##### 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, 2006
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the  Securities Exchange Act of 1934
 For
the transition period from
 to
  infoUSA INC.
 
  DELAWARE
    
    47-0751545(State or other jurisdiction of
    
    (I.R.S. Employer Identificationincorporation or organization)
    
    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.
 INDEXPART I  FINANCIAL INFORMATION AND MANAGEMENTS DISCUSSION AND ANALYSISItem 1. Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATION
    
    
    27Item 1. Legal Proceedings
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27Signature
    
    
    28Index to Exhibits
    
    
    29Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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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 31,2006
    
    
    2005(UNAUDITED)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,991
    
    
    $
    792Marketable securities
    
    
    3,122
    
    
    
    2,050Trade accounts receivable, net of allowances of $1,495 and $1,292, respectively
    
    
    36,656
    
    
    
    52,693List brokerage trade accounts receivable
    
    
    64,776
    
    
    
    50,384Deferred income taxes
    
    
    5,128
    
    
    
    3,234Prepaid expenses
    
    
    6,343
    
    
    
    5,386Deferred marketing costs
    
    
    3,635
    
    
    
    2,853Total current assets
    
    
    123,651
    
    
    
    117,392Property and equipment, net
    
    
    50,130
    
    
    
    48,530Goodwill
    
    
    320,492
    
    
    
    313,448Intangible assets, net
    
    
    48,190
    
    
    
    51,268Other assets
    
    
    12,044
    
    
    
    13,129$
    554,507
    
    
    $
    543,767LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    4,486
    
    
    $
    5,644Accounts payable
    
    
    16,217
    
    
    
    12,958List brokerage trade accounts payable
    
    
    54,624
    
    
    
    44,019Accrued payroll expenses
    
    
    22,991
    
    
    
    18,973Accrued expenses
    
    
    3,967
    
    
    
    6,955Income taxes payable
    
    
    3,834
    
    
    
    7,550Deferred revenue
    
    
    67,054
    
    
    
    86,080Total current liabilities
    
    
    173,173
    
    
    
    182,179Long-term debt, net of current portion
    
    
    132,334
    
    
    
    142,362Deferred income taxes
    
    
    21,266
    
    
    
    19,769Other liabilities
    
    
    2,016
    
    
    
    1,590Stockholders equity:Common stock, $.0025 par value. Authorized 295,000,000 shares; 55,409,476 shares
issued and 55,363,264 shares outstanding at September 30, 2006 and
53,957,616 shares
issued and 53,747,256 shares outstanding at December 31, 2005
    
    
    138
    
    
    
    135Paid-in capital
    
    
    126,111
    
    
    
    110,420Retained earnings
    
    
    100,536
    
    
    
    90,631Treasury stock, at cost, 46,212 shares held at September 30, 2006 and 210,360
shares held
at December 31, 2005
    
    
    (295
    )
    
    
    (1,297
    )Notes receivable from officers
    
    
    
    
    
    
    (339
    )Accumulated other comprehensive loss
    
    
    (772
    )
    
    
    (1,683
    )Total stockholders equity
    
    
    225,718
    
    
    
    197,867$
    554,507
    
    
    $
    543,767
 
 3




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##### Table of Contents



infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 THREE MONTHS ENDED
    
    
    NINE MONTHS ENDEDSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(UNAUDITED)
    
    
    (UNAUDITED)Net sales
    
    $
    106,384
    
    
    $
    95,536
    
    
    $
    309,760
    
    
    $
    284,367Costs and expenses:Database and production costs
    
    
    26,519
    
    
    
    26,381
    
    
    
    78,717
    
    
    
    79,354Selling, general and administrative
    
    
    54,050
    
    
    
    46,628
    
    
    
    166,450
    
    
    
    138,960Depreciation and amortization of operating assets
    
    
    3,540
    
    
    
    2,717
    
    
    
    10,072
    
    
    
    9,991Amortization of intangible assets
    
    
    2,307
    
    
    
    4,596
    
    
    
    11,539
    
    
    
    13,469Total operating costs and expenses
    
    
    86,416
    
    
    
    80,322
    
    
    
    266,778
    
    
    
    241,774Operating income
    
    
    19,968
    
    
    
    15,214
    
    
    
    42,982
    
    
    
    42,593Other expense, net:Investment income
    
    
    196
    
    
    
    400
    
    
    
    368
    
    
    
    2,794Other income (charges)
    
    
    121
    
    
    
    56
    
    
    
    (196
    )
    
    
    56Interest expense
    
    
    (2,887
    )
    
    
    (3,003
    )
    
    
    (8,321
    )
    
    
    (8,721
    )Other expense, net
    
    
    (2,570
    )
    
    
    (2,547
    )
    
    
    (8,149
    )
    
    
    (5,871
    )Income before income taxes
    
    
    17,398
    
    
    
    12,667
    
    
    
    34,833
    
    
    
    36,722Income taxes
    
    
    6,250
    
    
    
    4,578
    
    
    
    12,546
    
    
    
    13,219Net income
    
    $
    11,148
    
    
    $
    8,089
    
    
    $
    22,287
    
    
    $
    23,503Basic earnings per share:Basic earnings per share:
    
    $
    0.20
    
    
    $
    0.15
    
    
    $
    0.41
    
    
    $
    0.44Weighted average shares outstanding:
    
    
    55,331
    
    
    
    54,132
    
    
    
    54,822
    
    
    
    53,878Diluted earnings per share:Diluted earnings per share:
    
    $
    0.20
    
    
    $
    0.15
    
    
    $
    0.40
    
    
    $
    0.44Weighted average shares outstanding:
    
    
    55,425
    
    
    
    54,169
    
    
    
    55,177
    
    
    
    54,029
 
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infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 NINE MONTHS ENDEDSeptember 30,2006
    
    
    2005(UNAUDITED)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    22,287
    
    
    $
    23,503Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization of operating assets
    
    
    10,072
    
    
    
    9,991Amortization of intangible assets
    
    
    11,539
    
    
    
    13,469Amortization of deferred financing fees
    
    
    389
    
    
    
    432Deferred income taxes
    
    
    (2,576
    )
    
    
    (1,976
    )Non-cash stock option compensation expense (benefit)
    
    
    906
    
    
    
    (289
    )Non-cash 401(k) contribution in common stock
    
    
    1,700
    
    
    
    1,427Gain on sale of assets and marketable securities
    
    
    
    
    
    
    (2,626
    )Non-cash other charges
    
    
    318
    
    
    
    Non-cash interest earned on notes from officers
    
    
    (11
    )
    
    
    Changes in assets and liabilities, net of effect of
acquisitions:Trade accounts receivable
    
    
    16,144
    
    
    
    13,478List brokerage trade accounts receivable
    
    
    (2,779
    )
    
    
    (5,410
    )Prepaid expenses and other assets
    
    
    (366
    )
    
    
    (1,093
    )Deferred marketing costs
    
    
    (782
    )
    
    
    (148
    )Accounts payable
    
    
    3,071
    
    
    
    (8,031
    )List brokerage trade accounts payable
    
    
    (825
    )
    
    
    3,965Income taxes receivable and payable, net
    
    
    (3,714
    )
    
    
    (1,552
    )Accrued expenses and other liabilities
    
    
    277
    
    
    
    2,562Deferred revenue
    
    
    (19,201
    )
    
    
    (1,524
    )Net cash provided by operating activities
    
    
    36,449
    
    
    
    46,178CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds on sale of marketable securities
    
    
    536
    
    
    
    8,161Purchase of marketable securities
    
    
    (41
    )
    
    
    (4,244
    )Purchases of property and equipment
    
    
    (8,979
    )
    
    
    (4,110
    )Acquisitions of businesses, net of cash acquired
    
    
    (8,407
    )
    
    
    (8,778
    )Software development costs
    
    
    (6,008
    )
    
    
    (4,131
    )Net cash used in investing activities
    
    
    (22,899
    )
    
    
    (13,102
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayments of long-term debt
    
    
    (163,752
    )
    
    
    (54,293
    )Proceeds from long-term debt
    
    
    152,566
    
    
    
    26,278Deferred financing costs paid
    
    
    (839
    )
    
    
    (7
    )Dividends paid
    
    
    (12,385
    )
    
    
    (10,646
    )Proceeds from repayment of notes receivable from officers
    
    
    350
    
    
    
    Tax benefit related to employee stock options
    
    
    2,119
    
    
    
    Proceeds from exercise of stock options
    
    
    11,975
    
    
    
    2,391Net cash used in financing activities
    
    
    (9,966
    )
    
    
    (36,277
    )Effect of exchange rate fluctuations on cash
    
    
    (385
    )
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    3,199
    
    
    
    (3,201
    )Cash and cash equivalents, beginning
    
    
    792
    
    
    
    10,404Cash and cash equivalents, ending
    
    $
    3,991
    
    
    $
    7,203Supplemental cash flow information:Interest paid
    
    $
    7,935
    
    
    $
    8,670Income taxes paid
    
    $
    16,729
    
    
    $
    16,030
 
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##### Table of Contents



infoUSA INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. GENERAL
   Reclassification.
 Stock-Based Compensation Share-Based Payment Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation
  2. EARNINGS PER SHARE INFORMATION
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands)2006
    
    
    2005
    
    
    2006
    
    
    2005Weighted average number of shares used in basic EPS
    
    
    55,331
    
    
    
    54,132
    
    
    
    54,822
    
    
    
    53,878Net additional common stock equivalent shares outstanding after
assumed exercise of stock options
    
    
    94
    
    
    
    37
    
    
    
    355
    
    
    
    151Weighted average number of shares outstanding used in diluted EPS
    
    
    55,425
    
    
    
    54,169
    
    
    
    55,177
    
    
    
    54,029
 6




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##### Table of Contents



3. SEGMENT INFORMATION
  info
 info
 info
  Business Databases
    
    
    
    Consumer Databases
    
    15 Million U.S. and Canadian Businesses
    
    
    
    205 Million Consumers
    
    12.5 Million Executives and Professionals
    
    
    
    129 Million Households
    
    5.6 Million Small Business Owners
    
    
    
    75 Million Homeowners
    
    5 Million Business Addresses with Color Photos
    
    
    
    15 Million New Movers Per Year
    
    2.6 Million Brand New Businesses
    
    
    
    3 Million New Homeowners Per Year
    
    3.6 Million Yellow page Advertisers
    
    
    
    1.7 Million Bankruptcies
    
    1.7 Million Bankruptcy Filers
    
    
    
    129 Million Occupants
    
    900,000 Global Businesses and 2 Million Executives
    
    
    
    130 Million Consumer Email Addresses
    
    600,000 Manufacturers
    
    410,000 Big Businesses
    
    1.5 Million Business Email Addresses
    
    780,000 Medical Professionals
    
    380,000 U.S. Houses of Worship
    For The Three Months Ended September 30, 2006infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    37,845
    
    
    $
    68,539
    
    
    $
    
    
    
    $
    106,384Operating income (loss)
    
    
    13,730
    
    
    
    29,110
    
    
    
    (22,872
    )
    
    
    19,968Investment income
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    196Other income
    
    
    
    
    
    
    
    
    
    
    121
    
    
    
    121Interest expense
    
    
    
    
    
    
    
    
    
    
    (2,887
    )
    
    
    (2,887
    )Income (loss) before income taxes
    
    
    13,730
    
    
    
    29,110
    
    
    
    (25,442
    )
    
    
    17,398Goodwill
    
    
    50,349
    
    
    
    270,143
    
    
    
    
    
    
    
    320,492
 7




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##### Table of Contents



For The Three Months Ended September 30, 2005infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    35,312
    
    
    $
    60,224
    
    
    $
    
    
    
    $
    95,536Operating 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
    
    
    49,596
    
    
    
    253,625
    
    
    
    
    
    
    
    303,221
 For The Nine Months Ended September 30, 2006infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    112,861
    
    
    $
    196,899
    
    
    $
    
    
    
    $
    309,760Operating income (loss)
    
    
    35,139
    
    
    
    79,186
    
    
    
    (71,343
    )
    
    
    42,982Investment income
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    368Other charges
    
    
    
    
    
    
    
    
    
    
    (196
    )
    
    
    (196
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (8,321
    )
    
    
    (8,321
    )Income (loss) before income taxes
    
    
    35,139
    
    
    
    79,186
    
    
    
    (79,492
    )
    
    
    34,833Goodwill
    
    
    50,349
    
    
    
    270,143
    
    
    
    
    
    
    
    320,492
 For The Nine Months Ended September 30, 2005
    `}infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    107,879
    
    
    $
    176,488
    
    
    $
    
    
    
    $
    284,367Operating 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
    
    
    49,596
    
    
    
    253,625
    
    
    
    
    
    
    
    303,221
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##### Table of Contents



4. COMPREHENSIVE INCOME
  For The Three
    
    
    For The NineMonths Ended
    
    
    Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)
    
    
    (In thousands)Net income
    
    $
    11,148
    
    
    $
    8,089
    
    
    $
    22,287
    
    
    $
    23,503Other comprehensive income (loss):Unrealized gain (loss) from investments:Unrealized gains (losses)
    
    
    1,347
    
    
    
    (594
    )
    
    
    1,384
    
    
    
    531Related tax benefit (expense)
    
    
    (485
    )
    
    
    214
    
    
    
    (497
    )
    
    
    (191
    )Net
    
    
    862
    
    
    
    (380
    )
    
    
    887
    
    
    
    340Foreign currency translation adjustments:Unrealized gains (losses)
    
    
    (314
    )
    
    
    22
    
    
    
    39
    
    
    
    528Related tax benefit (expense)
    
    
    113
    
    
    
    (8
    )
    
    
    (15
    )
    
    
    (190
    )Net
    
    
    (201
    )
    
    
    14
    
    
    
    24
    
    
    
    338Total other comprehensive income (loss)
    
    
    661
    
    
    
    (366
    )
    
    
    911
    
    
    
    678Comprehensive income
    
    $
    11,809
    
    
    $
    7,723
    
    
    $
    23,198
    
    
    $
    24,181
  Foreign
    
    
    
    
    
    
    AccumulatedUnrealized
    
    
    Currency
    
    
    Unrealized
    
    
    OtherLosses from
    
    
    Translation
    
    
    Gains (Losses)
    
    
    ComprehensivePension plan
    
    
    Adjustments
    
    
    From Investments
    
    
    Loss(in thousands)Balance at September 30, 2006
    
    $
    (1,018
    )
    
    $
    (368
    )
    
    $
    614
    
    
    $
    (772
    )Balance at December 31, 2005
    
    $
    (1,018
    )
    
    $
    (392
    )
    
    $
    (273
    )
    
    $
    (1,683
    )
 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 30,2006
    
    2005
    
    2006
    
    2005(In thousands, except per share amounts)(unaudited)Net sales
    
    $
    106,384
    
    
    $
    100,523
    
    
    $
    314,300
    
    
    $
    303,050Net income
    
    $
    11,148
    
    
    $
    9,225
    
    
    $
    21,714
    
    
    $
    22,824Basic earnings per share
    
    $
    0.20
    
    
    $
    0.17
    
    
    $
    0.40
    
    
    $
    0.42Diluted earnings per share
    
    $
    0.20
    
    
    $
    0.17
    
    
    $
    0.39
    
    
    $
    0.42
 6. SHAREBASED PAYMENT ARRANGEMENTS
     Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2005
    
    
    September 30, 2005(in thousands, except per share amounts)Net income, as reported
    
    $
    8,089
    
    
    $
    23,503Less: Total stock-based employee compensation expense determined
under fair value based method, net of taxes
    
    
    96
    
    
    
    392Net income, pro forma
    
    $
    7,993
    
    
    $
    23,111Earnings per share:Basic earnings per share  as reported
    
    $
    0.15
    
    
    $
    0.44Basic earnings per share  pro forma
    
    $
    0.15
    
    
    $
    0.43Diluted earnings per share  as reported
    
    $
    0.15
    
    
    $
    0.44Diluted earnings per share  pro forma
    
    $
    0.15
    
    
    $
    0.43
   10




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##### Table of Contents



Nine Months
    
    Nine MonthsEnded
    
    EndedSeptember 30, 2006
    September 30, 2005Risk-free interest rate
    
    Not Applicable
    
    
    4.42
    %Expected dividend yield
    
    Not Applicable
    
    
    1.71
    %Expected volatility
    
    Not Applicable
    
    
    76.99
    %Expected term (in years)
    
    Not Applicable
    
    
    7.5
   Weighted
    
    
    
    
    
    
    Weighted
    
    
    AggregateAverage
    
    
    Weighted
    
    
    Average
    
    
    Intrinsic Value atNumber of
    
    
    Average
    
    
    Remaining
    
    
    September 30,Options
    
    
    Exercise
    
    
    Contractual
    
    
    2006Shares
    
    
    Price
    
    
    Term
    
    
    (in thousands)Outstanding beginning of period
    
    
    3,777,969
    
    
    $
    9.10Granted
    
    
    
    
    
    
    Exercised
    
    
    (1,401,860
    )
    
    
    8.25Forfeited
    
    
    (13,441
    )
    
    
    7.58Expired
    
    
    (16,000
    )
    
    
    7.28Outstanding end of period
    
    
    2,346,668
    
    
    
    9.64
    
    
    
    2.81
    
    
    $
    432Options exercisable at end of period
    
    
    1,629,382
    
    
    
    8.86
    
    
    
    1.13
    
    
    $
    370
  7. RESTRUCTURING CHARGES
   11




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BeginningAccrual
    
    
    Amounts
    
    
    Amounts
    
    
    Amounts
    
    
    Ending(in thousands)
    
    
    Expensed
    
    
    From Acquisitions
    
    
    Paid
    
    
    AccrualRestructuring accrual
    
    $
    1,796
    
    
    $
    2,609
    
    
    $
    338
    
    
    $
    2,934
    
    
    $
    1,133
 8. GOODWILL AND INTANGIBLE ASSETS
  September 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Goodwill
    
    $
    380,051
    
    
    $
    372,460Less accumulated amortization
    
    
    59,559
    
    
    
    59,012$
    320,492
    
    
    $
    313,448Other intangible assets:Non-compete agreements
    
    $
    13,534
    
    
    $
    13,534Core technology
    
    
    13,839
    
    
    
    13,753Customer base
    
    
    28,346
    
    
    
    24,663Trade names
    
    
    20,119
    
    
    
    19,272Purchased data processing software
    
    
    73,478
    
    
    
    73,478Acquired database costs
    
    
    21,591
    
    
    
    21,591Perpetual software license agreement, net
    
    
    733
    
    
    
    1,333Software development costs, net
    
    
    9,288
    
    
    
    7,289Database development costs, net
    
    
    3,389
    
    
    
    1,993Deferred financing costs
    
    
    12,019
    
    
    
    11,180196,336
    
    
    
    188,086Less accumulated amortization
    
    
    148,146
    
    
    
    136,818$
    48,190
    
    
    $
    51,268
 9. PROPERTY AND EQUIPMENT
  September 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Property and equipment
    
    $
    161,384
    
    
    $
    152,297Less accumulated depreciation
    
    
    111,254
    
    
    
    103,767$
    50,130
    
    
    $
    48,530
 10. CONTINGENCIES
   12




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11. RELATED PARTY TRANSACTIONS
    12. CREDIT FACILITY
  13. SUBSEQUENT EVENTS
 13




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14




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##### Table of Contents



Company Profile
 info info info info
 Business Databases
    
    Consumer Databases 15 Million U.S. and Canadian Businesses
    
     205 Million Consumers 12.5 Million Executives and Professionals
    
     129 Million Households 5.6 Million Small Business Owners
    
     75 Million Homeowners 5 Million Business Addresses with Color Photos
    
     15 Million New Movers Per Year 2.6 Million Brand New Businesses
    
     3 Million New Homeowners Per Year 3.6 Million Yellow page Advertisers
    
     1.7 Million Bankruptcies 1.7 Million Bankruptcy Filers
    
     129 Million Occupants 900,000 Global Businesses and 2 Million Executives
    
     130 Million Consumer Email Addresses 600,000 Manufacturers 410,000 Big Businesses 1.5 Million Business Email Addresses 780,000 Medical Professionals 380,000 U.S. Houses of Worship
     15




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##### Table of Contents




    
    Continued migration from one-time use customers to subscription-based customers of
our Internet based services called infoUSA.com, Salesgenie.com, Credit.net,
SalesLeadsUSA.info, PolkCityDirectories.com and infoUSACiti.com.
    
    Continued improvements of the content and accuracy of our database. Adding more content,
such as detailed business descriptions, more executives, hours of operation, credit cards
accepted, UCC filings, URL address and other information.
    
    Expand international business and executive databases.
    
    Increase investments in merchandising, advertising and branding using the mass media, key
word search, and banner advertising.
    
    Company has taken store front pictures of 3 million plus businesses that are part of our
Business Credit Report available on Credit.net.
 Sales & Marketing Strategy
 info Salesgenie.com
 info
 info
 info DM News, Target, Fortune, Forbes, Inc.,
Entrepreneur and Business 2.0 USA Today. Salesgenie.com. Salesgenie.ca info
  Salesgenie.com, Credit.net . . . Subscription Model
 info
 16




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##### Table of Contents



Our Growth Strategy
 info
   info
   17




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##### Table of Contents



Our International Growth Strategy
   RESULTS OF OPERATIONS
  THREE MONTHS
    
    
    THREE MONTHS
    
    
    NINE MONTHS
    
    
    NINE MONTHSENDED
    
    
    ENDED
    
    
    ENDED
    
    
    ENDEDSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005CONSOLIDATED STATEMENT OF OPERATIONS DATA:Net sales
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Costs and expenses:Database and production costs
    
    
    25
    
    
    
    27
    
    
    
    25
    
    
    
    27Selling, general and administrative
    
    
    51
    
    
    
    49
    
    
    
    54
    
    
    
    49Depreciation
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    4Amortization
    
    
    2
    
    
    
    5
    
    
    
    4
    
    
    
    5Total costs and expenses
    
    
    81
    
    
    
    84
    
    
    
    86
    
    
    
    85Operating income
    
    
    19
    
    
    
    16
    
    
    
    14
    
    
    
    15Other expense, net
    
    
    (2
    )
    
    
    (3
    )
    
    
    (3
    )
    
    
    (2
    )Income before income taxes
    
    
    17
    
    
    
    13
    
    
    
    11
    
    
    
    13Income taxes
    
    
    7
    
    
    
    5
    
    
    
    4
    
    
    
    5Net income
    
    
    10
    %
    
    
    8
    %
    
    
    7
    %
    
    
    8
    %
 18




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THREE MONTHS
    
    
    THREE MONTHS
    
    
    NINE MONTHS
    
    
    NINE MONTHSENDED
    
    
    ENDED
    
    
    ENDED
    
    
    ENDEDSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005(dollars in thousands)
    
    
    (dollars in thousands)SALES BY SEGMENT:infoUSA Group
    
    $
    37,845
    
    
    $
    35,312
    
    
    $
    112,861
    
    
    $
    107,879Donnelley Group
    
    
    68,539
    
    
    
    60,224
    
    
    
    196,899
    
    
    
    176,488Total
    
    $
    106,384
    
    
    $
    95,536
    
    
    $
    309,760
    
    
    $
    284,367SALES BY SEGMENT AS A PERCENTAGE OF NET
SALES:infoUSA Group
    
    
    36
    %
    
    
    37
    %
    
    
    36
    %
    
    
    38
    %Donnelley Group
    
    
    64
    
    
    
    63
    
    
    
    64
    
    
    
    62Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Net sales
  info info info
  Database and production costs
 info info
 Selling, general and administrative expenses
  19




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Depreciation expense
  Amortization expense
  Operating income
  info info
  Other expense, net
  20




---



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Income taxes
  Liquidity and Capital Resources
 Overview
      Selected Consolidated Statements of Cash Flows Information
 21




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Accounting in a Purchase Business Combination for
Deferred Revenue of an Acquiree
   Selected Consolidated Balance Sheet Information
        22




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Accounting Standards
 Share-Based Payments
 Accounting for
Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140
 Accounting for Servicing of Financial Assets-an
amendment of FASB Statement No. 140.
 Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109
 Fair Value Measurements.
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans.
 Considering the Effects
of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements
 23




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Inflation
  Factors That May Affect Operating Results
  Our business would be harmed if we do not continue to successfully implement our Internet
strategy.
 info
  
    
    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 markets are highly competitive and many of our competitors have greater resources than we
do.
   Changes in the direct marketing industry and in the industries in which our customers operate
may adversely affect our business.
  24




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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.
  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 laws and regulations relating to data privacy could adversely affect our business.
  25




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Our business would be harmed if we do not successfully integrate future acquisitions.
  
    
   (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal controls over financial reporting
  26




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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 27




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SIGNATURES
  infoUSA Inc.Date: November 9, 2006
    /s/ Stormy L. DeanStormy L. Dean, Chief Financial Officer 28




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INDEX TO EXHIBITS
 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