##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 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
    
    Smaller reporting company oDo not check if a smaller reporting compony
  o þ
  þ o
  Title of class
    
    Shares Outstanding at October 31, 2010Common Stock, par value $.001 per share
    
    50,031,441




---



##### 



DEX ONE CORPORATION
 INDEX TO FORM 10-Q
 PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at September 30, 2010 (Successor
Company) and December 31, 2009 (Predecessor Company)
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss) for the three and eight months ended September 30, 2010 (Successor
Company), the one month ended January 31, 2010 and the three and nine
months ended September 30, 2009 (Predecessor Company)
    
    
    4Condensed Consolidated Statements of Cash Flows for the eight months
ended September 30, 2010 (Successor Company), the one month ended January
31, 2010 and the nine months ended September 30, 2009 (Predecessor
Company)
    
    
    5Condensed Consolidated Statements of Changes in Shareholders Equity
(Deficit) for the eight months ended September 30, 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
    
    
    47Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    75Item 4. Controls and Procedures
    
    
    76PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    77Item 1A Risk Factors
    
    
    77Item 6. Exhibits
    
    
    78SIGNATURES
    
    
    79EX-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)
    
    September 30, 2010
    
    
    
    December 31, 2009AssetsCurrent AssetsCash and cash equivalents
    
    $
    129,724
    
    
    
    $
    665,940Accounts receivable:Billed
    
    
    203,638
    
    
    
    
    244,048Unbilled
    
    
    532,135
    
    
    
    
    636,350Allowance for doubtful accounts
    
    
    (57,657
    )
    
    
    
    (54,612
    )Net accounts receivable
    
    
    678,116
    
    
    
    
    825,786Deferred directory costs
    
    
    140,104
    
    
    
    
    138,061Prepaid expenses and other current assets
    
    
    69,514
    
    
    
    
    90,928Total current assets
    
    
    1,017,458
    
    
    
    
    1,720,715Fixed assets and computer software, net
    
    
    194,317
    
    
    
    
    157,272Deferred income taxes, net
    
    
    
    
    
    
    
    399,885Other non-current assets
    
    
    3,788
    
    
    
    
    62,699Intangible assets, net
    
    
    2,414,159
    
    
    
    
    2,158,223Goodwill, net
    
    
    959,501
    
    
    
    
    Total Assets
    
    $
    4,589,223
    
    
    
    $
    4,498,794Liabilities and Shareholders Equity (Deficit)Current Liabilities Not Subject to CompromiseAccounts payable and accrued liabilities
    
    $
    117,009
    
    
    
    $
    168,488Short-term deferred income taxes, net
    
    
    15,576
    
    
    
    
    108,184Accrued interest
    
    
    22,258
    
    
    
    
    4,643Deferred directory revenues
    
    
    657,253
    
    
    
    
    848,775Current portion of long-term debt
    
    
    146,381
    
    
    
    
    993,528Total current liabilities not subject to compromise
    
    
    958,477
    
    
    
    
    2,123,618Long-term debt
    
    
    2,708,690
    
    
    
    
    2,561,248Deferred income taxes, net
    
    
    259,270
    
    
    
    
    Other non-current liabilities
    
    
    112,232
    
    
    
    
    380,163Total liabilities not subject to compromise
    
    
    4,038,669
    
    
    
    
    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50,031,441 shares at September 30, 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
    
    
    1,453,853
    
    
    
    
    2,442,549Accumulated deficit
    
    
    (903,349
    )
    
    
    
    (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)
    
    
    550,554
    
    
    
    
    (6,919,048
    )Total Liabilities and Shareholders Equity (Deficit)
    
    $
    4,589,223
    
    
    
    $
    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 CompanyThree Months Ended
    
    
    Eight Months Ended
    
    
    
    One Month Ended
    
    
    Three Months Ended
    
    
    Nine Months Ended(in thousands, except per share data)
    
    September 30, 2010
    
    
    September 30, 2010
    
    
    
    January 31, 2010
    
    
    September 30, 2009
    
    
    September 30, 2009Net revenues
    
    $
    259,231
    
    
    $
    473,266
    
    
    
    $
    160,372
    
    
    $
    533,990
    
    
    $
    1,701,604Expenses:Production
and distribution expenses (exclusive of depreciation and amortization
shown separately below)
    
    
    67,408
    
    
    
    148,692
    
    
    
    
    27,271
    
    
    
    90,587
    
    
    
    286,216Selling and support expenses
    
    
    102,604
    
    
    
    253,660
    
    
    
    
    40,680
    
    
    
    148,601
    
    
    
    460,350General and administrative expenses
    
    
    32,671
    
    
    
    94,601
    
    
    
    
    8,186
    
    
    
    35,716
    
    
    
    103,284Depreciation and amortization
    
    
    58,304
    
    
    
    157,309
    
    
    
    
    20,161
    
    
    
    142,580
    
    
    
    427,746Impairment charges
    
    
    389,592
    
    
    
    1,159,266
    
    
    
    
    
    
    
    
    
    
    
    
    Total expenses
    
    
    650,579
    
    
    
    1,813,528
    
    
    
    
    96,298
    
    
    
    417,484
    
    
    
    1,277,596Operating income (loss)
    
    
    (391,348
    )
    
    
    (1,340,262
    )
    
    
    
    64,074
    
    
    
    116,506
    
    
    
    424,008Interest expense, net
    
    
    (67,536
    )
    
    
    (189,893
    )
    
    
    
    (19,656
    )
    
    
    (63,544
    )
    
    
    (423,849
    )Income (loss) before reorganization items, net and
income taxes
    
    
    (458,884
    )
    
    
    (1,530,155
    )
    
    
    
    44,418
    
    
    
    52,962
    
    
    
    159Reorganization items, net
    
    
    
    
    
    
    
    
    
    
    
    7,793,132
    
    
    
    (7,107
    )
    
    
    (77,887
    )Income (loss) before income taxes
    
    
    (458,884
    )
    
    
    (1,530,155
    )
    
    
    
    7,837,550
    
    
    
    45,855
    
    
    
    (77,728
    )(Provision) benefit for income taxes
    
    
    68,241
    
    
    
    626,806
    
    
    
    
    (917,541
    )
    
    
    (21,925
    )
    
    
    (375,033
    )Net income (loss)
    
    $
    (390,643
    )
    
    $
    (903,349
    )
    
    
    $
    6,920,009
    
    
    $
    23,930
    
    
    $
    (452,761
    )Earnings (loss) per share:Basic
    
    $
    (7.81
    )
    
    $
    (18.06
    )
    
    
    $
    100.3
    
    
    $
    0.35
    
    
    $
    (6.57
    )Diluted
    
    $
    (7.81
    )
    
    $
    (18.06
    )
    
    
    $
    100.2
    
    
    $
    0.35
    
    
    $
    (6.57
    )Shares used in computing earnings (loss) per share:Basic
    
    
    50,019
    
    
    
    50,015
    
    
    
    
    69,013
    
    
    
    68,930
    
    
    
    68,895Diluted
    
    
    50,019
    
    
    
    50,015
    
    
    
    
    69,052
    
    
    
    68,969
    
    
    
    68,895Comprehensive Income (Loss)Net income (loss)
    
    $
    (390,643
    )
    
    $
    (903,349
    )
    
    
    $
    6,920,009
    
    
    $
    23,930
    
    
    $
    (452,761
    )Amortization of gain on interest rate swaps,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    1,083
    
    
    
    4,120
    
    
    
    236Benefit plans adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    
    (4,535
    )
    
    
    (158
    )
    
    
    17,074Comprehensive income (loss)
    
    $
    (390,643
    )
    
    $
    (903,349
    )
    
    
    $
    6,916,557
    
    
    $
    27,892
    
    
    $
    (435,451
    )
  4




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##### Table of Contents



Dex One Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Successor Company
    
    
    
    Predecessor CompanyEight Months
    
    
    
    One Month
    
    
    Nine MonthsEnded
    
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    
    January 31,
    
    
    September 30,(in thousands)
    
    2010
    
    
    
    2010
    
    
    2009Cash Flows Provided By Operating Activities
    
    $
    394,526
    
    
    
    $
    71,741
    
    
    $
    408,587Cash Flows from Investing ActivitiesAdditions to fixed assets and computer software
    
    
    (25,490
    )
    
    
    
    (1,766
    )
    
    
    (18,193
    )Net cash used in investing activities
    
    
    (25,490
    )
    
    
    
    (1,766
    )
    
    
    (18,193
    )Cash Flows from Financing ActivitiesCredit facilities repayments
    
    
    (430,616
    )
    
    
    
    (511,272
    )
    
    
    (255,593
    )Debt issuance and other financing costs
    
    
    (2,785
    )
    
    
    
    (22,096
    )
    
    
    Revolver borrowings
    
    
    
    
    
    
    
    
    
    
    
    361,000Revolver repayments
    
    
    
    
    
    
    
    
    
    
    
    (18,749
    )Decrease in checks not yet presented for payment
    
    
    (5,366
    )
    
    
    
    (3,092
    )
    
    
    (1,780
    )Net cash provided by (used in) financing activities
    
    
    (438,767
    )
    
    
    
    (536,460
    )
    
    
    84,878Increase (decrease) in cash and cash equivalents
    
    
    (69,731
    )
    
    
    
    (466,485
    )
    
    
    475,272Cash and cash equivalents, beginning of period
    
    
    199,455
    
    
    
    
    665,940
    
    
    
    131,199Cash and cash equivalents, end of period
    
    $
    129,724
    
    
    
    $
    199,455
    
    
    $
    606,471Supplemental Information:Cash paid:Interest, net
    
    $
    136,942
    
    
    
    $
    15,460
    
    
    $
    336,877Income taxes, net
    
    $
    2,266
    
    
    
    $
    
    
    
    $
    1,411
  5




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##### Table of Contents



Dex One Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Changes in Shareholders Equity (Deficit)
 Accumulated 
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 gain 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 loss
    
    
    
    
    
    
    
    
    
    
    (903,349
    )
    
    
    
    
    
    
    
    
    
    
    (903,349
    )Compensatory stock awards
    
    
    
    
    
    
    3,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,119Balance, September 30, 2010 (Successor Company)
    
    $
    50
    
    
    $
    1,453,853
    
    
    $
    (903,349
    )
    
    $
    
    
    
    $
    
    
    
    $
    550,554
  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
 ® ® ® ®
 New Chief Executive Officer and President
  7




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##### Table of Contents



Retirement of Former Chairman and Chief Executive Officer
   Reclassifications
  Three Months Ended September 30, 2009As Previously
    
    
    
    
    
    AsReported
    
    
    Reclass
    
    
    ReclassifiedProduction and
distribution
expenses
    
    $
    83,736
    
    
    $
    6,851
    
    
    $
    90,587Selling and support
expenses
    
    
    162,393
    
    
    
    (13,792
    )
    
    
    148,601General and
administrative
expenses
    
    
    28,775
    
    
    
    6,941
    
    
    
    35,716
 8




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##### Table of Contents



Nine Months Ended September 30, 2009As 
Previously
    
    
    
    
    
    AsReported
    
    
    Reclass
    
    
    ReclassifiedProduction and
distribution
expenses
    
    $
    268,387
    
    
    $
    17,829
    
    
    $
    286,216Selling and support
expenses
    
    
    499,461
    
    
    
    (39,111
    )
    
    
    460,350General and
administrative
expenses
    
    
    82,002
    
    
    
    21,282
    
    
    
    103,284
  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.
  9




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##### Table of Contents



Consummation of the Plan
 Issuance of New Common Stock
  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
  10




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##### Table of Contents



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




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##### Table of Contents



2. Summary of Significant Accounting Policies
 Identifiable Intangible Assets and Goodwill
 st Intangibles  Goodwill and Other .
  
    
    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;
    
    Intangible asset carrying values;
    
    Trading values of our debt and equity securities; and
    
    Other Company-specific and Predecessor Company-specific information.
  Property, Plant and Equipment
 12




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13




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##### Table of Contents



Three Months Ended
    
    
    Eight Months EndedReporting Unit
    
    September 30, 2010
    
    
    June 30, 2010
    
    
    September 30, 2010RHDI
    
    $
    134,072
    
    
    $
    243,674
    
    
    $
    377,746DME Inc.
    
    
    103,169
    
    
    
    241,512
    
    
    
    344,681DMW Inc.
    
    
    141,868
    
    
    
    225,955
    
    
    
    367,823Business.com
    
    
    6,174
    
    
    
    41,199
    
    
    
    47,373Total
    
    $
    385,283
    
    
    $
    752,340
    
    
    $
    1,137,623
  Percentage By WhichReporting Unit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Years of Cash Flow
    
    
    Reporting Unit
    
    
    Reporting Unit Fairat September
    
    
    
    
    
    
    
    
    
    
    
    
    
    Terminal Growth
    
    
    Before Terminal
    
    
    Fair Value at
    
    
    Value Exceeds its30, 2010
    
    Goodwill Balance
    
    
    Percentage of Total
    
    
    Discount Rate
    
    
    Rate (1)
    
    
    Value
    
    
    September 30, 2010
    
    
    Carrying ValueRHDI
    
    $
    246,089
    
    
    
    25.7
    %
    
    
    10.3
    %
    
    
    0.0
    %
    
    4.25 years
    
    $
    1,310,000
    
    
    
    0.0
    %DME Inc.
    
    
    327,402
    
    
    
    34.1
    
    
    
    10.3
    %
    
    
    0.0
    %
    
    4.25 years
    
    
    1,045,000
    
    
    
    0.0
    %DMW Inc.
    
    
    386,010
    
    
    
    40.2
    
    
    
    10.3
    %
    
    
    0.0
    %
    
    4.25 years
    
    
    1,145,000
    
    
    
    0.0
    %Business.com
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    6,100
    
    
    
    0.0
    %Total
    
    $
    959,501
    
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,506,100
    
    
    
    
  Percentage By WhichReporting Unit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Years of Cash Flow
    
    
    Reporting Unit
    
    
    Reporting Unit FairAt June
    
    
    
    
    
    
    
    
    
    
    
    
    
    Terminal Growth
    
    
    Before Terminal
    
    
    Fair Value at June
    
    
    Value Exceeds its30, 2010
    
    Goodwill Balance
    
    
    Percentage of Total
    
    
    Discount Rate
    
    
    Rate (1)
    
    
    Value
    
    
    30, 2010
    
    
    Carrying ValueRHDI
    
    $
    380,161
    
    
    
    28.3
    %
    
    
    10.5
    %
    
    
    0.0
    %
    
    3.5 years
    
    $
    1,540,000
    
    
    
    0.0
    %DME Inc.
    
    
    430,571
    
    
    
    32.0
    
    
    
    10.5
    %
    
    
    0.0
    %
    
    3.5 years
    
    
    1,180,000
    
    
    
    0.0
    %DMW Inc.
    
    
    527,878
    
    
    
    39.2
    
    
    
    10.5
    %
    
    
    0.0
    %
    
    3.5 years
    
    
    1,335,000
    
    
    
    0.0
    %Business.com
    
    
    6,174
    
    
    
    0.5
    
    
    
    16.0
    %
    
    
    1.0
    %
    
    9.5 years
    
    
    15,600
    
    
    
    0.0
    %Total
    
    $
    1,344,784
    
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,070,600
    
    
    
    
 
 (1)
    
    Terminal growth rate is determined by reconciling the market value of our debt and
equity securities as of September 30, 2010 and June 30, 2010, respectively, to the Companys
long-term financial projections. 14




---



##### Table of Contents



Balance at February 1, 2010
    
    $
    2,097,124Goodwill impairment charge during the three months ended June 30, 2010
    
    
    (752,340
    )Goodwill impairment charge during the three months ended September 30, 2010
    
    
    (385,283
    )Balance at September 30, 2010
    
    $
    959,501
   Technology,Directory
    
    
    Local

    
    
    National
    
    
    
    Trade
    
    
    AdvertisingServices
    
    
    Customer
    
    
    Customer
    
    
    Names and
    
    
    CommitmentsAgreements
    
    
    Relationships
    
    
    Relationships
    
    
    Trademarks
    
    
    & Other
    
    
    TotalNet intangible
assets fair value
    
    $
    1,330,000
    
    
    $
    560,000
    
    
    $
    175,000
    
    
    $
    381,000
    
    
    $
    85,500
    
    
    $
    2,531,500Accumulated
amortization
    
    
    (58,189
    )
    
    
    (35,918
    )
    
    
    (4,755
    )
    
    
    (13,708
    )
    
    
    (4,771
    )
    
    
    (117,341
    )Net intangible
assets at September
30, 2010
    
    $
    1,271,811
    
    
    $
    524,082
    
    
    $
    170,245
    
    
    $
    367,292
    
    
    $
    80,729
    
    
    $
    2,414,159
   15




---



##### Table of Contents



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 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.   Interest Expense and Deferred Financing Costs
   16




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##### Table of Contents



Advertising Expense
  17




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##### Table of Contents



Concentration of Credit Risk
   Earnings (Loss) Per Share
  Successor CompanyThree Months
    
    
    Eight MonthsEnded
    
    
    EndedSeptember 30, 2010
    
    
    September 30, 2010Basic EPSNet loss
    
    $
    (390,643
    )
    
    $
    (903,349
    )Weighted average common shares outstanding
    
    
    50,019
    
    
    
    50,015Basic EPS
    
    $
    (7.81
    )
    
    $
    (18.06
    )Diluted EPSNet loss
    
    $
    (390,643
    )
    
    $
    (903,349
    )Weighted average common shares outstanding
    
    
    50,019
    
    
    
    50,015Dilutive effect of stock awards (1)
    
    
    
    
    
    
    Weighted average diluted shares outstanding
    
    
    50,019
    
    
    
    50,015Diluted EPS
    
    $
    (7.81
    )
    
    $
    (18.06
    )
 18




---



##### Table of Contents



Predecessor CompanyOne Month
    
    
    Three Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    EndedJanuary 31, 2010
    
    
    September 30, 2009
    
    
    September 30, 2009Basic EPSNet income (loss)
    
    $
    6,920,009
    
    
    $
    23,930
    
    
    $
    (452,761
    )Weighted average common shares outstanding
    
    
    69,013
    
    
    
    68,930
    
    
    
    68,895Basic EPS
    
    $
    100.3
    
    
    $
    0.35
    
    
    $
    (6.57
    )Diluted EPSNet income (loss)
    
    $
    6,920,009
    
    
    $
    23,930
    
    
    $
    (452,761
    )Weighted average common shares outstanding
    
    
    69,013
    
    
    
    68,930
    
    
    
    68,895Dilutive effect of stock awards (1)
    
    
    39
    
    
    
    39
    
    
    
    Weighted average diluted shares outstanding
    
    
    69,052
    
    
    
    68,969
    
    
    
    68,895Diluted EPS
    
    $
    100.2
    
    
    $
    0.35
    
    
    $
    (6.57
    )
 
 (1)
    
    Due to the Companys reported net loss for the three and eight months ended September
30, 2010 and the Predecessor Companys reported net loss for the nine months ended September
30, 2009, the effect of all stock-based awards was anti-dilutive and therefore not included in
the calculation of diluted EPS. For both the three and eight months ended September 30, 2010,
1.6 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 three and nine months ended September 30, 2009, 4.6 million shares, 4.7
million shares and 4.7 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. Stock-Based Awards
  Compensation  Stock Compensation,
  19




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##### Table of Contents



Long-Term Incentive Program
   Fair Value of Financial Instruments
  20




---



##### Table of Contents



Fair Value Measurements and Disclosures
     Fair Value MeasurementsUsing Significant Other Observable Inputs (Level 2)Successor Company
    
    
    Predecessor CompanyDerivatives:
    
    September 30, 2010
    
    
    December 31, 2009Interest Rate Swap 
Liabilities
    
    $
    (8,593
    )
    
    
    $
    (6,695
    )Interest Rate Cap  Assets
    
    $
    136
    
    
    
    $
    
     21




---



##### Table of Contents



Estimates
  New Accounting Pronouncements
 Improving Disclosures
about Fair Value Measurements
 Revenue Arrangements with Multiple Deliverables Revenue Arrangements with Multiple Deliverables
  22




---



##### Table of Contents



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
  Business Combinations
 23




---



##### Table of Contents



Methodology, Analysis and Assumptions
    Discounted Cash Flow Methodology
   24




---



##### Table of Contents



Publicly Traded Company Analysis
  Precedent Transaction Analysis
  Analysis of Post-Emergence Tax Attributes
   25




---



##### 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
 26




---



##### 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
 27




---



##### 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
 28




---



##### 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. 29




---



##### 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
  30




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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
  31




---



##### 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 
  32




---



##### 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
   Predecessor CompanyThree Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2009Write-off of unamortized deferred financing costs
    
    $
    
    
    
    $
    64,475Professional fees
    
    
    8,815
    
    
    
    59,278Write-off of net premiums / discounts on long-term
debt
    
    
    
    
    
    
    34,886Write-off of fair value adjustments
    
    
    
    
    
    
    (78,511
    )Lease rejections, abandoned property and other
    
    
    (1,708
    )
    
    
    (2,241
    )Total reorganization items
    
    $
    7,107
    
    
    $
    77,887
   33




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##### Table of Contents



5. Restructuring Charges
   6. Long-Term Debt, Credit Facilities and Notes
  Successor CompanyFair Market Value
    
    
    Carrying ValueSeptember 30, 2010
    
    
    September 30, 2010RHDI Amended and Restated Credit Facility
    
    $
    900,041
    
    
    $
    1,052,680Dex Media East Amended and Restated Credit Facility
    
    
    584,715
    
    
    
    771,901Dex Media West Amended and Restated Credit Facility
    
    
    639,179
    
    
    
    730,490Dex One 12%/14% Senior Subordinated Notes due 2017
    
    
    235,875
    
    
    
    300,000Total Dex One consolidated
    
    
    2,359,810
    
    
    
    2,855,071Less current portion
    
    
    117,866
    
    
    
    146,381Long-term debt
    
    $
    2,241,944
    
    
    $
    2,708,690
 RHDI Amended and Restated Credit Facility
  Dex Media East Amended and Restated Credit Facility
  34




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##### Table of Contents



Dex Media West Amended and Restated Credit Facility
       Dex One Senior Subordinated Notes
 st th
 35




---



##### Table of Contents



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
 36




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##### Table of Contents



Impact of Fresh Start Accounting
  Outstanding Debt atUnamortized Fair
    
    
    September 30, 2010 ExcludingCarrying Value at
    
    
    Value Adjustments
    
    
    the Impact of UnamortizedSeptember 30, 2010
    
    
    at September 30, 2010
    
    
    Fair Value AdjustmentsRHDI Amended and Restated Credit Facility
    
    $
    1,052,680
    
    
    $
    15,629
    
    
    $
    1,068,309Dex Media East Amended and Restated
Credit Facility
    
    
    771,901
    
    
    
    70,466
    
    
    
    842,367Dex Media West Amended and Restated
Credit Facility
    
    
    730,490
    
    
    
    13,044
    
    
    
    743,534Dex One 12%/14% Senior Subordinated
Notes due 2017
    
    
    300,000
    
    
    
    
    
    
    
    300,000Total
    
    $
    2,855,071
    
    
    $
    99,139
    
    
    $
    2,954,210
 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)
    
    
    1.688
    %
    
    January 31, 2013March 10, 2010
    
    
    100
    (1)
    
    
    1.75
    %
    
    January 31, 2013Total
    
    $
    500
  37




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##### 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 29, 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  Loss Recognized inInterest ExpenseFrom the Change in Fair Value ofInterest Rate SwapsFair Value
    
    
    Three Months
    
    
    Eight MonthsMeasurements
    
    
    Ended
    
    
    Endedat September 30, 2010
    
    
    September 30, 2010
    
    
    September 30, 2010Interest Rate Swaps:Accounts payable and accrued liabilities
    
    $
    (4,690
    )
    
    $
    1,263
    
    
    $
    4,691Other non-current liabilities
    
    
    (3,903
    )
    
    
    2,260
    
    
    
    3,902Total
    
    $
    (8,593
    )
    
    $
    3,523
    
    
    $
    8,593
 Loss Recognized inInterest ExpenseFrom the Change in Fair Value ofInterest Rate CapsFair Value
    
    
    Three Months
    
    
    Eight MonthsMeasurements
    
    
    Ended
    
    
    Endedat September 30, 2010
    
    
    September 30, 2010
    
    
    September 30, 2010Interest Rate Caps:Prepaid expenses and
other current assets
    
    $
    3
    
    
    $
    
    
    
    $
    66Other non-current assets
    
    
    133
    
    
    
    416
    
    
    
    1,936Total
    
    $
    136
    
    
    $
    416
    
    
    $
    2,002
  38




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##### 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
    39




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##### Table of Contents



8. Income Taxes
  Successor CompanyThree Months Ended
    
    
    Eight Months EndedSeptember 30, 2010
    
    
    September 30, 2010Loss before income taxes
    
    $
    (458,884
    )
    
    $
    (1,530,155
    )Statutory U.S. Federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of U.S. Federal tax benefit
    
    
    2.0
    
    
    
    2.8Non-deductible impairment charges
    
    
    (22.0
    )
    
    
    (19.8
    )Section 382 limitation
    
    
    
    
    
    
    23.0Change in valuation allowance
    
    
    (0.1
    )
    
    
    Effective tax rate
    
    
    14.9
    %
    
    
    41.0
    %
 40




---



##### Table of Contents



Predecessor CompanyOne Month Ended
    
    
    Three Months Ended
    
    
    Nine Months EndedJanuary 31, 2010
    
    
    September 30, 2009
    
    
    September 30, 2009Income (loss) before income taxes
    
    $
    7,837,550
    
    
    $
    45,855
    
    
    $
    (77,728
    )Statutory U.S. Federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of U.S. Federal tax benefit
    
    
    2.6
    
    
    
    (8.0
    )
    
    
    1.4Tax-exempt reorganization gain
    
    
    (28.0
    )
    
    
    
    
    
    
    Other non-deductible expenses
    
    
    
    
    
    
    27.7
    
    
    
    (25.0
    )Section 382 limitation
    
    
    1.1
    
    
    
    
    
    
    
    (482.9
    )Section 108 tax attribution reduction
    
    
    21.4
    
    
    
    
    
    
    
    Change in valuation allowance
    
    
    (19.5
    )
    
    
    0.2
    
    
    
    (2.2
    )Change in state tax law
    
    
    
    
    
    
    (6.9
    )
    
    
    1.0State tax benefit correction
    
    
    
    
    
    
    (12.7
    )
    
    
    Stock option forfeitures
    
    
    
    
    
    
    12.5
    
    
    
    (8.6
    )Other
    
    
    (0.9
    )
    
    
    
    
    
    
    (1.2
    )Effective tax rate
    
    
    11.7
    %
    
    
    47.8
    %
    
    
    (482.5
    )%
      41




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##### Table of Contents



9. Benefit Plans
  Pension BenefitsSuccessor CompanyThree Months Ended
    
    
    Eight Months EndedSeptember 30, 2010
    
    
    September 30, 2010Interest cost
    
    $
    3,319
    
    
    $
    8,979Expected return on plan assets
    
    
    (3,019
    )
    
    
    (8,770
    )Curtailment (gain)
    
    
    
    
    
    
    (3,754
    )Net periodic benefit cost (credit)
    
    $
    300
    
    
    $
    (3,545
    )
 Pension BenefitsPredecessor CompanyOne Month Ended
    
    
    Three Months Ended
    
    
    Nine Months EndedJanuary 31, 2010
    
    
    September 30, 2009
    
    
    September 30, 2009Service cost
    
    $
    
    
    
    $
    1,253
    
    
    $
    4,116Interest cost
    
    
    1,124
    
    
    
    3,515
    
    
    
    10,966Expected return on plan assets
    
    
    (1,385
    )
    
    
    (4,387
    )
    
    
    (13,512
    )Amortization of prior service cost
    
    
    81
    
    
    
    
    
    
    
    Amortization of net loss (gain)
    
    
    122
    
    
    
    (81
    )
    
    
    (108
    )Settlement loss
    
    
    
    
    
    
    
    
    
    
    3,546Net periodic benefit (credit) cost
    
    $
    (58
    )
    
    $
    300
    
    
    $
    5,008
 42




---



##### Table of Contents



Postretirement BenefitsSuccessor CompanyThree Months Ended
    
    
    Eight Months EndedSeptember 30, 2010
    
    
    September 30, 2010Interest cost
    
    $
    24
    
    
    $
    77Net periodic benefit cost
    
    $
    24
    
    
    $
    77
 Postretirement BenefitsPredecessor CompanyOne Month Ended
    
    
    Three Months Ended
    
    
    Nine Months EndedJanuary 31, 2010
    
    
    September 30, 2009
    
    
    September 30, 2009Service cost
    
    $
    
    
    
    $
    122
    
    
    $
    525Interest cost
    
    
    10
    
    
    
    603
    
    
    
    2,006Amortization of prior service cost
    
    
    
    
    
    
    (1
    )
    
    
    (4
    )Amortization of net (gain)
    
    
    (21
    )
    
    
    (174
    )
    
    
    (436
    )Curtailment (gain)
    
    
    
    
    
    
    
    
    
    
    (13,460
    )Net periodic benefit (credit) cost
    
    $
    (11
    )
    
    $
    550
    
    
    $
    (11,369
    )
       43




---



##### Table of Contents



10. Capital Stock
  11. Business Segments
  12. Legal Proceedings
     44




---



##### Table of Contents



13. Dex One Corporation (Parent Company) Financial Statements
   Condensed Parent Company Balance Sheets
 Successor
    
    
    
    PredecessorCompany
    
    
    
    CompanySeptember 30,
    
    
    
    December, 312010
    
    
    
    2009AssetsCash and cash equivalents
    
    $
    3,107
    
    
    
    $
    5,007Intercompany, net
    
    
    
    
    
    
    
    109,102Intercompany loan receivable
    
    
    3,900
    
    
    
    
    5,000Prepaid and other current assets
    
    
    314
    
    
    
    
    8,055Total current assets
    
    
    7,321
    
    
    
    
    127,164Investment in subsidiaries
    
    
    871,643
    
    
    
    
    Fixed assets and computer software, net
    
    
    
    
    
    
    
    5,990Deferred income taxes, net
    
    
    
    
    
    
    
    71,878Intercompany note receivable
    
    
    
    
    
    
    
    300,000Total assets
    
    $
    878,964
    
    
    
    $
    505,032Liabilities and Shareholders Equity (Deficit)Accounts payable, accrued liabilities and other
    
    $
    34
    
    
    
    $
    80,061Accrued interest
    
    
    99
    
    
    
    
    Intercompany, net
    
    
    15,010
    
    
    
    
    Short-term deferred income taxes, net
    
    
    11,519
    
    
    
    
    Total current liabilities not subject to compromise
    
    
    26,662
    
    
    
    
    80,061Long-term debt
    
    
    300,000
    
    
    
    
    Deferred income taxes, net
    
    
    548
    
    
    
    
    Deficit in subsidiaries
    
    
    
    
    
    
    
    3,950,031Other non-current liabilities
    
    
    1,200
    
    
    
    
    8,232Total liabilities not subject to compromise
    
    
    328,410
    
    
    
    
    4,038,324Liabilities subject to compromise
    
    
    
    
    
    
    
    3,385,756Shareholders equity (deficit)
    
    
    550,554
    
    
    
    
    (6,919,048
    )Total liabilities and shareholders equity (deficit)
    
    $
    878,964
    
    
    
    $
    505,032
 45




---



##### Table of Contents



Condensed Parent Company Statements of Operations
 Successor Company
    
    
    
    Predecessor CompanyThree Months Ended
    
    
    Eight Months Ended
    
    
    
    One Month Ended
    
    
    Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2010
    
    
    
    January 31, 2010
    
    
    September 30, 2009
    
    
    September 30, 2009Expenses
    
    $
    2,344
    
    
    $
    14,438
    
    
    
    $
    891
    
    
    $
    6,588
    
    
    $
    16,841Partnership and equity income (loss)
    
    
    (447,518
    )
    
    
    (1,491,468
    )
    
    
    
    643,971
    
    
    
    51,756
    
    
    
    143,784Operating income (loss)
    
    
    (449,862
    )
    
    
    (1,505,906
    )
    
    
    
    643,080
    
    
    
    45,168
    
    
    
    126,943Interest expense, net
    
    
    (9,022
    )
    
    
    (24,249
    )
    
    
    
    
    
    
    
    
    
    
    
    (106,036
    )Income (loss) before reorganization
items, net and income taxes
    
    
    (458,884
    )
    
    
    (1,530,155
    )
    
    
    
    643,080
    
    
    
    45,168
    
    
    
    20,907Reorganization items, net
    
    
    
    
    
    
    
    
    
    
    
    7,194,470
    
    
    
    687
    
    
    
    (98,635
    )Income (loss) before income taxes
    
    
    (458,884
    )
    
    
    (1,530,155
    )
    
    
    
    7,837,550
    
    
    
    45,855
    
    
    
    (77,728
    )(Provision) benefit for income taxes
    
    
    68,241
    
    
    
    626,806
    
    
    
    
    (917,541
    )
    
    
    (21,925
    )
    
    
    (375,033
    )Net income (loss)
    
    $
    (390,643
    )
    
    $
    (903,349
    )
    
    
    $
    6,920,009
    
    
    $
    23,930
    
    
    $
    (452,761
    )
 Condensed Parent Company Statements of Cash Flows
 Successor Company
    
    
    
    Predecessor CompanyEight Months Ended
    
    
    
    One Month Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    
    January 31, 2010
    
    
    September 30, 2009Cash flow used in operating
activities
    
    $
    (23,401
    )
    
    
    $
    (531
    )
    
    $
    (121,360
    )Cash flow from investing activities:Additions to fixed assets and
computer software, net
    
    
    
    
    
    
    
    (643
    )
    
    
    (200
    )Intercompany loan
    
    
    (3,900
    )
    
    
    
    
    
    
    
    (5,000
    )Net cash used in investing activities
    
    
    (3,900
    )
    
    
    
    (643
    )
    
    
    (5,200
    )Cash flow from financing activities:Debt issuance and other
financing costs
    
    
    
    
    
    
    
    (370
    )
    
    
    Decrease in checks not yet
presented for payment
    
    
    (1,073
    )
    
    
    
    (182
    )
    
    
    (940
    )Dividends from subsidiaries
    
    
    28,200
    
    
    
    
    
    
    
    
    129,600Net cash provided by (used in)
financing activities
    
    
    27,127
    
    
    
    
    (552
    )
    
    
    128,660Change in cash
    
    
    (174
    )
    
    
    
    (1,726
    )
    
    
    2,100Cash at beginning of period
    
    
    3,281
    
    
    
    
    5,007
    
    
    
    948Cash at end of period
    
    $
    3,107
    
    
    
    $
    3,281
    
    
    $
    3,048
 14. Subsequent Events
  46




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
  Corporate Overview
 ® ® ® ®
 Recent Trends Related to Our Business
  47




---



##### Table of Contents



Impairment Charges
 Intangibles  Goodwill and Other Property, Plant and Equipment
  48




---



##### Table of Contents



New Chief Executive Officer and President and Retirement of Former Chairman and Chief Executive
Officer
  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.
  49




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##### Table of Contents



Consummation of the Plan
 Issuance of New Common Stock
  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
  50




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##### Table of Contents



Impact on Long-Term Debt Upon Emergence from the Chapter 11 Proceedings
  Accounting Matters Resulting from the Chapter 11 Proceedings
  Fresh Start Accounting
 Reorganizations
 st
  Climate Change
  Going Concern
  51




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##### Table of Contents



Segment Reporting
  New Accounting Pronouncements
 Improving Disclosures
about Fair Value Measurements
 Revenue Arrangements with Multiple Deliverables Revenue Arrangements with Multiple Deliverables
  RESULTS OF OPERATIONS
 Factors Affecting Comparability
 Fresh Start Accounting Adjustments
   52




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##### Table of Contents



Business Combinations
   Impairment Charges
  Reclassifications
  53




---



##### Table of Contents



Three Months Ended September 30, 2009As Previously(amounts in millions)
    
    Reported
    
    
    Reclass
    
    
    As ReclassifiedProduction and
distribution
expenses
    
    $
    83.7
    
    
    $
    6.9
    
    
    $
    90.6Selling and support
expenses
    
    
    162.4
    
    
    
    (13.8
    )
    
    
    148.6General and
administrative
expenses
    
    
    28.8
    
    
    
    6.9
    
    
    
    35.7
 Nine Months Ended September 30, 2009As Previously(amounts in millions)
    
    Reported
    
    
    Reclass
    
    
    As ReclassifiedProduction and
distribution
expenses
    
    $
    268.4
    
    
    $
    17.8
    
    
    $
    286.2Selling and support
expenses
    
    
    499.4
    
    
    
    (39.1
    )
    
    
    460.3General and
administrative
expenses
    
    
    82.0
    
    
    
    21.3
    
    
    
    103.3
 GAAP Reported Results
 Successor Company  Three and Eight Months Ended September 30, 2010
 Net Revenues
  Successor CompanyThree Months EndedSeptember 30,
    
    
    Eight Months Ended(amounts in millions)
    
    2010
    
    
    September 30, 2010Gross advertising revenues
    
    $
    258.3
    
    
    $
    470.0Sales claims and allowances
    
    
    (3.6
    )
    
    
    (7.7
    )Net advertising revenues
    
    
    254.7
    
    
    
    462.3Other revenues
    
    
    4.5
    
    
    
    11.0Total
    
    $
    259.2
    
    
    $
    473.3
   54




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##### Table of Contents



Expenses
  Successor CompanyThree Months EndedSeptember 30,
    
    
    Eight Months Ended(amounts in millions)
    
    2010
    
    
    September 30, 2010Production and distribution expenses
    
    $
    67.4
    
    
    $
    148.7Selling and support expenses
    
    
    102.6
    
    
    
    253.7General and administrative expenses
    
    
    32.7
    
    
    
    94.6Depreciation and amortization
    
    
    58.3
    
    
    
    157.3Impairment charges
    
    
    389.6
    
    
    
    1,159.3Total
    
    $
    650.6
    
    
    $
    1,813.6
  Production and Distribution Expenses
  55




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##### Table of Contents



Selling and Support Expenses
  General and Administrative Expenses
  Depreciation and Amortization
  56




---



##### Table of Contents



Impairment Charges
  Operating Loss
  Interest Expense, Net
   57




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##### Table of Contents



Income Taxes
     Net Loss and Loss Per Share
   Predecessor Company  One Month Ended January 31, 2010
 Net Revenues
  Predecessor CompanyOne Month Ended(amounts in millions)
    
    January 31, 2010Gross advertising revenues
    
    $
    161.4Sales claims and allowances
    
    
    (3.5
    )Net advertising revenues
    
    
    157.9Other revenues
    
    
    2.5Total
    
    $
    160.4
  58




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##### Table of Contents



Expenses
  Predecessor CompanyOne Month EndedJanuary 31,(amounts in millions)
    
    2010Production and distribution expenses
    
    $
    27.2Selling and support expenses
    
    
    40.7General and administrative expenses
    
    
    8.2Depreciation and amortization
    
    
    20.2Total
    
    $
    96.3
 Production and Distribution Expenses
  Selling and Support Expenses
  General and Administrative Expenses
  59




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##### Table of Contents



Depreciation and Amortization
   Operating Income
  Interest Expense, Net
    Reorganization Items, Net
  60




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##### Table of Contents



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
  Income Taxes
    Net Income and Earnings Per Share
   61




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##### Table of Contents



Non-GAAP Financial Information  Adjusted and Combined Adjusted Results
  Adjusted
Results for the Three Months Ended September 30, 2010  compared to Predecessor Company GAAP Results for the Three Months Ended September 30, 2009
 Net Revenues
  Successor
    
    
    
    
    
    
    
    
    
    
    PredecessorCompany
    
    
    
    
    
    
    Adjusted
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    Three Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    Fresh Start
    
    
    September 30,
    
    
    September 30,(amounts in millions)
    
    2010
    
    
    Adjustments
    
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeGross advertising revenues
    
    $
    258.3
    
    
    $
    177.8
    (1)
    
    $
    436.1
    
    
    $
    536.4
    
    
    $
    (100.3
    )
    
    
    (18.7
    )%Sales claims and allowances
    
    
    (3.6
    )
    
    
    (3.1
    )(1)
    
    
    (6.7
    )
    
    
    (8.7
    )
    
    
    2.0
    
    
    
    23.0Net advertising revenues
    
    
    254.7
    
    
    
    174.7
    
    
    
    429.4
    
    
    
    527.7
    
    
    
    (98.3
    )
    
    
    (18.6
    )Other
revenues
    
    
    4.5
    
    
    
    1.1
    (1)
    
    
    5.6
    
    
    
    6.3
    
    
    
    (0.7
    )
    
    
    (11.1
    )Total
    
    $
    259.2
    
    
    $
    175.8
    
    
    $
    435.0
    
    
    $
    534.0
    
    
    $
    (99.0
    )
    
    
    (18.5
    )%
 
 (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 three months ended September 30, 2010 absent our adoption of fresh start
accounting required under GAAP.   Non-GAAP Statistical Measures
  62




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Expenses
  Successor
    
    
    
    
    
    
    
    
    
    
    PredecessorCompany
    
    
    
    
    
    
    Adjusted
    
    
    CompanyThree Months Ended
    
    
    Fresh Start

    
    
    Three Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    and Other
    
    
    September 30,
    
    
    September 30,(amounts in millions)
    
    2010
    
    
    Adjustments
    
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeProduction and
distribution expenses
    
    $
    67.4
    
    
    $
    17.4
    (1)
    
    $
    84.8
    
    
    $
    90.6
    
    
    $
    (5.8
    )
    
    
    (6.4
    )%Selling and support
expenses
    
    
    102.6
    
    
    
    16.9
    (1)
    
    
    119.5
    
    
    
    148.6
    
    
    
    (29.1
    )
    
    
    (19.6
    )General and
administrative
expenses
    
    
    32.7
    
    
    
    
    
    
    
    32.7
    
    
    
    35.7
    
    
    
    (3.0
    )
    
    
    (8.4
    )Depreciation and
amortization
    
    
    58.3
    
    
    
    
    (2)
    
    
    58.3
    
    
    
    142.6
    
    
    
    (84.3
    )
    
    
    (59.1
    )Impairment charges
    
    
    389.6
    
    
    
    (389.6
    )(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    650.6
    
    
    $
    (355.3
    )
    
    $
    295.3
    
    
    $
    417.5
    
    
    $
    (122.2
    )
    
    
    (29.3
    )%
 
 (1)
    
    Represents (a) certain deferred expenses for advertising sales fulfilled
prior to the Fresh Start Reporting Date, which would have been recognized during the three months
ended September 30, 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.(3)
    
    The goodwill and intangible asset impairment charges during the three months ended
September 30, 2010 have been excluded for the adjusted three months ended September 30, 2010. 63




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Production and Distribution Expenses
  Adjusted ThreeMonths Ended(amounts in millions)
    
    September 30, 2010Lower print, paper and distribution expenses
    
    $
    (6.7
    )Higher internet production and distribution expenses
    
    
    1.9All other, net
    
    
    (1.0
    )Total decrease in
adjusted production and
distribution expenses for
the three months ended
September 30, 2010
    
    $
    (5.8
    )
   Selling and Support Expenses
  Adjusted ThreeMonths Ended(amounts in millions)
    
    September 30, 2010Lower bad debt expense
    
    $
    (18.8
    )Lower commissions and salesperson expenses
    
    
    (5.1
    )Lower advertising expenses
    
    
    (2.8
    )Lower directory publishing expenses
    
    
    (1.8
    )All other, net
    
    
    (0.6
    )Total decrease in adjusted
selling and support
expenses for the three
months ended September 30,
2010
    
    $
    (29.1
    )
   64




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##### Table of Contents



General and Administrative Expenses
  Adjusted ThreeMonths Ended(amounts in millions)
    
    September 30, 2010Lower restructuring expenses
    
    $
    (1.8
    )All other, net
    
    
    (1.2
    )Total decrease in adjusted G&A
expenses for the three months
ended September 30, 2010.
    
    $
    (3.0
    )
  Depreciation and Amortization
   65




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Operating Income (Loss)
  Successor
    
    
    
    
    
    
    
    
    
    
    PredecessorCompany
    
    
    
    
    
    
    Adjusted
    
    
    CompanyThree Months Ended
    
    
    Fresh Start
    
    
    Three Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    and Other
    
    
    September 30,
    
    
    September 30,(amounts in millions)
    
    2010
    
    
    Adjustments
    
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeTotal
    
    $
    (391.3
    )
    
    $
    531.1
    (1)
    
    $
    139.8
    
    
    $
    116.5
    
    
    $
    23.3
    
    
    
    20.0
    %
 
 (1)
    
    Represents the net effect of (a) eliminating 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
three months ended September 30, 2010 absent our adoption of fresh start accounting required under
GAAP, (b) the exclusion of cost-uplift recorded under fresh start accounting and (c) excludes the
goodwill and intangible asset impairment charges during the three months ended September 30, 2010.  Combined Adjusted Results for the Nine Months Ended September 30, 2010
compared to Predecessor Company GAAP Results for the Nine Months Ended September 30, 2009
 Net Revenues
  Successor
    
    
    Predecessor
    
    
    
    
    
    
    Combined
    
    
    PredecessorCompany
    
    
    Company
    
    
    
    
    
    
    Adjusted
    
    
    Company(amounts in millions)
    
    Eight Months Ended 
September 30, 2010
    
    
    One
Month
Ended 
January
31,2010
    
    
    Fresh Start
Adjustments
    
    
    Nine
Months Ended 
September 30, 2010
    
    
    Nine
Months Ended 
September 30, 2009
    
    
    $ Change
    
    
    % ChangeGross advertising
revenues
    
    $
    470.0
    
    
    $
    161.4
    
    
    $
    729.7
    (1)
    
    $
    1,361.1
    
    
    $
    1,716.1
    
    
    $
    (355.0
    )
    
    
    (20.7
    )%Sales claims and
allowances
    
    
    (7.7
    )
    
    
    (3.5
    )
    
    
    (12.8
    )(1)
    
    
    (24.0
    )
    
    
    (34.6
    )
    
    
    10.6
    
    
    
    30.6Net advertising
revenues
    
    
    462.3
    
    
    
    157.9
    
    
    
    716.9
    
    
    
    1,337.1
    
    
    
    1,681.5
    
    
    
    (344.4
    )
    
    
    (20.5
    )Other revenues
    
    
    11.0
    
    
    
    2.5
    
    
    
    5.0
    (1)
    
    
    18.5
    
    
    
    20.1
    
    
    
    (1.6
    )
    
    
    (8.0
    )Total
    
    $
    473.3
    
    
    $
    160.4
    
    
    $
    721.9
    
    
    $
    1,355.6
    
    
    $
    1,701.6
    
    
    $
    (346.0
    )
    
    
    (20.3
    )%
 
 (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 nine months ended September 30, 2010 absent our adoption of fresh start
accounting required under GAAP. 66




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##### Table of Contents



Non-GAAP Statistical Measures
  Expenses
  Successor
    
    
    Predecessor
    
    
    
    
    
    
    Combined
    
    
    PredecessorCompany
    
    
    Company
    
    
    
    
    
    
    Adjusted
    
    
    Company(amounts in
    
    Eight
Months Ended 

September 30,
    
    
    One
Month Ended 
January
31,
    
    
    Fresh Start 
and Other
    
    
    Nine
Months Ended

September 30,
    
    
    Nine
 Months Ended 

September 30,
    
    
    $
    
    
    %millions)
    
    2010
    
    
    2010
    
    
    Adjustments
    
    
    2010
    
    
    2009
    
    
    Change
    
    
    ChangeProduction and
distribution expenses
    
    $
    148.7
    
    
    $
    27.2
    
    
    $
    74.9
    (1)
    
    $
    250.8
    
    
    $
    286.2
    
    
    $
    (35.4
    )
    
    
    (12.4
    )%Selling and support
expenses
    
    
    253.7
    
    
    
    40.7
    
    
    
    73.5
    (1)
    
    
    367.9
    
    
    
    460.3
    
    
    
    (92.4
    )
    
    
    (20.1
    )General and
administrative expenses
    
    
    94.6
    
    
    
    8.2
    
    
    
    
    
    
    
    102.8
    
    
    
    103.3
    
    
    
    (0.5
    )
    
    
    (0.5
    )Depreciation and
amortization
    
    
    157.3
    
    
    
    20.2
    
    
    
    
    (2)
    
    
    177.5
    
    
    
    427.7
    
    
    
    (250.2
    )
    
    
    (58.5
    )Impairment
charges
    
    
    1,159.3
    
    
    
    
    
    
    
    (1,159.3
    )(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,813.6
    
    
    $
    96.3
    
    
    $
    (1,010.9
    )
    
    $
    899.0
    
    
    $
    1,277.5
    
    
    $
    (378.5
    )
    
    
    (29.6
    )%
 
 (1)
 (2)
 67




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##### Table of Contents



(3)
 Production and Distribution Expenses
  Combined AdjustedNine Months Ended(amounts in millions)
    
    September 30, 2010Lower print, paper and distribution expenses
    
    $
    (25.4
    )Lower internet production and distribution expenses
    
    
    (7.4
    )All other, net
    
    
    (2.6
    )Total decrease in
combined adjusted
production and
distribution expenses for
the nine months ended
September 30, 2010
    
    $
    (35.4
    )
   Selling and Support Expenses
  Combined AdjustedNine Months Ended(amounts in millions)
    
    September 30, 2010Lower bad debt expense
    
    $
    (66.5
    )Lower commissions and salesperson expenses
    
    
    (18.1
    )Lower occupancy expenses
    
    
    (4.5
    )Lower directory publishing expenses
    
    
    (3.8
    )All other, net
    
    
    0.5Total decrease in
combined adjusted
selling and support
expenses for the nine
months ended September
30, 2010
    
    $
    (92.4
    )
   68




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##### Table of Contents



General and Administrative Expenses
  Combined AdjustedNine Months Ended(amounts in millions)
    
    September 30, 2010Lower restructuring expenses
    
    $
    (12.9
    )Lower general corporate expenses
    
    
    (3.5
    )Change in net curtailment gains
    
    
    9.7One-time expenses associated with retirement of Chief Executive Officer
    
    
    9.5All other, net
    
    
    (3.3
    )Total decrease in combined adjusted
G&A expenses for the nine months
ended September 30, 2010
    
    $
    (0.5
    )
      Depreciation and Amortization
  69




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##### Table of Contents



Operating Income (Loss)
  Successor
    
    
    Predecessor
    
    
    
    
    
    
    Combined
    
    
    PredecessorCompany
    
    

    Company

    
    
    
    
    
    Adjusted
    
    
    CompanyEight Months Ended
    
    
    One Month Ended
    
    
    Fresh Start
    
    
    Nine Months Ended
    
    
    Nine Months EndedSeptember 30,

    
    
    January 31,
    
    
    and Other
    
    
    September 30,
    
    
    September 30,(amounts in millions)
    
    2010
    
    
    2010
    
    
    Adjustments
    
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeTotal
    
    $
    (1,340.3
    )
    
    $
    64.1
    
    
    $
    1,732.8
    (1)
    
    $
    456.6
    
    
    $
    424.0
    
    
    $
    32.6
    
    
    
    7.7
    %
 
 (1)
    
    Represents the net effect of (a) eliminating 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
eight months ended September 30, 2010 absent our adoption of fresh start accounting required under
GAAP, (b) the exclusion of cost-uplift recorded under fresh start accounting (c) excludes the
goodwill and intangible asset impairment charges during the eight months ended September 30, 2010.  LIQUIDITY AND CAPITAL RESOURCES
  Successor CompanyFair Market Value
    
    
    Carrying ValueSeptember 30, 2010
    
    
    September 30, 2010RHDI Amended and Restated Credit Facility
    
    $
    900,041
    
    
    $
    1,052,680Dex Media East Amended and Restated Credit Facility
    
    
    584,715
    
    
    
    771,901Dex Media West Amended and Restated Credit Facility
    
    
    639,179
    
    
    
    730,490Dex One 12%/14% Senior Subordinated Notes due 2017
    
    
    235,875
    
    
    
    300,000Total Dex One consolidated
    
    
    2,359,810
    
    
    
    2,855,071Less current portion
    
    
    117,866
    
    
    
    146,381Long-term debt
    
    $
    2,241,944
    
    
    $
    2,708,690
 70




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##### Table of Contents



RHDI Amended and Restated Credit Facility
  Dex Media East Amended and Restated Credit Facility
  Dex Media West Amended and Restated Credit Facility
  Dex One Senior Subordinated Notes
 st th
   71




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##### Table of Contents



Impact of Fresh Start Accounting
  Outstanding Debt atSeptember 30, 2010Unamortized Fair
    
    
    Excluding theValue Adjustments
    
    
    Impact ofCarrying Value at
    
    
    at September 30,
    
    
    Unamortized FairSeptember 30, 2010
    
    
    2010
    
    
    Value AdjustmentsRHDI Amended and Restated Credit Facility
    
    $
    1,052,680
    
    
    $
    15,629
    
    
    $
    1,068,309Dex Media East Amended and Restated
Credit Facility
    
    
    771,901
    
    
    
    70,466
    
    
    
    842,367Dex Media West Amended and Restated
Credit Facility
    
    
    730,490
    
    
    
    13,044
    
    
    
    743,534Dex One 12%/14% Senior Subordinated
Notes due 2017
    
    
    300,000
    
    
    
    
    
    
    
    300,000Total
    
    $
    2,855,071
    
    
    $
    99,139
    
    
    $
    2,954,210
  Issuance of New Common Stock
  Registration Rights Agreement
  Liquidity and Cash Flows
   72




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Successor Company
     
    
    $430.6 million in principal payments on our amended and restated credit
facilities.
    
    $2.8 million in other financing costs.
    
    $5.4 million in the decreased balance of checks not yet presented for
payment.
 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.
 73




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##### Table of Contents




    
    $255.6 million in 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.
    
    $18.7 million in principal payments on the Predecessor Companys revolvers.
    
    $1.8 million in the decreased balance of checks not yet presented for
payment.
 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)
    
    $
    2,954.2
    
    
    $
    175.0
    
    
    $
    523.4
    
    
    $
    1,955.8
    
    
    $
    300.0Interest on long-term
debt (2)
    
    
    977.0
    
    
    
    210.9
    
    
    
    393.1
    
    
    
    325.2
    
    
    
    47.8Total long-term debt and
related interest
contractual
obligations
    
    $
    3,931.2
    
    
    $
    385.9
    
    
    $
    916.5
    
    
    $
    2,281.0
    
    
    $
    347.8
 
 (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 September 30, 2010.(2)
    
    Interest on debt represents cash interest payment obligations assuming all
indebtedness as of September 30, 2010 will be paid in accordance with its contractual maturity and
assumes interest rates on variable interest debt as of September 30, 2010 will remain unchanged in
future periods.  74




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##### Table of Contents



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)
    
    
    1.688
    %
    
    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 29, 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 75




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##### Table of Contents



Market Risk Sensitive Instruments
   
 Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  76




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
      
 Item 1A. Risk Factors
  77




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##### Table of Contents



Exhibits
 Exhibit No.
    
    Document31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2010 by Alfred T. Mockett, Chief Executive
Officer and President 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 September 30, 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 September 30, 2010, under Section 906 of the
Sarbanes-Oxley Act by Alfred T. Mockett, Chief Executive
Officer and President, and Steven M. Blondy, Executive Vice
President and Chief Financial Officer, for Dex One Corporation
 
 *
    
    Filed herewith. 78




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##### Table of Contents



SIGNATURES
  DEX ONE CORPORATIONDate: November 9, 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) 79




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Document31.1*
    
    Certification of Quarterly Report on Form 10-Q for the period
ended September 30, 2010 by Alfred T. Mockett, Chief Executive
Officer and President 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 September 30, 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 September 30, 2010, under Section 906 of the
Sarbanes-Oxley Act by Alfred T. Mockett, Chief Executive
Officer and President, and Steven M. Blondy, Executive Vice
President and Chief Financial Officer, for Dex One Corporation
 
 *
    
    Filed herewith. 80