<PAGE>
 
                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549


                               FORM 10-Q/A


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

For the quarterly period ended September 30, 1996 or

       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
                       -------------

                  AMERICAN BUSINESS INFORMATION, INC.
          ---------------------------------------------------
          (exact name of registrant specified in its charter)

         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)

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

(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
                        -------                ----------

                 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.

         21,259,960 shares of common stock at October 29, 1996
<PAGE>
 
                  AMERICAN BUSINESS INFORMATION, INC.

                                 INDEX


                                                                   PAGE NO.
                                                                   --------

PART I - FINANCIAL INFORMATION                                          2

         Consolidated Balance Sheets as of  September 30, 1996 and
         December 31, 1995                                              3

         Consolidated Statements of Operations for the three months
         and nine months ended September 30, 1996 and 1995              4

         Consolidated Statements of Cash Flows for the nine months
         ended September 30, 1996 and 1995                              5

         Notes to Consolidated Financial Statements                 6 - 7

         Management's Discussion and Analysis of Financial
         Condition and Results of Operations                       8 - 11

PART II - OTHER INFORMATION                                            12

         Item 6.  Exhibits and Reports on Form 8-K                     13

         Signatures                                                    14

         Index to Exhibits                                             15
<PAGE>
 
                  AMERICAN BUSINESS INFORMATION, INC.




                               FORM 10-Q



                         FOR THE QUARTER ENDED

                           SEPTEMBER 30, 1996




                                 PART I




                       FINANCIAL INFORMATION AND

      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                       AND RESULTS OF OPERATIONS




                                   2
<PAGE>
 
          AMERICAN BUSINESS INFORMATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
             as of September 30, 1996 and December 31, 1995
                  (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                              
                                              ASSETS                                   Sept. 30, 1996       Dec. 31, 1995
                                              ------                                   --------------       -------------
<S>                                                                                    <C>                  <C>
Current assets:
    Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .        $ 9,676              $11,999
    Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         22,538               23,350
    Trade accounts receivable, net  . . . . . . . . . . . . . . . . . . . . . . . .         25,554               19,215
    Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . .             64                    -
    Prepaid expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,079                1,733
    Deferred marketing costs  . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,600                  996
                                                                                           -------              -------
        Total current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . .         62,511               57,293
                                                                                           -------              -------

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .         16,962               13,885
Net assets of business transferred under contractual arrangement  . . . . . . . . .              -                2,972
Intangible assets, net of accumulated amortization  . . . . . . . . . . . . . . . .         11,588               14,642
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          5,587                    -
Other assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,259                1,999
                                                                                           -------              -------
                                                                                           $97,907              $90,791
                                                                                           =======              =======
                              LIABILITIES AND SHAREHOLDERS' EQUITY
                              ------------------------------------

Current liabilities:
    Notes payable and current portion of long-term debt . . . . . . . . . . . . . .        $ 8,402              $   969
    Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          7,309                4,254
    Accrued payroll expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,923                2,205
    Accrued expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2,444                1,891
    Income taxes payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              -                  143
    Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            568                  123
                                                                                           -------              -------
        Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .         20,646                9,585
Long-term debt, net of current portion  . . . . . . . . . . . . . . . . . . . . . .            549                1,070
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              -                1,707

Shareholders' equity:
    Preferred stock, $.0025 par value.  Authorized 5,000,000 shares;
        none issued or outstanding  . . . . . . . . . . . . . . . . . . . . . . . .              -                    -
    Common stock, $.0025 par value.  Authorized 75,000,000 shares;
        issued and outstanding 21,255,160 shares at September 30, 1996
        and 20,776,860 at December 31, 1995 . . . . . . . . . . . . . . . . . . . .             51                   51
    Treasury stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (2,281)                   -
    Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         29,881               27,342
    Net unrealized holding loss, net of tax . . . . . . . . . . . . . . . . . . . .           (698)                (246)
    Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         49,759               51,282
                                                                                           -------              -------
        Total shareholders' equity  . . . . . . . . . . . . . . . . . . . . . . . .         76,712               78,429
                                                                                           -------              -------
                                                                                           $97,907              $90,791
                                                                                           =======              =======
</TABLE>

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

                                   3
<PAGE>
 
          AMERICAN BUSINESS INFORMATION, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the three months and nine months ended September 30, 1996 and 1995
                (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                Three Months Ended                Nine Months Ended
                                                                   September 30                      September 30
                                                            ------------------------          ------------------------
                                                              1996             1995             1996             1995
                                                              ----             ----             ----             ----
<S>                                                         <C>              <C>              <C>              <C>
Net sales . . . . . . . . . . . . . . . . . . . . . .       $27,585          $21,501          $76,695          $63,405
Costs and expenses:
    Database and production costs . . . . . . . . . .         8,007            6,149           21,459           17,276
    Selling, general and administrative . . . . . . .        11,409            8,366           31,674           24,856
    One-time non-cash items . . . . . . . . . . . . .        22,240                -           22,240                -
    Depreciation and amortization . . . . . . . . . .           700              796            2,505            2,343
                                                            -------          -------          -------          -------
                                                             42,356           15,311           77,878           44,525
                                                            -------          -------          -------          -------

Operating income  . . . . . . . . . . . . . . . . . .       (14,771)           6,190           (1,183)          18,880
Other income (expense):
    Investment income . . . . . . . . . . . . . . . .           522              394            1,567              887
    Interest expense  . . . . . . . . . . . . . . . .           (20)             (60)             (53)            (148)
    Other . . . . . . . . . . . . . . . . . . . . . .             -                -                -             (162)
                                                            -------          -------          -------          -------
Income before income taxes and discontinued operation       (14,269)           6,524              331           19,784
Income taxes  . . . . . . . . . . . . . . . . . . . .        (5,389)           2,420              126            7,336
                                                            -------          -------          -------          -------
Income from continuing operations . . . . . . . . . .        (8,880)           4,104              205           12,448
Loss on discontinued operation  . . . . . . . . . . .          (355)               -             (355)          (2,147)
Loss from abandonment of subsidiary . . . . . . . . .        (1,373)               -           (1,373)               -
                                                            -------          -------          -------          -------
Net income  . . . . . . . . . . . . . . . . . . . . .      $(10,608)         $ 4,104          $(1,523)         $10,301
                                                            =======          =======          =======          =======

Earnings per share:
   Income from continuing operations. . . . . . . . .      $  (0.43)         $  0.20          $  0.01          $  0.60
                                                            =======          =======          =======          =======
   Loss on discontinued operations and abandonment
     of subsidiary. . . . . . . . . . . . . . . . . .      $  (0.08)         $  0.00          $ (0.08)         $ (0.10)
                                                            =======          =======          =======          =======
   Net income . . . . . . . . . . . . . . . . . . . .      $  (0.51)         $  0.20          $ (0.07)         $  0.50
                                                            =======          =======          =======          =======
Weighted average shares outstanding . . . . . . . . .        20,840           20,768           20,808           20,725
                                                            =======          =======          =======          =======
</TABLE>

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

                                   4
<PAGE>
 
          AMERICAN BUSINESS INFORMATION, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the nine months ended September 30, 1996 and 1995
                             (In thousands)

<TABLE>
<CAPTION>
                                                                                              Nine Months Ended
                                                                                                 September 30
                                                                                        ------------------------------
                                                                                          1996                   1995
                                                                                          ----                   ----
<S>                                                                                     <C>                    <C>
Cash flows from operating activities:
      Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $(1,523)               $10,301
      Adjustments to reconcile net income to cash flows from
        operating activities:
            Depreciation and amortization . . . . . . . . . . . . . . . . . . . . .       2,505                  2,446
            Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . .      (5,790)                     -
            One-time non-cash items . . . . . . . . . . . . . . . . . . . . . . . .      22,240                      -
            Impairment of other assets  . . . . . . . . . . . . . . . . . . . . . .           -                   (630)
            Impairment of net assets of business transferred  . . . . . . . . . . .           -                  1,663
            Loss on discontinued operation and abandonment of subsidiary  . . . . .       1,728                      -
            Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (83)                   212
      Changes in assets and liabilities, net of effect of acquisitions:
           Trade accounts receivable  . . . . . . . . . . . . . . . . . . . . . . .      (3,813)                (2,882)
           Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (987)                (1,429)
           Deferred marketing costs . . . . . . . . . . . . . . . . . . . . . . . .        (604)                     -
           Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .         987                  1,560
           Income taxes receivable  . . . . . . . . . . . . . . . . . . . . . . . .         (64)                     -
           Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . .        (143)                   460
           Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (715)                   258
                                                                                        -------                -------
               Net cash provided by operating activities  . . . . . . . . . . . . .      13,738                 11,959

Cash flows from investing activities:
      Proceeds from sale of marketable securities  . . . . . . . . . . . . . . . . .      8,274                  9,035
      Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . .     (8,634)               (18,018)
      Purchases of property and equipment  . . . . . . . . . . . . . . . . . . . . .     (4,639)                (2,834)
      Acquisition of businesses, including minority interest   . . . . . . . . . . .     (4,000)                  (900)
      Capitalization of software development costs   . . . . . . . . . . . . . . . .     (1,345)                     -
      Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        258                   (274)
                                                                                        -------                -------
               Net cash used in investing activities   . . . . . . . . . . . . . . .    (10,086)               (12,991)

Cash flows from financing activities:
      Repayment of long-term debt  . . . . . . . . . . . . . . . . . . . . . . . . .     (1,013)                (3,040)
      Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . .          -                    289
      Purchase and retirement of common stock  . . . . . . . . . . . . . . . . . . .     (5,589)                     -
      Proceeds from exercise of stock options  . . . . . . . . . . . . . . . . . . .      2,908                    766
      Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .     (2,281)                     -
                                                                                        -------                -------
               Net cash used in investing activities   . . . . . . . . . . . . . . .     (5,975)                (1,985)

Net increase (decrease) in cash and cash equivalents   . . . . . . . . . . . . . . .     (2,323)                (3,017)
Cash and cash equivalents, beginning . . . . . . . . . . . . . . . . . . . . . . . .     11,999                 13,491
                                                                                        -------                -------
Cash and cash equivalents, ending  . . . . . . . . . . . . . . . . . . . . . . . . .    $ 9,676                $10,474
                                                                                        =======                =======

Supplemental disclosure of cash flow information:
     Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $    53                $   148
                                                                                        =======                =======
     Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 5,418                $ 7,422
                                                                                        =======                =======
</TABLE>

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

                                   5
<PAGE>
 
          AMERICAN BUSINESS INFORMATION, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  GENERAL

The accompanying unaudited 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 December 31, 1995 Consolidated
Balance Sheet was derived from audited financial statements but does not
include all disclosures required by generally accepted accounting
principles.

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, 1995 included in the Company's 1995 Annual
Report to the Securities and Exchange Commission on Form 10-K. Results
for the interim period presented are not necessarily indicative of
results to be expected for the entire year.

"This amendment is being filed to reflect the presentation of American Business 
Communications, Inc. as a continuing operation until the Third Quarter of 1996, 
at which time the investment in this subsidiary was abandoned."

2.  CONSOLIDATED BALANCE SHEET DETAIL (IN THOUSANDS):

<TABLE>
<CAPTION>
                                                        September 30, 1996       December 31, 1995
                                                        ------------------       -----------------
                 <S>                                    <C>                      <C>
                 Property and equipment:
                    Land and improvements                    $ 1,220                  $ 1,032
                    Building and improvements                  8,059                    7,157
                    Furniture and equipment                   19,403                   15,439
                    Capitalized equipment leases               1,437                    1,437
                                                             -------                  -------
                                                              30,119                   25,065
                 Less accumulated depreciation
                    and amortization                          13,157                   11,180
                                                             -------                  -------
                                                             $16,962                  $13,885
                                                             =======                  =======
                 <CAPTION> 
                                                        September 30, 1996        December 31, 1995
                                                        ------------------       -----------------
                 <S>                                    <C>                      <C>
                 Intangible assets:
                    Goodwill                                 $ 4,998                  $ 5,012
                    Distribution networks                     11,871                   11,871
                    Noncompete agreements                        278                      150
                    Acquisition costs                         19,473                    1,319
                    Software development costs                 1,201                      431
                                                             -------                  -------
                                                              37,821                   18,783
                 Less accumulated amortization                26,233                    4,141
                                                             -------                  -------
                                                             $11,588                  $14,642
                                                             =======                  =======
</TABLE>

                                   6
<PAGE>
 
          AMERICAN BUSINESS INFORMATION, INC. AND SUBSIDIARIES
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


3.  DISCONTINUED OPERATIONS AND NET ASSETS OF BUSINESS TRANSFERRED
    UNDER CONTRACTUAL ARRANGEMENT

On June 1, 1995, the Company transferred substantially all of the assets
and liabilities of its wholly-owned subsidiary, American Business
Communications, Inc. (ABC), to a wholly-owned subsidiary of Baker
University.  ABC provided continuing education programs and products to
small and medium-sized businesses.  The Company received $3.0 million in
the form of a 7.52% non-recourse promissory note due in equal monthly
installments through 2005.

The impairment on the transfer of the net assets of ABC has been
accounted for in accordance with the Securities and Exchange
Commission's Staff Accounting Bulletin Topics 5-E and 5-Z.  Revenues of
ABC were $2.9 million from January 1, 1995 through the date of sale.

During the third quarter of 1996, Baker University defaulted on the note and the
Company abandoned any remaining net assets of the business.  As a result, the 
Company incurred a charge of $1.4 million, net of tax, to write-off the
remaining balance of the promissory note. All 1995 amounts related to ABC have 
therefore been reclassified as discontinued operations.

4.  ACQUISITION

On September 10, 1996, the Company acquired certain assets and assumed
certain liabilities of Digital Directory Assistance, Inc. (DDA), a
publisher of Phone Disc CD-ROM products.  The total purchase price was
approximately $17 million of which $4.0 million was paid on September
10, 1996 from the Company's corporate funds, $7.9 million in the form of
a promissory note issued to Seller due January 1997, and the remaining
amount through the issuance of 600,000 shares of the Company's common
stock in September 1996.  The acquisition was accounted for under the
purchase method of accounting.  Substantially all of the purchase price
consisted of intangibles and resulted in a one time charge of
approximately $10 million ($6.3 million after tax) representing
purchased research and development.

5.  ONE-TIME NON-CASH ITEMS

One-time non-cash items represent charges for the purchased in-process
research and development of approximately $10 million relating to the
acquisition of DDA, the change in estimated useful lives of
approximately $11.5 million due to management's evaluation of the
remaining lives of certain intangibles related to acquisitions prior to
1995, and the writedown of $740,000 of an equity investment made prior
to 1992.

                                   7
<PAGE>
 
          AMERICAN BUSINESS INFORMATION, INC. AND SUBSIDIARIES
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS

GENERAL

American Business Information, Inc. ("ABI") and its subsidiaries, ("the
Company"), provide business and consumer information to organizations
engaged in business-to-business and consumer marketing through products
and services derived from the Company's database. These products include
customized business lists, business directories, consumer lists and
other information services such as CD-ROM directories, Online Access and
Internet Access.

In addition, ABI provides business and consumer directories for home
use.  These directories are available in a series of CD-ROM titles,
which are distributed through national and local computer software
retail outlets.

RESULTS OF OPERATIONS

The following table sets out for the three and nine month periods
indicated, certain items from the Company's statement of operations data
expressed as a percentage of net sales:

<TABLE>
<CAPTION>
                                                                   Three Months Ended       Nine Months Ended
                                                                      September 30             September 30
                                                                     1996     1995             1996    1995
                                                                     ----     ----             ----    ----
                          <S>                                      <C>        <C>           <C>        <C>
                          Statement of Operations Data:

                          Net Sales                                  100%     100%             100%    100%

                          Costs and expenses:
                             Database and production costs            29       28               28      27
                             Selling, general and administrative      41       39               41      39
                             One-time, non-cash items                 81        -               30       -
                             Depreciation and amortization             3        4                3       4
                                                                     ---      ---              ---     ---
                          Operating income                           (54)      29               (2)     30

                          Other income (expense)                       2        1                2       1
                                                                     ---      ---              ---     ---
                          Income before income taxes and
                            discontinued operation                   (52)      30                -      31

                          Income taxes                               (20)      11                -      12
                                                                     ---      ---              ---     ---
                          Income from continuing operations          (32)      19                -      19

                          Loss on discontinued operation and
                             abandonment of subsidiary                (6)       -               (2)     (3)
                                                                     ---      ---              ---     ---
                          Net income                                 (38)%     19%              (2)%    16%
                                                                     ===      ===              ===     ===
</TABLE>

                                   8
<PAGE>
 
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS, continued

Net Sales
---------

Net sales increased 28% to $27.6 million for the three months ended
September 30, 1996 from $21.5 million in the third quarter of 1995. For
the nine month period ended September 30, 1996, net sales were $76.7
million, a 21% increase from $63.4 million in the comparable period in
1995.

Lead generation product net sales increased 25% to $18.5 million for the
three months ended September 30, 1996, from $14.8 million in the third
quarter of 1995.  For the nine month period ended September 30, 1996,
lead generation products were $52.3 million, a 16% increase from $45.2
million in the comparable period in 1995.  The increases for the
comparable three and nine month periods are largely the result of
increased marketing efforts which began late in 1995.

CD-ROM product net sales increased 61% to $5.1 million for the three
months ended September 30, 1996 from $3.2 million in the third quarter
of 1995.  For the nine month period ended September 30, 1996, CD-ROM
products were $12.6 million, a 59% increase from $8.0 million in the
comparable period in 1995.  The increase is a result of increased demand
in consumer retail channels, the introduction of additional CD-ROM
titles in the third quarter of 1996, and the acquisition of DDA which
accounted for approximately $1.1 million in sales during the third
quarter.

Directory product net sales for the three months and nine months ended
September 30, 1996, posted modest increases to $2.2 million and $6.2
million, respectively, or an increase of 7% and 4%, respectively,
compared to the same period in 1995.  Voice and on-line service net
sales accounted for $370 thousand in the third quarter of 1996 compared
to $350 thousand in the second quarter of 1995.  For the nine months
ended September 30, 1996, net sales were $1.1 million compared to $1.0
million in the same period of 1995.

The Company's net sales on a quarterly basis can be affected by the
timing of acquisitions and certain other factors including the timing
and extent of the Company's own direct marketing activities and the
release of new products.  There have been no significant price increases
for the majority of the Company's existing products and services during
the period.

Database and Production Costs
-----------------------------

Database and production costs for the third quarter of 1996 were $8.0
million, or 29% of net sales, compared to $6.1 million, or 28% of net
sales, in the prior year quarter.  For the nine months ended September
30, 1996, these costs were $21.5 million, or 28% of net sales, compared
to $17.3 million, or 27% of net sales in the comparable prior year
period.  These amounts primarily represent the costs of compiling and
telephone verifying information in the database, fulfilling customer
orders, the direct costs associated with the production of CD-ROM
titles, and royalty costs.

                                   9
<PAGE>
 
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS, continued


Selling, General, and Administrative
------------------------------------

Selling, general and administrative expenses in the third quarter of
1996 were $11.4 million, or 41% of net sales, compared to $8.4 million,
or 39% of net sales, in the prior year quarter. For the nine month
period, these costs were $31.7 million, or 41% of net sales, compared to
$27.3 million, or 41% in the comparable 1995 period.

One-Time Non-Cash Items
-----------------------

During the third quarter of 1996, the Company recorded one-time,
non-cash charges to continuing operations of $10.0 million for purchased
research and development associated with the September 1996 acquisition
of DDA, $11.5 million associated with a change in the estimated useful
lives of certain intangible assets related to acquisitions prior to
1995, and $740,000 for the writedown of an equity investment made prior
to 1992.

Depreciation and Amortization
-----------------------------

Depreciation and amortization expense for the three months ended
September 30, 1996 decreased to $700,000 from $796,000 in the comparable
1995 period.  These costs during the nine month period of 1996 were $2.5
million, compared to $2.4 million in the comparable 1995 period.

Operating Income
----------------

The operating loss for the third quarter of 1996 was $14.8 million, or
54% of net sales, compared to operating income of $6.2 million, or 29%
of net sales in the third quarter of 1995.  For the nine month period of
1996, the operating loss was $1.2 million, or 2% of net sales, compared
with operating income of $18.9 million, or 30% of net sales in the
comparable 1995 period.

Excluding the one-time, non-cash items described above, operating income
for the third quarter of 1996 would have been $7.5 million, or 27% of
net sales.  For the nine month period of 1996, operating income would
have been $21.1 million, or 27% of net sales.

Other Income
------------

Net investment income for the 1996 third quarter was $502,000 compared
to $334,000 in the same quarter of 1995.  For the nine months ended
September 30, 1996, net investment income was $1.5 million compared to
$739,000 in the prior year period.  The Company recognized net realized
losses of $270,000 on the sale of marketable securities in the first
nine months of 1995.  Additionally, the Company recognized net realized
gains of $83,000 on the sale of marketable securities in the first nine
months of 1996.

                                   10
<PAGE>
 
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS, continued


Provision for Income Taxes
--------------------------

A provision for income taxes has been recorded on the Company's 1996
earnings at a combined effective federal and state tax rate of 38%,
compared to the 1995 combined effective rate of 37%.  The increase in
the effective rate is a result of state income taxes and the mix of
states in which the Company conducts its business.


LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 1996, the Company's principal sources of liquidity
included cash and cash equivalents of $9.7 million and short term
investments of $22.5 million.  The Company has a revolving line of
credit totaling $5.0 million, which had no outstanding balance at
September 30, 1996.

Net cash provided by operating activities for the nine months ended
September 30, 1996 totaled $13.7 million compared to $12.0 million in
the same period of 1995.  The increase is due to the effect of recording
the one-time, non-cash charges, which is partially offset by higher
levels of trade accounts receivable, deferred marketing costs, and other
accrued expenses.  The Company spent $2.4 million on upgrades to data
processing equipment and $1.1 million for land and building improvements
to its Omaha, Nebraska and Carter Lake, Iowa facilities.  The Company
anticipates spending an additional $2.0 million over the next twelve
months for equipment and facility expansion.

The Company paid $4.0 million on September 10, 1996 as part of the
estimated purchase price of $17.1 million for DDA.  A promissory note of
$7.9 million is due the Seller in January 1997, for which management
anticipates using its cash equivalents.  The remaining amount due the
Seller of approximately $5.2 million was paid through the issuance of
the Company's common stock.

The Company believes that cash flows from operations, its cash and short
term investments, and its borrowing facilities will be sufficient to
fund its operations for at least the next twelve months.  However, if
the Company acquires additional companies or products, additional
financing may be required.

                                   11
<PAGE>
 
                  AMERICAN BUSINESS INFORMATION, INC.




                               FORM 10-Q



                         FOR THE QUARTER ENDED

                           SEPTEMBER 30, 1996




                                PART II




                           OTHER INFORMATION



                                   12
<PAGE>
 
                  AMERICAN BUSINESS INFORMATION, INC.
                               FORM 10-Q
                         FOR THE QUARTER ENDED
                           SEPTEMBER 30, 1996

                                PART II



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

         (a)      Exhibits

                  11      Statement regarding computation of per share earnings

         (b)      Report on Form 8-K

                  Form 8-K dated September 10, 1996, under Item 2, Acquisition
                  or Disposition of Assets, and under Item 7, Financial
                  Statement, ProForma Financial Information and Exhibits, was
                  filed with the Securities and Exchange Commission reporting
                  the acquisition of substantially all the net assets of Digital
                  Directory Assistance, Inc.

                                   13
<PAGE>
 
                          S I G N A T U R E S
                          -------------------

Pursuant 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.


                                        AMERICAN BUSINESS INFORMATION, INC.
                                        -----------------------------------


Date:    11/14/96                       /s/ Jon H. Wellman
      --------------                    ----------------------------
                                        Jon H. Wellman
                                        Executive Vice President and
                                        Chief Financial Officer




                                   14
<PAGE>
 
                           INDEX TO EXHIBITS

                                                               Sequential
Exhibit No.       Description                                  Page No.
-----------       -----------                                  ----------
      11          Statement regarding computation of per
                  share earnings






                                   15