##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-K
 Annual Report Pursuant 
to Sections 13 or 15(d) of the Securities Exchange Act of 1934
  (X)
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 ( )
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 
  R.H. DONNELLEY INC.
  Delaware
    
    36-2467635(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)1001 Winstead Drive, Cary, N.C.
    
    27513(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code           (919) 297-1600
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act: None
 
 
 
  
 
  THE REGISTRANT IS A WHOLLY-OWNED SUBSIDIARY OF R.H. DONNELLEY CORPORATION. THE REGISTRANT MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE
FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.




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TABLE OF CONTENTSPART IItem 1.
    
    Business
    3Item 1A.
    
    Risk Factors
    12Item 1B.
    
    Unresolved Staff Comments
    20Item 2.
    
    Properties
    20Item 3.
    
    Legal Proceedings
    21Item 4.*
    
    Submission of Matters to a Vote of Security Holders
    21PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    21Item 6. **
    
    Selected Financial Data
    21Item 7. ***
    
    Managements Narrative Analysis of Results of Operations
    22Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    33Item 8.
    
    Financial Statements and Supplementary Data
    F-1Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    35Item 9A.
    
    Controls and Procedures
    35Item 9B.
    
    Other Information
    35PART IIIItem 10.*
    
    Directors, Executive Officers and Corporate Governance
    36Item 11.*
    
    Executive Compensation
    36Item 12.*
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    36Item 13.*
    
    Certain Relationships and Related Transactions and Director Independence
    36Item 14.
    
    Principal Accountant Fees and Services
    36PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    37Signatures
    
    
    42
 
 *     Omitted pursuant to General Instruction I(2)(c) of Form 10-K**   Omitted pursuant to General Instruction I(2)(a) of Form 10-K*** Pursuant to General Instruction I(2)(a) of Form 10-K: (i) the information called for by Item 7
of Part II, Managements Discussion and Analysis of Financial Condition and Results of Operations
has been omitted and (ii) the registrant is providing a Managements Narrative Analysis of Results
of Operations. 2




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PART I
 ITEM 1. BUSINESS.
 General
   Corporate Overview
   ® ® ®
  3




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Significant Business Developments
   Acquisitions
 AT&T Directory Acquisition
  Embarq Acquisition
   4




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Historical Overview
   Segment Reporting
  Products and Services
  Print Products
    5




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Yellow Pages
   Listing options
 In-column advertising options
 Display advertising options
 White Pages
   Specialty/Awareness Products
  Tabs
 Cover Items
 Blow-in Cards
 Delivery bags
 6




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Ride-alongs
 Online Products and Services
      Business Cycle Overview
  Sales
    Premise sales representatives
 Telephone sales representatives
 7




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Locally centralized sales
   Marketing
   Publishing and Information Services
  8




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Printing and Distribution
    Credit Collections and Bad Debt Expense
    Competition
   ,
 9




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® ® ®
  Raw Materials
  10




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Intellectual Property
      Employees
  11




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ITEM 1A. RISK FACTORS
   1) Our ability to meet substantial debt service obligations
   
    
    our ability to obtain additional financing in excess of the borrowing capacity under the
revolving portion of our credit facility on satisfactory terms to fund working capital
requirements, capital expenditures, acquisitions, investments, debt service requirements
and other general corporate requirements is limited;
    
    we are more vulnerable to general economic downturns, competition and industry
conditions, which could place us at a competitive disadvantage compared to our competitors
that may be less leveraged;
    
    we face increased exposure to rising interest rates as a portion of our debt is at
variable interest rates;
    
    we have reduced availability of cash flow to fund working capital requirements, capital
expenditures, acquisitions or other strategic initiatives, investments and other general
corporate requirements because a substantial portion of our cash flow will be needed to
service our debt obligations;
    
    we have limited flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate;
    
    the agreements governing our debt substantially limit our ability to access the cash
flow and value of our subsidiaries and, therefore, to make payments on our notes;
    
    our ability to borrow additional funds or refinance existing indebtedness may be
limited; and
    
    there could be a material adverse effect on our business and financial condition if we
were unable to service our debt or obtain additional financing, as needed.
  12




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2) Restrictive covenants under our debt agreements
  
    
    incur additional debt;
    
    pay dividends on our subsidiaries equity interests, repurchase their equity interests
or make other payments to RHDI, which could adversely affect the ability of RHDI to satisfy
its obligations under its notes;
    
    make certain investments;
    
    enter into certain types of transactions with affiliates;
    
    expand into unrelated businesses;
    
    use assets as security in other transactions; and
    
    sell certain assets or merge with or into other companies.
   3) Competition
    13




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4) Usage of printed yellow pages directories and changes in technology.
  14




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
    
    impair our ability to maintain or increase our advertising prices;
    
    cause businesses that purchase advertising in our yellow pages directories to reduce or
discontinue those purchases; and
    
    discourage businesses that do not purchase advertising in our yellow pages directories from doing so.
   5) Information technology modernization effort and related IT matters
    15




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6) Impact of bankruptcy proceedings against Embarq or AT&T during the term of the respective
commercial arrangements
    
    
    Either of them, or a trustee acting on their behalf, could seek to reject our agreements
with them as executory contracts under U.S. bankruptcy law, thus allowing them to avoid
their obligations under such contracts. Loss of substantial rights under these agreements
could effectively require us to operate our business as an independent directory business,
which could have a material adverse effect on us.
    
    Either of them, or a trustee acting on their behalf, could seek to sell certain of their
assets, including the assets relating to their local telephone business, to third parties
pursuant to the approval of the bankruptcy court. In such case, the purchaser of any such
assets might be able to avoid, among other things, our rights under the respective
directory service license agreements, trademark license agreements and non-competition
agreements with our telecommunications partners.
  7) The inability to enforce any of our key agreements with Sprint, Embarq, or AT&T
   
    
    to the extent it is necessary to protect a legitimate business interest of the party seeking
enforcement;
    
    if it does not unreasonably restrain the party against whom enforcement is sought; and
    
    if it is not contrary to the public interest.
 16




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8) Future changes in directory publishing obligations in AT&T markets and other regulatory matters
      17




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9) Reliance on, and extension of credit to, small and medium-sized businesses
  10) Dependence on third-party providers of printing, distribution and delivery, and IT services
      11) Fluctuations in the price and availability of paper
   18




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12) The sale of advertising to national accounts is coordinated by third parties that we do not
control
   13) General economic factors
   
    
    the general possibility, express threat or future occurrence of terrorist or other related
disruptive events; or
    
    the United States continuing or expanded involvement in war especially with respect to the major markets in which we
operate that depend heavily upon travel, tourism or the military.
 14) Turnover among our sales force or key management
   15) The loss of important intellectual property rights
  19




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16) Recognition of impairment charges for our intangible assets or goodwill
 Accounting for the Impairment or Disposal of Long-lived Assets Goodwill and Other Intangible Assets
 17) Legal Proceedings
  ITEM 1B. UNRESOLVED STAFF COMMENTS
  ITEM 2. PROPERTIES
  ApproximateSquare
    
    
    
    LeaseProperty Location
    
    Footage
    
    Purpose
    
    ExpirationCary, NC
    
    
    122,000
    
    
    Corporate Headquarters
    
    
    2008  2015Chicago, IL
    
    
    100,000
    
    
    Sales and Operations
    
    
    2012Morrisville, NC
    
    
    55,000
    
    
    Pre-Press Publishing
    
    
    2011Overland Park, KS
    
    
    52,000
    
    
    Sales and Operations
    
    
    2009Bristol, TN
    
    
    25,000
    
    
    Graphics Operations
    
    
    OwnedFort Myers, FL
    
    
    21,000
    
    
    Sales and Operations
    
    
    2016Tinley Park, IL
    
    
    21,000
    
    
    Sales and Operations
    
    
    2017Dunmore, PA
    
    
    20,000
    
    
    Graphics Operations
    
    
    2009Lombard, IL
    
    
    20,000
    
    
    Sales and Operations
    
    
    2010
   20




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ITEM 3. LEGAL PROCEEDINGS
    ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  PART II
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  ITEM 6. SELECTED FINANCIAL DATA
  21




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ITEM 7. MANAGEMENTS NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
   Corporate Overview
   ® ® ®
  Significant Business Developments
  22




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Forward-Looking Information
  Acquisitions
 AT&T Directory Acquisition
   23




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Embarq Acquisition
    24




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Segment Reporting
  Critical Accounting Estimates
  Allowance for Doubtful Accounts and Sales Claims
  Pension Benefits
  25




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Intangible Assets and Goodwill Valuation and Amortization
  Accounting for the Impairment or Disposal of Long-Lived
Assets Goodwill and Other Intangible Assets
   26




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Stock-Based Compensation
 Share-Based Payment
 December 31, 2006Expected volatility
    
    28.2%Risk-free interest rate
    
    4.4%Expected life
    
    5 YearsForfeiture rate
    
    5.0 %Dividend yield
    
    0%
   New Accounting Pronouncements
 The Fair
Value Option for Financial Assets and Financial Liabilities  Including an amendment of FASB
Statement No. 115
 Fair Value Measurements
 Considering the Effects of
Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements
 27




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Accounting for Uncertainty in Income Taxes: An
Interpretation of FASB Statement No. 109 Accounting for Income Taxes
  28




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RESULTS OF OPERATIONS
 Year Ended December 31, 2006 compared to Year Ended December 31, 2005
 Factors Affecting Comparability
 Acquisitions
  SFAS No. 123 (R)
  Net Revenue
  For the Years Ended December 31,(amounts in millions)
    
    2006
    
    2005
    
    $ ChangeGross directory advertising revenue
    
    $
    1,038.3
    
    
    $
    956.0
    
    
    $
    82.3Sales claims and allowances
    
    
    (10.6
    )
    
    
    (10.4
    )
    
    
    (0.2
    )Net directory advertising revenue
    
    
    1,027.7
    
    
    
    945.6
    
    
    
    82.1Other revenue
    
    
    10.2
    
    
    
    11.0
    
    
    
    (0.8
    )Total net revenue
    
    $
    1,037.9
    
    
    $
    956.6
    
    
    $
    81.3
  29




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Expenses
  For the Years Ended December 31,(amounts in millions)
    
    2006
    
    2005
    
    $ ChangeCost of revenue
    
    $
    420.1
    
    
    $
    436.0
    
    
    $
    (15.9
    )General and administrative expenses
    
    
    69.2
    
    
    
    60.2
    
    
    
    9.0Depreciation and amortization expense
    
    
    90.9
    
    
    
    85.1
    
    
    
    5.8Total
    
    $
    580.2
    
    
    $
    581.3
    
    
    $
    (1.1
    )
  30




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Cost of Revenue
  (amounts in millions)
    
    $ ChangeExpenses related to the AT&T Directory Business excluded from the comparable
2005 period due to purchase accounting from the AT&T Directory Acquisition
    
    $
    15.1Increased bad debt expense, commissions and selling costs
    
    
    27.1Stock-based compensation expense resulting from the adoption of SFAS No. 123
(R)
    
    
    9.3Decreased cost uplift expense (defined below)
    
    
    (62.9
    )All other
    
    
    (4.5
    )Total 2006 decrease in cost of revenue compared to 2005
    
    $
    (15.9
    )
    General and Administrative Expenses
  31




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Depreciation and Amortization
  Operating Income
   For the Years Ended December 31,(amounts in millions)
    
    2006
    
    2005
    
    $ ChangeTotal
    
    $
    457.7
    
    
    $
    375.3
    
    
    $
    82.4
  Interest Expense, Net
  Provision for Income Taxes
    32




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 Interest Rate Risk and Risk Management
  Effective Dates
    
    Notional Amount
    
    
    Pay Rates
    
    Maturity Dates(amounts in millions)April 1, 2003
    
    $
    255
    (2)
    
    2.850%
    
    March 31, 2007September 7, 2004
    
    
    200
    (2)
    
    3.490% - 3.750%
    
    September 8, 2008 - September 7, 2009September 15, 2004
    
    
    250
    (3)
    
    3.200% - 3.910%
    
    September 15, 2007 - September 15, 2009September 17, 2004
    
    
    150
    (2)
    
    3.210% - 3.740%
    
    September 17, 2007 - September 17, 2009September 23, 2004
    
    
    150
    (2)
    
    3.160% - 3.438%
    
    September 24, 2007 - September 23, 2008December 20, 2005
    
    
    300
    (4)
    
    4.74% - 4.752%
    
    December 20, 2007 - December 22, 2008May 26, 2006
    
    
    200
    (1)
    
    5.2725% -5.275%
    
    May 26, 2009May 31, 2006
    
    
    100
    (1)
    
    5.295% - 5.312%
    
    May 31, 2008 - May 31, 2009Total
    
    $
    1,605
 
  33




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Market Risk Sensitive Instruments
 Accounting for Derivative
Instruments and Hedging Activities , Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an Amendment of FAS 133 Amendment of Statement 133 on Derivative Instruments and Hedging Activities
  34




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO FINANCIAL STATEMENTS
 PageR.H. DONNELLEY INC.Reports of Independent Registered Public Accounting Firms
    
    
    F-2Consolidated Balance Sheets at December 31, 2006 and 2005
    
    
    F-4Consolidated Statements of Income and Comprehensive Income for the three
years ended December 31, 2006
    
    
    F-5Consolidated Statements of Cash Flows for the three years ended December 31, 2006
    
    
    F-6Consolidated Statements of Changes in Shareholders Equity for the three years ended December 31, 2006
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 F-1




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Report of Independent Registered Public Accounting Firm
 
    Share-Based Payment Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88,
106, and 132(R)
 
 F-2




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Report of Independent Registered Public Accounting Firm
   
 F-3




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##### 



R.H. DONNELLEY INC.
CONSOLIDATED BALANCE SHEETS
 December 31,(in thousands, except share data)
    
    2006
    
    2005AssetsCurrent AssetsCash and cash equivalents
    
    $
    4,905
    
    
    $
    6,963Accounts receivableBilled
    
    
    120,387
    
    
    
    116,576Unbilled
    
    
    347,051
    
    
    
    362,343Allowance for doubtful accounts and sales claims
    
    
    (25,476
    )
    
    
    (27,328
    )Net accounts receivable
    
    
    441,962
    
    
    
    451,591Deferred directory costs
    
    
    67,204
    
    
    
    67,686Prepaid
expenses and other current assets
    
    
    50,017
    
    
    
    47,414Total current assets
    
    
    564,088
    
    
    
    573,654Fixed assets and computer software, net
    
    
    88,076
    
    
    
    55,687Amount due from Parent, net
    
    
    426,192
    
    
    
    331,841Other non-current assets
    
    
    52,147
    
    
    
    79,354Intangible assets, net
    
    
    2,755,624
    
    
    
    2,833,200Goodwill
    
    
    315,560
    
    
    
    319,014Total Assets
    
    $
    4,201,687
    
    
    $
    4,192,750Liabilities and Shareholders EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    74,764
    
    
    $
    69,605Accrued interest
    
    
    11,950
    
    
    
    11,196Deferred directory revenue
    
    
    439,100
    
    
    
    457,721Short-term deferred income taxes, net
    
    
    100,943
    
    
    
    91,183Current portion of long-term debt
    
    
    112,200
    
    
    
    100,234Total current liabilities
    
    
    738,957
    
    
    
    729,939Long-term debt
    
    
    2,442,269
    
    
    
    2,678,615Deferred income taxes, net
    
    
    181,417
    
    
    
    66,921Other non-current liabilities
    
    
    63,790
    
    
    
    54,305Total liabilities
    
    
    3,426,433
    
    
    
    3,529,780Commitments and contingenciesShareholders EquityCommon stock, no par value, authorized, issued and outstanding  100 shares
    
    
    308,942
    
    
    
    308,942Retained earnings
    
    
    476,488
    
    
    
    350,216Accumulated other comprehensive (loss) income
    
    
    (10,176
    )
    
    
    3,812Total shareholders equity
    
    
    775,254
    
    
    
    662,970Total Liabilities and Shareholders Equity
    
    $
    4,201,687
    
    
    $
    4,192,750
  F-4




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R.H. DONNELLEY INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 Years Ended December 31,(in thousands)
    
    2006
    
    2005
    
    2004Net revenue
    
    
    $1,037,862
    
    
    
    $956,631
    
    
    
    $603,116ExpensesCost of revenue (exclusive of
depreciation and amortization
shown separately below)
    
    
    420,099
    
    
    
    435,980
    
    
    
    263,150General and administrative expenses
    
    
    69,194
    
    
    
    60,228
    
    
    
    59,537Depreciation and amortization
    
    
    90,878
    
    
    
    85,146
    
    
    
    66,648Total expenses
    
    
    580,171
    
    
    
    581,354
    
    
    
    389,335Partnership income
    
    
    --
    
    
    
    --
    
    
    
    77,967Operating income
    
    
    457,691
    
    
    
    375,277
    
    
    
    291,748Interest expense, net
    
    
    (194,251
    )
    
    
    (243,898
    )
    
    
    (175,530
    )Income before income taxes
    
    
    263,440
    
    
    
    131,379
    
    
    
    116,218Provision for income taxes
    
    
    137,168
    
    
    
    50,532
    
    
    
    45,906Net income
    
    
    $126,272
    
    
    
    $80,847
    
    
    
    $70,312Comprehensive IncomeNet income
    
    
    $126,272
    
    
    
    $80,847
    
    
    
    $70,312Unrealized (loss) gain on
interest rate swaps, net of tax
(benefit) provision of $(4,401),
$8,126 and $3,770 for the years
ended December 31, 2006, 2005
and 2004, respectively
    
    
    (6,383
    )
    
    
    12,710
    
    
    
    5,774Minimum pension liability
adjustment, net of tax provision
(benefit) of $2,863, $(9,049)
and $- for the years ended
December 31, 2006, 2005 and
2004, respectively
    
    
    4,792
    
    
    
    (14,148
    )
    
    
    (515
    )Comprehensive income
    
    
    $124,681
    
    
    
    $79,409
    
    
    
    $75,571
  F-5




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##### 



R.H. DONNELLEY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,(in thousands)
    
    2006
    
    2005
    
    2004Cash Flows from Operating ActivitiesNet income
    
    
    $126,272
    
    
    
    $80,847
    
    
    
    $70,312Reconciliation of net income to net cash provided by operating activities:Depreciation and amortization
    
    
    90,878
    
    
    
    85,146
    
    
    
    66,648Loss on disposal of assets
    
    
    34
    
    
    
    --
    
    
    
    85Deferred income tax provision
    
    
    134,387
    
    
    
    50,532
    
    
    
    71,461Provision for bad debts
    
    
    37,587
    
    
    
    30,004
    
    
    
    14,927Stock-based compensation expense
    
    
    25,677
    
    
    
    5,689
    
    
    
    2,742Loss on extinguishment of debt
    
    
    --
    
    
    
    32,725
    
    
    
    --Other non-cash items
    
    
    (2,458
    )
    
    
    8
    
    
    
    11,341Cash in excess of partnership income
    
    
    --
    
    
    
    --
    
    
    
    1,426Changes in assets and liabilities:(Increase) in accounts receivable
    
    
    (27,958
    )
    
    
    (31,881
    )
    
    
    (51,858
    )Decrease (increase) in other assets
    
    
    14,953
    
    
    
    51,637
    
    
    
    (49,897
    )Increase in accounts payable and accrued liabilities
    
    
    7,279
    
    
    
    86,495
    
    
    
    21,871(Decrease) increase in deferred directory revenue
    
    
    (18,621
    )
    
    
    82,016
    
    
    
    164,899(Decrease) increase in other non-current liabilities
    
    
    1,594
    
    
    
    (82,445
    )
    
    
    73,248(Increase) decrease in amount due from Parent, net
    
    
    (118,549
    )
    
    
    12,498
    
    
    
    9,098Net cash provided by operating activities
    
    
    271,075
    
    
    
    403,271
    
    
    
    406,303Cash Flows from Investing ActivitiesAdditions to fixed assets and computer software
    
    
    (47,203
    )
    
    
    (31,605
    )
    
    
    (18,013
    )Acquisitions, net of cash received
    
    
    --
    
    
    
    --
    
    
    
    (1,413,620
    )Net cash used in investing activities
    
    
    (47,203
    )
    
    
    (31,605
    )
    
    
    (1,431,633
    )Cash Flows from Financing ActivitiesProceeds from the issuance of debt, net of costs
    
    
    (1,397
    )
    
    
    341,417
    
    
    
    1,318,947Revolver borrowings
    
    
    367,300
    
    
    
    268,000
    
    
    
    145,500Revolver repayments
    
    
    (316,900
    )
    
    
    (304,200
    )
    
    
    (104,300
    )Credit facility repayments
    
    
    (274,780
    )
    
    
    (345,227
    )
    
    
    (317,079
    )Debt repayments
    
    
    --
    
    
    
    (317,066
    )
    
    
    (21,245
    )Call premium
    
    
    --
    
    
    
    (25,268
    )
    
    
    --Decrease in amount due from Parent, net
    
    
    --
    
    
    
    5,126
    
    
    
    7,457(Decrease) increase in checks not yet presented for payment
    
    
    (153
    )
    
    
    1,760
    
    
    
    (917
    )Net cash (used in) provided by financing activities
    
    
    (225,930
    )
    
    
    (375,458
    )
    
    
    1,028,363(Decrease) increase in cash and cash equivalents
    
    
    (2,058
    )
    
    
    (3,792
    )
    
    
    3,033Cash and cash equivalents, beginning of year
    
    
    6,963
    
    
    
    10,755
    
    
    
    7,722Cash and cash equivalents, end of year
    
    
    $4,905
    
    
    
    $6,963
    
    
    
    $10,755Supplemental Information:Cash interest paid
    
    
    $183,032
    
    
    
    $221,560
    
    
    
    $160,730Income tax payments made (refunds) received, net
    
    
    901
    
    
    
    (935
    )
    
    
    (71,066
    )
  F-6




---



##### 



R.H. DONNELLEY INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 Accumulated OtherRetained
    
    
    Comprehensive
    
    
    Total Shareholders(in thousands)
    
    Common Stock
    
    
    Earnings
    
    
    (Loss) Income
    
    
    EquityBalance, December 31, 2003
    
    
    $  308,942
    
    
    
    $199,057
    
    
    
    $(9
    )
    
    
    $507,990Net income
    
    
    --
    
    
    
    70,312
    
    
    
    --
    
    
    
    70,312Unrealized gain on interest rate swaps,
net of tax
    
    
    --
    
    
    
    --
    
    
    
    5,774
    
    
    
    5,774Minimum pension liability adjustment,
net of tax
    
    
    --
    
    
    
    --
    
    
    
    (515
    )
    
    
    (515
    )Balance, December 31, 2004
    
    
    308,942
    
    
    
    269,369
    
    
    
    5,250
    
    
    
    583,561Net income
    
    
    --
    
    
    
    80,847
    
    
    
    --
    
    
    
    80,847Unrealized gain on interest rate swaps,
net of tax
    
    
    --
    
    
    
    --
    
    
    
    12,710
    
    
    
    12,710Minimum pension liability adjustment,
net of tax
    
    
    --
    
    
    
    --
    
    
    
    (14,148
    )
    
    
    (14,148
    )Balance, December 31, 2005
    
    
    308,942
    
    
    
    350,216
    
    
    
    3,812
    
    
    
    662,970Net income
    
    
    --
    
    
    
    126,272
    
    
    
    --
    
    
    
    126,272Unrealized loss on interest rate swaps,
net of tax
    
    
    --
    
    
    
    --
    
    
    
    (6,383
    )
    
    
    (6,383
    )Minimum pension liability adjustment,
net of tax
    
    
    --
    
    
    
    --
    
    
    
    4,792
    
    
    
    4,792Adjustment to initially apply SFAS No.
158, net of tax
    
    
    --
    
    
    
    --
    
    
    
    (12,397
    )
    
    
    (12,397
    )Balance, December 31, 2006
    
    
    $308,942
    
    
    
    $476,488
    
    
    
    $(10,176
    )
    
    
    $775,254
  F-7




---



##### 



R.H. DONNELLEY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (tabular amounts in thousands)
 1. Business and Presentation
    Significant Business Developments
   2. Summary of Significant Accounting Policies
 Principles of Consolidation.
 Revenue Recognition.
 F-8




---



##### 



Revenue
Arrangements with Multiple Deliverables.
 Deferred Directory Costs
 Equity Method Accounting.
  Cash and Cash Equivalents.
 Accounts Receivable.
 F-9




---



##### 



Fixed Assets and Computer Software.
 2006
    
    2005Computer software
    
    
    $73,308
    
    
    
    $42,680Computer equipment
    
    
    9,179
    
    
    
    19,837Machinery and equipment
    
    
    2,284
    
    
    
    5,926Furniture and fixtures
    
    
    8,656
    
    
    
    13,122Leasehold improvements
    
    
    9,815
    
    
    
    9,676Buildings
    
    
    1,735
    
    
    
    1,424Construction in Process  Computer software and equipment
    
    
    28,493
    
    
    
    22,049Total cost
    
    
    133,470
    
    
    
    114,714Less accumulated depreciation and amortization
    
    
    (45,394
    )
    
    
    (59,027
    )Net fixed assets and computer software
    
    
    $88,076
    
    
    
    $55,687
 
 2006
    
    2005
    
    2004Depreciation of fixed assets
    
    
    $4,128
    
    
    
    $4,887
    
    
    
    $  4,608Amortization of computer software
    
    
    9,174
    
    
    
    8,129
    
    
    
    4,703Total depreciation and amortization on
fixed assets and computer
software
    
    
    $13,302
    
    
    
    $13,016
    
    
    
    $  9,311
 Identifiable Intangible Assets and Goodwill.
 Directory Services
    
    Local Customer
    
    National CMR
    
    TradeAgreements
    
    Relationships
    
    Relationships
    
    Names
    
    TotalInitial fair value:AT&T
    
    $
    952,500
    
    
    $
    90,000
    
    
    $
    55,000
    
    
    $
    
    
    
    $
    1,097,500Embarq
    
    
    1,625,000
    
    
    
    200,000
    
    
    
    60,000
    
    
    
    30,000
    
    
    
    1,915,000Total
    
    
    2,577,500
    
    
    
    290,000
    
    
    
    115,000
    
    
    
    30,000
    
    
    
    3,012,500Accumulated
amortization
    
    
    (175,500
    )
    
    
    (58,841
    )
    
    
    (14,535
    )
    
    
    (8,000
    )
    
    
    (256,876
    )Net intangible assets
    
    $
    2,402,000
    
    
    $
    231,159
    
    
    $
    100,465
    
    
    $
    22,000
    
    
    
    $2,755,624
 F-10




---



##### 



Directory Services
    
    Local Customer
    
    National CMR
    
    TradeAgreements
    
    Relationships
    
    Relationships
    
    Names
    
    TotalInitial fair value:AT&T
    
    $
    952,500
    
    
    $
    90,000
    
    
    $
    55,000
    
    
    $
    --
    
    
    $
    1,097,500Embarq
    
    
    1,625,000
    
    
    
    200,000
    
    
    
    60,000
    
    
    
    30,000
    
    
    
    1,915,000Total
    
    
    2,577,500
    
    
    
    290,000
    
    
    
    115,000
    
    
    
    30,000
    
    
    
    3,012,500Accumulated
amortization
    
    
    (123,500
    )
    
    
    (40,000
    )
    
    
    (9,800
    )
    
    
    (6,000
    )
    
    
    (179,300
    )Net intangible assets
    
    $
    2,454,000
    
    
    $
    250,000
    
    
    $
    105,200
    
    
    $
    24,000
    
    
    $
    2,833,200
  F-11




---



##### 



Goodwill and Other
Intangible Assets
 Interest Expense and Deferred Financing Costs.
 Advertising Expense.
 F-12




---



##### 



Concentration of Credit Risk
   Derivative Financial Instruments and Hedging Activities. Accounting for Derivative Instruments and Hedging Activities , Accounting for Certain Derivative Instruments and Certain
Hedging Activities, an Amendment of FAS Amendment of Statement 133 on
Derivative Instruments and Hedging Activities.
  F-13




---



##### 



Pension and Postretirement Benefits
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of
FASB Statements No. 87, 88, 106, and 132(R)
  Income Taxes. Accounting for Income Taxes
 F-14




---



##### 



Stock-Based Awards
   Share-Based
Payment
 Accounting for Stock Issued to Employees
   Year Ended December 31, 2006As Reported
    
    Per APB No. 25Total stock-based compensation expense
    
    $
    25,677
    
    
    
    $5,900Net income
    
    $
    126,272
    
    
    $
    135,752
 F-15




---



##### 



Accounting
for Stock Based Compensation
 For the Years EndedDecember 31,2005
    
    2004Net income, as reported
    
    $
    80,847
    
    
    $
    70,312Add: Stock-based compensation expense included
in reported net income, net of related tax
effects
    
    
    3,162
    
    
    
    1,403Less: Stock-based compensation expense that
would have been included in the determination
of net income if the fair value method had been
applied to all awards, net of related tax
effects
    
    
    (7,791
    )
    
    
    (4,579
    )Pro forma net income
    
    $
    76,218
    
    
    $
    67,136
  For the Years EndedDecember 31,2005
    
    2004Dividend yield
    
    0%
    
    0%Expected volatility
    
    29%
    
    30%Risk-free interest rate
    
    3.9%
    
    3.5%Expected holding period
    
    5 years
    
    3 years
  WeightedAverageExercise/GrantShares
    
    
    Price Per ShareAwards outstanding, December 31, 2003
    
    
    3,344,412
    
    
    $
    23.78Granted
    
    
    1,279,357
    
    
    
    41.55Exercised
    
    
    (374,152
    )
    
    
    19.60Canceled or expired
    
    
    (214,732
    )
    
    
    28.54Awards outstanding, December 31, 2004
    
    
    4,034,885
    
    
    
    29.57Granted
    
    
    384,093
    
    
    
    59.54Exercised
    
    
    (334,718
    )
    
    
    22.06Canceled or expired
    
    
    (82,016
    )
    
    
    46.99Awards outstanding, December 31, 2005
    
    
    4,002,244
    
    
    $
    32.69Available for future grants at December 31, 2005
    
    
    5,301,277
 F-16




---



##### 



Stock Awards Outstanding
    
    Stock Awards ExercisableWeightedAverage
    
    
    
    
    
    
    
    
    
    WeightedRemaining
    
    
    
    
    
    
    
    
    
    AverageRange of
    
    
    
    
    
    Contractual
    
    Weighted Average
    
    
    
    
    
    Exercise/Exercise/Grant
    
    
    
    
    
    Life
    
    Exercise/Grant
    
    
    
    
    
    Grant PricePrices
    
    Shares
    
    (In Years)
    
    Price Per Share
    
    Shares
    
    Per Share$11.10  $14.75
    
    
    34,109
    
    
    
    1.76
    
    
    $
    14.02
    
    
    
    34,109
    
    
    $
    14.02$15.22  $19.41
    
    
    401,804
    
    
    
    3.09
    
    
    
    15.74
    
    
    
    401,804
    
    
    
    15.74$24.75  $29.59
    
    
    1,795,290
    
    
    
    4.47
    
    
    
    25.97
    
    
    
    1,398,971
    
    
    
    25.96$30.11  $39.21
    
    
    236,075
    
    
    
    4.14
    
    
    
    30.80
    
    
    
    79,719
    
    
    
    31.01$41.10  $43.85
    
    
    1,142,486
    
    
    
    5.40
    
    
    
    41.32
    
    
    
    210,772
    
    
    
    41.12$46.06  $53.74
    
    
    36,600
    
    
    
    5.28
    
    
    
    47.90
    
    
    
    7,066
    
    
    
    47.24$56.72  $64.95
    
    
    355,880
    
    
    
    6.20
    
    
    
    59.54
    
    
    
    225
    
    
    
    59.004,002,244
    
    
    
    4.72
    
    
    $
    32.69
    
    
    
    2,132,666
    
    
    $
    25.60
  Estimates.
 New Accounting Pronouncements. The Fair Value
Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement
No. 115
 Fair Value Measurements
 Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in
Current Year Financial Statements
 F-17




---



##### 



Accounting for Uncertainty in Income Taxes: An
Interpretation of FASB Statement No. 109
  3. Acquisitions
   Business
Combinations
 F-18




---



##### 



For the Year EndedDecember 31, 2004Net revenue
    
    $
    904,579Operating income
    
    
    409,970Net income
    
    
    119,919
 4. Restructuring and Impairment Charges
  2003
    
    2005Restructuring
    
    RestructuringActions
    
    Actions
    
    TotalBalance at December 31, 2003
    
    $
    8,499
    
    
    $
    --
    
    
    $
    8,499Additions to reserve charged to earnings
    
    
    2,657
    
    
    
    --
    
    
    
    2,657Payments
    
    
    (7,695
    )
    
    
    --
    
    
    
    (7,695
    )Balance at December 31, 2004
    
    
    3,461
    
    
    
    --
    
    
    
    3,461Additions to reserve charged to goodwill
    
    
    --
    
    
    
    8,828
    
    
    
    8,828Payments
    
    
    (1,884
    )
    
    
    (2,356
    )
    
    
    (4,240
    )Balance at December 31, 2005
    
    
    1,577
    
    
    
    6,472
    
    
    
    8,049Payments
    
    
    (606
    )
    
    
    (1,074
    )
    
    
    (1,680
    )Reserve reversal credited to goodwill
    
    
    --
    
    
    
    (3,455
    )
    
    
    (3,455
    )Balance at December 31, 2006
    
    $
    971
    
    
    $
    1,943
    
    
    $
    2,914
 F-19




---



##### 



5. Long-Term Debt, Credit Facilities and Notes
  2006
    
    
    2005Credit Facility
    
    $
    1,946,535
    
    
    $
    2,170,9158.875% Senior Notes due 2010
    
    
    7,934
    
    
    
    7,93410.875% Senior Subordinated Notes due 2012
    
    
    600,000
    
    
    
    600,000Total
    
    
    2,554,469
    
    
    
    2,778,849Less current portion
    
    
    112,200
    
    
    
    100,234Long-term debt
    
    $
    2,442,269
    
    
    $
    2,678,615
 F-20




---



##### 



Credit Facility
   
    
    The higher of (i) a base rate as determined by the Administrative Agent, Deutsche
Bank Trust Company Americas and (ii) the Federal Funds Effective Rate (as defined) plus
0.50%, and in each case, plus a 0.25% margin on the Revolver and Term Loan A-4 and a 0.50%
margin on Term Loan D-1 and Term Loan D-2; or
    
    The LIBOR rate plus a 1.25% margin on the Revolver and Term Loan A-4 and a 1.50% margin
on Term Loan D-1 and Term Loan D-2. We may elect interest periods of 1, 2, 3 or 6 months
(or 9 or 12 months if, at the time of the borrowing, all lenders agree to make such term
available), for LIBOR borrowings.
  Notes
 th th
   Redemption Year
    
    Price2006
    
    
    104.438
    %2007
    
    
    102.219
    %2008 and thereafter
    
    
    100.000
    %
 
   F-21




---



##### 



Redemption Year
    
    Price2007
    
    
    105.438
    %2008
    
    
    103.625
    %2009
    
    
    101.813
    %2010 and thereafter
    
    
    100.000
    %
 
     2007
    
    $
    112,2002008
    
    
    61,6952009
    
    
    92,9952010
    
    
    1,066,5282011
    
    
    621,051Thereafter
    
    
    600,000Total
    
    $
    2,554,469
 
   6. Derivative Financial Instruments
  Effective Dates
    
    Notional Amount
    
    
    
    
    Pay Rates
    
    Maturity Dates(amounts in millions)April 1, 2003
    
    $
    255
    
    
    (2)
    
    2.850%
    
    March 31, 2007September 7, 2004
    
    
    200
    
    
    (2)
    
    3.490% - 3.750%
    
    September 8, 2008 - September 7, 2009September 15, 2004
    
    
    250
    
    
    (3)
    
    3.200% - 3.910%
    
    September 15, 2007 - September 15, 2009September 17, 2004
    
    
    150
    
    
    (2)
    
    3.210% - 3.740%
    
    September 17, 2007 - September 17, 2009September 23, 2004
    
    
    150
    
    
    (2)
    
    3.160% - 3.438%
    
    September 24, 2007 - September 23, 2008December 20, 2005
    
    
    300
    
    
    (4)
    
    4.74% - 4.752%
    
    December 20, 2007 - December 22, 2008May 26, 2006
    
    
    200
    
    
    (1)
    
    5.2725% -5.275%
    
    May 26, 2009May 31, 2006
    
    
    100
    
    
    (1)
    
    5.295% - 5.312%
    
    May 31, 2008 - May 31, 2009Total
    
    $
    1,605
 
  F-22




---



##### 



7. Partnership Income and Investment
  Eight Months EndedAugust 31, 200450% share of DonTech net profits
    
    $
    12,777Revenue participation income
    
    
    65,190Total DonTech income
    
    $
    77,967
  Eight Months EndedAugust 31, 2004Net revenues
    
    $
    68,777Operating income
    
    $
    25,428Net income
    
    $
    25,554
 F-23




---



##### 



8. Income Taxes
   2006
    
    
    2005
    
    
    2004Current provision (benefit)U.S. Federal
    
    $
    2,154
    
    
    $
    --
    
    
    $
    (25,348
    )State and local
    
    
    627
    
    
    
    --
    
    
    
    (207
    )Total current provision (benefit)
    
    
    2,781
    
    
    
    --
    
    
    
    (25,555
    )Deferred provisionU.S. Federal
    
    
    91,894
    
    
    
    44,147
    
    
    
    66,230State and local
    
    
    42,493
    
    
    
    6,385
    
    
    
    5,231Total deferred provision
    
    
    134,387
    
    
    
    50,532
    
    
    
    71,461Provision for income taxes
    
    $
    137,168
    
    
    $
    50,532
    
    
    $
    45,906
  2006
    
    2005
    
    2004Statutory U.S. Federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of U.S. Federal tax benefit
    
    
    2.8
    
    
    
    3.2
    
    
    
    4.5State net operating loss utilization
    
    
    2.1
    
    
    
    --
    
    
    
    --Modification of state apportionment factors
    
    
    11.5
    
    
    
    --
    
    
    
    --Non-deductible expense
    
    
    0.2
    
    
    
    0.3
    
    
    
    --Other
    
    
    0.5
    
    
    
    --
    
    
    
    --Effective tax rate
    
    
    52.1
    %
    
    
    38.5
    %
    
    
    39.5
    %
  2006
    
    
    2005Deferred tax assetsReorganization and restructuring costs
    
    $
    --
    
    
    
    $1,422Bad debts
    
    
    3,168
    
    
    
    5,445Postretirement benefits
    
    
    6,780
    
    
    
    4,755Capital loss carryforward
    
    
    5,977
    
    
    
    6,148Deferred compensation
    
    
    2,999
    
    
    
    4,022Deferred directory cost uplift
    
    
    273
    
    
    
    4,148Net operating loss and credit carryforwards
    
    
    74,107
    
    
    
    156,000Pension
    
    
    12,344
    
    
    
    --Stock-based compensation expense under SFAS No. 123 (R)
    
    
    9,696
    
    
    
    --Total deferred tax assets
    
    
    115,344
    
    
    
    181,940Valuation allowance
    
    
    (5,977
    )
    
    
    (6,148
    )Net deferred tax assets
    
    
    109,367
    
    
    
    175,792Deferred tax liabilitiesRestructuring costs
    
    
    1,377
    
    
    
    --Pension
    
    
    --
    
    
    
    10,914Depreciation and amortization
    
    
    283,776
    
    
    
    218,232Net deferred revenue
    
    
    97,939
    
    
    
    92,672Other
    
    
    8,635
    
    
    
    265Total deferred tax liabilities
    
    
    391,727
    
    
    
    322,083Net deferred tax liability
    
    $
    282,360
    
    
    $
    146,291
 F-24




---



##### 



9. Stock Incentive Plans
  F-25




---



##### 



December 31, 2006Dividend yield
    
    0%Expected volatility
    
    28.2%Risk-free interest rate
    
    4.4%Expected life
    
    5 Years
    WeightedAverage
    
    AggregateExercise/Grant
    
    IntrinsicShares
    
    Price Per Share
    
    ValueAwards outstanding, January 1, 2006
    
    
    4,002,244
    
    
    
    $32.69
    
    $
    119,958Granted *
    
    
    1,834,890
    
    
    
    64.31
    
    
    585Dex Media stock-based awards
converted
    
    
    1,725,361
    
    
    
    12.73
    
    
    85,882Exercised
    
    
    (1,988,597
    )
    
    
    16.38
    
    
    (92,165
    )Forfeitures
    
    
    (292,125
    )
    
    
    57.10
    
    
    (1,438
    )Awards outstanding, December 31, 2006
    
    
    5,281,773
    
    
    
    $41.98
    
    $
    112,822Available for future grants at December 31, 2006
    
    
    4,052,363
 *
 F-26




---



##### 



Stock Awards Outstanding
    
    
    
    Stock Awards ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    
    AverageRemaining
    
    
    Average
    
    
    
    
    
    
    
    Remaining
    
    
    WeightedRange of
    
    
    
    
    
    Contractual
    
    
    Exercise/Grant
    
    
    
    
    
    
    
    Contractual
    
    
    AverageExercise/Grant
    
    
    
    
    
    Life
    
    
    Price Per
    
    
    
    
    
    
    
    Life
    
    
    Exercise/GrantPrices
    
    Shares
    
    
    (In Years)
    
    
    Share
    
    
    
    Shares
    
    
    (In Years)
    
    
    Price Per Share$10.78 - $14.75
    
    
    218,581
    
    
    
    5.73
    
    
    
    $11.19
    
    
    
    
    139,225
    
    
    
    5.06
    
    
    
    $11.42$15.22 - $19.41
    
    
    287,963
    
    
    
    2.10
    
    
    
    15.75
    
    
    
    
    287,963
    
    
    
    2.10
    
    
    
    15.75$24.75 - $29.59
    
    
    1,659,979
    
    
    
    3.47
    
    
    
    25.97
    
    
    
    
    1,659,979
    
    
    
    3.47
    
    
    
    25.97$30.11 - $39.21
    
    
    135,366
    
    
    
    3.16
    
    
    
    30.99
    
    
    
    
    100,649
    
    
    
    3.16
    
    
    
    30.96$41.10 - $43.85
    
    
    954,620
    
    
    
    4.34
    
    
    
    41.40
    
    
    
    
    650,429
    
    
    
    4.33
    
    
    
    41.40$46.06 - $55.25
    
    
    91,951
    
    
    
    5.95
    
    
    
    51.87
    
    
    
    
    23,799
    
    
    
    4.63
    
    
    
    47.98$56.55 - $65.00
    
    
    1,933,313
    
    
    
    5.78
    
    
    
    63.28
    
    
    
    
    622,061
    
    
    
    5.61
    
    
    
    62.015,281,773
    
    
    
    5.11
    
    
    
    $41.98
    
    
    
    
    3,484,105
    
    
    
    4.56
    
    
    
    $40.33
   Weighted AverageNon-vested
    
    
    Grant Date
    
    Non-vested
    
    
    Weighted AverageStock Options
    
    
    Exercise Price Per
    
    Restricted
    
    
    Grant Date Fairand SARs
    
    
    Award
    
    Stock
    
    
    Value Per AwardNon-vested at January 1, 2006
    
    
    1,869,578
    
    
    $40.78
    
    
    --
    
    
    $     --Granted
    
    
    1,834,890
    
    
    64.31
    
    
    208,793
    
    
    61.39Non-vested Dex OptionsConverted
    
    
    224,597
    
    
    12.73
    
    
    --
    
    
    --Vested
    
    
    (1,839,272
    )
    
    44.01
    
    
    --
    
    
    --Forfeitures
    
    
    (292,125
    )
    
    57.10
    
    
    (15,710
    )
    
    62.41Non-vested at December 31, 2006
    
    
    1,797,668
    
    
    $45.18
    
    
    193,083
    
    
    $61.31
   F-27




---



##### 



F-28




---



##### 



10. Benefit Plans
 Pension Plans.
  Savings Plans.
 Postretirement Benefits.
  Benefit Obligation and Funded Status
  Pension Plans
    
    Postretirement Plans2006
    
    
    2005
    
    
    2006
    
    
    2005Change in benefit obligationBenefit obligation, beginning of period
    
    
    $125,759
    
    
    
    $113,389
    
    
    
    $23,227
    
    
    
    $19,434Service cost
    
    
    5,681
    
    
    
    5,050
    
    
    
    677
    
    
    
    685Interest cost
    
    
    6,850
    
    
    
    6,406
    
    
    
    1,245
    
    
    
    1,195Plan participant contributions
    
    
    --
    
    
    
    --
    
    
    
    337
    
    
    
    258Amendments
    
    
    387
    
    
    
    --
    
    
    
    --
    
    
    
    --Actuarial (gain)/loss
    
    
    (5,294
    )
    
    
    6,448
    
    
    
    (1,353
    )
    
    
    2,677Benefits paid
    
    
    (5,271
    )
    
    
    (5,534
    )
    
    
    (1,143
    )
    
    
    (1,022
    )Benefit obligation, end of period
    
    
    $128,112
    
    
    $
    125,759
    
    
    
    $22,990
    
    
    $
    23,227Change in plan assetsFair value of plan assets, beginning of period
    
    
    $100,783
    
    
    $
    101,007
    
    
    $
    --
    
    
    $
    --Return on plan assets
    
    
    8,981
    
    
    
    5,252
    
    
    
    --
    
    
    
    --Employer contributions
    
    
    140
    
    
    
    58
    
    
    
    806
    
    
    
    765Plan participant contributions
    
    
    --
    
    
    
    --
    
    
    
    337
    
    
    
    257Benefits paid
    
    
    (5,271
    )
    
    
    (5,534
    )
    
    
    (1,143
    )
    
    
    (1,022
    )Fair value of plan assets, end of period
    
    
    $104,633
    
    
    $
    100,783
    
    
    $
    --
    
    
    $
    --Reconciliation of Funded StatusFunded status of plans
    
    
    $(23,479
    )
    
    
    $(24,976
    )
    
    
    $(22,990
    )
    
    $
    (23,227
    )Unrecognized net loss
    
    
    --
    
    
    
    36,834
    
    
    
    --
    
    
    
    4,376Unrecognized prior service costs
    
    
    --
    
    
    
    1,094
    
    
    
    --
    
    
    
    3,774Net amount recognized
    
    
    $(23,479
    )
    
    $
    12,952
    
    
    
    $(22,990
    )
    
    $
    (15,077
    )
 F-29




---



##### 



PostretirementPension Plans
    
    Plans2006
    
    2006Current liabilities
    
    $
    (200
    )
    
    $
    (1,006
    )Non-current liabilities
    
    
    (23,279
    )
    
    
    (21,984
    )Net amount recognized
    
    $
    (23,479
    )
    
    $
    (22,990
    )
 PostretirementPension Plans
    
    Plans2005
    
    2005Accrued liabilities
    
    $
    (11,906
    )
    
    $
    (15,077
    )Intangible asset
    
    
    1,146
    
    
    
    --Accumulated other comprehensive income
    
    
    23,712
    
    
    
    --Net amount recognized
    
    $
    12,952
    
    
    $
    (15,077
    )
   2006
    
    2005Projected benefit obligation
    
    $
    5,287
    
    
    $
    4,441Accumulated benefit obligation
    
    $
    3,323
    
    
    $
    2,749
 Components of Net Periodic Benefit Expense
  2006
    
    
    2005
    
    
    2004Service cost
    
    $
    5,681
    
    
    
    $5,050
    
    
    $
    4,147Interest cost
    
    
    6,850
    
    
    
    6,406
    
    
    
    4,661Expected return on plan assets
    
    
    (8,248
    )
    
    
    (8,363
    )
    
    
    (6,680
    )Amortization of unrecognized prior service cost
    
    
    130
    
    
    
    133
    
    
    
    116Amortization of unrecognized net loss
    
    
    2,062
    
    
    
    1,326
    
    
    
    733Net periodic benefit expense
    
    $
    6,475
    
    
    
    $4,552
    
    
    $
    2,977
  2006
    
    
    2005
    
    
    2004Service cost
    
    $
    678
    
    
    $
    685
    
    
    $
    548Interest cost
    
    
    1,245
    
    
    
    1,195
    
    
    
    870Amortization of unrecognized prior service cost
    
    
    219
    
    
    
    814
    
    
    
    172Amortization of unrecognized net loss
    
    
    813
    
    
    
    175
    
    
    
    681Net periodic benefit expense
    
    $
    2,955
    
    
    $
    2,869
    
    
    $
    2,271
 F-30




---



##### 



Additional Information
 Retirement Plans2006
    
    2005
    
    2004(Decrease) increase in minimum pension
liability included in other comprehensive
income
    
    $
    (7,655
    )
    
    $
    23,197
    
    
    $
    515
 Adoption of SFAS No. 158
  Before
    
    
    
    
    
    
    AfterApplication
    
    
    SFAS No.
    
    
    Applicationof SFAS No.
    
    
    158
    
    
    of SFAS No.158
    
    
    Adjustment
    
    
    158Liability for
pension and
postretirement
benefits
    
    
    $(28,041
    )
    
    
    $(18,428
    )
    
    
    $(46,469
    )Deferred income taxes
    
    
    --
    
    
    
    (7,406
    )
    
    
    --Accumulated other
comprehensive loss,
net of tax
    
    
    $(9,871)
    
    
    
    $(12,397)
    
    
    
    $(22,268)
  Pension
    
    
    PostretirementPlans
    
    
    PlansPreviously unrecognized actuarial gain
expected to be recognized in 2007
    
    $
    1,953
    
    
    $
    57Previously unrecognized prior service cost
expected to be recognized in 2007
    
    $
    164
    
    
    $
    814
  Pension
    
    
    PostretirementPlans
    
    
    PlansNet actuarial gain
    
    $
    28,746
    
    
    $
    2,803Prior service cost
    
    $
    1,350
    
    
    $
    2,960
 Assumptions
  2006
    
    
    2005Weighted average discount rate
    
    
    5.90
    %
    
    
    5.50
    %Rate of increase in future compensation
    
    
    3.66
    %
    
    
    3.66
    %
 F-31




---



##### 



2006
    
    
    2005
    
    
    2004Weighted average discount rate
    
    
    5.50
    %
    
    
    5.75
    %
    
    
    6.00
    %Rate of increase in future compensation
    
    
    3.66
    %
    
    
    3.66
    %
    
    
    3.66
    %Expected return on plan assets
    
    
    8.25
    %
    
    
    8.25
    %
    
    
    8.25
    %
   2006
    
    2005Healthcare cost trend rate assumed for next yearUnder 65
    
    
    10.0
    %
    
    
    10.0
    %65 and older
    
    
    12.0
    %
    
    
    12.0
    %Rate to which the cost trend rate is assumed to declineUnder 65
    
    
    5.0
    %
    
    
    5.0
    %65 and older
    
    
    5.0
    %
    
    
    5.0
    %Year ultimate trend rate is reached
    
    
    2013
    
    
    
    2013
  One Percent ChangeIncrease
    
    
    DecreaseEffect on the aggregate of the service and
interest cost components of net periodic
postretirement benefit cost (Consolidated
Statement of Income)
    
    $
    334
    
    
    $
    (245
    )Effect on accumulated postretirement benefit
obligation (Consolidated Balance Sheet)
    
    $
    3,306
    
    
    $
    (2,226
    )
 Plan Assets
  Plan Assets atDecember 31, 2006
    
    Asset Allocationand 2005
    
    TargetEquity securities
    
    
    67
    %
    
    
    65
    %Debt securities
    
    
    33
    %
    
    
    35
    %Total
    
    
    100
    %
    
    
    100
    %
 F-32




---



##### 



Estimated Future Benefit Payments
  MedicarePension
    
    Postretirement
    
    Part DPlans
    
    Plans
    
    Subsidy2007
    
    $
    7,887
    
    
    $
    1,005
    
    
    $
    1202008
    
    
    7,689
    
    
    
    1,051
    
    
    
    1532009
    
    
    7,660
    
    
    
    1,105
    
    
    
    1842010
    
    
    8,422
    
    
    
    1,196
    
    
    
    2212011
    
    
    8,540
    
    
    
    1,236
    
    
    
    262Years 2012-2016
    
    
    53,068
    
    
    
    7,067
    
    
    
    2,004
  Additional Information and Subsequent Events
  F-33




---



##### 



11. Commitments
  2007
    
    $
    10,3662008
    
    
    9,8142009
    
    
    8,7862010
    
    
    5,4902011
    
    
    4,426Thereafter
    
    
    8,219Total
    
    $
    47,101
  12. Legal Proceedings
    13. Business Segments
  F-34




---



##### 



14. Related Party Transactions and Allocations
   15. Valuation and Qualifying Accounts
 Net Additionto Allowance
    
    
    Net AdditionsBalance at
    
    
    from AT&T
    
    
    Charged To
    
    
    Write-offs
    
    
    Balance atBeginning of
    
    
    Directory
    
    
    Revenue and
    
    
    and Other
    
    
    End ofPeriod
    
    
    Acquisition
    
    
    Expense
    
    
    Deductions
    
    
    PeriodAllowance for Doubtful Accounts and
Sales ClaimsFor the year ended December 31, 2006
    
    
    $27,328
    
    
    
    --
    
    
    
    48,186
    
    
    
    (50,038
    )
    
    
    $25,476For the year ended December 31, 2005
    
    
    $33,093
    
    
    
    --
    
    
    
    54,921
    
    
    
    (60,686
    )
    
    
    $27,328For the year ended December 31, 2004
    
    
    $11,956
    
    
    
    25,788
    
    
    
    32,339
    
    
    
    (36,990
    )
    
    
    $33,093Deferred Tax Asset Valuation
AllowanceFor the year ended December 31, 2006
    
    
    $6,148
    
    
    
    --
    
    
    
    --
    
    
    
    (171
    )
    
    
    $5,977For the year ended December 31, 2005
    
    
    $6,148
    
    
    
    --
    
    
    
    --
    
    
    
    --
    
    
    
    $6,148For the year ended December 31, 2004
    
    
    $5,738
    
    
    
    --
    
    
    
    410
    
    
    
    --
    
    
    
    $6,148
 F-35




---



##### 



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  ITEM 9A.
    
    CONTROLS AND PROCEDURES.
 (a)
    
    Evaluation of Disclosure Controls and Procedures.Based on their evaluation, as of December
31, 2006, of the effectiveness of the Companys disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), the
principal executive officer and principal financial officer of the Company have each concluded
that such disclosure controls and procedures are effective and sufficient to ensure that
information required to be disclosed by the Company in reports that it files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commissions rules and forms.(b)
    
    Changes in Internal Controls.There has not been any change in the Companys internal
control over financial reporting that occurred during the Companys most recent fiscal quarter
that has materially affected, or is reasonably likely to materially affect, the Companys
internal control over financial reporting.
 ITEM 9B.
    
    OTHER INFORMATION.
  35




---



##### 



PART III
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  ITEM 11.
    
    EXECUTIVE COMPENSATION.
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
  ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   2006
    
    
    2005Audit fees (1)
    
    $
    2,575,615
    
    
    $
    1,680,793Audit-related fees (2)
    
    
    38,286
    
    
    
    1,137,119Tax fees (3)
    
    
    32,800
    
    
    
    216,531All other fees (4)
    
    
    --
    
    
    
    3,113Total fees
    
    $
    2,646,701
    
    
    $
    3,037,556
 
 (1)
    
    Audit fees for the years ended December 31, 2006 and 2005 were for professional
services rendered by KPMG and PwC, as applicable, for the audits of the consolidated
financial statements of RHD and its subsidiary registrants, reviews of the financial
statements included in RHD and its subsidiary registrants
Quarterly Reports on Form 10-Q and other audit services for RHD at a
consolidated level. The amount for 2006 represents an estimate of
overall fees, which have not yet been fully billed.(2)
    
    Audit-related fees for the years ended December 31, 2006
and 2005 were for assurance and related
services rendered by KPMG and PwC, as applicable, including various other financial accounting, reporting
and assurance services.(3)
    
    Tax fees for the years ended December 31, 2006 and 2005 were for
services rendered by KPMG and PwC, as applicable, in connection with
general tax planning and advice.(4)
    
    All other fees in 2005 were for accounting research software.
  36




---



##### 



PART IV
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 (A)(1)
and (2) -  List of financial statements and financial statement schedules
  Reports of Independent Registered Public Accounting FirmsConsolidated Balance Sheets at December 31, 2006 and 2005Consolidated Statements of Income and Comprehensive Income for the three years ended
December 31, 2006Consolidated Statements of Cash Flows for the three years ended December 31, 2006Consolidated Statements of Changes in Shareholders Equity for the three years ended
December 31, 2006Notes to Consolidated Financial StatementsFinancial statement schedules for the Company have not been prepared because the required
information has been included in the Companys consolidated financial statements included in
Item 8 of this Annual Report.
 37




---



##### 



(a) Exhibits:
 Exhibit No.
    
    Document3.1
    
    Certificate of Incorporation of the Company (incorporated by reference to
Exhibit 3.3 to Amendment No. 1 to the Registration Statement on Form S-4,
filed with the Securities and Exchange Commission on August 7, 1998,
Registration No. 333-59287)3.2
    
    By-laws of the Company (incorporated by reference to Exhibit 3.2 to the
Companys Registration Statement on Form S-4, filed with the Securities and
Exchange Commission on July 17, 1998, Registration No. 333-59287)4.1
    
    Indenture, dated as of December 3, 2002, between the Company (as successor
to R.H. Donnelley Finance Corporation I), as Issuer, and The Bank of New
York, as Trustee, with respect to the 8.875% Senior Notes due 2010
(incorporated by reference to Exhibit 4.13 to the Companys Annual Report
on Form 10-K, filed with the Securities and Exchange Commission on March
20, 2003, Commission File No. 333-59287)4.2
    
    Form of 8.875% Senior Notes due 2010 (included in Exhibit 4.1)4.3
    
    Supplemental Indenture, dated as of January 3, 2003, among the Company., as
Issuer, RHD and the other guarantors signatory thereto, as Guarantors, and
The Bank of New York, as Trustee, with respect to the 8.875% Senior Notes
due 2010 (incorporated by reference to Exhibit 4.14 to the Companys Annual
Report on Form 10-K, filed with the Securities and Exchange Commission on
March 20, 2003, Commission File No. 333-59287)4.4
    
    Second Supplemental Indenture, dated as of September 1, 2004, by and among
the Company , the guarantors party thereto and The Bank of New York, as
Trustee, with respect to the 8.875% Senior Notes due 2010 of the Company
(incorporated by reference to Exhibit 4.1 to the Companys Current Report
on Form 8-K, filed with the Securities and Exchange Commission on September
3, 2004, Commission File No. 333-59287)4.5
    
    Third Supplemental Indenture, dated as of December 6, 2005, among the
Company, as Issuer, RHD and the subsidiary guarantors named therein, as
Guarantors, and The Bank of New York, as Trustee, with respect to the
8.875% Senior Notes due 2010 of R.H. Donnelley Inc. (incorporated by
reference to Exhibit 4.1 of the Companys Current Report on Form 8-K, filed
with the Securities and Exchange Commission on December 20, 2005,
Commission File No. 333-59287)4.6
    
    Guarantees relating to the 8.875% Senior Notes due 2010 (incorporated by
reference to Exhibit 4.16 to the Companys Annual Report on Form 10-K,
filed with the Securities and Exchange Commission on March 20, 2003,
Commission File No. 333-59287)4.7
    
    Senior Guarantees relating to Second Supplemental Indenture to the
Indenture governing the 8.875% Senior Notes due 2010 (incorporated by
reference to Exhibit 4.3 to the Companys Current Report on Form 8-K, filed
with the Securities and Exchange Commission on September 3, 2004,
Commission File No. 333-59287)4.8
    
    Indenture, dated as of December 3, 2002, between the Company (as successor
to R.H. Donnelley Finance Corporation I), as Issuer, and The Bank of New
York, as Trustee, with respect to the 10.875% Senior Subordinated Notes due
2012 of the Company (incorporated by reference to Exhibit 4.17 to the
Companys Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 20, 2003, Commission File No. 333-59287)4.9
    
    Form of 10.875% Senior Subordinated Notes due 2012 (included in Exhibit 4.8)4.10
    
    Supplemental Indenture, dated as of January 3, 2003, among the Company, as
Issuer, RHD and the other guarantors signatory thereto, as Guarantors, and
The Bank of New York, as Trustee, with respect to the 10.875% Senior
Subordinated Notes due 2012 (incorporated by reference to Exhibit 4.18 to
the Companys Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 20, 2003, Commission File No. 333-59287)
 38




---



##### 



Exhibit No.
    
    Document4.11
    
    Second Supplemental Indenture, dated as of January 9, 2004, among the
Company, as Issuer, RHD and other guarantors signatory thereto, as
Guarantors, and The Bank of New York, as Trustee, with respect to the
10.875% Senior Subordinated Notes due 2012 (incorporated by reference to
Exhibit 4.21 to the Companys Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on March 12, 2004, Commission File No.
333-59287)4.12
    
    Third Supplemental Indenture, dated as of September 1, 2004, among the
Company, and the guarantors party thereto, as Guarantors, and The Bank of
New York, as Trustee, with respect to the 10.875% Senior Subordinated Notes
due 2012 of the Company (incorporated by reference to Exhibit 4.2 to the
Companys Current Report on Form 8-K, filed with the Securities and
Exchange Commission on September 3, 2004, Commission File No. 333-59287)4.13
    
    Guarantees relating to the 10.875% Senior Subordinated Notes due 2012
(incorporated by reference to Exhibit 4.20 to the Companys Annual Report
on Form 10-K, filed with the Securities and Exchange Commission on March
20, 2003, Commission File No. 333-59287)4.14
    
    Senior Subordinated Guarantees relating to the Third Supplemental Indenture
to the Indenture governing the 10.875% Notes due 2012 (incorporated by
reference to Exhibit 4.4 to the Companys Current Report on Form 8-K, filed
with the Securities and Exchange Commission on September 3, 2004,
Commission File No. 333-59287)10.1
    
    Non-Competition Agreement, dated as of January 3, 2003, by and among RHD,
R.H. Donnelley Publishing & Advertising, Inc. (f/k/a Sprint Publishing &
Advertising, Inc.), CenDon, L.L.C., R.H. Donnelley Directory Company (f/k/a
Centel Directory Company), Sprint Corporation and the Sprint Local
Telecommunications Division (incorporated by reference to Exhibit 10.4 to
RHDs Current Report on Form 8-K, filed with the Securities and Exchange
Commission on January 17, 2003, Commission File No. 001-07155)10.2
    
    Letter from Sprint Nextel Corporation, dated as of May 16, 2006,
acknowledging certain matters with respect to the Non-Competition Agreement
described above as Exhibit 10.1 (incorporated by reference to Exhibit 10.12
to RHDs Current Report on Form 8-K, filed with the Securities and Exchange
Commission on May 19, 2006, Commission File No. 001-07155)10.3
    
    Directory Services License Agreement, dated as of May 16, 2006, by and
among R.H. Donnelley Publishing & Advertising, Inc., CenDon, L.L.C., R.H.
Donnelley Directory Company, Embarq Corporation, Embarq Directory Trademark
Company, LLC and certain subsidiaries of Embarq Corporation formerly
constituting Sprint Local Telecommunications Division (incorporated by
reference to Exhibit 10.6 to RHDs Current Report on Form 8-K, filed with
the Securities and Exchange Commission on May 19, 2006, Commission File No.
001-07155)10.4
    
    Trademark License Agreement, dated as of May 16, 2006, by and among R.H.
Donnelley Publishing & Advertising, Inc., R.H. Donnelley Directory Company
and Embarq Directory Trademark Company, LLC (incorporated by reference to
Exhibit 10.7 to RHDs Current Report on Form 8-K, filed with the Securities
and Exchange Commission on May 19, 2006, Commission File No. 001-07155)10.5
    
    Publisher Trademark License Agreement, dated as of May 16, 2006, by and
among R.H. Donnelley Publishing & Advertising, Inc., CenDon, L.L.C., R.H.
Donnelley Directory Company and Embarq Corporation (incorporated by
reference to Exhibit 10.8 to RHDs Current Report on Form 8-K, filed with
the Securities and Exchange Commission on May 19, 2006, Commission File No.
001-07155)10.6
    
    Non-Competition Agreement, dated as of May 16, 2006, by and among RHD, R.H.
Donnelley Publishing & Advertising, Inc., CenDon, L.L.C., R.H. Donnelley
Directory Company, Embarq Corporation and certain subsidiaries of Embarq
Corporation formerly constituting Sprint Local Telecommunications Division
(incorporated by reference to Exhibit 10.9 to RHDs Current Report on Form
8-K, filed with the Securities and Exchange Commission on May 19, 2006,
Commission File No. 001-07155)
 39




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##### 



Exhibit No.
    
    Document10.7
    
    Subscriber Listings Agreement, dated as of May 16, 2006, by and among R.H.
Donnelley Publishing & Advertising, Inc., CenDon, L.L.C., R.H. Donnelley
Directory Company, Embarq Corporation and certain subsidiaries of Embarq
Corporation formerly constituting Sprint Local Telecommunications Division
(incorporated by reference to Exhibit 10.10 to RHDs Current Report on Form
8-K, filed with the Securities and Exchange Commission on May 19, 2006,
Commission File No. 001-07155)10.8
    
    Standstill Agreement, dated as of May 16, 2006, by and between R.H.
Donnelley Publishing & Advertising, Inc. and Embarq Corporation
(incorporated by reference to Exhibit 10.11 to RHDs Current Report on Form
8-K, filed with the Securities and Exchange Commission on May 19, 2006,
Commission File No. 001-07155)10.9#
    
    Directory Services License Agreement, dated as of September 1, 2004, among
RHD, R.H. Donnelley Publishing & Advertising of Illinois Partnership (f/k/a
The APIL Partners Partnership), DonTech II Partnership, Ameritech
Corporation, SBC Directory Operations, Inc. and SBC Knowledge Ventures,
L.P. (incorporated by reference to Exhibit 10.1 to RHDs Current Report on
Form 8-K, filed with the Securities and Exchange Commission on September 3,
2004, Commission File No. 001-07155)10.10
    
    Non-Competition Agreement, dated as of September 1, 2004, by and between
RHD and SBC Communications Inc. (incorporated by reference to Exhibit 10.2
to RHDs Current Report on Form 8-K, filed with the Securities and Exchange
Commission on September 3, 2004, Commission File No. 001-07155)10.11
    
    SMARTpages Reseller Agreement, dated as of September 1, 2004, among SBC
Communications, Inc., Southwestern Bell Yellow Pages, Inc., SBC Knowledge
Ventures, L.P., the Company, R.H. Donnelley Publishing & Advertising of
Illinois Partnership (f/k/a The APIL Partners Partnership) and DonTech II
Partnership (incorporated by reference to Exhibit 10.3 to RHDs Current
Report on Form 8-K, filed with the Securities and Exchange Commission on
September 3, 2004, Commission File No. 001-07155)10.12
    
    Ameritech Directory Publishing Listing License Agreement, dated as of
September 1, 2004, among R.H. Donnelley Publishing & Advertising of
Illinois Partnership (f/k/a The APIL Partners Partnership), DonTech II
Partnership and Ameritech Services Inc. (incorporated by reference to
Exhibit 10.4 to RHDs Current Report on Form 8-K, filed with the Securities
and Exchange Commission on September 3, 2004, Commission File No.
001-07155)10.13
    
    Agreement to Amend and Restate, dated December 13, 2005, among RHD and
lenders party to the Credit Agreement, dated as of November 8, 2002, as
amended (incorporated by reference to Exhibit 10.4 to RHDs Current Report
on Form 8-K filed with the Securities and Exchange Commission on December
19, 2005, Commission File No. 001-07155). This Agreement is no longer in
effect.10.14
    
    Agreement to Amend and Restate, dated December 13, 2005, among RHD and
lenders party to the Credit Agreement, dated as of September 9, 2003, as
amended (incorporated by reference to Exhibit 10.3 to RHDs Current Report
on Form 8-K filed with the Securities and Exchange Commission on December
19, 2005, Commission File No. 001-07155). This Agreement is no longer in
effect.10.15#
    
    Second Amended and Restated Credit Agreement, dated December 13, 2005,
among the Company, RHD, the several banks and other financial institutions
or entities from time to time parties thereto as lenders, J.P. Morgan
Securities Inc. and Deutsche Bank Trust Company Americas, as co-lead
arrangers and joint-bookrunners, JPMorgan Chase Bank, N.A., as syndication
agent, Bear Stearns Corporate Lending Inc., Credit Suisse, Cayman Islands
Branch, Goldman Sachs Credit Partners L.P., UBS Securities LLC and Wachovia
Bank, National Association, as co-documentation agents, and Deutsche Bank
Trust Company Americas, as administrative agent (incorporated by reference
to Exhibit 10.1 to RHDs Current Report on Form 8-K, filed with the
Securities and Exchange Commission on December 19, 2005, Commission File
No. 001-07155)10.16
    
    First Amendment, dated as of April 24, 2006, to the Second Amended and
Restated Credit Agreement, dated December 13, 2005, among the Company, RHD,
the several banks and other financial institutions or entities from time to
time parties thereto as lenders, and Deutsche Bank Trust Company Americas,
as administrative agent (incorporated by reference to Exhibit 10.1 to RHDs
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on April 28, 2006, Commission File No. 001-07155)
 40




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##### 



Exhibit No.
    
    Document10.17
    
    Second Amended and Restated Guaranty and Collateral Agreement, dated as of
December 13, 2005, among the Company, RHD, and the subsidiaries of the
Company party thereto, and Deutsche Bank Trust Company Americas, as
collateral agent (incorporated by reference to Exhibit 10.2 to RHDs
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on December 19, 2005, Commission File No. 001-07155)10.18
    
    Reaffirmation, dated as of April 24, 2006, among RHD, the Company and its
subsidiaries and Deutsche Bank Trust Company Americas, as administrative
agent (incorporated by reference to Exhibit 10.2 to RHDs Current Report on
Form 8-K, filed with the Securities and Exchange Commission on April 28,
2006, Commission File No. 001-07155)31.1*
    
    Certification of Annual Report on Form 10-K for the period ended December
31, 2006 by David C. Swanson, Chairman and Chief Executive Officer of R.H.
Donnelley Inc. under Section 302 of the Sarbanes-Oxley Act31.2*
    
    Certification of Annual Report on Form 10-K for the period ended December
31, 2006 by Steven M. Blondy, Executive Vice President, Chief Financial
Officer and Director of R.H. Donnelley Inc. under Section 302 of the Sarbanes-Oxley Act32.1*
    
    Certification of Annual Report on Form 10-K for the period ended December
31, 2006 under Section 906 of the Sarbanes-Oxley Act by David C. Swanson,
Chairman and Chief Executive Officer, and Steven M. Blondy, Executive Vice
President, Chief Financial Officer and Director, for R.H. Donnelley Inc.
 
 * Filed herewith.
^ Management contract or compensatory plan.
# The Company agrees to furnish supplementally a copy of any omitted exhibits or schedules
to the
Securities and Exchange Commission upon request. 41




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##### 



SIGNATURES
 th
 R.H. Donnelley Inc.By:
    
    /s/ David C. SwansonDavid C. Swanson,Chairman and Chief Executive Officer
  /s/ David C. Swanson

(David C. Swanson)
    
    Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
    
    March 28, 2007/s/ Steven M. Blondy

(Steven M. Blondy)
    
    Executive Vice President,
Chief Financial Officer and
Director
(Principal Financial Officer)
    
    March 28, 2007/s/ Jeffrey A. Smith

(Jeffrey A. Smith)
    
    Vice President and Controller
(Principal Accounting Officer)
    
    March 28, 2007/s/ Robert J. Bush

(Robert J. Bush)
    
    Director
    
    March 28, 2007
 42




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##### 



Exhibit Index
 Exhibit No.
    
    Document31.1*
    
    Certification of Annual Report on Form 10-K for the period
ended December 31, 2006 by David C. Swanson, Chairman and
Chief Executive Officer of R.H. Donnelley Inc. under Section
302 of the Sarbanes-Oxley Act31.2*
    
    Certification of Annual Report on Form 10-K for the period
ended December 31, 2006 by Steven M. Blondy, Executive Vice
President, Chief Financial Officer and Director of R.H. Donnelley Inc.
under Section 302 of the Sarbanes-Oxley Act32.1*
    
    Certification of Annual Report on Form 10-K for the period
ended December 31, 2006 under Section 906 of the
Sarbanes-Oxley Act by David C. Swanson, Chairman and Chief
Executive Officer, and Steven M. Blondy, Executive Vice
President, Chief Financial Officer and Director, for R.H. Donnelley Inc.
 
 ^ Management contract or compensatory plan.
* Filed herewith. 43