##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2005 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.
 
  DELAWARE
    
    47-0751545(State or other jurisdiction of
    
    (I.R.S. Employer Identification Number)incorporation or organization)5711 SOUTH 86TH CIRCLE, OMAHA, NEBRASKA
    
    68127(Address of principal executive offices)
    
    (Zip Code)
  N/A
 
   Yes þ No o
 þ o
 o þ
   53,898,532 shares of Common Stock at November 4, 2005




---



infoUSA INC.
 INDEX
 PART I  FINANCIAL INFORMATION AND MANAGEMENTS DISCUSSION AND ANALYSISItem 1. Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004
    
    4Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2005 and 2004
    
    5Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2005 and 2004
    
    6Notes to Consolidated Financial Statements
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    22Item 4. Controls and Procedures
    
    22PART II  OTHER INFORMATION
    
    24Item 1. Legal Proceedings
    
    24Item 2. Exhibits
    
    24Signature
    
    25Index to Exhibits
    
    26Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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3




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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,
    
    
    December 31,2005
    
    
    2004(UNAUDITED)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    7,203
    
    
    $
    10,404Marketable securities
    
    
    2,314
    
    
    
    3,049Trade accounts receivable, net of allowances of $1,686 and $1,394, respectively
    
    
    40,236
    
    
    
    51,707List brokerage trade accounts receivable
    
    
    25,028
    
    
    
    19,635Deferred income taxes
    
    
    2,461
    
    
    
    Prepaid expenses
    
    
    5,146
    
    
    
    6,544Deferred marketing costs
    
    
    2,780
    
    
    
    2,632Total current assets
    
    
    85,168
    
    
    
    93,971Property and equipment, net
    
    
    46,370
    
    
    
    42,537Goodwill, net
    
    
    303,221
    
    
    
    298,708Intangible assets, net
    
    
    55,445
    
    
    
    66,578Other assets
    
    
    13,147
    
    
    
    7,642$
    503,351
    
    
    $
    509,436LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    30,130
    
    
    $
    34,134Accounts payable
    
    
    13,354
    
    
    
    21,268List brokerage trade accounts payable
    
    
    19,383
    
    
    
    15,427Accrued payroll expenses
    
    
    18,637
    
    
    
    15,917Accrued expenses
    
    
    6,874
    
    
    
    7,028Income taxes payable
    
    
    4,639
    
    
    
    3,730Deferred income taxes
    
    
    
    
    
    
    170Deferred revenue
    
    
    51,510
    
    
    
    53,034Total current liabilities
    
    
    144,527
    
    
    
    150,708Long-term debt, net of current portion
    
    
    148,149
    
    
    
    162,092Deferred income taxes
    
    
    19,534
    
    
    
    23,460Other liabilities
    
    
    1,701
    
    
    
    1,701Stockholders equity:Common stock, $.0025 par value. Authorized 295,000,000 shares; 53,898,532 shares
issued and 53,648,767 outstanding at September 30, 2005 and 53,555,331 shares
issued
and 53,177,737 outstanding at December 31, 2004
    
    
    135
    
    
    
    134Paid-in capital
    
    
    110,009
    
    
    
    106,669Retained earnings
    
    
    82,629
    
    
    
    69,770Treasury stock, at cost, 249,765 shares held at September 30, 2005 and 377,594 held at
December 31, 2004
    
    
    (1,536
    )
    
    
    (2,311
    )Notes receivable from officers
    
    
    (341
    )
    
    
    (334
    )Accumulated other comprehensive loss
    
    
    (1,456
    )
    
    
    (2,453
    )Total stockholders equity
    
    
    189,440
    
    
    
    171,475$
    503,351
    
    
    $
    509,436
  4




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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 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(UNAUDITED)
    
    
    (UNAUDITED)Net sales
    
    $
    95,536
    
    
    $
    90,172
    
    
    $
    284,367
    
    
    $
    254,777Costs and expenses:Database and production costs
    
    
    26,381
    
    
    
    27,634
    
    
    
    79,354
    
    
    
    76,318Selling, general and administrative (excluding non-cash
stock option compensation expense of $0 and $(45) for
the three months and $(289) and $595 for the nine
months
ended September 30, 2005 and 2004, respectively)
    
    
    45,094
    
    
    
    43,046
    
    
    
    135,615
    
    
    
    123,246Depreciation and amortization of operating assets
    
    
    2,717
    
    
    
    3,523
    
    
    
    9,991
    
    
    
    10,397Amortization of intangible assets
    
    
    4,596
    
    
    
    4,409
    
    
    
    13,469
    
    
    
    11,471Non-cash stock option compensation expense (benefit)
    
    
    
    
    
    
    (45
    )
    
    
    (289
    )
    
    
    595Litigation settlement charges
    
    
    605
    
    
    
    
    
    
    
    731
    
    
    
    Restructuring charges
    
    
    929
    
    
    
    766
    
    
    
    2,549
    
    
    
    2,388Acquisition costs
    
    
    
    
    
    
    79
    
    
    
    354
    
    
    
    321Total operating costs and expenses
    
    
    80,322
    
    
    
    79,412
    
    
    
    241,774
    
    
    
    224,736Operating income
    
    
    15,214
    
    
    
    10,760
    
    
    
    42,593
    
    
    
    30,041Other income (expense):Investment income (loss)
    
    
    400
    
    
    
    (177
    )
    
    
    2,794
    
    
    
    (219
    )Other income (charges)
    
    
    56
    
    
    
    
    
    
    
    56
    
    
    
    (2,223
    )Interest expense
    
    
    (3,003
    )
    
    
    (2,447
    )
    
    
    (8,721
    )
    
    
    (6,422
    )Income before income taxes
    
    
    12,667
    
    
    
    8,136
    
    
    
    36,722
    
    
    
    21,177Income taxes
    
    
    4,578
    
    
    
    3,091
    
    
    
    13,219
    
    
    
    8,047Net income
    
    $
    8,089
    
    
    $
    5,045
    
    
    $
    23,503
    
    
    $
    13,130Basic earnings per share:Basic earnings per share:
    
    $
    0.15
    
    
    $
    0.10
    
    
    $
    0.44
    
    
    $
    0.25Weighted average shares outstanding:
    
    
    54,132
    
    
    
    53,005
    
    
    
    53,878
    
    
    
    52,630Diluted earnings per share:Diluted earnings per share:
    
    $
    0.15
    
    
    $
    0.10
    
    
    $
    0.44
    
    
    $
    0.25Weighted average shares outstanding:
    
    
    54,169
    
    
    
    53,317
    
    
    
    54,029
    
    
    
    53,123
  5




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infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 NINE MONTHS ENDEDSeptember 30,2005
    
    
    2004(UNAUDITED)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    23,503
    
    
    $
    13,130Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of operating assets
    
    
    9,991
    
    
    
    10,397Amortization of intangible assets
    
    
    13,469
    
    
    
    11,471Amortization of deferred financing costs
    
    
    432
    
    
    
    203Deferred income taxes
    
    
    (1,976
    )
    
    
    723Tax benefit related to employee stock options
    
    
    
    
    
    
    762Non-cash stock option compensation expense (benefit)
    
    
    (289
    )
    
    
    595Non-cash 401(k) contribution in common stock
    
    
    1,427
    
    
    
    1,146(Gain) loss on sale of assets and marketable securities
    
    
    (2,626
    )
    
    
    275Non-cash other charges
    
    
    
    
    
    
    796Changes in assets and liabilities, net of effect of acquisitions:Trade accounts receivable
    
    
    13,478
    
    
    
    3,846List brokerage trade accounts receivable
    
    
    (5,410
    )
    
    
    1,268Prepaid expenses and other assets
    
    
    (1,093
    )
    
    
    (960
    )Deferred marketing costs
    
    
    (148
    )
    
    
    2,836Accounts payable
    
    
    (8,031
    )
    
    
    (4,311
    )List brokerage trade accounts payable
    
    
    3,965
    
    
    
    (880
    )Income taxes receivable and payable, net
    
    
    (1,552
    )
    
    
    261Accrued expenses and other liabilities
    
    
    1,038
    
    
    
    4,233Net cash provided by operating activities
    
    
    46,178
    
    
    
    45,791CASH FLOWS FROM INVESTING ACTIVITIES:Sale of marketable securities
    
    
    8,161
    
    
    
    2,508Purchase of marketable securities
    
    
    (4,244
    )
    
    
    (3,948
    )Purchases of property and equipment
    
    
    (4,110
    )
    
    
    (3,721
    )Acquisitions of businesses, net of cash acquired
    
    
    (8,778
    )
    
    
    (109,766
    )Software and database development costs
    
    
    (4,131
    )
    
    
    (1,894
    )Net cash used in investing activities
    
    
    (13,102
    )
    
    
    (116,821
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of long-term debt
    
    
    (54,293
    )
    
    
    (195,613
    )Proceeds of long-term debt
    
    
    26,278
    
    
    
    272,833Deferred financing costs paid
    
    
    (7
    )
    
    
    (2,902
    )Dividends paid
    
    
    (10,646
    )
    
    
    Proceeds from exercise of stock options
    
    
    2,391
    
    
    
    4,127Net cash provided by (used in) financing activities
    
    
    (36,277
    )
    
    
    78,445Net increase (decrease) in cash and cash equivalents
    
    
    (3,201
    )
    
    
    7,415Cash and cash equivalents, beginning of period
    
    
    10,404
    
    
    
    2,686Cash and cash equivalents, end of period
    
    $
    7,203
    
    
    $
    10,101Supplemental cash flow information:Interest paid
    
    $
    8,670
    
    
    $
    6,208Income taxes paid
    
    $
    16,030
    
    
    $
    6,053
  6




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infoUSA INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. GENERAL
   2. EARNINGS PER SHARE INFORMATION
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands)2005
    
    
    2004
    
    
    2005
    
    
    2004Weighted average number of shares used in basic EPS
    
    
    54,132
    
    
    
    53,005
    
    
    
    53,878
    
    
    
    52,630Net additional common stock equivalent shares outstanding after
assumed exercise of stock options
    
    
    37
    
    
    
    312
    
    
    
    151
    
    
    
    493Weighted average number of shares outstanding used in diluted EPS
    
    
    54,169
    
    
    
    53,317
    
    
    
    54,029
    
    
    
    53,123
 3. SEGMENT INFORMATION
  info
 info
 info
     7




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For The Three Months Ended September 30, 2005infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    35,312
    
    
    $
    60,224
    
    
    $
    
    
    
    $
    95,536Litigation settlement
    
    
    
    
    
    
    
    
    
    
    (605
    )
    
    
    (605
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (929
    )
    
    
    (929
    )Operating income (loss)
    
    
    12,920
    
    
    
    26,585
    
    
    
    (24,291
    )
    
    
    15,214Investment income
    
    
    
    
    
    
    
    
    
    
    400
    
    
    
    400Other income
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    56Interest expense
    
    
    
    
    
    
    
    
    
    
    (3,003
    )
    
    
    (3,003
    )Income (loss) before income taxes
    
    
    12,920
    
    
    
    26,585
    
    
    
    (26,838
    )
    
    
    12,667Goodwill, net of amortization
    
    
    41,155
    
    
    
    262,066
    
    
    
    
    
    
    
    303,221
 For The Three Months Ended September 30, 2004infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    34,174
    
    
    $
    55,998
    
    
    $
    
    
    
    $
    90,172Non-cash stock compensation benefit
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    45Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (766
    )
    
    
    (766
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    (79
    )Operating income (loss)
    
    
    9,933
    
    
    
    21,791
    
    
    
    (20,964
    )
    
    
    10,760Investment (loss)
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    (177
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (2,447
    )
    
    
    (2,447
    )Income (loss) before income taxes
    
    
    9,933
    
    
    
    21,791
    
    
    
    (23,588
    )
    
    
    8,136Goodwill, net of amortization
    
    
    41,153
    
    
    
    258,328
    
    
    
    
    
    
    
    299,481
 For The Nine Months Ended September 30, 2005infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    107,879
    
    
    $
    176,488
    
    
    $
    
    
    
    $
    284,367Non-cash stock compensation benefit
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    289Litigation settlement
    
    
    
    
    
    
    
    
    
    
    (731
    )
    
    
    (731
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (2,549
    )
    
    
    (2,549
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (354
    )
    
    
    (354
    )Operating income (loss)
    
    
    35,333
    
    
    
    74,274
    
    
    
    (67,014
    )
    
    
    42,593Investment income
    
    
    
    
    
    
    
    
    
    
    2,794
    
    
    
    2,794Other income
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    56Interest expense
    
    
    
    
    
    
    
    
    
    
    (8,721
    )
    
    
    (8,721
    )Income (loss) before income taxes
    
    
    35,333
    
    
    
    74,274
    
    
    
    (72,885
    )
    
    
    36,722Goodwill, net of amortization
    
    
    41,155
    
    
    
    262,066
    
    
    
    
    
    
    
    303,221
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For The Nine Months Ended September 30, 2004infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    114,282
    
    
    $
    140,495
    
    
    $
    
    
    
    $
    254,777Non-cash stock compensation expense
    
    
    
    
    
    
    
    
    
    
    (595
    )
    
    
    (595
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (2,388
    )
    
    
    (2,388
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    (321
    )Operating income (loss)
    
    
    36,164
    
    
    
    61,076
    
    
    
    (67,199
    )
    
    
    30,041Investment (loss)
    
    
    
    
    
    
    
    
    
    
    (219
    )
    
    
    (219
    )Other charges
    
    
    
    
    
    
    
    
    
    
    (2,223
    )
    
    
    (2,223
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (6,422
    )
    
    
    (6,422
    )Income (loss) before income taxes
    
    
    36,164
    
    
    
    61,076
    
    
    
    (76,063
    )
    
    
    21,177Goodwill, net of amortization
    
    
    41,153
    
    
    
    258,328
    
    
    
    
    
    
    
    299,481
 4. COMPREHENSIVE INCOME (LOSS)
  For The Three
    
    
    For The NineMonths Ended
    
    
    Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)
    
    
    (In thousands)Net income
    
    $
    8,089
    
    
    $
    5,045
    
    
    $
    23,503
    
    
    $
    13,130Other comprehensive income:Unrealized gain (loss) from investments:Unrealized gains (losses)
    
    
    (594
    )
    
    
    (655
    )
    
    
    531
    
    
    
    (845
    )Related tax benefit (expense)
    
    
    214
    
    
    
    249
    
    
    
    (191
    )
    
    
    321Net
    
    
    (380
    )
    
    
    (406
    )
    
    
    340
    
    
    
    (524
    )Foreign currency translation adjustments:Unrealized gains (losses)
    
    
    22
    
    
    
    (36
    )
    
    
    528
    
    
    
    (36
    )Related tax expense
    
    
    (8
    )
    
    
    -
    
    
    
    (190
    )
    
    
    -Net
    
    
    14
    
    
    
    (36
    )
    
    
    338
    
    
    
    (36
    )Total other comprehensive income (loss)
    
    
    (366
    )
    
    
    (442
    )
    
    
    678
    
    
    
    (560
    )Comprehensive income
    
    $
    7,723
    
    
    $
    4,603
    
    
    $
    24,181
    
    
    $
    12,570
  Foreign
    
    
    
    
    
    
    AccumulatedUnrealized
    
    
    Currency
    
    
    Unrealized
    
    
    OtherLosses
    
    
    Translation
    
    
    Gains (Losses)
    
    
    ComprehensivePension plan
    
    
    Adjustments
    
    
    On Securities
    
    
    Loss(in thousands)Balance at September 30, 2005
    
    $
    (1,055
    )
    
    $
    (228
    )
    
    $
    (173
    )
    
    $
    (1,456
    )Balance at December 31, 2004
    
    $
    (1,055
    )
    
    $
    (885
    )
    
    $
    (513
    )
    
    $
    (2,453
    )
 5. ACQUISITIONS
   9




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##### Table of Contents



Accounting in a Purchase Business
Combination for Deferred Revenue of an Acquiree
    For The Three Months Ended
    
    For The Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004(In thousands, except per share amounts)(unaudited)Net sales
    
    $
    95,536
    
    
    $
    92,066
    
    
    $
    284,943
    
    
    $
    290,669Net income
    
    $
    8,089
    
    
    $
    4,861
    
    
    $
    23,216
    
    
    $
    5,831Basic earnings per share
    
    $
    0.15
    
    
    $
    0.09
    
    
    $
    0.43
    
    
    $
    0.11Diluted earnings per share
    
    $
    0.15
    
    
    $
    0.09
    
    
    $
    0.43
    
    
    $
    0.11
 6. NON-CASH STOCK COMPENSATION EXPENSE
 Accounting
for Stock Issued to Employees
 10




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##### Table of Contents



Accounting for Stock-Based Compensation
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands, except
    
    
    (in thousands, exceptper share amounts)
    
    
    per share amounts)Net income, as reported
    
    $
    8,089
    
    
    $
    5,045
    
    
    $
    23,503
    
    
    $
    13,130Less: Total stock-based employee compensation expense determined
under fair value based method, net of taxes
    
    
    96
    
    
    
    584
    
    
    
    392
    
    
    
    1,869Net income, pro forma
    
    $
    7,993
    
    
    $
    4,461
    
    
    $
    23,111
    
    
    $
    11,261Earnings per share:Basic  as reported
    
    $
    0.15
    
    
    $
    0.10
    
    
    $
    0.44
    
    
    $
    0.25Basic  pro forma
    
    $
    0.15
    
    
    $
    0.08
    
    
    $
    0.43
    
    
    $
    0.21Diluted  as reported
    
    $
    0.15
    
    
    $
    0.10
    
    
    $
    0.44
    
    
    $
    0.25Diluted  pro forma
    
    $
    0.15
    
    
    $
    0.08
    
    
    $
    0.43
    
    
    $
    0.21
    7. RESTRUCTURING CHARGES
    Beginning
    
    
    Amounts
    
    
    Amounts From
    
    
    Amounts
    
    
    EndingAccrual
    
    
    Expensed
    
    
    Acquisition
    
    
    Paid
    
    
    Accrual(In thousands)Restructuring accrual
    
    $
    629
    
    
    $
    2,549
    
    
    $
    91
    
    
    $
    1,795
    
    
    $
    1,474
 11




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##### Table of Contents



8. GOODWILL AND INTANGIBLE ASSETS
  September 30,
    
    
    December 31,2005
    
    
    2004(In thousands)Goodwill
    
    $
    362,233
    
    
    $
    357,720Less accumulated amortization
    
    
    59,012
    
    
    
    59,012Goodwill, net
    
    $
    303,221
    
    
    $
    298,708Intangible assets:Non-compete agreements
    
    
    13,534
    
    
    
    13,534Core technology
    
    
    13,753
    
    
    
    13,753Customer base
    
    
    24,663
    
    
    
    24,663Trade names
    
    
    19,259
    
    
    
    19,259Purchased data processing software
    
    
    73,478
    
    
    
    73,478Acquired database costs
    
    
    21,591
    
    
    
    21,591Perpetual software license agreement, net
    
    
    1,533
    
    
    
    2,133Software development costs, net
    
    
    7,191
    
    
    
    5,983Database development costs, net
    
    
    1,758
    
    
    
    461Deferred financing costs
    
    
    11,130
    
    
    
    11,123187,890
    
    
    
    185,978Less accumulated amortization
    
    
    132,445
    
    
    
    119,400Intangible assets, net
    
    $
    55,445
    
    
    $
    66,578
 9. PROPERTY AND EQUIPMENT
  September 30,
    
    
    December 31,2005
    
    
    2004(In thousands)Property and equipment
    
    $
    147,803
    
    
    $
    135,789Less accumulated depreciation
    
    
    101,433
    
    
    
    93,252$
    46,370
    
    
    $
    42,537
 10. RELATED PARTY TRANSACTIONS
   11. SUBSEQUENT EVENT
  12




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Recent Significant Development
 info info info
   Company Profile
 info info info info
 Business Databases
    
    
    Consumer Databases
    
    15 Million U.S. and Canadian Businesses
    
    
    
    183 Million Consumers
    
    12.5 Million Executives and Professionals
    
    
    
    115 Million Households
    
    5.6 Million Small Business Owners
    
    
    
    68 Million Homeowners
    
    5 Million Business Addresses with Color Photos
    
    
    
    14 Million New Movers Per Year
 13




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##### Table of Contents



Business Databases
    
    
    Consumer Databases
    
    2.6 Million Brand New Businesses
    
    
    
    3.1 Million New Homeowners Per Year
    
    3.6 Million Yellow page Advertisers
    
    1.7 Million Bankruptcy Filers
    
    900,000 Global Businesses and 2
Million Executives
    
    600,000 Manufacturers
    
    410,000 Big Businesses
     
    
    Migration of one time customers to Subscription based service
called Sales Genie.com. See the following page for more
description.
    
    Unlimited access to 12 million credit reports on
Credit.net. See the following page for more description.
    
    Yellow Page Advertising Expense Report  The report will include all spending by small businesses for Yellow Page
advertising. Yellow Page publishers and web advertising firms will be able to sort this information by many selects, including
by individual business as well as by SIC code and any geographic region.
    
    Business Address Photographs  The Company introduced the
industrys first pictures of storefronts with corresponding
longitude and latitude coordinates to its Business Database. Important applications for this data include business credit
reports/applications, directory assistance, wireless navigation devices and insurance appraisals/underwriting.
 Sales & Marketing Strategy
 info info
 info
 info
  14




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Sales
Genie.com, Credit.net, SalesLeadsUSA . . . Subscription Model
 info
     Our Growth Strategy
  info
   15




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Our International Growth Strategy
     THREE MONTHS
    
    
    THREE MONTHS
    
    
    NINE MONTHS
    
    
    NINE MONTHSENDED
    
    
    ENDED
    
    
    ENDED
    
    
    ENDEDSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004CONSOLIDATED STATEMENT OF OPERATIONS DATA:Net sales
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Costs and expenses:Database and production costs
    
    
    27
    
    
    
    31
    
    
    
    27
    
    
    
    30Selling, general and administrative
    
    
    47
    
    
    
    48
    
    
    
    48
    
    
    
    48Depreciation
    
    
    3
    
    
    
    4
    
    
    
    4
    
    
    
    4Amortization
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5Non-cash stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Litigation settlement charge
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Restructuring charges
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    84
    
    
    
    88
    
    
    
    85
    
    
    
    88Operating income
    
    
    16
    
    
    
    12
    
    
    
    15
    
    
    
    12Other expense, net
    
    
    (3
    )
    
    
    (3
    )
    
    
    (2
    )
    
    
    (3
    )Income before income taxes
    
    
    13
    
    
    
    9
    
    
    
    13
    
    
    
    9Income taxes
    
    
    5
    
    
    
    3
    
    
    
    5
    
    
    
    3Net income
    
    
    8
    %
    
    
    6
    %
    
    
    8
    %
    
    
    6
    %
  THREE MONTHS
    
    
    THREE MONTHS
    
    
    NINE MONTHS
    
    
    NINE MONTHSENDED
    
    
    ENDED
    
    
    ENDED
    
    
    ENDEDSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004(dollars in thousands)
    
    
    (dollars in thousands)SALES BY SEGMENT:infoUSA Group
    
    $
    35,312
    
    
    $
    34,174
    
    
    $
    107,879
    
    
    $
    114,282Donnelley Group
    
    
    60,224
    
    
    
    55,998
    
    
    
    176,488
    
    
    
    140,495Total
    
    $
    95,536
    
    
    $
    90,172
    
    
    $
    284,367
    
    
    $
    254,777SALES BY SEGMENT AS A PERCENTAGE OF NET
SALES:infoUSA Group
    
    
    37
    %
    
    
    38
    %
    
    
    38
    %
    
    
    45
    %Donnelley Group
    
    
    63
    
    
    
    62
    
    
    
    62
    
    
    
    55Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 16




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##### Table of Contents



Net sales
  info info
  Database and production costs
  Selling, general and administrative expenses
  Depreciation expense
  Amortization expense
  Non-cash stock compensation expense
  17




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Litigation settlement charges
  Restructuring costs
  Acquisition costs
  Operating income
    Other income (expense), net
   Income taxes
  Liquidity and Capital Resources
 Overview
 18




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##### Table of Contents



Selected Consolidated Statements of Cash Flows Information
      Selected Consolidated Balance Sheet Information
   19




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##### Table of Contents



Off-Balance Sheet Arrangements
  Accounting Standards
   Inflation
  Factors That May Affect Operating Results
 Our markets are highly competitive and many of our competitors have greater resources than we
do.
   20




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##### Table of Contents



We are leveraged. If we are unable to service our debt as it becomes due, our business would
be harmed.
   Fluctuations in our operating results may result in decreases 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.
   
    
    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.
 Our ability to increase our revenues will depend to some extent upon introducing new products
and services, and if the marketplace does not accept these new products and services, our revenues
may decline.
  Changes in the direct marketing industry and in the industries in which our customers operate
may adversely affect our business.
  21




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Changes in laws and regulations relating to data privacy could adversely affect our business.
  Our business would be harmed if we do not successfully integrate future acquisitions.
  
 
  
 
 (a) Evaluation of disclosure controls and procedures
  22




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
    
    The Company is implementing a formal review process of cost method investments.
    
    The Company has hired a Corporate Controller with a high level of accounting
expertise.
    
    The Company has hired a Director of Income Tax and has implemented improved processes
and controls within the Income Tax department.
    
    The Company is providing continuing training to accounting staff on non-routine
technical accounting matters.
    
    The Company is assessing the existing accounting personnel to ensure the correct
individuals with the necessary expertise have been placed in the appropriate positions.
  (b) Changes in internal controls over financial reporting
  23




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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 24




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##### Table of Contents



infoUSA INC.Date: November 9, 2005
    /s/ Alan HeckartAlan Heckart, Controller(principal accounting officer) 25




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##### Table of Contents



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 26