##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2007
 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 
incorporation or organization)
    
    (I.R.S. Employer Identification
Number)
 5711 SOUTH 86TH CIRCLE, OMAHA, NEBRASKA
    
    68127(Address of principal executive offices)
    
    (Zip Code)
   
   þ o
  o þ o
 o þ




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##### 



infoUSA INC.
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of September 30, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2007 and 2006
    
    
    4Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2007 and 2006
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27PART II  OTHER INFORMATION
    
    
    28Item 1. Legal Proceedings
    
    
    28Item 6. Exhibits
    
    
    29Signature
    
    
    30Index to ExhibitsCertification 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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##### Table of Contents



ITEM 1. FINANCIAL STATEMENTS
 infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts)
 September 30,
    
    
    December 31,2007
    
    
    2006(UNAUDITED)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,257
    
    
    $
    4,433Marketable securities
    
    
    1,958
    
    
    
    2,665Trade accounts receivable, net of allowances of $2,082 and $878, respectively
    
    
    65,109
    
    
    
    76,628List brokerage trade accounts receivable
    
    
    65,009
    
    
    
    68,437Unbilled services
    
    
    28,357
    
    
    
    20,794Other accounts receivable
    
    
    1,791
    
    
    
    Deferred income taxes
    
    
    5,767
    
    
    
    3,522Prepaid expenses
    
    
    10,394
    
    
    
    7,268Deferred marketing costs
    
    
    2,269
    
    
    
    3,485Total current assets
    
    
    188,911
    
    
    
    187,232Property and equipment, net
    
    
    68,748
    
    
    
    61,172Goodwill
    
    
    418,065
    
    
    
    381,749Intangible assets, net
    
    
    114,439
    
    
    
    108,046Other assets
    
    
    12,822
    
    
    
    11,376$
    802,985
    
    
    $
    749,575LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    5,288
    
    
    $
    4,627Accounts payable
    
    
    30,851
    
    
    
    27,474List brokerage trade accounts payable
    
    
    54,612
    
    
    
    62,028Accrued payroll expenses
    
    
    36,549
    
    
    
    33,608Accrued expenses
    
    
    18,584
    
    
    
    12,149Income taxes payable
    
    
    8,272
    
    
    
    4,655Deferred revenue
    
    
    65,775
    
    
    
    77,944Total current liabilities
    
    
    219,931
    
    
    
    222,485Long-term debt, net of current portion
    
    
    295,897
    
    
    
    255,263Deferred income taxes
    
    
    30,418
    
    
    
    35,421Other liabilities
    
    
    7,967
    
    
    
    2,248Stockholders equity:Common stock, $.0025 par value. Authorized 295,000,000 shares; 56,289,189 shares
issued and outstanding at September 30, 2007 and 55,460,322 shares issued and
outstanding at December 31, 2006
    
    
    140
    
    
    
    138Paid-in capital
    
    
    134,949
    
    
    
    126,943Retained earnings
    
    
    118,677
    
    
    
    108,391Receivable from officer
    
    
    (5,053
    )
    
    
    Accumulated other comprehensive income (loss)
    
    
    59
    
    
    
    (1,314
    )Total stockholders equity
    
    
    248,772
    
    
    
    234,158$
    802,985
    
    
    $
    749,575
 
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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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(UNAUDITED)
    
    
    (UNAUDITED)Net sales
    
    $
    184,972
    
    
    $
    106,384
    
    
    $
    502,929
    
    
    $
    309,760Costs and expenses:Cost of goods and services
    
    
    71,553
    
    
    
    26,519
    
    
    
    198,733
    
    
    
    78,717Selling, general and administrative
    
    
    71,357
    
    
    
    54,050
    
    
    
    212,952
    
    
    
    166,450Depreciation and amortization of operating assets
    
    
    5,696
    
    
    
    3,540
    
    
    
    15,613
    
    
    
    10,072Amortization of intangible assets
    
    
    4,957
    
    
    
    2,307
    
    
    
    13,354
    
    
    
    11,539Total operating costs and expenses
    
    
    153,563
    
    
    
    86,416
    
    
    
    440,652
    
    
    
    266,778Operating income
    
    
    31,409
    
    
    
    19,968
    
    
    
    62,277
    
    
    
    42,982Other expense, net:Investment income
    
    
    606
    
    
    
    196
    
    
    
    660
    
    
    
    368Other income (charges)
    
    
    315
    
    
    
    121
    
    
    
    (36
    )
    
    
    (196
    )Interest expense
    
    
    (5,591
    )
    
    
    (2,887
    )
    
    
    (15,807
    )
    
    
    (8,321
    )Other expense, net
    
    
    (4,670
    )
    
    
    (2,570
    )
    
    
    (15,183
    )
    
    
    (8,149
    )Income before income taxes
    
    
    26,739
    
    
    
    17,398
    
    
    
    47,094
    
    
    
    34,833Income taxes
    
    
    9,708
    
    
    
    6,250
    
    
    
    17,386
    
    
    
    12,546Net income
    
    $
    17,031
    
    
    $
    11,148
    
    
    $
    29,708
    
    
    $
    22,287Basic earnings per share:Basic earnings per share
    
    $
    0.31
    
    
    $
    0.20
    
    
    $
    0.53
    
    
    $
    0.41Basic weighted average shares outstanding
    
    
    55,837
    
    
    
    55,331
    
    
    
    55,605
    
    
    
    54,822Diluted earnings per share:Diluted earnings per share
    
    $
    0.30
    
    
    $
    0.20
    
    
    $
    0.53
    
    
    $
    0.40Diluted weighted average shares outstanding
    
    
    56,017
    
    
    
    55,425
    
    
    
    55,826
    
    
    
    55,177
 
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infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 NINE MONTHS ENDEDSeptember 30,2007
    
    
    2006(UNAUDITED)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    29,708
    
    
    $
    22,287Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of operating assets
    
    
    15,613
    
    
    
    10,072Amortization of intangible assets
    
    
    13,354
    
    
    
    11,539Amortization of deferred financing fees
    
    
    459
    
    
    
    389Deferred income taxes
    
    
    (10,641
    )
    
    
    (2,576
    )Non-cash stock compensation expense
    
    
    603
    
    
    
    906Non-cash 401(k) contribution in common stock
    
    
    2,122
    
    
    
    1,700Loss on sale of assets and marketable securities
    
    
    553
    
    
    
    Non-cash other charges
    
    
    365
    
    
    
    318Non-cash interest earned on notes from officers
    
    
    
    
    
    
    (11
    )Changes in assets and liabilities, net of effect of acquisitions:Trade accounts receivable
    
    
    17,319
    
    
    
    16,144List brokerage trade accounts receivable
    
    
    3,131
    
    
    
    (2,779
    )Prepaid expenses and other assets
    
    
    (4,472
    )
    
    
    (366
    )Deferred marketing costs
    
    
    1,215
    
    
    
    (782
    )Accounts payable
    
    
    (1,210
    )
    
    
    3,071List brokerage trade accounts payable
    
    
    (8,191
    )
    
    
    (825
    )Income taxes receivable and payable, net
    
    
    3,832
    
    
    
    (3,714
    )Accrued expenses and other liabilities
    
    
    9,522
    
    
    
    277Deferred revenue
    
    
    (18,265
    )
    
    
    (19,201
    )Net cash provided by operating activities
    
    
    55,017
    
    
    
    36,449CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of marketable securities
    
    
    1,816
    
    
    
    536Purchases of marketable securities
    
    
    (54
    )
    
    
    (41
    )Purchases of property and equipment
    
    
    (13,532
    )
    
    
    (8,979
    )Acquisitions of businesses, net of cash acquired
    
    
    (54,073
    )
    
    
    (8,407
    )Software development costs
    
    
    (3,823
    )
    
    
    (6,008
    )Net cash used in investing activities
    
    
    (69,666
    )
    
    
    (22,899
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayments of long-term debt
    
    
    (143,342
    )
    
    
    (163,752
    )Proceeds from long-term debt
    
    
    181,678
    
    
    
    152,566Deferred financing costs paid
    
    
    (1,171
    )
    
    
    (839
    )Dividends paid
    
    
    (19,425
    )
    
    
    (12,385
    )Proceeds from repayment of notes receivable from officers
    
    
    
    
    
    
    350Proceeds from termination of derivative financial instruments
    
    
    704
    
    
    
    Tax benefit related to employee stock options
    
    
    16
    
    
    
    2,119Proceeds from exercise of stock options
    
    
    149
    
    
    
    11,975Net cash provided by (used in) used in financing activities
    
    
    18,609
    
    
    
    (9,966
    )Effect of exchange rate fluctuations on cash
    
    
    (136
    )
    
    
    (385
    )Effect of SAB 108 adjustment on cash
    
    
    
    
    
    
    (2,089
    )Net increase in cash and cash equivalents
    
    
    3,824
    
    
    
    1,110Cash and cash equivalents, beginning
    
    
    4,433
    
    
    
    792Cash and cash equivalents, ending
    
    $
    8,257
    
    
    $
    1,902Supplemental cash flow information:Interest paid
    
    $
    14,163
    
    
    $
    7,935Income taxes paid
    
    $
    17,130
    
    
    $
    16,729
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infoUSA INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. GENERAL
  info
 Reclassification.
 2. EARNINGS PER SHARE INFORMATION
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands)2007
    
    
    2006
    
    
    2007
    
    
    2006Weighted average number of shares used in basic EPS
    
    
    55,837
    
    
    
    55,331
    
    
    
    55,605
    
    
    
    54,822Net additional common stock equivalent shares outstanding after
assumed exercise of stock options
    
    
    180
    
    
    
    94
    
    
    
    221
    
    
    
    355Weighted average number of shares outstanding used in diluted
EPS
    
    
    56,017
    
    
    
    55,425
    
    
    
    55,826
    
    
    
    55,177
 3. SEGMENT INFORMATION
   info
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For the Three Months Ended September 30, 2007MarketingData
    
    Services
    
    Research
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    92,674
    
    
    $
    36,018
    
    
    $
    56,280
    
    
    $
    
    
    
    $
    184,972Operating income (loss)
    
    
    31,375
    
    
    
    9,993
    
    
    
    2,272
    
    
    
    (12,231
    )
    
    
    31,409Investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606
    
    
    
    606Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,591
    )
    
    
    (5,591
    )Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    315
    
    
    
    315Income (loss) before income taxes
    
    
    31,375
    
    
    
    9,993
    
    
    
    2,272
    
    
    
    (16,901
    )
    
    
    26,739Goodwill
    
    
    255,797
    
    
    
    63,945
    
    
    
    98,323
    
    
    
    
    
    
    
    418,065
 For the Three Months Ended September 30, 2006Data
    
    Services
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    73,382
    
    
    $
    33,002
    
    
    $
    
    
    
    $
    106,384Operating income (loss)
    
    
    17,719
    
    
    
    9,863
    
    
    
    (7,614
    )
    
    
    19,968Investment income
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    196Interest expense
    
    
    
    
    
    
    
    
    
    
    (2,887
    )
    
    
    (2,887
    )Other income
    
    
    
    
    
    
    
    
    
    
    121
    
    
    
    121Income (loss) before income taxes
    
    
    17,719
    
    
    
    9,863
    
    
    
    (10,184
    )
    
    
    17,398Goodwill
    
    
    254,962
    
    
    
    65,530
    
    
    
    
    
    
    
    320,492
 For the Nine Months Ended September 30, 2007MarketingData
    
    Services
    
    Research
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    248,941
    
    
    $
    99,544
    
    
    $
    154,444
    
    
    $
    
    
    
    $
    502,929Operating income (loss)
    
    
    63,439
    
    
    
    23,804
    
    
    
    6,528
    
    
    
    (31,494
    )
    
    
    62,277Investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    660
    
    
    
    660Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,807
    )
    
    
    (15,807
    )Other expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36
    )
    
    
    (36
    )Income (loss) before income taxes
    
    
    63,439
    
    
    
    23,804
    
    
    
    6,528
    
    
    
    (46,677
    )
    
    
    47,094Goodwill
    
    
    255,797
    
    
    
    63,945
    
    
    
    98,323
    
    
    
    
    
    
    
    418,065
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For the Nine Months Ended September 30, 2006Data
    
    Services
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    222,643
    
    
    $
    87,117
    
    
    $
    
    
    
    $
    309,760Operating income (loss)
    
    
    44,073
    
    
    
    21,129
    
    
    
    (22,220
    )
    
    
    42,982Investment income
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    368Interest expense
    
    
    
    
    
    
    
    
    
    
    (8,321
    )
    
    
    (8,321
    )Other expense
    
    
    
    
    
    
    
    
    
    
    (196
    )
    
    
    (196
    )Income (loss) before income taxes
    
    
    44,073
    
    
    
    21,129
    
    
    
    (30,369
    )
    
    
    34,833Goodwill
    
    
    254,962
    
    
    
    65,530
    
    
    
    
    
    
    
    320,492
 4. COMPREHENSIVE INCOME
  For the Three
    
    
    For the NineMonths Ended
    
    
    Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)
    
    
    (In thousands)Net income
    
    $
    17,031
    
    
    $
    11,148
    
    
    $
    29,708
    
    
    $
    22,287Other comprehensive income:Unrealized gain from investments:Unrealized gains
    
    
    1,778
    
    
    
    1,347
    
    
    
    1,294
    
    
    
    1,384Related tax (expense)
    
    
    (640
    )
    
    
    (485
    )
    
    
    (466
    )
    
    
    (497
    )Net
    
    
    1,138
    
    
    
    862
    
    
    
    828
    
    
    
    887Foreign currency translation adjustments:Unrealized gains (losses)
    
    
    (234
    )
    
    
    (314
    )
    
    
    (224
    )
    
    
    39Related tax (expense) benefit
    
    
    84
    
    
    
    113
    
    
    
    80
    
    
    
    (15
    )Net
    
    
    (150
    )
    
    
    (201
    )
    
    
    (144
    )
    
    
    24Unrealized gain from pension plan:Unrealized gains
    
    
    22
    
    
    
    
    
    
    
    64
    
    
    
    Related tax expense
    
    
    (8
    )
    
    
    
    
    
    
    (23
    )
    
    
    Net
    
    
    14
    
    
    
    
    
    
    
    41
    
    
    
    Unrealized gain from derivative financial instruments:Unrealized gains (losses)
    
    
    (20
    )
    
    
    
    
    
    
    1,013
    
    
    
    Related tax (expense) benefit
    
    
    7
    
    
    
    
    
    
    
    (365
    )
    
    
    Net
    
    
    (13
    )
    
    
    
    
    
    
    648
    
    
    
    Total other comprehensive income
    
    
    989
    
    
    
    661
    
    
    
    1,373
    
    
    
    911Comprehensive income
    
    $
    18,020
    
    
    $
    11,809
    
    
    $
    31,081
    
    
    $
    23,198
  Foreign
    
    
    Unrealized
    
    
    
    
    
    
    AccumulatedUnrealized
    
    
    Currency
    
    
    Gains
    
    
    Derivative
    
    
    OtherLosses from
    
    
    Translation
    
    
    From
    
    
    Financial
    
    
    ComprehensivePension plan
    
    
    Adjustments
    
    
    Investments
    
    
    Instruments
    
    
    Income (Loss)(In thousands)Balance at September 30, 2007
    
    $
    (853
    )
    
    $
    (732
    )
    
    $
    996
    
    
    $
    648
    
    
    $
    59Balance at December 31, 2006
    
    $
    (894
    )
    
    $
    (588
    )
    
    $
    168
    
    
    $
    
    
    
    $
    (1,314
    )
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5. ACQUISITIONS
         9




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##### Table of Contents



For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006(In thousands, except per share amounts)(unaudited)Net sales
    
    $
    193,461
    
    
    $
    175,059
    
    
    $
    552,034
    
    
    $
    523,169Net income
    
    $
    17,550
    
    
    $
    11,451
    
    
    $
    31,076
    
    
    $
    25,351Basic earnings per share
    
    $
    0.31
    
    
    $
    0.21
    
    
    $
    0.56
    
    
    $
    0.46Diluted earnings per share
    
    $
    0.31
    
    
    $
    0.21
    
    
    $
    0.56
    
    
    $
    0.46
 6. SHAREBASED PAYMENT ARRANGEMENTS
  Share-Based Payment
    Weighted
    
    AggregateWeighted Average
    
    Weighted
    
    Average
    
    Intrinsic Value atNumber of
    
    Average
    
    Remaining
    
    September 30,Options
    
    Exercise
    
    Contractual
    
    2007Shares
    
    Price
    
    Term
    
    (In thousands)Outstanding beginning of period
    
    
    2,313,711
    
    
    $
    9.67Granted
    
    
    
    
    
    
    Exercised
    
    
    (624,893
    )
    
    
    8.03Forfeited
    
    
    
    
    
    
    Expired
    
    
    (850,000
    )
    
    
    9.77Outstanding end of period
    
    
    838,818
    
    
    
    10.80
    
    
    
    4.82
    
    
    $
    9,063Options exercisable at end of period
    
    
    321,318
    
    
    
    7.80
    
    
    
    .62
    
    
    $
    2,507
  10




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7. RESTRUCTURING CHARGES
 info info
  info
 Recognition of Liabilities in Connection with a Purchase Business Combinatio
  11




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##### Table of Contents



AmountsBeginning
    
    
    Amounts
    
    
    From
    
    
    Amounts
    
    
    EndingAccrual
    
    
    Expensed
    
    
    Acquisitions
    
    
    Paid
    
    
    Accrual(In thousands)Data Group:Employee separation costs
    
    $
    1,286
    
    
    $
    5,814
    
    
    $
    5
    
    
    $
    3,785
    
    
    $
    3,320Other associated costs
    
    $
    
    
    
    $
    2,381
    
    
    $
    
    
    
    $
    2,324
    
    
    $
    57Contract termination costs
    
    $
    
    
    
    $
    685
    
    
    $
    
    
    
    $
    220
    
    
    $
    465Research Group:Employee separation costs
    
    $
    
    
    
    $
    
    
    
    $
    1,797
    
    
    $
    930
    
    
    $
    867Contract termination costs
    
    $
    
    
    
    $
    
    
    
    $
    3,224
    
    
    $
    493
    
    
    $
    2,731
 8. GOODWILL AND INTANGIBLE ASSETS
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Goodwill
    
    $
    477,624
    
    
    $
    441,308Less accumulated amortization
    
    
    59,559
    
    
    
    59,559$
    418,065
    
    
    $
    381,749Other intangible assets:Non-compete agreements
    
    $
    14,656
    
    
    $
    13,537Core technology
    
    
    15,374
    
    
    
    15,072Customer base
    
    
    91,327
    
    
    
    77,270Trade names
    
    
    35,679
    
    
    
    32,448Purchased data processing software
    
    
    73,478
    
    
    
    73,478Acquired database costs
    
    
    21,591
    
    
    
    21,591Perpetual software license agreement, net
    
    
    
    
    
    
    533Software development costs, net
    
    
    11,158
    
    
    
    9,894Database development costs, net
    
    
    2,630
    
    
    
    3,244Deferred financing costs
    
    
    13,203
    
    
    
    12,032279,096
    
    
    
    259,099Less accumulated amortization
    
    
    164,657
    
    
    
    151,053$
    114,439
    
    
    $
    108,046
 9. PROPERTY AND EQUIPMENT
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Property and equipment
    
    $
    193,846
    
    
    $
    174,554Less accumulated depreciation
    
    
    125,098
    
    
    
    113,382$
    68,748
    
    
    $
    61,172
 10. INCOME TAXES
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 Accounting for Income Taxes
 12




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11. CONTINGENCIES
    13




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12. RELATED PARTY TRANSACTIONS
  13. DEBT
     14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
   14




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Accounting for Derivative Instruments and Certain Hedging Activities
  15. SUBSEQUENT EVENTS
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General
 Overview
   
    
    Continuing to migrate to subscription-based from one-time use customers of our
Internet-based services Salesgenie.com, Salesgenie.com/Lite, SalesLeadsUSA.info, Credit.net,
PolkCityDirectories.com and infoUSACiti.com. Key to this is our effort to replace revenue
from declining traditional direct marketing products and services with our on-line Internet
subscription services.  Subscription services offer enhanced annual revenue per customer,
assure greater multi-year revenue retention, and, most importantly, provide greater value to
our customers by providing Internet access to our content and customer acquisition and
retention software tools.
    
    Continuing to capture more information from the websites of businesses, such as
description, executive names, titles and hours of operation.
    
    Expanding international business and executive databases by adding content for China and
Australia.
    
    Expanding Yesmails presence, which is our e-mail technology Company.
    
    Increasing investments in merchandising, advertising and branding. The advertising
campaigns include email, print, television, radio, direct mail, and search word advertising,
as well as the use of white glove client services. Most notable advertisements included
three commercials that aired during the Super Bowl, on February 4, 2007, featuring
Salesgenie.com.
    
    Continuing the integration efforts of Opinion Research Corporation, acquired December
4, 2006, by facilitating a strategic cross-selling plan.
    
    Developing a call center for the Marketing Research Group based in Papillion, Nebraska
that we believe will significantly reduce its cost of services.
    
    Completion of the acquisition of expresscopy.com, a national market leader in
short-run customized direct mail pieces such as direct response post cards, mailers,
brochures, newsletters, flyers and business cards.
    
    Completion of the acquisitions of NWC Research in Australia and Guideline, Inc., which
have expanded our international presence and have given us even more product offerings such
as on-demand secondary research, market and competitive intelligence.
 16




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
    
    Announcing the plan to compile a business database in the United Kingdom. The database
will be sold to small and large customers in the form of customized list products, online
access, subscription services, and license agreements to value added resellers.
    
    Announcing the plan to complete photographs of all businesses in the United States.
Currently we have photographs for 2.5 million businesses, and we will be adding an additional
3 million. The high quality photos have been very well received in the market and are being
used by almost all of the major search engines.
 
    
    Announcing the acquisitions of SECO Financial and Northwest Research Group, which were
closed effective October 1, 2007. SECO Financial will become a part of our Data Group with
a focus in financial services industry marketing. Northwest Research Group will provide us
with access to the market research industry in the western part of the United States. We
also believe that it will help us enter the transportation marketing sector and enhance our
customer satisfaction expertise by providing additional senior level support.
 Sales & Marketing Strategy
 Salesgenie.com. Salesgenie.ca
  Growth Strategy
    17




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RESULTS OF OPERATIONS
  CONSOLIDATED STATEMENT OF OPERATIONS DATA:
 For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Net sales
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Costs and expenses:Cost of goods and services
    
    
    39
    
    
    
    25
    
    
    
    40
    
    
    
    25Selling, general and administrative
    
    
    38
    
    
    
    51
    
    
    
    42
    
    
    
    54Depreciation
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3Amortization
    
    
    3
    
    
    
    2
    
    
    
    3
    
    
    
    4Total costs and expenses
    
    
    83
    
    
    
    81
    
    
    
    88
    
    
    
    86Operating income
    
    
    17
    
    
    
    19
    
    
    
    12
    
    
    
    14Other expense, net
    
    
    (3
    )
    
    
    (2
    )
    
    
    (3
    )
    
    
    (3
    )Income before income taxes
    
    
    14
    
    
    
    17
    
    
    
    9
    
    
    
    11Income taxes
    
    
    5
    
    
    
    7
    
    
    
    3
    
    
    
    4Net income
    
    
    9
    %
    
    
    10
    %
    
    
    6
    %
    
    
    7
    %
 OTHER DATA
 For the Three Months Ended
    
    

For the Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2006
    
    
    September 30, 2007
    
    
    September 30, 2006(dollars in thousands)SALES BY SEGMENT:Data Group
    
    $
    92,674
    
    
    $
    73,382
    
    
    $
    248,941
    
    
    $
    222,643Services Group
    
    
    36,018
    
    
    
    33,002
    
    
    
    99,544
    
    
    
    87,117Marketing Research Group
    
    
    56,280
    
    
    
    
    
    
    
    154,444
    
    
    
    Total
    
    $
    184,972
    
    
    $
    106,384
    
    
    $
    502,929
    
    
    $
    309,760SALES BY SEGMENT AS A PERCENTAGE OF NET
SALES:Data Group
    
    
    50
    %
    
    
    69
    %
    
    
    49
    %
    
    
    72
    %Services Group
    
    
    20
    
    
    
    31
    
    
    
    20
    
    
    
    28Marketing Research Group
    
    
    30
    
    
    
    
    
    
    
    31
    
    
    
    Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Net sales
   19




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Cost of goods and services
      Selling, general and administrative expenses
  20




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info info
     Depreciation expense
    21




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Amortization expense
     Operating income
    22




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Other expense, net
  Income taxes
  Liquidity and Capital Resources
 Overview
     23




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Selected Consolidated Statements of Cash Flows Information
    24




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##### Table of Contents



Selected Consolidated Balance Sheet Information
       info
     25




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##### Table of Contents



Off-Balance Sheet Arrangements
  Accounting Standards
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109 Accounting for Income Taxes
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Inflation
  26




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(a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
  27




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28




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2.1
    
    
    
    Agreement and Plan of Merger, dated as June 28, 2007, by and among infoUSA Inc.,
Knickerbocker Acquisition Corp. and Guideline, Inc., incorporated herein by reference to Exhibit
2.1 filed with the Companys Current Report on Form 8-K filed July 5, 2007.3.1
    
    
    
    Certificate of Incorporation, as amended through October 22, 1999, incorporated herein by
reference to exhibits filed with our Registration Statement on Form 8-A, as amended, filed March
20, 2000.3.2
    
    
    
    Bylaws, incorporated herein by reference to our Registration Statement on Form S-1 (File No.
33-42887), which became effective February 18, 1992.3.3
    
    
    
    Amended and Restated Certificate of Designation of Participating Preferred Stock, filed in
Delaware on October 22, 1999, incorporated herein by reference to exhibits filed with our
Registration Statement on Form 8-A, as amended, filed March 20, 2000.4.1
    
    
    
    Preferred Share Rights Agreement, incorporated herein by reference to our Registration Statement
on Form 8-A, as amended, filed March 20, 2000.4.2
    
    
    
    Specimen of Common Stock Certificate, incorporated herein by reference to the exhibits filed with
our Registration Statement on Form 8-A, as amended, filed March 20, 2000.10.1
    
    
    
    Agreement, dated July 20, 2007, between Vinod Gupta and infoUSA Inc., incorporated herein by
reference to Exhibit 10.2 filed with our Current Report on Form 8-K, filed July 26, 2007.31.1*
    
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2*
    
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1*
    
    
    
    Certification of Chief Executive Officer pursuant to Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    
    
    Certification of Chief Financial Officer pursuant to Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 29




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SIGNATURE
  infoUSA Inc.Date: November 9, 2007
    /s/ Stormy L. DeanStormy L. Dean, Chief Financial Officer 30




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INDEX TO EXHIBITS
 2.1
    
    
    
    Agreement and Plan of Merger, dated as June 28, 2007, by and among infoUSA Inc.,
Knickerbocker Acquisition Corp. and Guideline, Inc., incorporated herein by reference to Exhibit
2.1 filed with the Companys Current Report on Form 8-K filed July 5, 2007.3.1
    
    
    
    Certificate of Incorporation, as amended through October 22, 1999, incorporated herein by
reference to exhibits filed with our Registration Statement on Form 8-A, as amended, filed March
20, 2000.3.2
    
    
    
    Bylaws, incorporated herein by reference to our Registration Statement on Form S-1 (File No.
33-42887), which became effective February 18, 1992.3.3
    
    
    
    Amended and Restated Certificate of Designation of Participating Preferred Stock, filed in
Delaware on October 22, 1999, incorporated herein by reference to exhibits filed with our
Registration Statement on Form 8-A, as amended, filed March 20, 2000.4.1
    
    
    
    Preferred Share Rights Agreement, incorporated herein by reference to our Registration Statement
on Form 8-A, as amended, filed March 20, 2000.4.2
    
    
    
    Specimen of Common Stock Certificate, incorporated herein by reference to the exhibits filed with
our Registration Statement on Form 8-A, as amended, filed March 20, 2000.10.1
    
    
    
    Agreement, dated July 20, 2007, between Vinod Gupta and infoUSA Inc., incorporated herein by
reference to Exhibit 10.2 filed with our Current Report on Form 8-K, filed July 26, 2007.31.1*
    
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2*
    
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1*
    
    
    
    Certification of Chief Executive Officer pursuant to Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    
    
    Certification of Chief Financial Officer pursuant to Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith