##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

x
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the quarterly period ended September 30, 2003 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 0-19598

infoUSA INC.

(exact name of registrant specified in its charter)


DELAWARE
    
    47-0751545(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification Number)5711 SOUTH 86TH CIRCLE, OMAHA, NEBRASKA
    
    68127(Address of principal executive offices)
    
    (Zip Code)


Registrants telephone number, including area code (402) 593-4500

N/A

(Former name, former address and former fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.

Yes  x    No  o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule12b-2 of the Act). Yes x No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

52,242,941 shares of Common Stock at
November 6, 2003





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TABLE OF CONTENTS



|                                                 |                                                                    |                                            |  |  |  |  |  | 
|------------------------------------------------ | ------------------------------------------------------------------ | ------------------------------------------ |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                    
|                                                 | ITEM 1. FINANCIAL STATEMENTS                                      
|                                                 |                                                                    | CONSOLIDATED BALANCE SHEETS               
|                                                 |                                                                    | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                 |                                                                    | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                 |                                                                    | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                 | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|                                                 | ITEM 4. CONTROLS AND PROCEDURES                                   
|PART II OTHER INFORMATION                       
|                                                 | ITEM 1. LEGAL PROCEEDINGS                                         
|                                                 | ITEM 5. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS       
|                                                 | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                          
|SIGNATURES                                      
|Exhibit Index                                   
|EX-10.1 Credit Agreement                        
|EX-10.2 Pledge Agreement                        
|EX-10.3 Security Agreement                      
|EX-10.4 Subsidiaries Guaranty Agreement         
|EX-31.1 Certification of Chief Executive Officer
|EX-31.2 Certification of Chief Financial Officer
|EX-32.1 Certification of Chief Executive Officer
|EX-32.2 Certification of Chief Financial Officer



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##### Table of Contents



infoUSA INC.

INDEX

PART I  FINANCIAL INFORMATION AND MANAGEMENTS DISCUSSION AND ANALYSISItem 1.
    
    Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2003 and 2002Consolidated Statements of Cash Flows Nine Months ended September 30, 2003 and 2002Notes to Consolidated Financial StatementsItem 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RiskItem 4.
    
    Controls and ProceduresPART II  OTHER INFORMATIONItem 6.
    
    Exhibits and Reports on Form 8-KSignatureIndex to Exhibits


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infoUSA INC.

FORM 10-Q

FOR THE QUARTER ENDED

September 30, 2003




PART I

FINANCIAL INFORMATION

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ITEM 1. FINANCIAL STATEMENTS




infoUSA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

September 30, 2003
    
    December 31, 2002(UNAUDITED)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,141
    
    
    $
    6,285Marketable securities
    
    
    1,007
    
    
    
    887Trade accounts receivable, net of allowances of $2,829 and
$3,673, respectively
    
    
    34,152
    
    
    
    39,352Officer note receivable
    
    
    510
    
    
    
    510List brokerage trade accounts receivable
    
    
    12,621
    
    
    
    16,635Income taxes receivable
    
    
    1,439
    
    
    
    Prepaid expenses
    
    
    6,832
    
    
    
    4,515Deferred marketing costs
    
    
    3,599
    
    
    
    1,746Total current assets
    
    
    63,301
    
    
    
    69,930Property and equipment, net
    
    
    43,480
    
    
    
    45,756Intangible assets, net
    
    
    263,982
    
    
    
    273,246Other assets
    
    
    4,990
    
    
    
    4,454$
    375,753
    
    
    $
    393,386LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    16,910
    
    
    $
    26,312Accounts payable
    
    
    13,704
    
    
    
    13,303List brokerage trade accounts payable
    
    
    8,721
    
    
    
    12,745Accrued payroll expenses
    
    
    11,990
    
    
    
    11,410Accrued expenses
    
    
    1,884
    
    
    
    1,827Income taxes payable
    
    
    
    
    
    
    3,287Deferred income taxes
    
    
    7,476
    
    
    
    515Deferred revenues
    
    
    15,399
    
    
    
    13,821Total current liabilities
    
    
    76,084
    
    
    
    83,220Long-term debt, net of current portion
    
    
    136,477
    
    
    
    164,116Deferred income taxes
    
    
    18,836
    
    
    
    21,722Other liabilities
    
    
    4,554
    
    
    
    6,000Stockholders equity:Common stock, $.0025 par value. Authorized
295,000,000 shares; 52,799,107 shares issued and
52,218,561 outstanding at September 30, 2003 and 51,869,816
shares issued and 51,111,014 outstanding at December 31, 2002
    
    
    132
    
    
    
    130Paid-in capital
    
    
    98,237
    
    
    
    92,205Retained earnings
    
    
    47,449
    
    
    
    32,237Treasury stock, at cost, 580,546 shares held at September 30, 2003
and 758,802 held at December 31, 2002
    
    
    (3,494
    )
    
    
    (4,538
    )Notes receivable from officers
    
    
    (337
    )
    
    
    (834
    )Accumulated other comprehensive loss
    
    
    (2,185
    )
    
    
    (872
    )Total stockholders equity
    
    
    139,802
    
    
    
    118,328$
    375,753
    
    
    $
    393,386


The accompanying notes are an integral part of the
consolidated financial statements.

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infoUSA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

THREE MONTHS ENDED
    
    NINE MONTHS ENDEDSeptember 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002(UNAUDITED)
    
    (UNAUDITED)Net sales
    
    $
    77,379
    
    
    $
    77,171
    
    
    $
    232,290
    
    
    $
    227,936Costs and expenses:Database and production costs
    
    
    21,416
    
    
    
    20,618
    
    
    
    64,556
    
    
    
    63,191Selling, general and administrative (excluding non-cash stock option
compensation expense of $76 and $8 for the three months and $145 and
$35 for the nine months ended September 30, 2003 and 2002,
respectively)
    
    
    36,827
    
    
    
    34,711
    
    
    
    103,825
    
    
    
    98,558Depreciation and amortization
    
    
    7,006
    
    
    
    6,805
    
    
    
    21,214
    
    
    
    21,058Non-cash stock option compensation
    
    
    76
    
    
    
    8
    
    
    
    145
    
    
    
    35Restructuring charges
    
    
    645
    
    
    
    804
    
    
    
    1,630
    
    
    
    1,616Litigation settlement charge
    
    
    1,667
    
    
    
    110
    
    
    
    1,667
    
    
    
    417Acquisition costs
    
    
    
    
    
    
    2
    
    
    
    54
    
    
    
    175Total operating costs and expenses
    
    
    67,637
    
    
    
    63,058
    
    
    
    193,091
    
    
    
    185,050Operating income
    
    
    9,742
    
    
    
    14,113
    
    
    
    39,199
    
    
    
    42,886Other income (expense):Investment income
    
    
    394
    
    
    
    35
    
    
    
    1,222
    
    
    
    133Other charges
    
    
    (2,240
    )
    
    
    (115
    )
    
    
    (6,385
    )
    
    
    (5,355
    )Interest expense
    
    
    (2,243
    )
    
    
    (3,404
    )
    
    
    (9,500
    )
    
    
    (12,562
    )Income before income taxes
    
    
    5,653
    
    
    
    10,629
    
    
    
    24,536
    
    
    
    25,102Income taxes
    
    
    2,021
    
    
    
    4,225
    
    
    
    9,324
    
    
    
    9,606Net income
    
    $
    3,632
    
    
    $
    6,404
    
    
    $
    15,212
    
    
    $
    15,496Basic earnings per share:
    
    $
    0.07
    
    
    $
    0.12
    
    
    $
    0.30
    
    
    $
    0.30Diluted earnings per share:
    
    $
    0.07
    
    
    $
    0.12
    
    
    $
    0.30
    
    
    $
    0.30


The accompanying notes are an integral part of the
consolidated financial statements.

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infoUSA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

NINE MONTHS ENDEDSeptember 30,2003
    
    2002(UNAUDITED)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    15,212
    
    
    $
    15,496Adjustments to reconcile net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    21,214
    
    
    
    21,058Amortization of deferred financing costs
    
    
    539
    
    
    
    620Deferred income taxes
    
    
    4,304
    
    
    
    (2,164
    )Non-cash stock option compensation expense
    
    
    145
    
    
    
    35Non-cash 401(k) contribution in common stock
    
    
    1,028
    
    
    
    649Gain on sale of assets
    
    
    (860
    )
    
    
    Non-cash impairment of assets
    
    
    
    
    
    
    2,978Non-cash other charges
    
    
    2,482
    
    
    
    1,264Changes in assets and liabilities, net of effect of acquisitions:Trade accounts receivable
    
    
    6,727
    
    
    
    3,020List brokerage trade accounts receivable
    
    
    4,014
    
    
    
    (825
    )Prepaid expenses and other assets
    
    
    (5,185
    )
    
    
    2,649Deferred marketing costs
    
    
    (1,853
    )
    
    
    (429
    )Accounts payable
    
    
    (533
    )
    
    
    3,117List brokerage trade accounts payable
    
    
    (4,179
    )
    
    
    541Income taxes receivable and payable, net
    
    
    (4,726
    )
    
    
    (1,480
    )Accrued expenses and other liabilities
    
    
    (785
    )
    
    
    (10,900
    )Net cash provided by operating activities
    
    
    37,544
    
    
    
    35,629CASH FLOWS FROM INVESTING ACTIVITIES:Sale of other investments
    
    
    1,628
    
    
    
    Purchase of other investments
    
    
    (626
    )
    
    
    (32
    )Purchases of property and equipment
    
    
    (4,657
    )
    
    
    (2,453
    )Acquisitions of businesses, net of cash acquired
    
    
    (5,494
    )
    
    
    (6,453
    )Software and database development costs
    
    
    (743
    )
    
    
    (1,820
    )Net cash used in investing activities
    
    
    (9,892
    )
    
    
    (10,758
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of long-term debt
    
    
    (137,041
    )
    
    
    (27,233
    )Proceeds of long-term debt
    
    
    100,000
    
    
    
    Deferred financing costs paid
    
    
    (141
    )
    
    
    (1,030
    )Proceeds for repayment of officer loan
    
    
    496
    
    
    
    Proceeds from exercise of stock options
    
    
    5,890
    
    
    
    569Net cash used in financing activities
    
    
    (30,796
    )
    
    
    (27,694
    )Net decrease in cash and cash equivalents
    
    
    (3,144
    )
    
    
    (2,823
    )Cash and cash equivalents, beginning
    
    
    6,285
    
    
    
    4,382Cash and cash equivalents, ending
    
    $
    3,141
    
    
    $
    1,559Supplemental cash flow information:Interest paid
    
    $
    8,390
    
    
    $
    9,884Income taxes paid
    
    $
    9,904
    
    
    $
    13,630


The accompanying notes are an integral part of the
consolidated financial statements.

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infoUSA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

The accompanying unaudited consolidated financial statements have been
prepared on the same basis as the audited consolidated financial statements
and, in the opinion of management, contain all adjustments, consisting of
normal recurring adjustments, necessary to fairly present the financial
information included therein. The consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include
all the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.

The Company suggests that this financial data be read in conjunction with
the audited consolidated financial statements and notes thereto for the year
ended December 31, 2002 included in the Companys 2002 Annual Report on Form
10-K, filed with the Securities and Exchange Commission. Results for the
interim period presented are not necessarily indicative of results to be
expected for the entire year.

Reclassifications.In April 2002, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 145,
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections. SFAS No. 145, among other things, rescinds
SFAS No. 4 which required all gains and losses from the extinguishments of debt
to be classified as an extraordinary item and amends SFAS No. 13 to require
that certain lease modification that have economic effect similar to
sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. Upon adoption of the new accounting standard in
2003, the Company was required to reclassify the extraordinary item of $1.8
million related to the extinguishment of debt as reported in the 2002
consolidated statement of operations. The reclassification increased other
charges expense by $2.9 million and decreased income tax expense by $1.1
million.

2. EARNINGS PER SHARE INFORMATION

The following table shows the amounts used in computing earnings per share
and the effect on the weighted average number of shares of dilutive potential
common stock.

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(In Thousands)
    
    (In Thousands)2003
    
    2002
    
    2003
    
    2002Weighted average number of shares
used in basic EPS
    
    
    51,676
    
    
    
    50,991
    
    
    
    51,351
    
    
    
    50,935Net additional common stock
equivalent shares outstanding after
assumed exercise of stock options
    
    
    681
    
    
    
    
    
    
    
    102
    
    
    
    83Weighted average number of shares
outstanding used in diluted EPS
    
    
    52,357
    
    
    
    50,991
    
    
    
    51,453
    
    
    
    51,018


3. SEGMENT INFORMATION

The Company currently manages existing operations utilizing financial
information accumulated and reported for two business segments.

The small business segment principally engages in the selling of sales
lead generation, business directories and consumer DVD products to small and
medium sized companies, small office and home office businesses and individual
consumers. This segment includes the sale of content via the Internet.

The large business segment principally engages in the selling of data
processing services, licensed databases, database marketing solutions, e-mail
marketing solutions and list brokerage and list management services to large
companies. This segment includes the licensing of databases for Internet
directory assistance services.

The small business and large business segments reflect actual net sales,
direct order production, and identifiable direct sales and

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marketing costs related to their operations. The remaining indirect costs
are presented as a reconciling item in corporate activities.

Corporate activities principally represent the information systems
technology, database compilation, database verification, and administrative
functions of the Company. Investment income, interest expense, income taxes,
amortization of intangibles, and depreciation expense are only recorded in
corporate activities. The Company does not allocate these costs to the two
business segments. The Company records unusual or non-recurring items including
acquisition costs, non-cash stock compensation expense, asset impairments and
other extraordinary items in corporate activities to allow for the analysis of
the sales business segments excluding such unusual or non-recurring charges.

The Company accounts for property and equipment on a consolidated basis.
The Companys business segments share the Companys property and equipment.
Depreciation expense is recorded in corporate activities.

The Company has no intercompany sales or intercompany expense
transactions. Accordingly, there are no adjustments necessary to eliminate
amounts between the Companys segments.

The following table summarizes segment information:

For The Three Months Ended September 30, 2003Small
    
    Large
    
    Corporate
    
    ConsolidatedBusiness
    
    Business
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    37,902
    
    
    $
    39,477
    
    
    $
    
    
    
    $
    77,379Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    (76
    )
    
    
    (76
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (645
    )
    
    
    (645
    )Litigation settlement charges
    
    
    
    
    
    
    
    
    
    
    (1,667
    )
    
    
    (1,667
    )Operating income (loss)
    
    
    10,423
    
    
    
    20,009
    
    
    
    (20,690
    )
    
    
    9,742Investment income
    
    
    
    
    
    
    
    
    
    
    394
    
    
    
    394Other charges
    
    
    
    
    
    
    
    
    
    
    (2,240
    )
    
    
    (2,240
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (2,243
    )
    
    
    (2,243
    )Income (loss) before income taxes
    
    
    10,423
    
    
    
    20,009
    
    
    
    (24,779
    )
    
    
    5,653


For The Three Months Ended September 30, 2002Small
    
    Large
    
    Corporate
    
    ConsolidatedBusiness
    
    Business
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    41,084
    
    
    $
    36,087
    
    
    $
    
    
    
    $
    77,171Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (8
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (804
    )
    
    
    (804
    )Litigation settlement charges
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    (110
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Operating income (loss)
    
    
    15,585
    
    
    
    18,571
    
    
    
    (20,043
    )
    
    
    14,113Investment income
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    35Other charges
    
    
    
    
    
    
    
    
    
    
    (115
    )
    
    
    (115
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (3,404
    )
    
    
    (3,404
    )Income (loss) before income taxes
    
    
    15,585
    
    
    
    18,571
    
    
    
    (23,527
    )
    
    
    10,629


For The Nine Months Ended September 30, 2003Small
    
    Large
    
    Corporate
    
    ConsolidatedBusiness
    
    Business
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    117,556
    
    
    $
    114,734
    
    
    $
    
    
    
    $
    232,290Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    (145
    )
    
    
    (145
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (1,630
    )
    
    
    (1,630
    )Litigation settlement charges
    
    
    
    
    
    
    
    
    
    
    (1,667
    )
    
    
    (1,667
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    (54
    )Operating income (loss)
    
    
    41,006
    
    
    
    57,365
    
    
    
    (59,172
    )
    
    
    39,199Investment income
    
    
    
    
    
    
    
    
    
    
    1,222
    
    
    
    1,222Other charges
    
    
    
    
    
    
    
    
    
    
    (6,385
    )
    
    
    (6,385
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (9,500
    )
    
    
    (9,500
    )Income (loss) before income taxes
    
    
    41,006
    
    
    
    57,365
    
    
    
    (73,835
    )
    
    
    24,536


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For The Nine Months Ended September 30, 2002Small
    
    Large
    
    Corporate
    
    ConsolidatedBusiness
    
    Business
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    117,405
    
    
    $
    110,531
    
    
    $
    
    
    
    $
    227,936Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    (35
    )
    
    
    (35
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (1,616
    )
    
    
    (1,616
    )Litigation settlement charges
    
    
    
    
    
    
    
    
    
    
    (417
    )
    
    
    (417
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (175
    )
    
    
    (175
    )Operating income (loss)
    
    
    46,066
    
    
    
    58,615
    
    
    
    (61,795
    )
    
    
    42,886Investment income
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    133Other charges
    
    
    
    
    
    
    
    
    
    
    (5,355
    )
    
    
    (5,355
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (12,562
    )
    
    
    (12,562
    )Income (loss) before income taxes
    
    
    46,066
    
    
    
    58,615
    
    
    
    (79,579
    )
    
    
    25,102


4. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss), including the components of other
comprehensive income (loss), is as follows:

For The Three
    
    For The NineMonths Ended
    
    Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002(In thousands)
    
    (In thousands)Net income
    
    $
    3,632
    
    
    $
    6,404
    
    
    $
    15,212
    
    
    $
    15,496Other comprehensive income:Unrealized gain from
investments:Unrealized gains (losses)
    
    
    (57
    )
    
    
    (10
    )
    
    
    136
    
    
    
    (66
    )Related tax expense
    
    
    22
    
    
    
    4
    
    
    
    (52
    )
    
    
    25Net
    
    
    (35
    )
    
    
    (6
    )
    
    
    84
    
    
    
    (41
    )Interest rate swap agreement:Gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    850Related tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (323
    )Net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    527Pension plan:Unrealized gains (losses)
    
    
    (1,397
    )
    
    
    
    
    
    
    (1,397
    )
    
    
    Total other comprehensive income
    
    
    (1,432
    )
    
    
    (6
    )
    
    
    (1,313
    )
    
    
    486Comprehensive income
    
    $
    2,200
    
    
    $
    6,398
    
    
    $
    13,899
    
    
    $
    15,982


The components of accumulated other comprehensive income (loss) is as
follows:

Foreign
    
    
    
    
    
    AccumulatedUnrealized
    
    Currency
    
    Unrealized
    
    OtherGains/(Losses)
    
    Translation
    
    Gains / (Losses)
    
    ComprehensivePension plan
    
    Adjustments
    
    On Securities
    
    Income (Loss)(in thousands)Balance at September 30, 2003
    
    $
    (1,397
    )
    
    $
    (672
    )
    
    $
    (116
    )
    
    $
    (2,185
    )Balance at December 31, 2002
    
    $
    
    
    
    $
    (672
    )
    
    $
    (200
    )
    
    $
    (872
    )


5. ACQUISITIONS

Effective September 14, 2003, the Company purchased the assets of LTWC
Corporation (Markado), a provider of email marketing services. Total
consideration for the acquisition was cash of $1.0 million. The purchase price
for the acquisition has been preliminarily allocated to current assets of $0.3
million, property and equipment of $0.1 million and goodwill of $0.6 million.
The acquisition has been accounted for under the purchase method of accounting,
and accordingly, the operating results of Markado have been included in the
Companys financial statements since the date of acquisition.

Effective March 1, 2003, the Company acquired all issued and outstanding
common stock of Yesmail, Inc., a provider of email acquisition and retention
services. The acquisition has been accounted for under the purchase method of
accounting, and accordingly,


9Table of Contentsthe operating results of Yesmail, Inc. have been included in the Companys
financial statements since the date of acquisition. Total consideration for
the acquisition was cash of $5.0 million. The purchase price for the
acquisition had been preliminarily allocated to current assets of $3.1 million,
property and equipment of $1.4 million, current liabilities of $3.7 million and
goodwill of $4.2 million. The transaction is subject to purchase price
adjustment represented by an adjustment for finalized working capital and a
two-year escrow for other contingent items specified within the merger
agreement. During the second quarter of 2003, the Company recorded an
adjustment for finalized working capital resulting in a reclassification of
$1.0 million from goodwill to current assets and $0.2 million from goodwill to
current liabilities. Intangibles recorded as part of the purchase as of
September 30, 2003 total $3.4 million.Assuming Markado and Yesmail, Inc. had been acquired on January 1, 2002,
included in the accompanying consolidated statements of operations, unaudited
pro forma consolidated net sales, net income and net income per share would
have been as follows:For the three months ended
    
    For the nine months endedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002(In thousands, except per share amounts)(unaudited)Net sales
    
    $
    77,856
    
    
    $
    81,351
    
    
    $
    236,132
    
    
    $
    241,815Net income
    
    $
    3,685
    
    
    $
    3,729
    
    
    $
    13,303
    
    
    $
    3,022Basic earnings per share
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.26
    
    
    $
    0.06Diluted earnings per
share
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.26
    
    
    $
    0.06


The pro forma information provided above does not purport to be indicative
of the results of operations that would actually have resulted if the
acquisitions were made as of those dates or of results that may occur in the
future. Pro forma net income includes adjustments for amortization of
intangible assets and income taxes.6. NON-CASH STOCK COMPENSATION EXPENSEAt September 30, 2003, the Company has a nonqualified stock option plan.
The Company applies the intrinsic value based method of Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations in accounting for its stock option plan. No
stock-based employee compensation cost is reflected in net income, as all
options granted under the plan had an exercise price equal to the market value
of the underlying common stock on the date of grant. The Companys pro forma
net income and earnings per share would have been as indicated below had the
fair value of all option grants been charged to salaries, wages, and benefits
in accordance with SFAS No. 123, Accounting for Stock-Based Compensation:Three months ended
    
    Nine Months endedSeptember 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002Net income, as reported
    
    $
    3,632
    
    
    $
    6,404
    
    
    $
    15,212
    
    
    $
    15,496Less: Total stock-based employee compensation
expense determined under fair value based
method, net of taxes
    
    
    527
    
    
    
    635
    
    
    
    1,747
    
    
    
    2,037Net income, pro forma
    
    $
    3,105
    
    
    $
    5,769
    
    
    $
    13,465
    
    
    $
    13,459Earnings per share:Basic  as reported
    
    $
    .07
    
    
    $
    .12
    
    
    $
    .30
    
    
    $
    .30Basic  pro forma
    
    $
    .06
    
    
    $
    .11
    
    
    $
    .26
    
    
    $
    .26Diluted  as reported
    
    $
    .07
    
    
    $
    .12
    
    
    $
    .30
    
    
    $
    .30Diluted  pro forma
    
    $
    .06
    
    
    $
    .11
    
    
    $
    .26
    
    
    $
    .26


The above pro forma results are not likely to be representative of the
effects on reported net income for future years since options vest over several
years and additional awards generally are made each year.The fair value of the weighted average of option grants is estimated as of
the date of grant using the Black-Scholes option-pricing model with the
following assumptions used for grants in 2003 and 2002: expected volatility of
78.89% (2003) and 80.73% (2002), risk free interest rate of 4.67% (2003) and
4.84% (2002) based on the U.S. Treasury strip yield at the date of grant and
expected lives of 5 years.Compensation cost for stock options and warrants granted to non-employees
and vendors is measured based upon the fair value of the stock option or
warrant granted. When the performance commitment of the non-employee or vendor
is not complete as of the10Table of Contentsgrant date, the Company estimates the total compensation cost using a fair
value method at the end of each period. Generally, the final measurement of
compensation cost occurs when the non-employee or vendors related performance
commitment is complete. Changes, either increases or decreases, in the
estimated fair value of the options between the date of the grant and the final
vesting of the options result in a change in the measure of compensation cost
for the stock options or warrants. Compensation cost is recognized as expense
over the periods in which the benefit is received.During the second quarter of 2002, the Company granted non-qualified stock
options to a non-employee consultant of the Company in connection with a
consulting agreement executed by the Company. The options vest evenly over four
years and have a five-year life. The fair value of the option was estimated, as
of the grant date, using the Black-Scholes option pricing model with the
following assumptions: no dividend yield for any year, expected volatility of
78.89%, risk free interest rate of 4.67% and an expected life of 5 years. As
such, the Company has recorded a non-cash charge of $145 thousand, related to
stock options granted to the consultant during the nine months ended September
30, 2003. The charges were recorded as an addition to paid-in-capital. The
consulting agreement commits the Company to make cash payments of $675
thousand, $775 thousand and $200 thousand in 2003, 2004 and 2005 to the
consultant for services rendered. Expense recorded for the three months and
nine months ended September 30, 2003 for this consulting agreement was $175
thousand and $550 thousand, respectively and $292 thousand for the three months
and nine months ended September 30, 2002.7. RESTRUCTURING CHARGESDuring the three and nine months ended September 30, 2003, the Company
recorded restructuring charges due to workforce reductions of $645 thousand and
$1.6 million, respectively. The charges included involuntary employee
separation costs for 64 employees in administration, order production and data
processing support staff. As of September 30, 2003, an accrual of $410
thousand was included in the accompanying consolidated balance sheet for
severance costs remaining to be paid.During the three and nine months ended September 30, 2002, the Company
recorded restructuring charges due to workforce reductions of $804 thousand and
$1.6 million, respectively as a part of the Companys overall strategy to
reduce costs and continue commitment to its core businesses. The workforce
reduction charges included involuntary employee separation costs for 73
employees in administration, sales support and marketing functions.8. ACQUISITION COSTSThe Company recorded costs of $54 thousand and $175 thousand during the
nine months ended September 30, 2003 and 2002, respectively, for general and
administrative expenses incurred in connection with the integration of acquired
companies. These costs are not direct costs of acquisition and therefore
cannot be capitalized as part of the purchase price.9. OTHER CHARGESOn May 14, 2002, a principal of one of the acquisitions made by the Company in
1996 was awarded $1.7 million by an arbitrator for settlement of a dispute
regarding exercise of stock options issued by the Company. Although the
Company has appealed the arbitrators decision, the Companys management, under
advise from outside counsel, determined during the third quarter of 2003 that
the Company was not likely to be successful in the appeal. Consequently, the
Company recorded a litigation charge of $1.7 million during the three months
ended September 30, 2003, for the arbitrators award.During the nine months ended September 30, 2003, the Company purchased $67
million of its 91/2% Senior Subordinated Notes of which $11.5 million of the
notes were held by the Companys Chief Executive Officer. All purchases of
91/2% Senior Subordinated Notes occurred at the same price and under the same
terms. As part of these purchases, the Company recorded charges of $1.6
million for related net non-amortized debt issue costs and $3.1 million for
amounts paid in excess of carrying value of the debt.On May 27, 2003 the Company amended and restated the Senior Secured Credit
Facility administered by Bank of America, N.A. in order to take advantage of
lower interest rates and make significant redemptions of the 91/2% Senior
Subordinated Notes. The total credit available was increased from $115
million to $145 million. The existing term loans A and B were combined into a
single term loan of $100 million maturing April 30, 2007. In addition, the
revolving credit facility of $18 million was increased to $45 million and is
due May 27, 2006, reducing to $40 million on
April 1, 2004 and reducing to $35 million on April 1,
2005. The Company has expensed $0.8 million in non-amortized costs
associated with the issue of the previous11Table of Contentsfacility and $0.8 million in bank fees associated with the new facility,
which are classified as other charges in the statement of operations.During the nine months ended September 30, 2002, the Company wrote-off
deferred financing costs of $2.9 million in connection with the refinancing of
its Senior Secured Credit Facility. Additionally, the refinancing resulted in
a loss of $1.2 million for the reclassification of an interest rate swap
agreement from Other Comprehensive Income (Loss) included in the Companys
consolidated balance sheet. The Company also recorded a loss of $1.1 million
for an other-than-temporary decline in the value of a non-marketable equity
investment.10. RELATED PARTY TRANSACTIONSDuring 2003, the Company purchased the rights to a skybox at a local
university for $617 thousand from Annapurna Corporation, which is 100% owned by
Mr. Gupta, the Companys Chief Executive Officer. The cost covers the
remaining 21 years of the lease and has been recorded in other assets on the
accompanying consolidated balance sheet. Expense recognized for the three and
nine months ended September 30, 2003 was $7 thousand and $10 thousand,
respectively.During 2003, the Company purchased $11.5 million of its 91/2% Senior
Subordinated Notes from Mr. Gupta at the same terms and prices offered to
unrelated parties.Mr. Gupta was eligible for a cash bonus in 2002 based on Company
performance. The criteria for Mr. Guptas bonus specifies that he would receive
10% of the Companys adjusted EBITDA in excess of $80 million. In January 2002,
the Company paid an advance of $1.5 million to Mr. Gupta (based on the
Companys 2001 performance) to be off set against any 2002 bonus payable to Mr.
Gupta pursuant to his bonus program. The advance was to be applied to part or
his entire 2002 bonus or paid back by Mr. Gupta by January 2004. In May 2002,
Mr. Gupta paid back $0.6 million of the original advance, leaving an advance
balance of $0.9 million. Mr. Guptas 2002 bonus has been determined to be $0.4
million. The remaining balance of $0.5 million is classified as Officer Note
Receivable in the accompanying Balance Sheet.11. GOODWILL AND OTHER INTANGIBLE ASSETSIntangible assets consist of the following:September 30,
    
    December 31,2003
    
    2002(In thousands)Goodwill
    
    $
    273,560
    
    
    $
    262,417Non-compete agreements
    
    
    13,534
    
    
    
    13,534Core technology
    
    
    4,800
    
    
    
    4,800Customer base
    
    
    8,372
    
    
    
    8,372Trade names
    
    
    15,802
    
    
    
    15,802Purchased data processing software
    
    
    73,478
    
    
    
    73,478Acquired database costs
    
    
    19,000
    
    
    
    19,000Perpetual software license agreement
    
    
    8,000
    
    
    
    8,000Software development costs, net
    
    
    2,379
    
    
    
    5,565Deferred financing costs
    
    
    8,207
    
    
    
    8,845427,132
    
    
    
    419,813Less accumulated amortization
    
    
    163,150
    
    
    
    146,567$
    263,982
    
    
    $
    273,246


12. CONTINGENCIESThe Company and its subsidiaries are involved in legal proceedings, claims
and litigation arising in the ordinary course of business. Management believes
that any resulting liability should not materially affect the Companys
financial position, results of operations, or cash flows.12Table of ContentsITEM 2.infoUSA INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONSGENERALThe Company is a leading provider of business and consumer information,
data processing and database marketing services. The Companys key assets
include proprietary databases of 14 million businesses and 220 million
consumers in the United States and Canada. We believe our proprietary content
is the most comprehensive and accurate data available. We leverage these key
assets by selling through multiple distribution channels to over 4 million
customers that include small and medium-size businesses, Fortune 1000
companies, consumers, and Internet users.The Company has supplemented its internal growth through strategic
acquisitions and has completed over 20 acquisitions since mid 1996. The
Company has increased its presence in the consumer marketing information
industry, greatly increased its ability to provide data processing solutions,
increased its presence in list management and list brokerage services and
broadened its offerings for e-mail and business marketing information. During
2002 and 2003, the Company completed the integration of Polk City Directories
and enhanced its presence in e-mail marketing, e-mail customer retention and
e-mail customer acquisition services with the purchase of DoubleClicks email
deployment business, ClickAction, Yesmail and Markado. The Company also
continued to consolidate the printed and online directory industry with its
acquisition of Hill-Donnelly and City Publishing directory companies.Since 1996, the Company has systematically integrated the operations of
the acquired companies into existing operations of the Company. In most cases,
the results of operations for these acquired activities are no longer
separately accounted for from existing activities. The Company cannot report
the results of the operations of acquired companies upon completion of the
integration as the results are commingled with existing results.
Additionally, upon integration of the acquired operations, the Company
frequently combines acquired products or features with existing products, and
experiences significant cross selling of products between business units,
including sales of acquired products by existing business units and sales by
acquired business units of existing products. Due to recent and potential
future acquisitions, future results of operations will not be comparable to
historical data.This discussion and analysis contains forward-looking statements,
including without limitation statements in the discussion of comparative
results of operations, accounting standards and liquidity and capital
resources, within the meaning of Section 21E of the Securities Exchange Act of
1934 and Section 27A of the Securities Act of 1933, which are subject to the
safe harbor created by those sections. The Companys actual future results
could differ materially from those projected in the forward-looking statements.
Some factors which could cause future actual results to differ materially from
the companys recent results or those projected in the forward-looking
statements are described in Factors that May Affect Operating Results below.
The Company assumes no obligation to update the forward-looking statement or
such factors.13Table of ContentsRESULTS OF OPERATIONSThe following table sets forth, for the periods indicated, selected
financial information and other data. The amounts and related percentages may
not be fully comparable due to acquisitions.THREE MONTHS
    
    THREE MONTHS
    
    NINE MONTHS
    
    NINE MONTHSENDED
    
    ENDED
    
    ENDED
    
    ENDEDSeptember 30, 2003
    
    September 30, 2002
    
    September 30, 2003
    
    September 30, 2002CONSOLIDATED STATEMENT OF OPERATIONS DATA:Net sales
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Costs and expenses:Database and production costs
    
    
    28
    
    
    
    27
    
    
    
    28
    
    
    
    28Selling, general and administrative
    
    
    47
    
    
    
    45
    
    
    
    44
    
    
    
    43Depreciation and amortization
    
    
    9
    
    
    
    9
    
    
    
    9
    
    
    
    9Non-cash stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring charges
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Litigation settlement charge
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    Acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    87
    
    
    
    82
    
    
    
    83
    
    
    
    81Operating income
    
    
    13
    
    
    
    18
    
    
    
    17
    
    
    
    19Other expense, net
    
    
    (5
    )
    
    
    (5
    )
    
    
    (6
    )
    
    
    (8
    )Income before income taxes
    
    
    7
    
    
    
    13
    
    
    
    11
    
    
    
    11Income taxes
    
    
    2
    
    
    
    5
    
    
    
    4
    
    
    
    5Net income
    
    
    5
    %
    
    
    8
    %
    
    
    7
    %
    
    
    6
    %OTHER DATA:SALES BY SEGMENT:
    
    
    
    
    
    (in thousands)Small business
    
    $
    37,902
    
    
    $
    41,084
    
    
    $
    117,556
    
    
    $
    117,405Large business
    
    
    39,477
    
    
    
    36,087
    
    
    
    114,734
    
    
    
    110,531Total
    
    $
    77,379
    
    
    $
    77,171
    
    
    $
    232,290
    
    
    $
    227,936SALES BY SEGMENT AS A PERCENTAGE OF NET SALES:Small business
    
    
    49
    %
    
    
    53
    %
    
    
    51
    %
    
    
    52
    %Large business
    
    
    51
    
    
    
    47
    
    
    
    49
    
    
    
    48Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Amortization expense of intangible assets (1)
    
    $
    3,310
    
    
    $
    3,325
    
    
    $
    9,960
    
    
    $
    9,986Earnings before, interest, taxes, depreciation and
amortization, (EBITDA), as adjusted (2)
    
    $
    16,824
    
    
    $
    20,926
    
    
    $
    60,558
    
    
    $
    63,979EBITDA, as adjusted, as a percentage of net sales
    
    
    22
    %
    
    
    27
    %
    
    
    26
    %
    
    
    28
    %Cash Flow Data:
    
    
    
    
    
    
    
    
    
    (in thousands)Net cash from operating activities
    
    
    
    
    
    
    
    
    
    $
    37,544
    
    
    $
    35,629Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    $
    (9,892
    )
    
    $
    (10,758
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    $
    (30,796
    )
    
    $
    (27,694
    )

(1) This represents amortization expense recorded by the Company on amortizable
intangible assets recorded as part of the acquisition of other companies, and
excludes amortization related to deferred financing costs, software development
costs and other intangible assets not recorded as part of an acquisition of
another company.(2) EBITDA, as adjusted, is defined as net income adjusted to exclude
depreciation and amortization, non-cash impairment of assets,
non-operating other charges, income taxes,
interest expense, investment income and non-cash stock compensation expenses. EBITDA is presented because
it is a widely accepted measure of performance that eliminates the effects of a
variety of methods used for deprecation and amortization that have changed over
time. However, EBITDA, does not purport to represent cash provided by
operating activities as reflected in the Companys consolidated statements of
cash flows, is not a measure of financial performance under generally accepted
accounting principles (GAAP) and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with GAAP.
Also, the measure of EBITDA, may not be comparable to similar measures reported
by other companies.14Table of ContentsThe following provides a reconciliation of net income to EBITDA, as
adjusted:Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002Net income
    
    $
    3,632
    
    
    $
    6,404
    
    
    $
    15,212
    
    
    $
    15,496Other charges
    
    
    2,240
    
    
    
    115
    
    
    
    6,385
    
    
    
    5,355Investment income
    
    
    (394
    )
    
    
    (35
    )
    
    
    (1,222
    )
    
    
    (133
    )Interest expense
    
    
    2,243
    
    
    
    3,404
    
    
    
    9,500
    
    
    
    12,562Income taxes
    
    
    2,021
    
    
    
    4,225
    
    
    
    9,324
    
    
    
    9,606Depreciation and amortization
    
    
    7,006
    
    
    
    6,805
    
    
    
    21,214
    
    
    
    21,058Non-cash stock compensation
    
    
    76
    
    
    
    8
    
    
    
    145
    
    
    
    35EBITDA, as adjusted
    
    $
    16,824
    
    
    $
    20,926
    
    
    $
    60,558
    
    
    $
    63,979


Net salesNet sales of the Company for the quarter ended September 30, 2003 were
$77.4 million compared to $77.2 million for the same period of 2002, an
increase of less than 1%. Net sales of the Company for the nine months ended
September 30, 2003 were $232.3 million compared to $227.9 million for the same
period of 2002, an increase of 2%.Net sales of the small business segment for the quarter ended September
30, 2003 were $37.9 million, compared to $41.1 million for the same period of
2002, a decrease of $3.2 million or 8%. The decrease was principally due to a
decline in net sales for Polk City Directories, a subsidiary of the Company.
Net sales of the small business segment for the nine months ended September 30,
2003 were $117.6 million, compared to $117.4 million for the same period of
2002, an increase of less than 1%. The small business segment principally
engages in the selling of sales lead generation and consumer DVD products to
small to medium sized companies, small office and home office businesses and
individual consumers. This segment also includes the sale of content via the
Internet.Net sales of the large business segment for the quarter ended September
30, 2003 were $39.5 million compared to $36.1 million for the same period of
2002, an increase of 9%. Net sales of the large business segment for the nine
months ended September 30, 2003 were $114.7 million compared to $110.5 million
for the same period of 2002, an increase of 4%. The increase was principally
due to the acquisition of ClickAction in December 2002 and Yesmail in March
2003. The large business segment principally engages in the selling of data
processing services, licensed databases, database marketing solutions, e-mail
marketing solutions and list brokerage and list management services to large
companies. This segment includes the licensing of databases for Internet
directory assistance services.Database and production costsDatabase and production costs for the quarter ended September 30, 2003
were $21.4 million, or 28% of net sales, compared to $20.6 million, or 27% of
net sales for the same period of 2002. Database and production costs for the
nine months ended September 30, 2003 were $64.6 million, or 28% of net sales,
compared to $63.2 million, or 28% of net sales for the same period of 2002.Selling, general and administrative expensesSelling, general and administrative expenses for the quarter ended
September 30, 2003 were $36.8 million, or 47% of net sales, compared to $34.7
million, or 45% of net sales for the same period of 2002. Selling, general and
administrative expenses for the nine months ended September 30, 2003 were
$103.8 million, or 44% of net sales, compared to $98.6 million, or 43% of net
sales for the same period of 2002. The increase in selling, general and
administrative expenses principally relates to the Companys planned increase
in direct marketing costs and the addition of sales staff, beginning during the
quarter ended September 30, 2003. Additionally, the increase is partially due
to the acquisition of various companies during 2002 and 2003, including
Hill-Donnelly, City Publishing, and the e-mail list business of DoubleClick,
ClickAction and Yesmail. These acquired companies historically had higher
operating sales and marketing cost structures than the Companys existing
businesses. The increase in selling, general and administrative
expenses was partially offset by a decrease in bad debt expense
totaling $0.6 million during the nine months ended
September 30, 2003. The decrease in bad debt expense corresponds
with the decrease in the Companys total trade accounts
receivable outstanding and days sales outstanding (DSO)
ratio.Depreciation and amortization expensesDepreciation and amortization expenses for the quarter ended September 30,
2003 were $7.0 million, or 9% of net sales, compared to $6.8 million, or 9% of
net sales for the same period of 2002. Depreciation and amortization expenses
for the nine months ended September 30, 2003 were $21.2 million, or 9% of net
sales, compared to $21.1 million, or 9% of net sales for the same period of
2002.15Table of ContentsThe Company adopted SFAS No. 142, Goodwill and Other Intangible Assets
as of January 1, 2002. SFAS No. 142 requires the
Company to complete an annual impairment test on goodwill and other intangible
assets with an indefinite life rather than record amortization expense on those
assets. We currently do not expect to record an impairment charge, however,
there can be no assurance that at the time a review is completed a material
impairment charge will not be recorded.Restructuring costsDuring the quarter ended September 30, 2003, the Company recorded
restructuring charges due to workforce reductions of $0.6 million as part of
the Companys continuing strategy to reduce costs and further consolidate data
processing operations. The workforce reduction charges included involuntary
employee separation costs for 64 employees. During the nine months ended
September 30, 2003, the Company recorded restructuring charges due to workforce
reductions of $1.6 million for the involuntary employee separation costs for
179 employees.During the three and nine months ended September 30, 2002, the Company
recorded restructuring charges due to workforce reductions of $0.8 million and
$1.6 million, respectively, as a part of the Companys continuing strategy to
reduce costs and focus on core operations. The workforce reduction charges
included involuntary employee separation costs for 73 employees for the nine
months ended September 30, 2002.Acquisition costsThe Company recorded costs of $54 thousand and $175 thousand during the
nine months ended September 30, 2003 and 2002, respectively, for general and
administrative expenses incurred in connection with the integration of acquired
companies. These costs are not direct costs of acquisition and therefore
cannot be capitalized as part of the purchase price.Operating incomeIncluding the factors previously described, the Company had operating
income of $9.7 million, or 13% of net sales for the quarter ended September 30,
2003, compared to operating income of $14.1 million, or 18% of net sales for
the same period in 2002. The Company had operating income of $39.2 million, or
17% of net sales for the nine months ended September 30, 2003, compared to
operating income of $42.9 million, or 19% of net sales for the same period in
2002. The decrease in operating income as a percentage of net sales
is a result of the following items: 1) the Companys planned
increase in direct marketing costs and the addition of sales staff,
beginning during the quarter ended September 30, 2003; 2) a
decline in net sales for Polk City Directories during the quarter
ended September 30, 2003; 3) a litigation settlement charge
of $1.7 million recorded during the quarter ended
September 30, 2003; and 4) increased operating expenses
represented as percentage of net sales associated with companies
acquired during 2002 and 2003 including City Publishing,
Hill-Donnelly, ClickAction and Yesmail.Operating income for the small business segment for the quarter ended
September 30, 2003 was $10.4 million, or 27% of net sales, as compared to $15.6
million, or 38% of net sales for the same period in 2002. Operating income for
the small business segment for the nine months ended September 30, 2003 was
$41.0 million, or 35% of net sales, as compared to $46.1 million, or 39% of net
sales for the same period in 2002. The decrease in operating income as a
percentage of net sales principally relates to the Companys planned increase
in direct marketing costs and the addition of sales staff, beginning during the
quarter ended September 30, 2003. Additionally, the decrease is partially due
to a decline in net sales for Polk City Directories and increased operating
expenses represented as a percentage of net sales associated with companies
acquired during 2002 and 2003 including City Publishing and Hill-Donnelly.Operating income for the large business segment for the quarter ended
September 30, 2003 was $20.0 million, or 51% of net sales, as compared to $18.6
million, or 51% of net sales for the same period in 2002. Operating income for
the large business segment for the nine months ended September 30, 2003 was
$57.4 million, or 50% of net sales, as compared to $58.6 million, or 53% of net
sales for the same period in 2002. The decrease in operating income as a
percentage of net sales is principally due to increased operating expenses
represented as a percentage of net sales associated with companies acquired
during 2002 and 2003 including ClickAction and Yesmail.Other income (expense), netOther income (expense) net, was $(4.1) million, or (5)% of net sales, and
$(3.5) million, or (5)% of net sales, for the quarters ended September 30, 2003
and 2002, respectively. Other income (expense) net, was $(14.7) million, or
(6)% of net sales, and $(17.8) million, or (8)% of net sales, for the nine
months ended September 30, 2003 and 2002, respectively. Other income (expense)
is comprised of interest expense, investment income and other income or expense
items, which do not represent components of operating income (expense) of the
Company.Interest expense was $2.2 million and $3.4 million for the quarters ended
September 30, 2003 and 2002, respectively. Interest16Table of Contentsexpense was $9.5 million
and $12.6 million for the nine months ended September 30, 2003 and 2002,
respectively. Interest expense
has decreased due to the continued reduction in the amount of total debt
outstanding and favorable interest rates. Investment income was $394 thousand
and $35 thousand for the quarters ended September 30, 2003 and 2002.
Investment income was $1.2 million and $133 thousand for the nine months ended
September 30, 2003 and 2002.During 1999 in conjunction with the acquisition of Donnelley, the Company
negotiated a credit arrangement (Senior Debt Credit Facility). According to
the terms of the Senior Debt Credit Facility, the Company entered into an
interest rate swap agreement with Union Bank of California, to fix the rate on
$60.5 million of the debt at an interest rate of 6.385% for the term of 3
years. On March 6, 2002, the Company refinanced the Senior Debt Credit
facility with Bank of America, N.A. As a result of the refinancing, the
Company recorded a charge of $1.2 million (classified with other non-operating
charges) for amounts reported in Other Comprehensive Income related to the fair
value of the interest rate swap agreement. Also during the quarter ended
September 30, 2002, the Company wrote-off deferred financing costs of $2.9
million in connection with the refinancing of its Senior Debt Credit Facility
as described above. On May 27, 2003 the Bank of America Senior Secured Credit
Facility was amended and restated to increase the credit available from $115
million to $145 million to facilitate the partial redemption of the Companys
91/2% Senior Subordinated Notes. As a result of the refinancing, the Company
expensed $0.8 million in non-amortized deferred financing costs associated with
the issue of the previous facility and $0.7 million in bank fees associated
with the new facility. During the nine months ended September 30, 2003, the
Company purchased $67 million of its 91/2% Senior Subordinated Notes. As
part of these purchases, the Company recorded charges of $1.6 million for
related net non-amortized debt issue costs and $3.1 million for amounts paid in
excess of carrying value of the debt.Income taxesA provision for income taxes of $2.0 million and $4.2 million was recorded
for the quarters ended September 30, 2003 and 2002, respectively. A provision
for income taxes of $9.3 million and $9.6 million was recorded for the nine
months ended September 30, 2003 and 2002, respectively.EBITDAThe
Companys EBITDA, as adjusted was $16.8 million, or 22% of net sales and $20.9
million, or 27% of net sales for the quarters ended September 30, 2003 and
2002, respectively. EBITDA as adjusted was $60.6 million, or 26% of net sales and $64.0
million, or 28% of net sales for the nine months ended September 30, 2003 and
2002, respectively. EBITDA, as adjusted, is defined as net income adjusted to
exclude depreciation and amortization, non-cash impairment of assets,
non-operating other charges, income
taxes, interest expense, investment income and non-cash stock compensation expenses.LIQUIDITY AND CAPITAL RESOURCESConsolidated Statements of Cash Flows Information:As of September 30, 2003, the Companys principal sources of liquidity
included cash and cash equivalents of $3.1 million, and $25.5 million available
under the revolving credit facility described above. As of September 30, 2003,
the Company had a working capital deficit of $12.8 million.Net cash provided by operating activities during the nine months ended
September 30, 2003, totaled $37.5 million compared to $35.6 million during the
same period of 2002.During the nine months ended September 30, 2003, the Company spent $4.7
million for additions of property and equipment, $0.7 million related to
software and database development costs, $5.5 million for the acquisition of
businesses and a net amount of $37.0 million on the repayment of long-term
debt.The amended Senior Secured Credit Facility provides for a term loan of
$100 million due April 30, 2007 ($92.5 million outstanding at September 30, 2003)
and $45.0 million ($19.5 million outstanding at September 30, 2003) under a
revolving credit facility due May 2006, reduces to
$40 million on April 1, 2004 and reducing to
$35 million on April 1, 2005.The Senior Secured Credit Facility provides for grid-based interest
pricing based upon the Companys consolidated leverage ratio and ranges from
base rate + 1.00% to 2.00% for base rate loans and from LIBOR + 2.00% to 3.00%
for LIBOR loans for use of the revolving credit facility for loans of up to
$45.0 million. The term loan interest rate is base rate +3.00% or LIBOR +
4.00%.17Table of ContentsSubstantially all of the assets of the Company are pledged as security
under the terms of the credit facility. As of December 31, 2002,
term loan A had a balance of $34.3 million, with an interest rate of
4.30% and term loan B had a balance of $40.8 million, with an interest rate
of 4.80% under the previous credit agreement. At September 30, 2003, the term
loan had a balance of $92.5 million with an interest rate of 5.1% and $25.5
million was available under the revolving credit facility. Additionally, the
Company is required to pay a commitment fee of between 0.35% and 0.50%,
dependent on the consolidated leverage ratio, on the average unused amount of
the revolving credit facility.The Company is subject to certain financial covenants in its various
credit facilities, including total funded debt leverage ratio, senior debt
leverage ratio, fixed charge coverage ratio, net worth and minimum consolidated
EBITDA. The Company was in compliance with all restrictive covenants of the
Companys various credit facilities at September 30, 2003.The Company believes that its existing sources of liquidity and cash
generated from operations will satisfy the Companys projected working capital,
debt repayments and other cash requirements for at least the next 12 months.
Acquisitions of other technologies, products or companies, or internal product
development efforts may require the Company to obtain additional equity or debt
financing, which may not be available or may be dilutive.CONSOLIDATED BALANCE SHEET INFORMATION:Trade accounts receivable decreased from $40.6 million at September 30,
2002 to $34.2 million at September 30, 2003, with related days sales
outstanding (DSO) decreasing to 40 days for the quarter ended September 30,
2003 from 47 days for the same period in 2002. The allowance for bad debts has
been reduced from 9% of trade accounts receivable to 8% of trade accounts
receivable during the quarter ended September 30, 2003 primarily due to the
reduction in DSO and better credit and collection techniques.RECENT ACCOUNTING PRONOUNCEMENTSIn September 2001, the FASB released SFAS No. 143, Accounting for Asset
Retirement Obligations, which addresses financial accounting and reporting for
obligations associated with retirement of tangible long-lived assets and the
associated asset retirement costs. SFAS No. 143 requires recognition of asset
retirement obligations as a liability rather than a contra-asset. SFAS No. 143
is effective for the Companys fiscal year ending December 31, 2003. SFAS No.
143 did not impact the Companys consolidated financial statements.In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical
Corrections. SFAS No. 145, among other things, rescinds SFAS No. 4 which
required all gains and losses from the extinguishments of debt to be classified
as an extraordinary item and amends SFAS No. 13 to require that certain lease
modification that have economic effect similar to sale-leaseback transactions
be accounted for in the same manner as sale-leaseback transactions. Upon
adoption of the new accounting standard in 2003, the Company reclassified the
extraordinary item of $1.8 million related to the extinguishment of debt as
reported in the 2002 consolidated statement of operations. The
reclassification increased other non-operating expense by $2.9 million and
decreased income tax expense by $1.1 million.In June 2002, the FASB released SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which addresses accounting and
reporting for costs associated with exit or disposal activities, and nullifies
EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to exit an Activity. SFAS No. 146 addresses involuntary one-time
employee termination benefits, cost to terminate a contract that is not a
capital lease, and other associated exit costs. Existing accounting guidelines
require companies to recognize a liability when management commits itself or
announces plans to exit or dispose of an activity. SFAS No. 146 will prohibit
companies from recognizing an exit or disposal liability that cannot be
measured at fair value. The Company has applied the provisions of SFAS No. 146
for liability recognition for disposal activities that have been initiated
after December 31, 2002.In May 2003, the Emerging Issues Task Force of the FASB issued EITF 00-21,
Revenue Arrangements with Multiple Deliverables.EITF 00-21 addresses how to
determine whether an arrangement involving multiple deliverables contains more
than one unit of accounting. EITF 00-21 is effective for revenue arrangements
entered into in fiscal periods beginning after June 15, 2003. EITF 00-21 has
not had a material impact on the Companys consolidated financial statements.18Table of ContentsIn November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others, an
interpretation of SFAS No. 5, 57 and 107 and rescission of FASB Interpretation
No. 34. This interpretation requires additional disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also specifies the
requirements for liability recognition (at fair value) for obligations
undertaken in issuing the guarantee. The disclosure requirements are effective
for interim and annual financial statements ending after December 15, 2002,
(December 31, 2002 financial statements for calendar year companies). The
initial recognition and measurement provisions are effective for all guarantees
within the scope of Interpretation 45 issued or modified after December 31,
2002. Interpretation No. 45 does not have a material impact on the Companys
consolidated financial statements.In April 2003, the Financial Accounting Standards Board (FASB) issued SFAS
No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities.This statement amends and clarifies financial accounting and
reporting for derivative instruments and for hedging activities under SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities.As of
September 30, 2003, management believes that SFAS No. 149 does not have a
significant effect on the financial position, results of operations, and cash
flows of the Company.In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
This statement requires that an issuer classify a financial instrument that is
within its scope as a liability. The provisions of this statement are
effective for financial instruments entered into of modified after May 31,
2003. As of September 30, 2003, management believes that SFAS No. 150 has no
significant effect on the financial position, results of operations, and cash
flows of the Company.In January 2003, the FASB issued FASB interpretation No. 46, Consolidation
of Variable Interest Entities.FIN no. 46 address consolidation by business
enterprises of certain variable interest entities. The provisions of FIN No.
46 are effective immediately for variable interest entities created after
January 31, 2003 and for variable interest entities in which an enterprise
obtains an interest after that date. The provisions are effective in the first
fiscal year of interim period beginning after December 15, 2003, for variable
interest entities in which an enterprise hold a variable interest that it
acquired before February 1, 2003. The Company does not believe FIN No. 46 will
have a material impact on the financial position, results of operations, and
cash flows of the Company.FACTORS THAT MAY AFFECT OPERATING RESULTSOur Internet strategy is subject to review and revision.Our Internet strategy is to leverage our proprietary content into multiple
vertical market applications and provide marketing solutions for electronic
commerce applications. The strategy we introduced in fiscal 2000  of being an
incubator of Internet database companies  has been revised to a strategy of
developing more efficient and profitable applications of our content through
the Internet. We cannot guarantee that our customers will choose to have our
products and services delivered to them over the Internet. If we are successful
in developing Internet applications, we may face strong competition from
current and potential competitors, including other Internet companies and other
providers of business and consumer databases. We will review our Internet
strategy from time to time and may continue to revise it.Our markets are highly competitive and many of our competitors have greater
resources than we do.The business and consumer marketing information industry in which we
operate is highly competitive. Intense competition could harm us by causing,
among other things, price reductions, reduced gross margins, and loss of market
share. Our competition includes:
    
    In consumer sales lead generation products, Acxiom, Experian (a
subsidiary of Great Universal Stores, P.L.C. (GUS)), and Equifax, both
directly and through reseller networks.
    
    In data processing services, Acxiom, Experian, Direct Marketing
Technologies (a subsidiary of GUS), and Harte-Hanks Communications, Inc.
    
    In business sales lead generation products, Experian and Duns
Marketing Services (DMS), a division of Dun & Bradstreet. DMS, which
relies upon information compiled from Dun & Bradstreets credit
database, tends to focus on marketing to large companies.
    
    In business directory publishing, from Regional Bell Operating
Companies and many smaller, regional directory publishers.


19Table of Contents
    
    In consumer products, certain smaller producers of CD-Rom products.
    
    Technologies which companies may install and implement in-house as
part of their internal IS functions, instead of purchasing or
outsourcing such functions.In addition, we may face competition from new entrants to the business and
consumer marketing information industry as a result of the rapid expansion of
the Internet, which creates a substantial new channel for distributing business
information to the market. Many of our competitors have longer operating
histories, better name recognition and greater financial resources than we do,
which may enable them to implement their business strategies more readily than
we can.We are highly leveraged. If we are unable to service our debt as it becomes
due, our business would be harmed.As of September 30, 2003, we had total indebtedness of approximately
$153.4 million, including $30.0 million of Notes under an indenture (the
Indenture) and $112 million under a $145 million Senior Secured Credit
Agreement. Substantially all of our assets are pledged as security under the
terms of the Senior Secured Credit Agreement. The indebtedness under the Senior
Secured Credit Agreement was refinanced March 6, 2002 (amended and restated May
27, 2003) and originally incurred in connection with our acquisition of
Donnelley Marketing in 1999. Our ability to pay principal and interest on the
Notes issued under the Indenture and the indebtedness under the Senior Secured
Credit Agreement and to satisfy our other debt obligations will depend upon our
future operating performance. Our performance will be affected by prevailing
economic conditions and financial, business and other factors. Certain of these
factors are beyond our control. The future availability of revolving credit
under the Senior Secured Credit Agreement will depend on, among other things,
our ability to meet certain specified financial ratios and maintenance tests.
We expect that our operating cash flow should be sufficient to meet our
operating expenses, to make necessary capital expenditures and to service our
debt requirements as they become due. If we are unable to service our
indebtedness, however, we will be forced to take actions such as reducing or
delaying acquisitions and/or capital expenditures, selling assets,
restructuring or refinancing our indebtedness (including the Notes issued under
the Indenture and the Senior Secured Credit Agreement) or seeking additional
equity capital. We may not be able to implement any such measures or obtain
additional financing.The terms of our current indebtedness restrict our ability to take certain
actions that fit our business strategy.Our existing credit facilities contain certain covenants which restrict
our ability to:
    
    Incur additional indebtedness;
    
    Pay dividends and make certain other similar payments;
    
    Guarantee indebtedness of others;
    
    Enter into certain transactions with affiliates;
    
    Consummate certain asset sales, certain mergers and consolidations,
sales or other dispositions of all or substantially all of our assets
    
    Acquire other companies; and
    
    Obtain dividends or certain other payments from our subsidiaries.These restrictions may impair our ability to take certain actions that fit
our business strategy. A breach of any of these covenants could result in an
event of default under the terms of our existing credit facilities. Upon the
occurrence of an event of default, the lenders could elect to declare all
amounts outstanding, together with accrued interest, to be immediately due and
payable. If the payment of any such indebtedness is accelerated, our assets may
not be sufficient to repay in full the indebtedness under our credit facilities
and our other indebtedness. Moreover, if we were unable to repay amounts owed
to the lenders under our credit facilities, the lenders could foreclose on our
assets that secure the indebtedness.Under the terms of our current indebtedness, the occurrence of a change of
control of infoUSA could have serious adverse financial consequences to us.


20Table of ContentsIf a change of control of infoUSA were to occur, we would in certain
circumstances be required to make an offer to purchase all outstanding Notes
under the Indenture at a purchase price equal to 101% of the principal amount
of the Notes, together with accrued and unpaid interest. There can be no
guarantee that, if this were to happen, we would have sufficient funds to
purchase the Notes. In addition, a change of control and any repurchase of the
Notes upon a change of control may constitute an event of default under our
other current or future credit facilities. In that event, our obligations under
such credit facilities could be declared due and payable by the lenders, and
the lenders may also have the right to be paid for all outstanding obligations
under such credit facilities before we repurchase any of the Notes.Fluctuations in our operating results may result in decreases in the market
price of our common stock.Our operating results may fluctuate on a quarterly and annual basis. Our
expense levels are relatively fixed and are based, in part, on our expectations
as to future revenues. As a result, unexpected changes in revenue levels may
have a disproportionate effect on operating performance in any given period. In
some period or periods our operating results may be below the expectations of
public market analysts and investors. Our failure to meet analyst or investor
expectations could result in a decrease in the market price of our common
stock.If we do not adapt our products and services to respond to changes in
technology, they could become obsolete.We provide marketing information and services to our customers in a
variety of formats, including printed formats, electronic formats such as
CD-Rom and DVD, and over the Internet. Advances in information technology may
result in changing customer preferences for products and product delivery
formats. If we do not successfully adapt our products and services to take
advantage of changes in technology and customer preferences, our business,
financial condition and results of operations would be adversely affected.We have adopted an Internet strategy because we believe that the Internet
represents an important and rapidly evolving market for marketing information
products and services. Our business, financial condition and results of
operations would be adversely affected if we:
    
    Fail to develop products and services that are well suited to the
Internet market;
    
    Experience difficulties that delay or prevent the successful
development, introduction and marketing of these products and services;
or
    
    Fail to achieve sufficient traffic to our Internet sites to generate
significant revenues, or to successfully implement electronic commerce
operations.Changes in laws and regulations relating to data privacy could adversely affect
our business.We engage in direct marketing, as do many of our customers. Certain data
and services provided by us are subject to regulation by federal, state and
local authorities in the United States as well as those in Canada and the
United Kingdom. In addition, growing concerns about individual privacy and the
collection, distribution and use of information about individuals have led to
self-regulation of such practices by the direct marketing industry through
guidelines suggested by the Direct Marketing Association and to increased
federal and state regulation. There is increasing awareness and concern among
the general public regarding marketing and privacy concerns, particularly as it
relates to the Internet. This concern is likely to result in new laws and
regulations. Compliance with existing federal, state and local laws and
regulations and industry self-regulation has not to date seriously affected our
business, financial condition or results of operations. Nonetheless, federal,
state and local laws and regulations designed to protect the public from the
misuse of personal information in the marketplace and adverse publicity or
potential litigation concerning the commercial use of such information may
increasingly affect our operations. This could result in substantial regulatory
compliance or litigation expense or a loss of revenue.Our business would be harmed if we do not successfully integrate future
acquisitions.Our business strategy includes continued growth through acquisitions of
complementary products, technologies or businesses. We have made over 20
acquisitions since mid-1996 and completed the integration of these acquisitions
into our existing business. We continue to evaluate strategic opportunities
available to us and intend to pursue opportunities that we believe fit our
business strategy.21Table of ContentsAcquisitions of companies, products or technologies may
result in the diversion of managements time and attention from day-to-day
operations of our business and may entail numerous other risks, including
difficulties in assimilating and integrating acquired operations, databases,
products, corporate cultures and personnel, potential loss of key employees of
acquired businesses, difficulties in applying our internal controls to acquired
businesses, and particular problems, liabilities or contingencies related to
the businesses being acquired. To the extent our efforts to integrate future
acquisitions fail, our business, financial condition and results of operations
would be adversely affected.

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe Company is exposed to material future earnings or cash flow exposures
from changes in interest rates as more than 50% of the Companys debt is not at
fixed rates. At September 30, 2003, the fair value of the Companys long-term
debt is based on quoted market prices at the reporting date or is estimated by
discounting the future cash flows of each instrument at rates currently offered
to the Company for similar debt instruments of comparable maturities. At
September 30, 2003, the Company had long-term debt with a carrying value of
$153.4 million and estimated fair value of the same. The Company has no
significant operations subject to risks of foreign currency fluctuations.

ITEM 4.
CONTROLS AND PROCEDURESAs of September 30, 2003, the Company carried out an evaluation, under the
supervision and with the participation of the Companys management, including
the Companys Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure controls
and procedures, as defined in Exchange Act Rule 15d-15(e) and Rule 13a-15(e).
Based upon that evaluation, the Companys Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and
procedures were effective in enabling the Company to record, process, summarize
and report information required to be included in the Companys periodic SEC
filings within the required time period. There have been no changes in internal
controls over financial reporting that has materially affected, or are
reasonably likely to materially affect, the Companys internal control over
financial reporting, subsequent to the date the Chief Executive Officer and
Chief Financial Officer completed their evaluation.


22Table of Contents

infoUSA INC.
FORM 10-QFOR THE QUARTER ENDEDSEPTEMBER 30, 2003PART IIOTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGSOn
May 14, 2002, a principal of one of the acquisitions made by the
Company in 1996 was awarded $1.7 million by an arbitrator for
settlement of a dispute regarding exercise of stock options issued by
the Company. Although the Company has appealed the arbitrators
decision, the Companys management, under advise from outside
counsel, determined during the third quarter of 2003 that the Company
was not likely to be successful in the appeal. Consequently, the
Company recorded a litigation charge of $1.7 million during the
three months ended September 30, 2003, for the arbitrators
award.

ITEM 5.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSThere
were no matters submitted to a vote of security holders during the
three months ended September 30, 2003.

ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K(a) Exhibits10.1*
    
    
    
    
    Credit Agreement by and among infoUSA,
Inc., various Lenders (as defined therein)
and Bank of America, N.A. dated as of May
27, 2003.10.2*
    
    
    
    
    Pledge Agreement by and among infoUSA,
Inc., Various Lenders (as defined therein)
and Bank of America, N.A. dated as of May
27, 2003.10.3*
    
    
    
    
    Security Agreement by and among infoUSA,
Inc., various Lenders (as defined therein)
and Bank of America, N.A. dated as of May
27, 200310.4*
    
    
    
    
    Subsidiaries Guaranty Agreement by and
among infoUSA, Inc., various Lenders (as
defined therein) and Bank of America, N.A.
dated as of May 27, 2003.31.1*
    
    
    
    
    Certification of Chief Executive Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed
herewith.31.2*
    
    
    
    
    Certification of Chief Financial Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed
herewith.32.1*
    
    
    
    
    Certification of Chief Executive Officer
pursuant to Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed
herewith.32.2*
    
    
    
    
    Certification of Chief Financial Officer
pursuant to Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed
herewith.

* Filed herewith(b) Reports on Form 8-KThe Company filed a Form 8-K under Items 7 and 12 (filed under Item 9 as
permitted by SEC guidance) on July 18, 2003 for a press release announcing
second quarter results; Form 8-K under Items 5, 7 and 9 (filed under Item 9 as
permitted by SEC guidance) on August 20, 2003 press releases announcing lower
interest rates on the revolving line of credit, Tim Hoffmans appointment to
Chief Accounting Officer and Stormy Deans departure as Chief Financial
Officer; Form 8-K under Items 5, 7 and 9 (filed under Item 9 as permitted by
SEC guidance) on September 12, 2003 press releases announcing the Appointment
of Raj Das as Chief Financial Officer and revision of guidance for 2003; and a
Form 8-K under Items 7 and 12 (filed under Item 9 as permitted by SEC guidance)
on October 15, 2003 for a press release announcing third quarter results.23Table of Contents

SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.infoUSA INC.Date: November 13, 2003
    
    /s/ Tim HoffmanTim Hoffman, Chief Accounting Officer
(principal accounting officer)



24Table of Contents

Exhibit IndexExhibit
    
    
    
    
    
    Description10.1
    
    
    
    -
    
    
    Credit Agreement by and among infoUSA,
Inc., various Lenders (as defined therein)
and Bank of America, N.A. dated as of May
27, 2003.10.2
    
    
    
    -
    
    
    Pledge Agreement by and among infoUSA,
Inc., Various Lenders (as defined therein)
and Bank of America, N.A. dated as of May
27, 2003.10.3
    
    
    
    -
    
    
    Security Agreement by and among infoUSA,
Inc., various Lenders (as defined therein)
and Bank of America, N.A. dated as of May
27, 200310.4
    
    
    
    -
    
    
    Subsidiaries Guaranty Agreement by and
among infoUSA, Inc., various Lenders (as
defined therein) and Bank of America, N.A.
dated as of May 27, 2003.31.1
    
    
    
    -
    
    
    Certification of Chief Executive Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed
herewith.31.2
    
    
    
    -
    
    
    Certification of Chief Financial Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed
herewith.32.1
    
    
    
    -
    
    
    Certification of Chief Executive Officer
pursuant to Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed
herewith.32.2
    
    
    
    -
    
    
    Certification of Chief Financial Officer
pursuant to Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed
herewith.