##### 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 June 30, 2005 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For
 the transition period from  to
 Commission
File Number 0-19598
 infoUSA INC.
 
  DELAWARE
    
    47-0751545(State or other jurisdiction of
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
 þ o




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PART I  FINANCIAL INFORMATION AND MANAGEMENTS DISCUSSION AND ANALYSISItem 1. Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004
4Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2005 and 2004
5Consolidated Statements of Cash Flows for the Six Months ended June 30, 2005 and 2004
6Notes to Consolidated Financial Statements
7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
14Item 3. Quantitative and Qualitative Disclosures about Market Risk
23Item 4. Controls and Procedures
23PART II  OTHER INFORMATION
25Item 1. Legal Proceedings
25Item 6. Exhibits
25Signature
26Index to Exhibits
27Certification 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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ITEM 1. FINANCIAL STATEMENTS
 infoUSA
INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 June 30,
    
    December 31,2005
    
    2004(UNAUDITED)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,714
    
    
    $
    10,404Marketable securities
    
    
    4,785
    
    
    
    3,049Trade accounts receivable, net of allowances of $1,452 and $1,394, respectively
    
    
    43,913
    
    
    
    51,707List brokerage trade accounts receivable
    
    
    22,222
    
    
    
    19,635Deferred income taxes
    
    
    1,775
    
    
    
    3⁄4Prepaid expenses
    
    
    6,020
    
    
    
    6,544Deferred marketing costs
    
    
    3,538
    
    
    
    2,632Total current assets
    
    
    90,967
    
    
    
    93,971Property and equipment, net
    
    
    46,225
    
    
    
    42,537Goodwill, net
    
    
    303,219
    
    
    
    298,708Intangible assets, net
    
    
    59,280
    
    
    
    66,578Other assets
    
    
    11,273
    
    
    
    7,642$
    510,964
    
    
    $
    509,436LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    30,076
    
    
    $
    34,134Accounts payable
    
    
    16,962
    
    
    
    21,268List brokerage trade accounts payable
    
    
    17,660
    
    
    
    15,427Accrued payroll expenses
    
    
    20,171
    
    
    
    15,917Accrued expenses
    
    
    5,009
    
    
    
    7,028Income taxes payable
    
    
    1,359
    
    
    
    3,730Deferred income taxes
    
    
    3⁄4
    
    
    
    170Deferred revenue
    
    
    55,000
    
    
    
    53,034Total current liabilities
    
    
    146,237
    
    
    
    150,708Long-term debt, net of current portion
    
    
    161,606
    
    
    
    162,092Deferred income taxes
    
    
    21,060
    
    
    
    23,460Other liabilities
    
    
    1,701
    
    
    
    1,701Stockholders equity:Common stock, $.0025 par value. Authorized 295,000,000 shares; 53,817,433
shares issued and 53,532,590 outstanding at June 30, 2005 and 53,555,331
shares issued and 53,177,737 outstanding at December 31, 2004
    
    
    134
    
    
    
    134Paid-in capital
    
    
    108,998
    
    
    
    106,669Retained earnings
    
    
    74,540
    
    
    
    69,770Treasury stock, at cost, 284,843 shares held at June 30, 2005 and 377,594 held
at December 31, 2004
    
    
    (1,749
    )
    
    
    (2,311
    )Notes receivable from officers
    
    
    (337
    )
    
    
    (334
    )Accumulated other comprehensive loss
    
    
    (1,226
    )
    
    
    (2,453
    )Total stockholders equity
    
    
    180,360
    
    
    
    171,475$
    510,964
    
    
    $
    509,436
 
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infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
 THREE MONTHS ENDED
    
    SIX MONTHS ENDEDJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(UNAUDITED)
    
    (UNAUDITED)Net sales
    
    $
    93,736
    
    
    $
    83,794
    
    
    $
    188,831
    
    
    $
    164,605Costs and expenses:Database and production costs
    
    
    26,945
    
    
    
    24,823
    
    
    
    52,973
    
    
    
    48,684Selling, general and administrative (excluding
non-cash stock option compensation expense of $0
and $458 for the three months and $(289) and
$640 for the six months ended June 30, 2005 and
2004, respectively)
    
    
    46,123
    
    
    
    40,021
    
    
    
    90,521
    
    
    
    80,200Depreciation and amortization of operating assets
    
    
    3,366
    
    
    
    3,560
    
    
    
    7,274
    
    
    
    6,874Amortization of intangible assets
    
    
    4,469
    
    
    
    3,616
    
    
    
    8,873
    
    
    
    7,062Non-cash stock option compensation (benefit)
    
    
    
    
    
    
    458
    
    
    
    (289
    )
    
    
    640Litigation settlement charge
    
    
    126
    
    
    
    
    
    
    
    126
    
    
    
    Restructuring charges
    
    
    917
    
    
    
    1,007
    
    
    
    1,620
    
    
    
    1,622Acquisition costs
    
    
    
    
    
    
    239
    
    
    
    354
    
    
    
    242Total operating costs and expenses
    
    
    81,946
    
    
    
    73,724
    
    
    
    161,452
    
    
    
    145,324Operating income
    
    
    11,790
    
    
    
    10,070
    
    
    
    27,379
    
    
    
    19,281Other income (expense):Investment income (loss)
    
    
    1,074
    
    
    
    (243
    )
    
    
    2,394
    
    
    
    (42
    )Other charges
    
    
    
    
    
    
    (2,079
    )
    
    
    
    
    
    
    (2,223
    )Interest expense
    
    
    (2,979
    )
    
    
    (1,761
    )
    
    
    (5,718
    )
    
    
    (3,975
    )Income before income taxes
    
    
    9,885
    
    
    
    5,987
    
    
    
    24,055
    
    
    
    13,041Income taxes
    
    
    3,529
    
    
    
    2,275
    
    
    
    8,641
    
    
    
    4,956Net income
    
    $
    6,356
    
    
    $
    3,712
    
    
    $
    15,414
    
    
    $
    8,085Basic earnings per share:Basic earnings per share:
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.15Weighted average shares outstanding:
    
    
    54,021
    
    
    
    52,540
    
    
    
    53,859
    
    
    
    52,440Diluted earnings per share:Diluted earnings per share:
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.15Weighted average shares outstanding:
    
    
    54,052
    
    
    
    53,106
    
    
    
    53,961
    
    
    
    53,030
 
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infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 SIX MONTHS ENDEDJune 30,2005
    
    2004(UNAUDITED)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    15,414
    
    
    $
    8,085Adjustments to reconcile net income to net cash provided by operating activities:Depreciation of operating assets
    
    
    7,274
    
    
    
    6,874Amortization of intangible assets
    
    
    8,873
    
    
    
    7,062Amortization of deferred financing costs
    
    
    305
    
    
    
    77Deferred income taxes
    
    
    (664
    )
    
    
    (2,874
    )Tax benefit related to employee stock options
    
    
    
    
    
    
    762Non-cash stock option compensation expense
    
    
    (289
    )
    
    
    640Non-cash 401(k) contribution in common stock
    
    
    1,029
    
    
    
    812(Gain) loss on sale of assets and marketable securities
    
    
    (2,289
    )
    
    
    79Non-cash other charges
    
    
    
    
    
    
    796Changes in assets and liabilities, net of effect of acquisitions:Trade accounts receivable
    
    
    9,572
    
    
    
    213List brokerage trade accounts receivable
    
    
    (2,604
    )
    
    
    1,316Prepaid expenses and other assets
    
    
    (94
    )
    
    
    (151
    )Deferred marketing costs
    
    
    (906
    )
    
    
    2,417Accounts payable
    
    
    (4,708
    )
    
    
    (2,766
    )List brokerage trade accounts payable
    
    
    2,242
    
    
    
    (2,206
    )Income taxes receivable and payable, net
    
    
    (4,146
    )
    
    
    1,089Accrued expenses and other liabilities
    
    
    4,192
    
    
    
    3,991Net cash provided by operating activities
    
    
    33,201

    
    
    
    26,216CASH FLOWS FROM INVESTING ACTIVITIES:Sale of marketable securities
    
    
    5,611
    
    
    
    1,704Purchase of marketable securities
    
    
    (3,907
    )
    
    
    (2,929
    )Purchases of property and equipment
    
    
    (3,044
    )
    
    
    (2,491
    )Acquisitions of businesses, net of cash acquired
    
    
    (8,688
    )
    
    
    (109,356
    )Software and database development costs
    
    
    (2,878
    )
    
    
    (1,032
    )Net cash (used in) investing activities
    
    
    (12,906
    )
    
    
    (114,104
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of long-term debt
    
    
    (39,309
    )
    
    
    (179,649
    )Proceeds of long-term debt
    
    
    26,100
    
    
    
    272,833Deferred financing costs paid
    
    
    (7
    )
    
    
    (2,651
    )Dividends paid
    
    
    (10,646
    )
    
    
    Proceeds from exercise of stock options
    
    
    1,877
    
    
    
    4,045Net cash provided by (used in) financing activities
    
    
    (21,985
    )
    
    
    94,578Net increase (decrease) in cash and cash equivalents
    
    
    (1,690
    )
    
    
    6,690Cash and cash equivalents, beginning of period
    
    
    10,404
    
    
    
    2,686Cash and cash equivalents, end of period
    
    $
    8,714
    
    
    $
    9,376Supplemental cash flow information:Interest paid
    
    $
    5,795
    
    
    $
    3,651Income taxes paid
    
    $
    12,580
    
    
    $
    5,792
 
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infoUSA INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. GENERAL
   2. EARNINGS PER SHARE INFORMATION
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In Thousands)2005
    
    2004
    
    2005
    
    2004Weighted average number of shares used in basic EPS
    
    
    54,021
    
    
    
    52,540
    
    
    
    53,859
    
    
    
    52,440Net additional common stock equivalent shares
outstanding after assumed exercise of stock options
    
    
    31
    
    
    
    566
    
    
    
    102
    
    
    
    590Weighted average number of shares outstanding used in
diluted EPS
    
    
    54,052
    
    
    
    53,106
    
    
    
    53,961
    
    
    
    53,030
 3. SEGMENT INFORMATION
  info
 info
 info
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For The Three Months Ended June 30, 2005infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    34,698
    
    
    $
    59,038
    
    
    $
    
    
    
    $
    93,736Litigation settlement
    
    
    
    
    
    
    
    
    
    
    (126
    )
    
    
    (126
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (917
    )
    
    
    (917
    )Operating income (loss)
    
    
    10,243
    
    
    
    24,462
    
    
    
    (22,915
    )
    
    
    11,790Investment income
    
    
    
    
    
    
    
    
    
    
    1,074
    
    
    
    1,074Interest expense
    
    
    
    
    
    
    
    
    
    
    (2,979
    )
    
    
    (2,979
    )Income (loss) before income taxes
    
    
    10,243
    
    
    
    24,462
    
    
    
    (24,820
    )
    
    
    9,885Goodwill, net of amortization
    
    
    41,181
    
    
    
    262,038
    
    
    
    
    
    
    
    303,219
 For The Three Months Ended June 30, 2004InfoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    39,216
    
    
    $
    44,578
    
    
    $
    
    
    
    $
    83,794Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    (458
    )
    
    
    (458
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (1,007
    )
    
    
    (1,007
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (239
    )
    
    
    (239
    )Operating income (loss)
    
    
    13,607
    
    
    
    18,854
    
    
    
    (22,391
    )
    
    
    10,070Investment (loss)
    
    
    
    
    
    
    
    
    
    
    (243
    )
    
    
    (243
    )Other charges
    
    
    
    
    
    
    
    
    
    
    (2,079
    )
    
    
    (2,079
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (1,761
    )
    
    
    (1,761
    )Income (loss) before income taxes
    
    
    13,607
    
    
    
    18,854
    
    
    
    (26,474
    )
    
    
    5,987Goodwill, net of amortization
    
    
    41,243
    
    
    
    257,465
    
    
    
    
    
    
    
    298,708
 For The Six Months Ended June 30, 2005InfoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    72,567
    
    
    $
    116,264
    
    
    $
    
    
    
    $
    188,831Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    289Litigation settlement
    
    
    
    
    
    
    
    
    
    
    (126
    )
    
    
    (126
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (1,620
    )
    
    
    (1,620
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (354
    )
    
    
    (354
    )Operating income (loss)
    
    
    22,490
    
    
    
    47,481
    
    
    
    (42,592
    )
    
    
    27,379Investment income
    
    
    
    
    
    
    
    
    
    
    2,394
    
    
    
    2,394Interest expense
    
    
    
    
    
    
    
    
    
    
    (5,718
    )
    
    
    (5,718
    )Income (loss) before income taxes
    
    
    22,490
    
    
    
    47,481
    
    
    
    (45,916
    )
    
    
    24,055Goodwill, net of amortization
    
    
    41,181
    
    
    
    262,038
    
    
    
    
    
    
    
    303,219
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For The Six Months Ended June 30, 2004InfoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    80,107
    
    
    $
    84,498
    
    
    $
    
    
    
    $
    164,605Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    (640
    )
    
    
    (640
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (1,622
    )
    
    
    (1,622
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (242
    )
    
    
    (242
    )Operating income (loss)
    
    
    26,231
    
    

    
    39,284
    
    
    
    (46,234
    )
    
    
    19,281Investment income
    
    
    
    
    
    
    
    
    
    
    (42
    )
    
    
    (42
    )Other charges
    
    
    
    
    
    
    
    
    
    
    (2,223
    )
    
    
    (2,223
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (3,975
    )
    
    
    (3,975
    )Income (loss) before income taxes
    
    
    26,231
    
    
    
    39,284
    
    
    
    (52,474
    )
    
    
    13,041Goodwill, net of amortization
    
    
    41,243
    
    
    
    257,465
    
    
    
    
    
    
    
    298,708
 4. COMPREHENSIVE INCOME (LOSS)
  For The Three
    
    For The SixMonths Ended
    
    Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(In thousands)
    
    (In thousands)Net income
    
    $
    6,356
    
    
    $
    3,712
    
    
    $
    15,414
    
    
    $
    8,085Other comprehensive income:Unrealized gain from investments:Unrealized gains (losses)
    
    
    (809
    )
    
    
    89
    
    
    
    1,125
    
    
    
    (190
    )Related tax expense
    
    
    291
    
    
    
    (34
    )
    
    
    (405
    )
    
    
    72Net
    
    
    (518
    )
    
    
    55
    
    
    
    720
    
    
    
    (118
    )Foreign currency translation adjustments:Unrealized gains
    
    
    86
    
    
    
    
    
    
    
    507
    
    
    
    Related tax expense
    
    
    (31
    )
    
    
    
    
    
    
    (183
    )
    
    
    Net
    
    
    55
    
    
    
    
    
    
    
    324
    
    
    
    Total other comprehensive income (loss)
    
    
    (463
    )
    
    
    55
    
    
    
    1,044
    
    
    
    (118
    )Comprehensive income
    
    $
    5,893
    
    
    $
    3,767
    
    
    $
    16,458
    
    
    $
    7,967
  Foreign
    
    
    
    
    
    AccumulatedUnrealized
    
    Currency
    
    Unrealized
    
    OtherLosses
    
    Translation

    
    Gains (Losses)
    
    ComprehensivePension plan
    
    Adjustments
    
    On Securities
    
    Loss(in thousands)Balance at June 30, 2005
    
    $
    (1,055
    )
    
    $
    (378
    )
    
    $
    207
    
    
    $
    (1,226
    )Balance at December 31, 2004
    
    $
    (1,055
    )
    
    $
    (885
    )
    
    $
    (513
    )
    
    $
    (2,453
    )
 5. ACQUISITIONS
   9




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Accounting in a Purchase Business
Combination for Deferred Revenue of an Acquiree
    For the three months ended
    
    For the six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(In thousands, except per share amounts)(unaudited)Net sales
    
    $
    94,312
    
    
    $
    97,557
    
    
    $
    189,983
    
    
    $
    198,603Net income
    
    $
    6,069
    
    
    $
    (1,209
    )
    
    $
    14,840
    
    
    $
    971Basic earnings per share
    
    $
    0.11
    
    
    $
    (0.02
    )
    
    $
    0.28
    
    
    $
    0.02Diluted earnings per share
    
    $
    0.11
    
    
    $
    (0.02
    )
    
    $
    0.28
    
    
    $
    0.02
 6. NON-CASH STOCK COMPENSATION EXPENSE
 Accounting for
Stock Issued to Employees
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##### Table of Contents



Accounting for Stock-Based Compensation
 Three months ended
    
    Six Months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in thousands, except
    
    (in thousands, exceptper share amounts)
    
    per share amounts)Net income, as reported
    
    $
    6,356
    
    
    $
    3,712
    
    
    $
    15,414
    
    
    $
    8,085Less: Total stock-based
employee compensation
expense determined under
fair value based method,
net of taxes
    
    
    127
    
    
    
    620
    
    
    
    296
    
    
    
    1,285Net income, pro forma
    
    $
    6,229
    
    
    $
    3,092
    
    
    $
    15,118
    
    
    $
    6,800Earnings per share:Basic  as reported
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.15Basic  pro forma
    
    $
    0.12
    
    
    $
    0.06
    
    
    $
    0.28
    
    
    $
    0.13Diluted  as reported
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.29
    
    
    $
    0.15Diluted  pro forma
    
    $
    0.12
    
    
    $
    0.06
    
    
    $
    0.28
    
    
    $
    0.13
     7. RESTRUCTURING CHARGES
    11




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##### Table of Contents



Beginning
    
    Amounts
    
    Amounts From
    
    Amounts
    
    EndingAccrual
    
    Expensed
    
    Acquisition
    
    Paid
    
    Accrual(In thousands)Restructuring accrual
    
    $
    629
    
    
    $
    1,619
    
    
    $
    96
    
    
    $
    993
    
    
    $
    1,351
 8. GOODWILL AND INTANGIBLE ASSETS
  June 30,
    
    December 31,2005
    
    2004(In thousands)Goodwill
    
    $
    362,231
    
    
    $
    357,720Less accumulated amortization
    
    
    59,012
    
    
    
    59,012Goodwill, net
    
    $
    303,219
    
    
    $
    298,708Intangible assets:Non-compete agreements
    
    
    13,534
    
    
    
    13,534Core technology
    
    
    13,753
    
    
    
    13,753Customer base
    
    
    24,663
    
    
    
    24,663Trade names
    
    
    19,259
    
    
    
    19,259Purchased data processing software
    
    
    73,478
    
    
    
    73,478Acquired database costs
    
    
    21,591
    
    
    
    21,591Perpetual software license agreement, net
    
    
    1,733
    
    
    
    2,133Software development costs, net
    
    
    7,025
    
    
    
    5,983Database development costs, net
    
    
    1,228
    
    
    
    461Deferred financing costs
    
    
    11,130
    
    
    
    11,123187,394
    
    
    
    185,978Less accumulated amortization
    
    
    128,114
    
    
    
    119,400Intangible assets, net
    
    $
    59,280
    
    
    $
    66,578
 9. PROPERTY AND EQUIPMENT
  June 30,
    
    December 31,2005
    
    2004(In thousands)Property and equipment
    
    $
    145,537
    
    
    $
    135,789Less accumulated depreciation
    
    
    99,312
    
    
    

    93,252$
    46,225
    
    
    $
    42,537
 10. RELATED PARTY TRANSACTIONS
    12




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11. SUBSEQUENT EVENT
  13




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Recent Significant Development
 info info info
 Company Profile
 info info info info
 Business Databases
    
    
    
    
    
    Consumer Databases
    
    14 Million U.S. and Canadian Businesses
    
    
    
    
    
    180 Million Consumers
    
    11.5 Million Executives and Professionals
    
    
    
    
    
    112 Million Households
    
    5 Million Small Business Owners
    
    
    
    
    
    65 Million Homeowners
    
    5 Million Business Addresses with Color Photos
    
    
    
    
    
    15 Million New Movers Per Year
 14




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
    
    2.6 Million Brand New Businesses
    
    
    
    
    
    3.1 Million New Homeowners Per Year
    
    3.6 Million Yellow page Advertisers
    
    1.7 Million Bankruptcy Filers
    
    900,000 Global Businesses and 2 Million Executives
    
    600,000 Manufacturers
    
    410,000 Big Businesses
     
    
    Yellow Page Advertising Expense Report  The report will include all spending by small
businesses for Yellow Page advertising. Yellow Page publishers and web advertising firms
will be able to sort this information by many selects, including by individual business as
well as by SIC code and any geographic region.
    
    Business Address Photographs- The Company introduced the industrys first pictures of
storefronts with corresponding longitude and latitude coordinates to its Business Database.
Important applications for this data include business credit reports/applications, directory
assistance, wireless navigation devices and insurance appraisals/underwriting.
    
    Sales Genie
    
    Credit.Net
 Sales & Marketing Strategy
 info info
 info
 info
  15




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##### Table of Contents



Sales Genie, Credit.Net, SalesLeadsUSA . . . Subscription Model
 info
     Our Growth Strategy
  info
    16




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##### Table of Contents



THREE MONTHS
    
    THREE MONTHS
    
    SIX MONTHS
    
    SIX MONTHSENDED
    
    ENDED
    
    ENDED
    
    ENDEDJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004CONSOLIDATED STATEMENT OF OPERATIONS
DATA:Net sales
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Costs and expenses:Database and production costs
    
    
    28
    
    
    
    30
    
    
    
    28
    
    
    
    30Selling, general and administrative
    
    
    49
    
    
    
    48
    
    
    
    48
    
    
    
    49Depreciation
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4Amortization
    
    
    5
    
    
    
    4
    
    
    
    5
    
    
    
    4Non-cash stock compensation expense
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    Litigation settlement charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring charges
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    87
    
    
    
    88
    
    
    
    86
    
    
    
    88Operating income
    
    
    13
    
    
    
    12
    
    
    
    14
    
    
    
    12Other expense, net
    
    
    (1
    )
    
    
    (5
    )
    
    
    (1
    )
    
    
    (4
    )Income before income taxes
    
    
    12
    
    
    
    7
    
    
    
    13
    
    
    
    8Income taxes
    
    
    5
    
    
    
    3
    
    
    
    5
    
    
    
    3Net income
    
    
    7
    %
    
    
    4
    %
    
    
    8
    %
    
    
    5
    %
  THREE MONTHS
    
    THREE MONTHS
    
    SIX MONTHS
    
    SIX MONTHSENDED
    
    ENDED
    
    ENDED
    
    ENDEDJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(in thousands)
    
    (in thousands)SALES BY SEGMENT:infoUSA Group
    
    $
    34,698
    
    
    $
    39,216
    
    
    $
    72,567
    
    
    $
    80,107Donnelley Group
    
    
    59,038
    
    
    
    44,578
    
    
    
    116,264
    
    
    
    84,498Total
    
    $
    93,736
    
    
    $
    83,794
    
    
    $
    188,831
    
    
    $
    164,605SALES BY SEGMENT AS A
PERCENTAGE OF NET
SALES:infoUSA Group
    
    
    37
    %
    
    
    47
    %
    
    
    38
    %
    
    
    49
    %Donnelley Group
    
    
    63
    
    
    
    53
    
    
    
    62
    
    
    
    51Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Net sales
 info
  17




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##### Table of Contents



Database and production costs
  Selling, general and administrative expenses
  Depreciation expense
  Amortization expense
  Non-cash stock compensation expense
  Restructuring costs
  Acquisition costs
  Operating income
  18




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##### Table of Contents



Other income (expense), net
   Income taxes
  Liquidity and Capital Resources
 Overview
      19




---



##### Table of Contents



Selected Consolidated Statements of Cash Flows Information
      Selected Consolidated Balance Sheet Information
       Off-Balance Sheet Arrangements
  Accounting Standards
  20




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##### Table of Contents



Inflation
  Factors That May Affect Operating Results
 There can be no assurance that a transaction will result from the proposal we received from an
affiliate of Vinod Gupta. Our management may spend a significant amount of time and resources
evaluating and pursuing strategic options.
 info info
 Our markets are highly competitive and many of our competitors have greater resources than we do.
   We are leveraged. If we are unable to service our debt as it becomes due, our business would
be harmed.
   21




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##### Table of Contents



Fluctuations in our operating results may result in decreases in the market price of our
common stock.
  If we do not adapt our products and services to respond to changes in technology, they could
become obsolete.
   
    
    Fail to develop products and services that are well suited to the Internet market;
    
    Experience difficulties that delay or prevent the successful development, introduction
and marketing of these products and services; or
    
    Fail to achieve sufficient traffic to our Internet sites to generate significant
revenues, or to successfully implement electronic commerce operations.
 Our ability to increase our revenues will depend to some extent upon introducing new products
and services, and if the marketplace does not accept these new products and services, our revenues
may decline.
  Changes in laws and regulations relating to data privacy could adversely affect our business.
  22




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Our business would be harmed if we do not successfully integrate future acquisitions.
  
 
  
 
 (a) Evaluation of disclosure controls and procedures
  
    
    The Company is implementing a formal review process of cost method investments.
    
    The Company has hired a Corporate Controller with a high level of accounting expertise.
    
    The Company has hired a Director of Income Tax and has implemented improved processes and
controls within the Income Tax department.
    
    The Company is providing continuing training to accounting staff on non-routine technical
accounting matters.
    
    The Company is assessing the existing accounting personnel to ensure the correct
individuals with the necessary expertise have been placed in the appropriate positions.
  23




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##### Table of Contents



(b) Changes in internal controls over financial reporting
  24




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info info info
 
   31.1*
    
    
    
    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.31.2*
    
    
    
    Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.32.1*
    
    
    
    Certification of Chief Executive Officer pursuant to
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, filed herewith.32.2*
    
    
    
    Certification of Chief Financial Officer pursuant to
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed herewith.
 
 *
    
    Filed herewith 25




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##### Table of Contents



infoUSA INC.Date: August 9, 2005
    
    /s/ Alan HeckartAlan Heckart, Controller(principal accounting officer)
 26




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##### Table of Contents



31.1*
    
    
    
    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.31.2*
    
    
    
    Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.32.1*
    
    
    
    Certification of Chief Executive Officer pursuant to
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, filed herewith.32.2*
    
    
    
    Certification of Chief Financial Officer pursuant to
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed herewith.
 
 *
    
    Filed herewith 27