##### 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, 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
 Commission File Number 0-19598
 infoUSA INC.
 (exact name of registrant specified in its charter)
 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)
   (Former name, former address and former fiscal year, if changed since last report)
  þ o
  o þ o
 o þ




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##### 



infoUSA INC.
 INDEX
  
 PART I  FINANCIAL INFORMATION AND MANAGEMENTS DISCUSSION AND ANALYSISItem 1. Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows for the Six Months ended June 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    25PART II  OTHER INFORMATION
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    26Signature
    
    
    27Index to Exhibits
    
    
    28Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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##### Table of Contents



ITEM 1. FINANCIAL STATEMENTS
 infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 June 30,
    
    
    December 31,2006
    
    
    2005(UNAUDITED)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,599
    
    
    $
    792Marketable securities
    
    
    2,269
    
    
    
    2,050Trade accounts receivable, net of allowances of $1,652 and $1,292, respectively
    
    
    38,572
    
    
    
    52,693List brokerage trade accounts receivable
    
    
    49,345
    
    
    
    50,384Deferred income taxes
    
    
    5,434
    
    
    
    3,234Prepaid expenses
    
    
    5,660
    
    
    
    5,386Deferred marketing costs
    
    
    3,713
    
    
    
    2,853Total current assets
    
    
    108,592
    
    
    
    117,392Property and equipment, net
    
    
    48,841
    
    
    
    48,530Goodwill
    
    
    318,088
    
    
    
    313,448Intangible assets, net
    
    
    49,812
    
    
    
    51,268Other assets
    
    
    10,694
    
    
    
    13,129$
    536,027
    
    
    $
    543,767LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    5,296
    
    
    $
    5,644Accounts payable
    
    
    15,719
    
    
    
    12,958List brokerage trade accounts payable
    
    
    43,037
    
    
    
    44,019Accrued payroll expenses
    
    
    19,509
    
    
    
    18,973Accrued expenses
    
    
    4,473
    
    
    
    6,955Income taxes payable
    
    
    435
    
    
    
    7,550Deferred revenue
    
    
    75,087
    
    
    
    86,080Total current liabilities
    
    
    163,556
    
    
    
    182,179Long-term debt, net of current portion
    
    
    136,652
    
    
    
    142,362Deferred income taxes
    
    
    21,061
    
    
    
    19,769Other liabilities
    
    
    2,024
    
    
    
    1,590Stockholders equity:Common stock, $.0025 par value. Authorized 295,000,000 shares; 55,408,173 shares
issued and 55,300,311 outstanding at June 30, 2006 and 53,957,616 shares issued
and 53,747,256 outstanding at December 31, 2005
    
    
    138
    
    
    
    135Paid-in capital
    
    
    125,660
    
    
    
    110,420Retained earnings
    
    
    89,388
    
    
    
    90,631Treasury stock, at cost, 107,862 shares held at June 30, 2006 and 210,360 held at
December 31, 2005
    
    
    (673
    )
    
    
    (1,297
    )Notes receivable from officers
    
    
    (345
    )
    
    
    (339
    )Accumulated other comprehensive loss
    
    
    (1,434
    )
    
    
    (1,683
    )Total stockholders equity
    
    
    212,734
    
    
    
    197,867$
    536,027
    
    
    $
    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
    
    
    SIX MONTHS ENDEDJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(UNAUDITED)
    
    
    (UNAUDITED)Net sales
    
    $
    100,306
    
    
    $
    93,736
    
    
    $
    203,376
    
    
    $
    188,831Costs and expenses:Database and production costs
    
    
    26,473
    
    
    
    26,945
    
    
    
    52,198
    
    
    
    52,973Selling, general and administrative
    
    
    58,321
    
    
    
    47,166
    
    
    
    112,400
    
    
    
    92,332Depreciation and amortization of operating assets
    
    
    3,392
    
    
    
    3,366
    
    
    
    6,532
    
    
    
    7,274Amortization of intangible assets
    
    
    4,595
    
    
    
    4,469
    
    
    
    9,232
    
    
    
    8,873Total operating costs and expenses
    
    
    92,781
    
    
    
    81,946
    
    
    
    180,362
    
    
    
    161,452Operating income
    
    
    7,525
    
    
    
    11,790
    
    
    
    23,014
    
    
    
    27,379Other expense, net:Investment income
    
    
    100
    
    
    
    1,074
    
    
    
    172
    
    
    
    2,394Other charges
    
    
    (2
    )
    
    
    
    
    
    
    (317
    )
    
    
    Interest expense
    
    
    (2,629
    )
    
    
    (2,979
    )
    
    
    (5,434
    )
    
    
    (5,718
    )Other expense, net
    
    
    (2,531
    )
    
    
    (1,905
    )
    
    
    (5,579
    )
    
    
    (3,324
    )Income before income taxes
    
    
    4,994
    
    
    
    9,885
    
    
    
    17,435
    
    
    
    24,055Income taxes
    
    
    1,802
    
    
    
    3,529
    
    
    
    6,296
    
    
    
    8,641Net income
    
    $
    3,192
    
    
    $
    6,356
    
    
    $
    11,139
    
    
    $
    15,414Basic earnings per share:Basic earnings per share:
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.20
    
    
    $
    0.29Weighted average shares outstanding:
    
    
    55,255
    
    
    
    54,021
    
    
    
    54,564
    
    
    
    53,859Diluted earnings per share:Diluted earnings per share:
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.20
    
    
    $
    0.29Weighted average shares outstanding:
    
    
    55,617
    
    
    
    54,052
    
    
    
    55,111
    
    
    
    53,961
 
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##### Table of Contents



infoUSA INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 SIX MONTHS ENDEDJune 30,2006
    
    
    2005(UNAUDITED)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    11,139
    
    
    $
    15,414Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of operating assets
    
    
    6,532
    
    
    
    7,274Amortization of intangible assets
    
    
    9,232
    
    
    
    8,873Amortization of deferred financing fees
    
    
    266
    
    
    
    305Deferred income taxes
    
    
    (2,688
    )
    
    
    (664
    )Non-cash stock compensation expense (benefit)
    
    
    633
    
    
    
    (289
    )Non-cash 401(k) contribution in common stock
    
    
    1,153
    
    
    
    1,029Gain on sale of assets and marketable securities
    
    
    
    
    
    
    (2,289
    )Non-cash other charges
    
    
    318
    
    
    
    Non-cash interest earned on notes from officers
    
    
    (8
    )
    
    
    Changes in assets and liabilities, net of effect of acquisitions:Trade accounts receivable
    
    
    14,260
    
    
    
    9,572List brokerage trade accounts receivable
    
    
    12,334
    
    
    
    (2,604
    )Prepaid expenses and other assets
    
    
    1,667
    
    
    
    (94
    )Deferred marketing costs
    
    
    (860
    )
    
    
    (906
    )Accounts payable
    
    
    2,611
    
    
    
    (4,708
    )List brokerage trade accounts payable
    
    
    (12,194
    )
    
    
    2,242Income taxes receivable and payable, net
    
    
    (7,113
    )
    
    
    (4,146
    )Accrued expenses and other liabilities
    
    
    (2,702
    )
    
    
    2,226Deferred revenue
    
    
    (11,168
    )
    
    
    1,966Net cash provided by operating activities
    
    
    23,412
    
    
    
    33,201CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds on sale of marketable securities
    
    
    
    
    
    
    5,611Purchase of marketable securities
    
    
    
    
    
    
    (3,907
    )Purchases of property and equipment
    
    
    (5,140
    )
    
    
    (3,044
    )Acquisitions of businesses, net of cash acquired
    
    
    (5,988
    )
    
    
    (8,688
    )Software development costs
    
    
    (4,280
    )
    
    
    (2,878
    )Net cash used in investing activities
    
    
    (15,408
    )
    
    
    (12,906
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayments of long-term debt
    
    
    (144,058
    )
    
    
    (39,309
    )Proceeds from long-term debt
    
    
    138,000
    
    
    
    26,100Deferred financing costs paid
    
    
    (770
    )
    
    
    (7
    )Dividends paid
    
    
    (12,385
    )
    
    
    (10,646
    )Proceeds from repayment of notes receivable from officers
    
    
    1
    
    
    
    Tax benefit related to employee stock options
    
    
    2,120
    
    
    
    Proceeds from exercise of stock options
    
    
    11,965
    
    
    
    1,877Net cash used in financing activities
    
    
    (5,127
    )
    
    
    (21,985
    )Effect of exchange rate fluctuations on cash
    
    
    (70
    )
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    2,807
    
    
    
    (1,690
    )Cash and cash equivalents, beginning
    
    
    792
    
    
    
    10,404Cash and cash equivalents, ending
    
    $
    3,599
    
    
    $
    8,714Supplemental cash flow information:Interest paid
    
    $
    5,193
    
    
    $
    5,795Income taxes paid
    
    $
    13,851
    
    
    $
    12,580
 
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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
    
    Six Months EndedJune 30,
    
    June 30,(In Thousands)2006
    
    2005
    
    2006
    
    2005Weighted average number of shares used in basic EPS
    
    
    55,255
    
    
    
    54,021
    
    
    
    54,564
    
    
    
    53,859Net additional common stock equivalent shares outstanding after
assumed exercise of stock options
    
    
    362
    
    
    
    31
    
    
    
    547
    
    
    
    102Weighted average number of shares outstanding used in diluted
EPS
    
    
    55,617
    
    
    
    54,052
    
    
    
    55,111
    
    
    
    53,961
 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
    
    
    
    183 Million Consumers
    
    12.5 Million Executives and Professionals
    
    
    
    115 Million Households
    
    5.6 Million Small Business Owners
    
    
    
    68 Million Homeowners
    
    5 Million Business Addresses with Color Photos
    
    
    
    14 Million New Movers Per Year
    
    2.6 Million Brand New Businesses
    
    
    
    3.1 Million New Homeowners Per Year
    
    3.6 Million Yellow page Advertisers
    
    
    
    1.7 Million Bankruptcies
    
    1.7 Million Bankruptcy Filers
    
    
    
    123 Million Occupants
    
    900,000 Global Businesses and 2 Million Executives
    
    
    
    50 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 June 30, 2006infoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    36,949
    
    
    $
    63,357
    
    
    $
    
    
    
    $
    100,306Operating income (loss)
    
    
    10,376
    
    
    
    23,149
    
    
    
    (26,000
    )
    
    
    7,525Investment income
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    100Other charges
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (2,629
    )
    
    
    (2,629
    )Income (loss) before income taxes
    
    
    10,376
    
    
    
    23,149
    
    
    
    (28,531
    )
    
    
    4,994Goodwill
    
    
    41,907
    
    
    
    276,181
    
    
    
    
    
    
    
    318,088
 For The Three Months Ended June 30, 2005InfoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    34,698
    
    
    $
    59,038
    
    
    $
    
    
    
    $
    93,736Operating 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
    
    
    41,181
    
    
    
    262,038
    
    
    
    
    
    
    
    303,219
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##### Table of Contents



For The Six Months Ended June 30, 2006InfoUSA
    
    Donnelley
    
    Corporate
    
    ConsolidatedGroup
    
    Group
    
    Activities
    
    Total(In thousands)Net sales
    
    $
    75,018
    
    
    $
    128,358
    
    
    $
    
    
    
    $
    203,376Operating income (loss)
    
    
    21,180
    
    
    
    50,306
    
    
    
    (48,472
    )
    
    
    23,014Investment income
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    172Other charges
    
    
    
    
    
    
    
    
    
    
    (317
    )
    
    
    (317
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (5,434
    )
    
    
    (5,434
    )Income (loss) before income taxes
    
    
    21,180
    
    
    
    50,306
    
    
    
    (54,051
    )
    
    
    17,435Goodwill
    
    
    41,907
    
    
    
    276,181
    
    
    
    
    
    
    
    318,088
 For The Six Months Ended June 30, 2005InfoUSA
    
    
    Donnelley
    
    
    Corporate
    
    
    ConsolidatedGroup
    
    
    Group
    
    
    Activities
    
    
    Total(In thousands)Net sales
    
    $
    72,567
    
    
    $
    116,264
    
    
    $
    
    
    
    $
    188,831Operating 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
    
    
    41,181
    
    
    
    262,038
    
    
    
    
    
    
    
    303,219
 4. COMPREHENSIVE INCOME
  For The Three
    
    
    For The SixMonths Ended
    
    
    Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)
    
    
    (In thousands)Net income
    
    $
    3,192
    
    
    $
    6,356
    
    
    $
    11,139
    
    
    $
    15,414Other comprehensive income (loss):Unrealized gain from investments:Unrealized gains (losses)
    
    
    (117
    )
    
    
    (809
    )
    
    
    38
    
    
    
    1,125Related tax benefit (expense)
    
    
    42
    
    
    
    291
    
    
    
    (14
    )
    
    
    (405
    )Net
    
    
    (75
    )
    
    
    (518
    )
    
    
    24
    
    
    
    720Foreign currency translation adjustments:Unrealized gains (losses)
    
    
    (366
    )
    
    
    86
    
    
    
    352
    
    
    
    507Related tax benefit (expense)
    
    
    132
    
    
    
    (31
    )
    
    
    (127
    )
    
    
    (183
    )Net
    
    
    (234
    )
    
    
    55
    
    
    
    225
    
    
    
    324Total other comprehensive income (loss)
    
    
    (309
    )
    
    
    (463
    )
    
    
    249
    
    
    
    1,044Comprehensive income
    
    $
    2,883
    
    
    $
    5,893
    
    
    $
    11,388
    
    
    $
    16,458
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Foreign
    
    
    
    
    
    
    AccumulatedUnrealized
    
    
    Currency
    
    
    Unrealized
    
    
    OtherLosses from
    
    
    Translation
    
    
    Losses from
    
    
    ComprehensivePension plan
    
    
    Adjustments
    
    
    Investments
    
    
    Loss(in thousands)Balance at June 30, 2006
    
    $
    (1,018
    )
    
    $
    (167
    )
    
    $
    (249
    )
    
    $
    (1,434
    )Balance at December 31, 2005
    
    $
    (1,018
    )
    
    $
    (392
    )
    
    $
    (273
    )
    
    $
    (1,683
    )
 5. ACQUISITIONS
     For The Three Months Ended
    
    For The Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005(In thousands, except per share amounts)(unaudited)Net sales
    
    $
    101,994
    
    
    $
    99,729
    
    
    $
    207,916
    
    
    $
    202,527Net income
    
    $
    2,681
    
    
    $
    4,995
    
    
    $
    10,566
    
    
    $
    13,600Basic earnings per share
    
    $
    0.05
    
    
    $
    0.09
    
    
    $
    0.19
    
    
    $
    0.25Diluted earnings per share
    
    $
    0.05
    
    
    $
    0.09
    
    
    $
    0.19
    
    
    $
    0.25
 6. SHAREBASED PAYMENT ARRANGEMENTS
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Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2005
    
    
    June 30, 2005(in thousands, except per share amounts)Net income, as reported
    
    $
    6,356
    
    
    $
    15,414Less: Total stock-based employee compensation expense determined
under fair value based method, net of taxes
    
    
    127
    
    
    
    296Net income, pro forma
    
    $
    6,229
    
    
    $
    15,118Earnings per share:Basic earnings per share  as reported
    
    $
    0.12
    
    
    $
    0.29Basic earnings per share  pro forma
    
    $
    0.12
    
    
    $
    0.28Diluted earnings per share  as reported
    
    $
    0.12
    
    
    $
    0.29Diluted earnings per share  pro forma
    
    $
    0.12
    
    
    $
    0.28
    Six Months
    
    Six MonthsEnded
    
    EndedJune 30, 2006
    
    June 30, 2005Risk-free interest rate
    
    N/A
    
    
    4.42
    %Expected dividend yield
    
    N/A
    
    
    1.71
    %Expected volatility
    
    N/A
    
    
    76.99
    %Expected term (in years)
    
    N/A
    
    
    7.5
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Weighted
    
    
    
    
    
    Weighted
    
    AggregateAverage
    
    Weighted
    
    Average
    
    Intrinsic ValueNumber of
    
    Average
    
    Remaining
    
    at June 30,Options
    
    Exercise
    
    Contractual
    
    2006Shares
    
    Price
    
    Term
    
    (in thousands)Outstanding beginning of period
    
    
    3,777,969
    
    
    $
    9.10Granted
    
    
    
    
    
    
    Exercised
    
    
    (1,400,557
    )
    
    
    8.25Forfeited
    
    
    (2,814
    )
    
    
    6.00Expired
    
    
    (10,000
    )
    
    
    7.00Outstanding end of period
    
    
    2,364,598
    
    
    
    9.63
    
    
    
    3.08
    
    
    $
    2,863Options exercisable at end of period
    
    
    1,574,994
    
    
    
    8.89
    
    
    
    1.38
    
    
    $
    2,238
  7. RESTRUCTURING CHARGES
    Beginning
    
    
    Amounts
    
    
    Amounts
    
    
    EndingAccrual
    
    
    Expensed
    
    
    Paid
    
    
    Accrual(in thousands)Restructuring accrual
    
    $
    1,796
    
    
    $
    1,672
    
    
    $
    2,407
    
    
    $
    1,061
 11




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##### Table of Contents



8. GOODWILL AND OTHER INTANGIBLE ASSETS
  June 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Goodwill
    
    $
    377,647
    
    
    $
    372,460Less accumulated amortization
    
    
    59,559
    
    
    
    59,012$
    318,088
    
    
    $
    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
    
    
    21,592
    
    
    
    21,591Perpetual software license agreement, net
    
    
    933
    
    
    
    1,333Software development costs, net
    
    
    8,891
    
    
    
    7,289Database development costs, net
    
    
    3,047
    
    
    
    1,993Deferred financing costs
    
    
    11,950
    
    
    
    11,180195,729
    
    
    
    188,086Less accumulated amortization
    
    
    145,917
    
    
    
    136,818$
    49,812
    
    
    $
    51,268
 9. PROPERTY AND EQUIPMENT
  June 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Property and equipment
    
    $
    157,642
    
    
    $
    152,297Less accumulated depreciation
    
    
    108,801
    
    
    
    103,767$
    48,841
    
    
    $
    48,530
 10. CONTINGENCIES
    12




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11. RELATED PARTY TRANSACTIONS
    12. CREDIT FACILITY
  13




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##### Table of Contents



Company Profile
 info info info info
 Business Databases
    
    Consumer Databases 15 Million U.S. and Canadian Businesses
    
     183 Million Consumers 12.5 Million Executives and Professionals
    
     115 Million Households 5.6 Million Small Business Owners
    
     68 Million Homeowners 5 Million Business Addresses with Color Photos
    
     14 Million New Movers Per Year 2.6 Million Brand New Businesses
    
     3.1 Million New Homeowners Per Year 3.6 Million Yellow page Advertisers
    
     1.7 Million Bankruptcies 1.7 Million Bankruptcy Filers
    
     123 Million Occupants 900,000 Global Businesses and 2 Million Executives
    
     50 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
     14




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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 HillDonn.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
  15




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##### Table of Contents



Salesgenie.com, Credit.net . . . Subscription Model
 info
    Our Growth Strategy
 info
   info
   16




---



##### Table of Contents



Our International Growth Strategy
   RESULTS OF OPERATIONS
  THREE MONTHS
    
    THREE MONTHS
    
    SIX MONTHS
    
    SIX MONTHSENDED
    
    ENDED
    
    ENDED
    
    ENDEDJune 30, 2006
    
    June 30, 2005
    
    June 30, 2006
    
    June 30, 2005CONSOLIDATED STATEMENT OF OPERATIONS DATA:Net sales
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Costs and expenses:Database and production costs
    
    
    26
    
    
    
    28
    
    
    
    26
    
    
    
    28Selling, general and administrative
    
    
    58
    
    
    
    50
    
    
    
    55
    
    
    
    49Depreciation
    
    
    3
    
    
    
    4
    
    
    
    3
    
    
    
    4Amortization
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5Total costs and expenses
    
    
    92
    
    
    
    87
    
    
    
    89
    
    
    
    86Operating income
    
    
    8
    
    
    
    13
    
    
    
    11
    
    
    
    14Other expense, net
    
    
    (3
    )
    
    
    (1
    )
    
    
    (3
    )
    
    
    (1
    )Income before income taxes
    
    
    5
    
    
    
    12
    
    
    
    8
    
    
    
    13Income taxes
    
    
    2
    
    
    
    5
    
    
    
    3
    
    
    
    5Net income
    
    
    3
    %
    
    
    7
    %
    
    
    5
    %
    
    
    8
    %
 17




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##### Table of Contents



THREE MONTHS
    
    
    THREE MONTHS
    
    
    SIX MONTHS
    
    
    SIX MONTHSENDED
    
    
    ENDED
    
    
    ENDED
    
    
    ENDEDJune 30, 2006
    
    
    June 30, 2005
    
    
    June 30, 2006
    
    
    June 30, 2005(in thousands)
    
    
    (in thousands)SALES BY SEGMENT:infoUSA Group
    
    $
    36,949
    
    
    $
    34,698
    
    
    $
    75,018
    
    
    $
    72,567Donnelley Group
    
    
    63,357
    
    
    
    59,038
    
    
    
    128,358
    
    
    
    116,264Total
    
    $
    100,306
    
    
    $
    93,736
    
    
    $
    203,376
    
    
    $
    188,831SALES BY SEGMENT AS A
PERCENTAGE OF NET
SALES:infoUSA Group
    
    
    37
    %
    
    
    37
    %
    
    
    37
    %
    
    
    38
    %Donnelley Group
    
    
    63
    
    
    
    63
    
    
    
    63
    
    
    
    62Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Net sales
  info info info
  Database and production costs
 info info
 Selling, general and administrative expenses
  18




---



##### Table of Contents



Depreciation expense
  Amortization expense
  Operating income
  info info
  19




---



##### Table of Contents



Other expense, net
   Income taxes
  Liquidity and Capital Resources
 Overview
      20




---



##### Table of Contents



Selected Consolidated Statements of Cash Flows Information
  Accounting in a Purchase Business Combination for Deferred Revenue of an Acquiree
   Selected Consolidated Balance Sheet Information
      Off-Balance Sheet Arrangements
  21




---



##### Table of Contents



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
 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
 22




---



##### Table of Contents




    
    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.
  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.
  23




---



##### Table of Contents



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.
  Our business would be harmed if we do not successfully integrate future acquisitions.
  
 
  24




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##### Table of Contents



(a) Evaluation of disclosure controls and procedures
  (b) Changes in internal controls over financial reporting
  25




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##### Table of Contents



1.
    
    The stockholders elected the following persons to serve as directors of the Company for a
term of three years, expiring in 2009:
 Vinod Gupta
    
    FOR:
    
    
    25,870,053
    
    
    WITHHELD:
    
    
    634,973Dr. George F. Haddix
    
    FOR:
    
    
    25,898,687
    
    
    WITHHELD:
    
    
    606,339Dr. Vasant Raval
    
    FOR:
    
    
    26,168,174
    
    
    WITHHELD:
    
    
    336,852
  Malcolm M. Aslin
    
    FOR:
    
    
    24,485,435
    
    
    WITHHELD:
    
    
    12,279Karl L. Meyer
    
    FOR:
    
    
    24,474,989
    
    
    WITHHELD:
    
    
    22,725Robert A. Trevisani
    
    FOR:
    
    
    24,474,989
    
    
    WITHHELD:
    
    
    22,725
  Terms expiring in 2007:
Terms expiring in 2008:
    
    Bill L. Fairfield, Anshoo Gupta and Elliot S. Kaplan
Martin F. Kahn, Bernard W. Reznicek and Dennis P. Walker
 2.
    
    The stockholders also voted on a stockholder proposal to amend the Companys bylaws to limit
the discretion of the Board of Directors to fill vacancies on the Board. The stockholder
proposal was not approved. The voting on the stockholder proposal was as follows:
 FOR:
    
    
    24,518,113
    
    
    AGAINST:
    
    
    26,349,602
    
    
    ABSTAIN:
    
    
    135,024
 
 
  
 
 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 26




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##### Table of Contents



SIGNATURES
  infoUSA INCDate: August 9, 2006
    /s/ Stormy L. DeanStormy L. Dean, Chief Financial Officer 27




---



##### Table of Contents



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 28