months Ended(amounts in millions)
    
    March 31, 2010Gross advertising revenues
    
    $
    52.3Sales claims and allowances
    
    
    (2.5
    )Net advertising revenues
    
    
    49.8Other revenues
    
    
    3.3Total
    
    $
    53.1
  49




---



##### Table of Contents



Expenses
  Successor CompanyTwo Months Ended(amounts in millions)
    
    March 31, 2010Production and distribution expenses
    
    $
    29.0Selling and support expenses
    
    
    58.4General and administrative expenses
    
    
    21.7Depreciation and amortization
    
    
    39.4Total
    
    $
    148.5
  50




---



##### Table of Contents



Production and Distribution Expenses
  Selling and Support Expenses
  General and Administrative Expenses
  Depreciation and Amortization
  51




---



##### Table of Contents



Operating Loss
  Interest Expense, Net
    Income Taxes
    52




---



##### Table of Contents



Net Income and Earnings Per Share
   Predecessor Company  One Month Ended January 31, 2010
  Net Revenues
  Predecessor CompanyOne Month Ended(amounts in millions)
    
    January 31, 2010Gross advertising revenues
    
    $
    161.0Sales claims and allowances
    
    
    (3.5
    )Net advertising revenues
    
    
    157.5Other revenues
    
    
    2.9Total
    
    $
    160.4
    53




---



##### Table of Contents



Expenses
  Predecessor CompanyOne MonthEnded January 31,(amounts in millions)
    
    2010Production and distribution expenses
    
    $
    27.0Selling and support expenses
    
    
    40.9General and administrative expenses
    
    
    8.2Depreciation and amortization
    
    
    20.2Total
    
    $
    96.3
 Production and Distribution Expenses
  Selling and Support Expenses
  General and Administrative Expenses
  Depreciation and Amortization
   54




---



##### Table of Contents



Operating Income
  Interest Expense, Net
    Reorganization Items, Net
  Predecessor CompanyOne Month Ended(amounts in thousands)
    
    January 31, 2010Liabilities subject to compromise
    
    $
    6,352,813Issuance of new Dex One common stock (par value)
    
    
    (50
    )Dex One additional paid-in capital
    
    
    (1,450,734
    )Dex One Senior Subordinated Notes
    
    
    (300,000
    )Reclassified into other balance sheet liability accounts
    
    
    (39,471
    )Professional fees and other
    
    
    (38,403
    )Gain on reorganization / settlement of liabilities subject to compromise
    
    
    4,524,155Fresh start accounting adjustments:Goodwill
    
    
    2,097,124Write off of deferred revenue and deferred directory costs
    
    
    655,555Fair value adjustment to intangible assets
    
    
    415,132Fair value adjustment to the amended and restated credit facilities
    
    
    120,245Fair value adjustment to fixed assets and computer software
    
    
    49,814Write-off of deferred financing costs
    
    
    (48,443
    )Other fresh start accounting adjustments
    
    
    (20,450
    )Total fresh start accounting adjustments
    
    
    3,268,977Total reorganization items, net
    
    $
    7,793,132
 55




---



##### Table of Contents



Income Taxes
    Net Income and Earnings Per Share
   56




---



##### Table of Contents



Non-GAAP Financial Information  Combined Adjusted Results
  Combined Adjusted Results for the Three Months Ended March 31, 2010
compared to Predecessor Company GAAP Results for the Three Months Ended March 31, 2009
 Net Revenues
  Successor
    Predecessor


    
    
    Combined
    
    PredecessorCompany
    Company
    


    
    Adjusted
    
    CompanyTwo Months Ended
    One Month Ended
    


    
    Three Months Ended
    
    Three Months EndedMarch 31,
    January 31,

    Fresh Start
    

    March 31,

    March 31,(amounts in millions)
    
    2010
    
    2010
    
    Adjustments
    
    2010
    
    2009
    
    $ Change
    
    % ChangeGross advertising revenues
    
    $
    52.3
    
    
    $
    161.0
    
    
    $
    257.9
    (1)
    
    $
    471.2
    
    
    $
    608.2
    
    
    $
    (137.0
    )
    
    
    (22.5
    )%Sales claims and allowances
    
    
    (2.5
    )
    
    
    (3.5
    )
    
    
    (4.6
    )(1)
    
    
    (10.6
    )
    
    
    (14.2
    )
    
    
    3.6
    
    
    
    25.4Net advertising revenues
    
    
    49.8
    
    
    
    157.5
    
    
    
    253.3
    
    
    
    460.6
    
    
    
    594.0
    
    
    
    (133.4
    )
    
    
    (22.5
    )Other revenues
    
    
    3.3
    
    
    
    2.9
    
    
    1.8(1)
    
    
    8.0
    
    
    
    8.0
    
    
    
    
    
    
    
    Total
    
    $
    53.1
    
    
    $
    160.4
    
    
    $
    255.1
    
    
    $
    468.6
    
    
    $
    602.0
    
    
    $
    (133.4
    )
    
    
    (22.2
    )%
 
 (1)
    
    Represents gross advertising revenues, sales claims and allowances and other
revenues for advertising sales fulfilled prior to the Fresh Start Reporting Date, which would have
been recognized during the two months ended March 31, 2010 absent our adoption of fresh start
accounting required under GAAP.   57




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##### Table of Contents



Expenses
  Successor
    
    
    PredecessorCompany
    
    
    Company
    
    
    
    
    
    
    Combined
    
    
    PredecessorTwo
    
    
    One
    
    
    
    
    
    
    Adjusted
    
    
    CompanyMonths Ended
    
    
    Month Ended
    
    
    
    
    
    
    Three Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    January 31,
    
    
    Fresh Start
    
    
    March 31,
    
    
    March 31,(amounts in millions)
    
    2010
    
    
    2010
    
    
    Adjustments
    
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeProduction and distribution expenses
    
    $
    29.0
    
    
    $
    27.0
    
    
    $
    27.1
    (1)
    
    $
    83.1
    
    
    $
    101.9
    
    
    $
    (18.8
    )
    
    
    (18.4
    )%Selling and
support expenses
    
    
    58.4
    
    
    
    40.9
    
    
    
    27.9
    (1)
    
    
    127.2
    
    
    
    152.0
    
    
    
    (24.8
    )
    
    
    (16.3
    )General and administrative expenses
    
    
    21.7
    
    
    
    8.2
    
    
    
    
    
    
    
    29.9
    
    
    
    41.6
    
    
    
    (11.7
    )
    
    
    (28.1
    )Depreciation and amortization
    
    
    39.4
    
    
    
    20.2
    
    
    
    
    (2)
    
    
    59.6
    
    
    
    142.8
    
    
    
    (83.2
    )
    
    
    (58.3
    )Total
    
    $
    148.5
    
    
    $
    96.3
    
    
    $
    55.0
    
    
    $
    299.8
    
    
    $
    438.3
    
    
    $
    (138.5
    )
    
    
    (31.6
    )%
 
 (1)
    
    Represents (a) certain deferred expenses for advertising sales fulfilled
prior to the Fresh Start Reporting Date, which would have been recognized during the two months
ended March 31, 2010 absent our adoption of fresh start accounting required under GAAP, and (b) the
exclusion of cost-uplift recorded under fresh start accounting.(2)
    
    Depreciation and amortization expense has not been adjusted for the increase in
fair value of our intangible assets and fixed assets and computer software as a result of our
adoption of fresh start accounting, the reduced carrying values of intangible assets resulting from
impairment charges recorded by the Predecessor Company during the fourth quarter of 2009 and the
associated reduction in remaining useful lives effective January 1, 2010. 58




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##### Table of Contents



Production and Distribution Expenses
  CombinedAdjusted ThreeMonths Ended March(amounts in millions)
    
    31, 2010Lower print, paper and distribution expenses
    
    $
    (10.2
    )Lower internet production and distribution expenses
    
    
    (5.8
    )All other, net
    
    
    (2.8
    )Total decrease in
combined adjusted
production and
distribution expenses for
the three months ended
March 31, 2010
    
    $
    (18.8
    )
   Selling and Support Expenses
  CombinedAdjusted Three Months(amounts in millions)
    
    Ended March 31, 2010Lower bad debt expense
    
    $
    (16.2
    )Lower commissions and salesperson expenses
    
    
    (6.6
    )Lower occupancy expenses
    
    
    (1.7
    )All other, net
    
    
    (0.3
    )Total decrease in
combined adjusted
selling and support
expenses for the three
months ended March 31,
2010
    
    $
    (24.8
    )
    59




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##### Table of Contents



General and Administrative Expenses
  Combined AdjustedThree Months Ended March(amounts in millions)
    
    31, 2010Lower restructuring expenses
    
    $
    (9.1
    )All other, net
    
    
    (2.6
    )Total decrease in
combined adjusted G&A
expenses for the three
months ended March 31,
2010
    
    $
    (11.7
    )
   Depreciation and Amortization
   60




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##### Table of Contents



Operating Income (Loss)
  Successor
    
    
    Predecessor
    
    
    
    
    
    
    Combined
    
    
    PredecessorCompany
    
    
    Company
    
    
    
    
    
    
    Adjusted
    
    
    CompanyTwo Months Ended
    
    
    One Month Ended
    
    
    
    
    
    
    Three Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    January 31,
    
    
    Fresh Start
    
    
    March 31,
    
    
    March 31,(amounts in millions)
    
    2010
    
    
    2010
    
    
    Adjustments
    
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeTotal
    
    $
    (95.4
    )
    
    $
    64.1
    
    
    $
    200.1
    (1)
    
    $
    168.8
    
    
    $
    163.6
    
    
    $
    5.2
    
    
    
    3.2
    %
 
 (1)
    
    Represents the net effect of eliminating (a) gross advertising revenues,
sales claims and allowances, other revenues and certain deferred expenses for advertising sales
fulfilled prior to the Fresh Start Reporting Date, which would have been recognized during the two
months ended March 31, 2010 absent our adoption of fresh start accounting required under GAAP, and
(b) the exclusion of cost-uplift recorded under fresh start accounting.  61




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
  Successor CompanyFair Market Value
    
    
    Carrying ValueMarch 31, 2010
    
    
    March 31, 2010RHDI Amended and Restated Credit Facility
    
    $
    1,127,257
    
    
    $
    1,141,490Dex Media East Amended and Restated Credit Facility
    
    
    828,710
    
    
    
    848,949Dex Media West Amended and Restated Credit Facility
    
    
    801,412
    
    
    
    826,477Dex One 12%/14% Senior Subordinated Notes due 2017
    
    
    304,500
    
    
    
    300,000Total Dex One consolidated
    
    
    3,061,879
    
    
    
    3,116,916Less current portion
    
    
    241,739
    
    
    
    228,860Long-term debt
    
    $
    2,820,140
    
    
    $
    2,888,056
 RHDI Amended and Restated Credit Facility
  
    
    The highest (subject to a floor of 4.00%) of (i) the Prime Rate (as
defined in the RHDI Amended and Restated Credit Facility), (ii) the Federal Funds
Effective Rate (as defined in the RHDI Amended and Restated Credit Facility) plus
0.50%, and (iii) one month LIBOR plus 1.00% in each case, plus an interest rate
margin for base rate loans. The interest rate margin for base rate loans is
initially 5.25% per annum, and such interest rate margin adjusts pursuant to a
pricing grid that provides for a margin equal to 5.25% per annum if RHDIs
consolidated leverage ratio is greater than or equal to 4.25 to 1.00, and equal to
5.00% per annum if RHDIs consolidated leverage ratio is less than 4.25 to 1.00; or
    
    The higher of (i) LIBOR rate and (ii) 3.00%, in each case, plus an
interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar
loans is initially 6.25% per annum, and such interest rate margin adjusts pursuant
to a pricing grid that provides for a margin equal to 6.25% per annum if RHDIs
consolidated leverage ratio is greater than or equal to 4.25 to 1.00, and equal to
6.00% per annum if RHDIs consolidated leverage ratio is less than 4.25 to 1.00.
RHDI may elect interest periods of 1, 2, 3 or 6 months for LIBOR borrowings.
  Dex Media East Amended and Restated Credit Facility
  
    
    The highest of (i) the Prime Rate (as defined in the Dex Media East
Amended and Restated Credit Facility), (ii) the Federal Funds Effective Rate (as
defined in the Dex Media East Amended and Restated Credit Facility) plus 0.50%, and
(iii) one month LIBOR plus 1.00% in each case, plus an interest rate margin for
base rate loans. The interest rate margin for base rate loans is initially 1.50%
per annum, and such interest rate margin adjusts pursuant to a pricing grid that
provides for a margin equal to 1.50% per annum if DME Inc.s consolidated leverage
ratio is greater than or equal to 2.75 to 1.00, equal to 1.25% per annum if DME
Inc.s consolidated leverage ratio is greater than or equal to 2.50 to 1.00 but
less than 2.75 to 1.00 and equal to 1.00% per annum if DME Inc.s consolidated
leverage ratio is less than 2.50 to 1.00; or
 62




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##### Table of Contents




    
    The LIBOR rate plus an interest rate margin for Eurodollar loans. The interest rate
margin for Eurodollar loans is initially 2.50% per annum, and such interest rate
margin adjusts pursuant to a pricing grid that provides for a margin equal to 2.50%
per annum if DME Inc.s consolidated leverage ratio is greater than or equal to 2.75
to 1.00, equal to 2.25% per annum if DME Inc.s consolidated leverage ratio is
greater than or equal to 2.50 to 1.00 but less than 2.75 to 1.00 and equal to 2.00%
per annum if DME Inc.s consolidated leverage ratio is less than 2.50 to 1.00. DME
Inc. may elect interest periods of 1, 2, 3 or 6 months for LIBOR borrowings.
  Dex Media West Amended and Restated Credit Facility
  
    
    The highest (subject to a floor of 4.00%) of (i) the Prime Rate (as
defined in the Dex Media West Amended and Restated Credit Facility), (ii) the
Federal Funds Effective Rate (as defined in the Dex Media West Amended and Restated
Credit Facility) plus 0.50%, and (iii) one month LIBOR plus 1.00% in each case,
plus an interest rate margin for base rate loans. The interest rate margin for
base rate loans is initially 3.50% per annum, and such interest rate margin adjusts
pursuant to a pricing grid that provides for a margin equal to 3.50% per annum if
DMW Inc.s consolidated leverage ratio is greater than or equal to 2.75 to 1.00,
equal to 3.25% per annum if DMW Inc.s consolidated leverage ratio is greater than
or equal to 2.50 to 1.00 but less than 2.75 to 1.00 and equal to 3.00% per annum if
DMW Inc.s consolidated leverage ratio is less than 2.50 to 1.00; or
    
    The higher of (i) LIBOR rate and (ii) 3.00%, in each case, plus an
interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar
loans is initially 4.50% per annum, and such interest rate margin adjusts pursuant
to a pricing grid that provides for a margin equal to 4.50% per annum if DMW Inc.s
consolidated leverage ratio is greater than or equal to 2.75 to 1.00, equal to
4.25% per annum if DMW Inc.s consolidated leverage ratio is greater than or equal
to 2.50 to 1.00 but less than 2.75 to 1.00 and equal to 4.00% per annum if DMW
Inc.s consolidated leverage ratio is less than 2.50 to 1.00. DMW Inc. may elect
interest periods of 1, 2, 3 or 6 months for LIBOR borrowings.
    63




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Dex One Senior Subordinated Notes
 st th
  64




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##### Table of Contents



Redemption Year
    
    Price2011
    
    106.000%2012
    
    102.000%2013
    
    101.000%2014 and thereafter
    
    100.000%
  Predecessor CompanyNotes in Default
    
    
    Credit FacilitiesDecember 31, 2009RHD6.875% Senior Notes due 2013
    
    $
    206,791
    
    
    $
    6.875% Series A-1 Senior Discount Notes due
2013
    
    
    320,903
    
    
    
    6.875% Series A-2 Senior Discount Notes due
2013
    
    
    483,365
    
    
    
    8.875% Series A-3 Senior Notes due 2016
    
    
    1,012,839
    
    
    
    8.875% Series A-4 Senior Notes due 2017
    
    
    1,229,760
    
    
    
    R.H. Donnelley Inc.Credit Facility
    
    
    
    
    
    
    1,424,04811.75% Senior Notes due 2015
    
    
    412,871
    
    
    
    Dex Media, Inc.8% Senior Notes due 2013
    
    
    500,000
    
    
    
    9% Senior Discount Notes due 2013
    
    
    749,857
    
    
    
    Dex Media EastCredit Facility
    
    
    
    
    
    
    1,039,436Dex Media WestCredit Facility
    
    
    
    
    
    
    1,091,2928.5% Senior Notes due 2010
    
    
    385,000
    
    
    
    5.875% Senior Notes due 2011
    
    
    8,720
    
    
    
    9.875% Senior Subordinated Notes due 2013
    
    
    761,650
    
    
    
    Total Predecessor Company consolidated
    
    
    6,071,756
    
    
    
    3,554,776Less current portion not subject to compromise
    
    
    
    
    
    
    993,528Long-term debt subject to compromise
    
    $
    6,071,756
    
    
    
    Long-term debt not subject to compromise
    
    
    
    
    
    $
    2,561,248
 65




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##### Table of Contents



Impact of Fresh Start Accounting
  Outstanding Debt atUnamortized Fair
    
    March 31, 2010 ExcludingCarrying Value at
    
    Value Adjustments
    
    the Impact of UnamortizedMarch 31, 2010
    
    at March 31, 2010
    
    Fair Value AdjustmentsRHDI Amended and Restated Credit Facility
    
    $
    1,141,490
    
    
    $
    17,644
    
    
    $
    1,159,134Dex Media East Amended and Restated
Credit Facility
    
    
    848,949
    
    
    
    82,186
    
    
    
    931,135Dex Media West Amended and Restated
Credit Facility
    
    
    826,477
    
    
    
    14,901
    
    
    
    841,378Dex One 12%/14% Senior Subordinated
Notes due 2017
    
    
    300,000
    
    
    
    
    
    
    
    300,000Total
    
    $
    3,116,916
    
    
    $
    114,731
    
    
    $
    3,231,647
  Impact of Dex Media Merger
  Issuance of New Common Stock
  Registration Rights Agreement
  66




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##### Table of Contents



Liquidity and Cash Flows
     Successor Company
     
    
    $153.2 million in principal payments on our amended and restated credit facilities.
    
    $0.9 million in other financing costs.
    
    $3.3 million in the increased balance of checks not yet presented for payment.
 67




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##### Table of Contents



Predecessor Company
     
    
    $511.3 million in principal payments on term loans under the Predecessor Companys
credit facilities in accordance with the Plan and in conjunction with our emergence from
Chapter 11.
    
    $22.1 million in costs associated with the issuance of the Dex One Senior
Subordinated Notes and other financing related costs.
    
    $3.1 million in the decreased balance of checks not yet presented for payment.
    
    
    $22.0 million in scheduled principal payments on term loans under the
Predecessor Companys credit facilities.
    
    $361.0 million in borrowings under the Predecessor Companys revolvers. The
Predecessor Company made the borrowings under the various revolving credit facilities to
preserve its financial flexibility in light of the continuing uncertainty in the global
credit markets.
    
    $10.9 million in the increased balance of checks not yet presented for
payment.
 68




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##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Payment Due by PeriodLess than
    
    1-3
    
    3-5
    
    More than 5(amounts in millions)
    
    Total
    
    1 Year
    
    Years
    
    Years
    
    YearsLong-term debt (1)
    
    $
    3,231.6
    
    
    $
    260.0
    
    
    $
    624.8
    
    
    $
    2,046.8
    
    
    $
    300.0Interest on long-term
debt (2)
    
    
    1,084.6
    
    
    
    230.2
    
    
    
    424.2
    
    
    
    364.4
    
    
    
    65.8Total long-term debt and
related interest
contractual obligations
    
    $
    4,316.2
    
    
    $
    490.2
    
    
    $
    1,049.0
    
    
    $
    2,411.2
    
    
    $
    365.8
 
 (1)
    
    Included in long-term debt are principal amounts owed under the amended and
restated credit facilities and the Dex One Senior Subordinated Notes, including the current portion
of long-term debt and an estimate of additional debt repayments resulting from cash flow sweep
requirements under our amended and restated credit facilities, as of March 31, 2010.(2)
    
    Interest on debt represents cash interest payment obligations assuming all
indebtedness as of March 31, 2010 will be paid in accordance with its contractual maturity and
assumes interest rates on variable interest debt as of March 31, 2010 will remain unchanged in
future periods.  69




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Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk and Risk Management
   Interest Rate Swaps  Dex Media East
 Effective Dates
    
    Notional Amount
    
    
    Pay Rates
    
    Maturity Dates(amounts in millions)February 26, 2010
    
    $
    300
    (2)
    
    1.20% - 1.796%
    
    February 29, 2012  February 28, 2013March 5, 2010
    
    
    100
    (1)
    
    1.668%
    
    January 31, 2013March 10, 2010
    
    
    100
    (1)
    
    1.75%
    
    January 31, 2013Total
    
    $
    500
   Interest Rate Caps  RHDI
 Effective Dates
    
    Notional Amount
    
    
    Cap Rates
    
    Maturity Dates(amounts in millions)February 26, 2010
    
    $
    200
    (3)
    
    3.0% - 3.5%
    
    February 28, 2012  February 28, 2013March 8, 2010
    
    
    100
    (4)
    
    3.5%
    
    January 31, 2013March 10, 2010
    
    
    100
    (4)
    
    3.0%
    
    April 30, 2012Total
    
    $
    400
 
 (1)
    
    Consists of one swap(2)
    
    Consists of three swaps(3)
    
    Consists of two caps(4)
    
    Consists of one cap  70




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Market Risk Sensitive Instruments
   71




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##### Table of Contents



Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  72




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
      73




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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, 2010, by David C. Swanson, Chairman and Chief
Executive Officer of Dex One Corporation under Section 302 of
the Sarbanes-Oxley Act31.2*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended March 31, 2010 by Steven M. Blondy, Executive Vice
President and Chief Financial Officer of Dex One Corporation
under Section 302 of the Sarbanes-Oxley Act32.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended March 31, 2010, 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 Dex One Corporation
 
 *
    
    Filed herewith. 74




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##### Table of Contents



SIGNATURES
  DEX ONE CORPORATIONDate: May 13, 2010
    By:
    /s/ Steven M. BlondySteven M. BlondyExecutive Vice President and Chief Financial Officer
(Principal Financial Officer)/s/ Sylvester J. JohnsonSylvester J. JohnsonVice President, Corporate Controller and Chief Accounting Officer
(Principal Accounting Officer) 75




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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, 2010 by David C. Swanson, Chairman and Chief
Executive Officer of Dex One Corporation under Section 302 of
the Sarbanes-Oxley Act31.2*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended March 31, 2010 by Steven M. Blondy, Executive Vice
President and Chief Financial Officer of Dex One Corporation
under Section 302 of the Sarbanes-Oxley Act32.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended March 31, 2010 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 Dex One Corporation
 
 *
    
    Filed herewith. 76